How we put the plan to work: Three strategies for transformation
To build a stronger, future-ready Michigan, we’re focusing on three things: diversified industries, skilled workers, and resilient communities that are ready for what’s next. These strategies work together to help Michigan grow in a balanced way.
Strategy 1
Industry growth & diversification
Michigan’s Economic Transition Strategy aims to bridge the gap between our economic future and our industrial legacy and heritage. It serves both as a tool to help small and medium-sized manufacturers adapt to economic change, and as a strategic comparative advantage to attract new investment from companies seeking dependable supply chains built for what’s coming next.
The Transition Office, in partnership with the Michigan Economic Development Corporation (MEDC), has developed an Industrial Growth & Diversification strategy that aims to help small and medium-sized manufacturers (the backbone of Michigan’s economy) successfully adapt and thrive despite several emerging challenges:
- Global competition is moving faster, so products change more quickly and suppliers have to keep up. When the rules keep changing, companies risk putting money into technology that won’t pay off — and they may struggle to move fast enough to chase better opportunities. Tight labor markets, cost pressures, and regulatory uncertainty make a fast, local supply chain more essential than ever.
Michigan’s strategy helps manufacturers navigate this environment by building a new capability to proactively identify, engage, and support suppliers more effectively and systematically. This approach doesn’t just enhance the state’s effort, it makes it easier for the strong network of organizations that support manufacturers to collaborate toward shared goals.
Michigan has a strong network of organizations that support business creation, retention, and growth. This includes state departments, industry associations, technical service providers, business support organizations, regional and local economic development organizations and chambers of commerce, and regional manufacturing councils. This network is rich with capable actors, but fragmented with few mechanisms for shared goal setting, coordinated action, or consistent information exchange.
A key tactic of the Michigan Economic Transition Strategy is to improve coordination within this network of strong and capable organizations and create more opportunities for collaboration. The Transition Office has worked toward this goal through investments in data sharing and digital infrastructure, which facilitate shared planning and coordinated program delivery.
We are creating the data tools needed to identify who is currently a part of our critical supply chains, what they are making, and what their respective threats and opportunities for growth or expansion are to more efficiently align and target our resources.
While policy and government programs can be impactful, the most powerful driver of economic growth form Michigan manufacturers is strong customer strategies aligned with clear market growth. The Michigan Economic Transition Strategy leverages the state’s ability to convene large employers, philanthropists, economic development agencies, industry experts, and other partners to identify future demand and solve supply chain gaps while creating new market pathways for Michigan-based firms.
Michigan is building a next-generation supply chain strategy rooted in a core belief: Our greatest untapped resource is the diverse network of small and medium-sized manufacturers that underpin our industrial economy. By aligning industrial insight, supplier readiness, and demand signals across sectors, Michigan is positioning itself as the premier state for solving supply chain challenges.
What began as a set of technical tools can become a scalable model for industrial resilience and business attraction. The state’s coordinated approach to supply chain challenges can enable faster problem-solving and lower market entry barriers for businesses and smarter industrial policy decisions based on real-time data.
Why it matters
Michigan’s ability to lead in the next era of manufacturing depends on how effectively it can respond to rapid change. This strategy plays a critical role by retaining and growing jobs in long-standing industrial communities, attracting new investment through practical solutions to supply chain instability, and positioning the state as a national leader in high-value, domestically resilient supply chains. It also offers a replicable model for other regions navigating similar economic transitions.
The Michigan Economic Transition Strategy is more than a response to economic change — it’s a competitive edge in a volatile global market. By combining industrial data, targeted business support, and public-private collaboration, Michigan is securing its manufacturing legacy and shaping its economic future.
Explore the programs that are making industry growth and diversification possible.
Michigan is building responsive tools such as the MI Hub for Manufacturers, a single digital front door to a wide variety of services available to companies from the state and partner organizations. Whether they are facing disruption or seeking opportunity, manufacturers can find access to the help they need, including:
- Technical assistance and advisory support
- Access to capital and funding opportunities
- Digital learning
- AI-enabled resource matching
- Real-time impact dashboards
Not only does the Hub make it easier for manufacturers to navigate to the services and resources they need, it also makes it easier for the individual service providers to coordinate when providing services to the same business.
“Having access to [the] kind of help [on the MI Hub for Manufacturers] in one place makes it even easier for businesses like ours to evolve, modernize, and grow.”
-Tom Aepelbacher, President, New Center Stamping
Michigan has a strong network of organizations that support business creation, retention, and growth. This includes state departments, industry associations, technical service providers, business support organizations, regional and local economic development organizations and chambers of commerce, and regional manufacturing councils. This network is rich with capable actors, but fragmented with few mechanisms for shared goal setting, coordinated action or consistent information exchange.
A key tactic of the Michigan Economic Transition Strategy is to improve coordination within this network of strong and capable organizations and create more opportunities for collaboration. The Transition Office has worked toward this goal through investments in data-sharing and digital infrastructure, which facilitate shared planning and coordinated program delivery.
