Is This Christian Wall Street

April 10, 2006
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While it is often connected with the very essence of the region, West Michigan has somehow largely overlooked one of its most significant industry clusters: Christianity.

Home to the Christian business sector's largest publisher, its largest retailer, a denominational headquarters, a bevy of Christian colleges and hundreds of comparable organizations, West Michigan is the center of an industry believed to be recession-proof and globally viable, with growth potential rivaling health care and life sciences.

Faith-based products achieved blockbuster status in the past decade. Although the market serves only 20 percent of the 250 million Americans who identify themselves as Christians, sales have been phenomenal. Starting with the "Left Behind" book series and "Veggie Tales" cartoons in the mid-1990s, the niche began to outpace the general market. That trend reached critical mass with the release of Rick Warren's "The Purpose-Driven Life" in 2002, and Mel Gibson's film, "The Passion of the Christ" in 2004.

Warren's book, published by Grand Rapids-based Zondervan, sold 26 million copies and was the nation's top-selling book two years in a row. Gibson's film — which was partially funded by West Michigan investors and distributed on DVD by Zondervan — became one of the highest grossing films of all time.

Zondervan, a subsidiary of HarperCollins Publishers, is the global cornerstone of Christian publishing. It experienced spectacular growth from 1993 to 2002, growing from 8 million units shipped to 32 million.

"And this category continues to grow," said President Doug Lockhart, who estimated sales of 33 million units in 2006. With 90 percent of the company's sales stateside, he welcomes the emerging global marketplace. Domestically, a changing demographic and emerging electronic media are also positive signs.

"As the baby boomer generation ages and begins to look back on their lives, and for their children — a desire to have a positive impact on them and their grandchildren in a spiritual way — publishing will have a bright future," he said.

Those trends will likely benefit other local publishers such as Wm. B. Eerdmans Publishing Co. and Baker Publishing Group, as well as retailers like Family Christian Stores Inc. Even with big box retailers Wal-Mart and Barnes & Noble entering the market, Grand Rapids-based Family Christian grew from 148 stores in 1994 to 300 today. It is the nation's largest Christian retail chain.

"This is a fascinating phenomenon in West Michigan, no question about it," Zondervan's Lockhart said.

Though the Christian retail market in the United States has experienced solid double-digit growth for several years, at $5.7 billion it is still a far cry from West Michigan's primary cluster, the $11 billion contract furniture industry. Some local content providers have eyes for the market, such as local video-game developer Norseman Games, which has two faith-based offerings in development.

"We see a huge potential market for what everyone in economic development is talking about: service industries," said Jeff Lambert, managing partner of Lambert Edwards & Associates. The communications firm has 10 clients in the Christian products segment. The firm also consults with general market companies looking to gain access to the Christian consumer.

"This shouldn't be exclusionary," Lambert said. "This isn't 'Jesus drank Coke.' It's 'These are our products and we think you should know about them.'"

This view was seen in a February market analysis by global accounting firm KPMG. The growth in faith-based media clearly indicates the buying power of this segment, the report said, but marketing "The Passion" to Christian groups was only logical thinking. What about cars, apparel and other items?

Companies don't have to change their message, KPMG and Lambert agreed. Disney's marketing of the film "The Lion, The Witch and The Wardrobe," and Lambert Edwards' efforts on "The End of the Spear," are good examples. Both films were general market releases, with grassroots campaigns targeting Christian groups.

"It wasn't a Christian product, but it was relevant to the Christian audience," Lambert said.

Local advertising firm Hanon McKendry has a number of faith-based clients, including the powerhouse advocacy group Focus on the Family. Agency founder Bill McKendry believes the market isn't defined as much by Christianity as by "heartland values," one of the key reasons this activity is not common in larger markets.

"Since we live in it, we understand it," he said. "We know how to reach people with similar values."

As it turns out, opportunities are not limited to the Christian market. Suburban growth and the advent of Protestant "mega-churches" have driven a church construction finance market that could grow from $28 billion to $40 billion by 2010, according to Lambert Edwards Analytics. Among West Michigan mega-churches, the 11,000-member Mars Hill Bible Church in Grandville is a former shopping mall; the 8,000-member Resurrection Life Church just completed a $32 million addition.

"Churches and charitable organizations have the same need for money management, investment services, and mortgage lending as any for-profit business," said Tim Horner, an attorney specializing in church finance securities offerings at Warner Norcross & Judd in Grand Rapids.

Horner's six-person team managed over $1 billion in securities offerings last year for clients nationwide, and was part of the industry's first ever loan syndication (see related story, page B3). Grand Rapids-based Hartwick Capital Group was the investment banker for the $300 million financing package.

"This is a great opportunity, but it's really no different from getting a business started," said Hartwick principal Remos Lenio. "We're helping someone accomplish their goals."

George Erickcek, senior analyst at the Upjohn Institute for Employment Research, said he believes the growing Christian business niche could prove a valuable asset in West Michigan's attempts to diversify its economy.

"One of the nice attributes of this industry is that it does not have cyclical swings," he said. "In fact, there could be some evidence that it's counter-cyclical: You rely on faith more in bad times."

The regional infrastructure and intellectual talent that have already been developed in West Michigan's Christian business cluster could be the basis "for some pretty dynamic activity," he added.

Birgit Klohs, president of economic development group The Right Place Inc., said a similar topic was discussed in the 1980s, with thoughts of Grand Rapids mimicking efforts by economic development officials in Colorado Springs, Colo., to attract religious nonprofits.

"Just attracting them was not profitable enough," she said. "You don't have the ripple effect that some other businesses have."

Religion has played a central role in one of the region's boldest development plans: the DeVos Place convention center. Religious groups are a primary target of the Convention and Visitors Bureau, with some of the center's largest conventions to date in this segment.

With the annual meeting of the Religious Conference Management Association here in 2009, Grand Rapids will likely be a popular destination of religious groups for the next decade. According to George Helmstead, CVB vice president of sales, cities that have hosted the RCMA have seen hotel room stays increase by 20,000 to 100,000 in subsequent years.

Gaylen Byker, president of Calvin College, credited the school's January Series and related faith-based events in attracting the conference.

"It's the same when we go to attract faculty members," he said. "They see the churches, schools, atmosphere and other activities to be very compatible to their outlook and lifestyle."

There is no available employment data for the segment. The largest for-profit, Zondervan, employs 350, but it is clear that the nonprofit sector dwarfs its commercial counterpart.

"I know we don't help the tax base, but we certainly help with employment," said Myles Fish, president of International Aid, a Christian disaster relief and development agency headquartered in Spring Lake.

Fish thinks he has come up with an opportunity to attract people to West Michigan.

Neither his agency nor comparable organizations like Grand Rapids-based Bethany Christian Services, the largest adoption and family services agency in the country, could have their national reach without a legion of dedicated volunteers, he said. Likewise, West Michigan is a frequent stop for missionaries, and is arguably the foremost staging point in the country. International Aid operates a retail operation stocked with mission supplies, the only one of its kind.

International Aid alone boasts 650 volunteers and 5,000 missionaries each year.

"I've worked for Christian nonprofits my entire life and never seen anything like what we have here," Fish said. "There are so many opportunities to be involved with something of lasting value. I think West Michigan could be promoted as a place for people to retire who don't want to just sit on the beach or play golf, where they can do something of significance."      

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