Google Going Maize and Blue

Online search and advertising giant Google (Nasdaq: GOOG  ) is moving into Michigan in force. According to state and company press releases, Google will build a call and operations center in Ann Arbor, Mich., and staff it with as many as 1,000 new workers over the next five years. That's a significant boost to the company's current headcount of around 7,000 employees worldwide.

The new technology center will house much of the AdWords division, which is vital to Google's revenue generation. Microsoft (Nasdaq: MSFT  ) and Yahoo! (Nasdaq: YHOO  ) only wish they had an advertising machine to match Google's, and both are putting serious money and effort into building their own.

In addition, Google's library-digitizing project will move to Michigan, only miles from one of its biggest partners at the University of Michigan. That school also just happens to be Google co-founder Larry Page's alma mater. Whether Page's hometown ties or the state's generous tax credits sealed the deal, we'll never know for sure, but they both surely had an impact.

The expansion may be huge in Google's terms, but it's a mere drop in the ocean for Michigan. Home to troubled automakers like Ford (NYSE: F  ) , General Motors (NYSE: GM  ) , and the Chrysler part of DaimlerChrysler (NYSE: DMX  ) , the state has lost 300,000 jobs in the past six years. Now Gov. Jennifer Granholm is trying to remake Motown into a new high-tech center under the moniker Automation Alley.

Apart from the 1,000 direct Google employees, the Michigan Economic Development Corporation (MEDC) says that the addition will create another 1,200 jobs to build out support services for the new tech central and its employees. In all, the whole enchilada is expected to enrich local Michiganians by more than $2 billion over the 20-year life of the tax credit. Not a bad return on $38 million, the amount of the tax credits Michigan is offering the company -- on condition that its state employment reaches 2,000.

The state government is clearly hoping that Google's leap of faith will attract more new business to the area. It could work, and it sure would be nice to see this once-great state rise anew from the carnage brought on by Toyota (NYSE: TM  ) and its Far Eastern sidekicks. Is Michigan the next Silicon Valley of the Midwest? We'll just have to wait and see.

Further Foolish reading:

• Michigan isn't alone in hitting hard times.
• But the state has been taking it especially hard.
• Maybe some of Motown's giants are good values now.

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Fool contributor Anders Bylund owns none of the stocks discussed here, but he uses Google's services every day. Microsoft is an Inside Value selection. Foolish disclosure has healing powers.