For example, Michigan is building a deep and dynamic map of manufacturers’ capabilities, risk factors, and sector alignment. This helps the state understand exposure to transition risk, prepare for and respond to market shocks with precision, and identify retooling opportunities and growth potential for thousands of firms. The goal is for this tool to be shared with partner organizations to improve coordination and real time information sharing. It is currently in its testing phase.
Michigan is putting its coordinated approach into practice through initiatives like the Small Supplier Conversion Grant Program, which aligns state and federal resources to help small and medium-sized automotive suppliers retool their facilities to produce technology for hybrid and battery electric vehicles. The program offers competitive retooling grants, technical assistance, and access to matching capital to help firms that most need to pivot toward future growth. By leveraging Michigan’s extensive network of technical assistance partners, including the Michigan Manufacturing Technology Center, Centrepolis Accelerator, Michigan Small Business Development Center, and the University of Michigan Economic Growth Institute, the initiative ensures that even the smallest and most vulnerable suppliers can adapt to market change, retain quality jobs, and remain part of Michigan’s manufacturing future.
Michigan is building sector-focused partnerships that bring together large buyers, small and medium-sized manufacturers, and supportive economic development programming to solve real world supply chain challenges and open new markets for Michigan firms. Through these collaborations, the Transition Office convenes industry leaders and other major purchasers to identify near- and long-term demand, map critical supply chain gaps, and pinpoint where Michigan-based suppliers can step in. Partners share data on upcoming projects, technical requirements, and procurement timelines, while the state helps manufacturers understand opportunities, meet specifications, and navigate financing and incentives.
This approach turns abstract market trends into concrete projects and purchasing commitments. It helps:
- Industry leaders and purchasers reduce risk, improve resilience, and localize key parts of their supply chains.
- Small and medium-sized manufacturers diversify into new sectors with clearer demand signals, customer introductions, and targeted support.
- Regions and communities attract investments tied to real market needs.
Our initial partnership has focused on the energy sector, helping Michigan’s utilities identify suppliers to support grid modernization and expansion. Over time, this model can be replicated in additional sectors, creating a durable platform for collaborative problem-solving, diversification, and long-term industrial growth.
Discover recommendations for continued industry growth and diversification across Michigan.
Michigan’s Small Supplier Conversion Grant Program has already demonstrated strong demand and clear value for small and mid-sized manufacturers seeking to modernize and diversify. During the program’s recent Notice of Intent period, the Transition Office received 72 submissions, with more than 80% meeting eligibility criteria and representing over $146 million in proposed capital investment — more than four times the available project funding. This level of interest underscores both the scale of opportunity and the urgent need for additional support. By using state resources and pursuing additional federal funding streams, Michigan could expand the Supplier Conversion Grant Program to reach more firms and support retooling and diversification projects in other advanced manufacturing and growth sectors that fall outside the grant’s existing scope. Strengthening and scaling this program would help modernize facilities, retrain workers, and keep Michigan’s manufacturing communities competitive as technology and markets evolve.
Requires significant new investment
To maintain economic viability and foster sustained growth, Michigan’s legacy industries must adapt quickly to changing market demands. Transitioning to high-mix low-volume manufacturing can provide a vital pathway for manufacturers to modernize operations, enhance competitiveness, and ensure long-term economic stability. A strategic investment in a dedicated high-mix low-volume training program in Michigan would help manufacturers swiftly adapt their production processes to accommodate diverse and specialized products, reduce inventory and operational costs, maintain relevance in competitive industries by more effectively responding to customer demands for customized and niche-market products, and expand their opportunities by entering new growth-oriented markets. This type of training program can also be an effective method to attract innovative startups in hard-tech and clean tech sectors, as founders frequently leverage high-mix low-volume strategies to minimize the costs associated with establishing dedicated production facilities.
Requires modest investment or new use of existing funds
Requires additional study
Maintaining the state’s leadership in manufacturing will require our small and medium-sized enterprises to continue adapting to and embracing new, innovative technologies and ways of working. Adoption of artificial intelligence technologies will be imperative for our smaller suppliers to maintain competitiveness in an advanced manufacturing economy. Building on the MEDC’s successful Industry 4.0 grant program and leveraging the state’s high-tech innovative ecosystem, Michigan can create additional grant programs specifically to support small suppliers as they conduct AI assessments and fund technical assistance that helps this manufacturing base navigate how to best implement these technologies to serve their business needs, modernize operations, and prepare for future growth.
Requires significant new investment
Businesses looking to diversify their offerings likely know which industry or supply chain they are well-positioned to enter. But obtaining any required industry certifications or credentials can be time- and cost-prohibitive. Providing these suppliers with dedicated technical assistance and grant funding to meet the standards needed to receive these new certifications and offset any implementation and training costs can make it easier for smaller businesses to expand their market opportunities and enter growth-oriented markets such as aerospace and defense.
