Aug. 9--For decades, Michigan and Ohio operated like twin pistons of a giant machine, churning out the nation's automobiles and steel.

Now both giants are faltering under double-digit unemployment rates. Each state's 10-year growth rate lags far behind the nation's growth rate as a whole.

But just as any twins diverge in important ways as they grow, Michigan and Ohio are faring in unequal measure in these troubled times. The difference in performance underscores what economists have long preached -- that a more-diverse economy is healthier in the long run.

That gives the more-diverse Ohio a decided edge. Ohio's 11.1% unemployment rate in June was more than four percentage points lower than Michigan's 15.2% rate. And although both states badly lag overall U.S. growth, Ohio's economy has grown 40% since 1999, compared with just 28% for Michigan's.

But if Ohio is outpacing its neighboring state lately, Robert Grevey, a spokesman for the Ohio Department of Development, declines to trash-talk Michigan.

"I'd hate to toot any horns because it's really not the time for that," he says. "There's a lot of work to do."

State has modified tax structure

California native Guy Lopez once hoped to start his motorcycle-customizing business in Los Angeles. But commercial real estate values and the West Coast cost of living nixed that.

So when his girlfriend suggested Ohio, where she had lived, Lopez moved to the Buckeye State. With advice and other help from a chamber of commerce and a local credit union, Lopez and his partner, Victor Garcia, opened their Gorilla Powder Coating shop in Toledo in 2005. They recently relocated it to Archbold, Ohio, about a half-hour to the west, and are expanding rapidly.

Lopez is sold on Ohio's business climate for entrepreneurs.

"I would definitely say this is the place to come start a business, without a doubt," he said.

Ohioans, of course, are suffering along with everyone else from the prolonged national recession. The state is one of 16 posting double-digit unemployment rates in June, and overall growth has been sluggish.

But compared with its neighboring state of Michigan, Ohio's economy doesn't look so bad, as Lopez and other entrepreneurs have found.

Leader in new facilities

In March, Site Selection magazine gave its Governor's Cup Award to Ohio for the third straight year for leading the nation in new and expanded business facilities. Ohio boasted 503 projects, while Michigan was in third place with 296.

Why the difference in performance? In part because Ohio, while seeing its automotive manufacturing sector slump, is more diverse than Michigan.