MUSKEGON -- When Michigan and Muskegon pooled every incentive package they could tap, the lure still was not strong enough to land the first factory for homegrown wind-turbine company WindTronics, LLC.

Instead, WindTronics turbines will be produced by 174 Canadian workers in an old Magna International auto-seating plant in Windsor, Ontario, helped by a $2.7 million up-front provincial grant. Production in the $5.4 million facility will begin as early as January.

Early access to cash made the difference, WindTronics President Reg Adams said.

Michigan's offer of a $500,000 loan and a $3.7 million, 10-year tax break for a Muskegon plant didn't even come in second, he said.

Not that Michigan didn't try.

Gov. Jennifer Granholm called Adams before the young tech company had even started its plant search, hes said.

Later, a Michigan Economic Development Corp. team paid a site visit and made its best offer.

"We knew we were competing with other locations, and worked hard to lure this company to Michigan by offering all of the tools at our disposal," MEDC spokeswoman Bridget Beckman said.

A $3.7 million tax credit, a brownfield credit and a loan were in the mix.

"The long and short of it is that, in the end, our performance-based incentives weren't as attractive to the company as the cash up-front package offered by Windsor," Beckman said.

Adams agreed.

"Although (Michigan offered) a large amount over 12 years, it really doesn't do a lot for a new technology company to get up and running quickly," he said. "

"We very much wanted to be in Michigan. We offered to take less than the other alternatives to be located here."

But Oregon came with money up front. So did Pennsylvania.

Then, Ontario brought its new Green Energy Act, offering the multi-million-dollar grant and a system that generates demand for products made in the Canadian province.

The jobs also help out Windsor, which has Canada's highest unemployment rate for cities at 14.8 percent. Michigan's unemployment rate of 15.2 percent.

The lost opportunity irritates U.S. Rep. Peter Hoekstra, R-Holland, a Michigan gubernatorial candidate for 2010.

"This has all the strengths that enables Michigan to be competitive on a global basis," he said. "Design engineers, manufacturing engineers, tool and die, injection molding. We are great at building things and assembling things.

"That last step in the process is where all the jobs are, and we blew it."

The technology for residential wind turbines was developed by Imad Mahawili while he was director of Grand Valley State University's Michigan Alternative and Renewable Research Center in Muskegon.

He is now technical director for WindTronics.

The system developed at GVSU is now patented in 120 countries. It enables the turbine to produce electricity in breezes as light as 2 miles per hour, by tapping the energy at the tip of the spinning blade, rather than at the hub.

Each turbine can produce 200 watts, about 10 to 20 percent of a household's electrical use, in a 165-pound, 6-foot diameter unit retailing for $5,500, company officials said.

By January, the first units will be available for order through Ace Hardware stores in the U.S.

WindTronics' 760 will be sold under the Honeywell International Inc. brand as the Honeywell WT6500, through a development agreement with the Morris Township, N.J.-based technology firm.

The unit produces power at the turbine blade ends instead of at its hub, where traditional turbines power a gear box.

Mahawili's brainchild is gaining note. The design was named "one of the 10 most brilliant products of 2009" by Popular Mechanics and was an innovation featured on Inc. Magazine's Web site.

WindTronics' wind-turbine business is a separate company of EarthTronics Inc., formed in Muskegon two years ago to import, distribute and market energy-efficient products such as light bulbs and fixtures.

West Michigan's other wind-turbine product, the Swift, is a much larger 1.5-kilowatt unit that sells for about $15,000. Parts and assembly are by Cascade Engineering Inc., of Cascade Township.

Although WindTronics is keeping 16 employees at its Muskegon headquarters and customer-service offices, local officials can't help but be disappointed.

"We put a lot of effort into this deal locally," said Ed Garner, Muskegon Area First president.

Both the state and local governments "absolutely put as much on the table as they had available for a start-up," he said.

"We realize it's a competitive situation. But we thought we had a little leg up because it was a homegrown entity."

One fact is helping the region adjust.

Nearly all suppliers for WindTronics are from Michigan.

Windsor workers will assemble the wind turbines, not produce the components.

"Right now, the majority of our suppliers, except for unique global products, are in Michigan," Adams said.

"We did award multiple contracts to Michigan vendors. We tried to compensate."