Requires modest investment or new use of existing funds
For Michigan’s small- and medium-sized businesses to diversify into new sectors, they need early customers and reduced risk. The State of Michigan can play a pivotal role by coordinating supplier-support initiatives across agencies and leveraging its own to create predictable, reliable demand for Michigan-made products. Acting as a first customer helps firms establish commercial track records and signals viability to private buyers. Complementing this with de-risking tools such as shared-risk grants or loans, early order guarantees, or insurance mechanisms that protect companies if projects fall short would further lower barriers to entry and encourage suppliers to pursue new markets. Together, approaches can open early markets, accelerate diversification, and attract private investment into advanced manufacturing products and technologies developed in Michigan.
Requires modest investment or new use of existing funds
Requires increased collaboration or coordination
Requires policy
Michigan needs a clear, data-driven view of its highest-potential industries and value chains to help small and mid-sized manufacturers move into markets with strong long-term growth. Many suppliers lack the capacity to track emerging sectors on their own, and there is an opportunity for the state to build a more complete view of which markets best fit Michigan’s strengths in manufacturing, talent, and research. By conducting a robust opportunity assessment and pairing it with detailed value chain analyses (building on work already underway in areas like lithium-ion batteries) the state can identify promising sectors, map gaps that hinder growth, and highlight where Michigan has a competitive edge. This coordinated research will guide suppliers toward profitable markets they might otherwise overlook and give the state a solid foundation for long-term investment, sector strategy, and future economic resilience.
Requires modest investment or new use of existing funds
Michigan needs a way to anticipate and respond to major economic shifts that fall outside the Transition Office’s core focus but still have significant effects on manufacturers and workers. Changes in federal tariffs, rapid advances in artificial intelligence, and other external shocks can reshape supply chains, alter cost structures, and shift workforce needs almost overnight. The state should draw on tools like the Michigan Statewide Workforce Plan’s AI addendum to build a monitoring and response system that can track these developments, assess their likely impacts, and coordinate timely guidance or support for businesses and workforce partners. This will help Michigan stay ahead of disruptive trends and adapt its strategies before those shifts lead to lost jobs or missed opportunities.
Requires modest investment or new use of existing funds
Requires increased collaboration or coordination
Michigan can strengthen regional competitiveness and accelerate growth in strategic industries by supporting both regional site readiness and the creation of Advanced Industrial Zones. Regions can work together to identify priority industrial sites, complete early assessments, and coordinate local resources — steps that shorten project timelines and make it easier for companies to evaluate and develop sites. The state can support this effort by creating an Advanced Industrial Zones designation for high-quality sites that have met early milestones and are on the path to becoming market ready. Within these Zones, the state would align resources, streamline permissions, and coordinate infrastructure, while requiring participating projects to target high-growth, priority sectors and meet high standards for job quality and community stewardship. Together, these efforts would help Michigan prepare investment-ready sites and attract businesses poised to invest in the next generation of manufacturing.
Requires significant new investment
Requires increased collaboration or coordination
Michigan has a long track record of building world-class clusters, most notably in automotive and mobility, where strong anchors and dense supplier networks have created deep expertise and durable competitive advantages. The state can apply this same playbook to emerging, high-growth sectors by taking a more deliberate approach to attracting and supporting companies across an industry’s full value chain. That means continuing to compete for major projects while also helping regions identify and target the suppliers, service providers, and specialized firms that make these sectors thrive. In New Albany, Ohio, Intel’s investment brought in a wave of semiconductor materials and equipment suppliers. Similar patterns can be seen in places like the Research Triangle’s biotech ecosystem and Austin’s rapidly expanding electronics and battery industry. By building connected clusters in these next-generation sectors, Michigan can create new engines of growth that complement — and strengthen — its existing manufacturing base.
Requires modest investment or new use of existing funds
Requires increased collaboration or coordination
As many small and medium-sized business owners in Michigan approach retirement, the state can help preserve jobs and local ownership by supporting transitions to employee ownership models such as ESOPs, worker cooperatives, or employee ownership trusts. These conversions are especially valuable in manufacturing communities at risk of economic disruption where preserving local ownership has resulted in stronger community ties and increased job retention. The state can play a key role by convening a financial and technical assistance network, offering grants for feasibility studies, accounting, legal, and other technical support, integrating employee ownership into existing tools like the MI Hub and Community Transition Playbook, and partnering with philanthropic and federal sources to finance conversions. This approach builds worker wealth, retains local businesses, and prevents avoidable closures — advancing inclusive, community-rooted economic growth.
Requires modest investment or new use of existing funds
Requires increased collaboration or coordination
“Economic shifts are not a one-size-fits-all process. The Transition Office recognizes that and works with communities to address their individual challenges.”
-Daniel Gilmartin, MML Executive Director