Emsi Case Study (See Full Archive)
A new $5 billion data center. An estimated 1,000 jobs added to the region. The revitalization of a gigantic, long-empty facility.
In a major economic development coup for West Michigan and the Grand Rapids area, Las Vegas-based Switch is establishing the largest data center campus in the eastern United States just south of Grand Rapids. Switch’s decision will have far-reaching implications for West Michigan, and it wouldn’t have happened without new legislation approved by the state legislature in December.
This is the story of how local economic development officials used Emsi data not to convince Switch to locate a data center in West Michigan, but to help inform legislators and community stakeholders about the impact Switch’s expansion could have on the regional economy.
Not Your Typical Business Attraction Success Story
By the time officials at The Right Place, a regional economic development organization in Grand Rapids, heard of Switch’s interest in locating a data center in the former Steelcase Pyramid in Gaines Township, the leadership at Switch had already visited the sprawling site.
In May 2015, Norman Properties purchased the 600,000-square-foot pyramid-shape facility that Steelcase, a major office furniture manufacturer, had vacated approximately five years ago. Norman Properties had a previous relationship with Switch, so after hearing the Las Vegas tech company was looking for a site for an eastern US data center, it posed the idea of Switch choosing the former Pyramid.
Once Switch completed its initial review of the site during that first confidential visit, the company reached out to The Right Place in early October. A huge economic development project was underway, one that would set the stage for Michigan to become a destination for high-tech investment and growth in the Midwest.
But this wasn’t your typical business attraction success story.
“This was a case when the data that we ran and the information that we used had no bearing on directly attracting the client,” said Tim Mroz, VP of marketing and communications at The Right Place. “It had everything to do with informing local community leaders and stakeholders of the impact that this client could have. It’s 180 degrees from what we’re normally used to.”
Emsi Data Helps Educate Legislators on Data Center’s Impact
The major hurdle in getting Switch to West Michigan was convincing the state legislature to change how the state taxed data centers. Data processing and hosting is a relatively small industry in Michigan, with around 30-35 data centers in the state, and it hadn’t been on The Right Place’s radar before the Switch project. So the first step for The Right Place was to educate itself—and then the community—about the industry.
Dave Riley, business research manager at The Right Place, went to work to find all the relevant statistics he could on data centers. He dug into Emsi’s labor market analytics software to gather this information and also to understand the potential economic impact of the Switch project. This included looking at occupations that staff data centers through a staffing pattern analysis. He also used Emsi’s input-output model to estimate the impact of adding 400 jobs, the most conservative number Switch gave The Right Place. (Since it will be a third-party data center, customers of Switch who have servers there will also be employed on site. This makes estimating the total jobs associated with the project tricky, but there’s expected to be around 1,000 badged IT professionals at the data center.)
“[Using Emsi data] had everything to do with informing local community leaders and stakeholders of the impact that this client could have.” — Tim Mroz, The Right Place
Riley’s input-output analysis showed the 400 initial jobs from Switch would lead to over 800 total jobs in the economy through inter-industry purchases and increased spending from employees.
The Right Place used these and other data points to inform its testimony in front of a state legislative committee when the proposed legislation was being debated and in meetings with other stakeholders. The education process was a necessary and helpful part of the quick project.
In mid-December, just two months after Switch contacted The Right Place, the state legislature and governor approved legislation that exempts all data centers and co-located businesses from the sales and use tax on data center equipment for 20 years.
Igniting a New Industry
With the change in legislation and Switch’s decision to locate in the Grand Rapids area, The Right Place and other regional economic development partners hope to make West Michigan an attractive spot for other tech companies. Grand Rapids already had a growing tech industry, and Switch’s move could prove to be a powerful signal “to the rest of the country and the rest of the world that there is a significant technology infrastructure in West Michigan,” Mroz said.
“I’ve been with The Right Place [almost] eight years, and during my tenure here the tech industry in West Michigan has come onto the radar screen,” Mroz said. “I think a decision like this is going to open up many eyes in the industry on what is going on in the Grand Rapids area and why Switch chose West Michigan.”
Further Reading and Resources
Gov. Snyder signs tax breaks for $5B Switch data center (includes interview with the Right Place CEO Birgit Kohls)
About The Right Place
The Right Place, Inc. is a regional non-profit economic development organization founded in 1985 and supported through investments from the private and public sector. Its mission is to promote economic growth in the areas of quality employment, productivity and technology in West Michigan by developing jobs through leading business retention, expansion, and attraction efforts. For more information, visit www.rightplace.org.