The Obstacle

Industries rise and fall as they go through boom-and-bust cycles. When that happens, unmanaged economic transitions can cause serious harm to individuals, businesses, and communities.

In Michigan, major economic transitions in the automotive, manufacturing, and energy industries have led to job losses and disinvestment in a number of communities over the past few decades, with the pace of economic change likely to accelerate in the years ahead.

In the past, the communities affected by these economic transitions had little advance warning before a factory was shuttered or a business closed down. As a result, closure-response processes were often reactive and fragmented, leaving workers at higher risk of prolonged unemployment and damaging the social and fiscal well-being of those communities.

In 2023, Michigan created a new Community & Worker Economic Transition Office with a mandate to address the shift toward renewable energy in the utility sector and advance around EVs, batteries, and software-defined vehicles in the auto sector. Together, these two sectors account for more than 20% of the state’s economy.

Instead of just managing the negative impact of utility and auto plant closures, the idea is for the Transition Office to support forward-looking economic transition strategies for communities, workers, and employers. These strategies ideally would help Michigan improve its industrial competitiveness, strengthen its resilience, and future-proof its workforce.

“The goal was not only to prepare for negative things that happen in the economy, but also to think about opportunities and how we can position Michigan at all levels—from the state to communities to small businesses and individual workers—to take advantage of future growth,” says Jonathan Smith, who served until March 2026 as the senior chief deputy director of Michigan’s Department of Labor and Economic Opportunity.

Many other states have established economic transition offices, but those initiatives have generally been focused quite narrowly on specific industries or localities. Michigan had more ambitious goals. “Michigan’s approach is comprehensive and proactive,” says Smith. “We’re not just looking to help individual towns. Our goal is to uplift every corner of Michigan.”

Economic transitions are inevitable. The question is whether you would rather face an unplanned and unmitigated transition or go into the transition proactively, better prepared to manage your own destiny.” — Jonathan Nipper, Managing Director and Partner at BCG

Our Approach

Michigan engaged BCG to support the Transition Office in defining its mission, setting up its operating model and organizational structure, and launching its first initiatives with engagement from stakeholders including local leaders, workforce partners, and other state agencies.

BCG helped the Transition Office establish its overarching goals and key pillars (communities, workers, employers) and then create the internal systems to track funding deployment and monitor progress on projects. By anchoring the office’s structure in principles of transparency, accountability, and data-driven reporting, BCG strengthened the ability of the Transition Office to maximize the impact of over $50 million in state funding.

Early on, the Transition Office and BCG recognized the power of bottom-up capacity building in communities. BCG helped the Transition Office launch one of its core initiatives related to communities: a set of closure-response workshops that involved over 50 local leaders from more than 10 communities across Michigan. Using a sophisticated scenario-planning approach, participants modeled potential responses to plant closures and economic transition events. The workshops revealed some critical capacity gaps common across communities, such as the lack of regional structures to coordinate responses to economic transitions that might impact multiple communities at the same time. The workshops also generated dozens of community-informed recommendations on ways that Michigan can improve how it responds to economic disruptions. Ultimately, these workshops will inform the development of a community economic transition playbook that will serve as a resource for communities across the state.

The Result

  • Development of effective and practical digital tools. For example, the Transition Office teamed up with mission-driven advisory firm Next Street on the development of MI Hub for Manufacturers, a tool that any manufacturer across Michigan can use to get assistance finding a new customer, retooling its factory, or upskilling its workforce. The Transition Office has also developed a codified set of metrics focused on the early identification of economic transition risks. “These metrics allow communities to proactively scan for risks that might impact a particular industry, community, or manufacturing facility,” says Jonathan Nipper, managing director and partner at BCG. “This can protect communities from being blindsided by an unexpected plant closure and give stakeholders a chance to join forces and prevent some disruptions altogether—for instance, by setting up training programs so that companies can find the local talent they need to stay competitive.”
  • Greater coordination among a broad range of stakeholders. Michigan already had a lot of programming in place to support communities, workers, and employers. Instead of trying to replicate these initiatives, the Transition Office recognized that it could add value by playing an important coordinating role so that stakeholders could navigate, utilize, and take advantage of all the existing resources. The Transition Office aims to unify and align the actions of dozens of public, private, and philanthropic actors to help workers, employers, and communities thrive in any economic scenario.
  • Implementation of scalable pilot programs. The Transition Office has launched new training programs such as the Community Growth Academy that works with local and regional coalitions to help communities develop and implement strategies for overcoming economic transitions and planning for long-term growth. Beyond technical assistance and access to competitive grant funding, the Community Growth Academy also gives participants valuable opportunities for peer-to-peer learning.
  • Creation of a Community Transition Playbook. Developed based on deep research with communities that participated in the inaugural Community Growth Academy and the community workshops hosted across ten Michigan communities, the Playbook offers a suite of tools covering usage of economic data, plant closure protocols, long-term planning, and proactive economic diversification.

“BCG’s support allowed us to put our strategy in place and get up to speed quickly and effectively,” says Smith. “As a result, we’re now able to position Michigan as a national leader in economic resilience and clean energy workforce development. I think that other states could benefit from applying some of the lessons we’ve learned and using some of the tools we’ve built to help communities diversify their economies and become more resilient in the face of change.”