Economic Development and Nonprofits

Economic outlook remains positive

Most pressing issues are low unemployment and a shortage of talent

December 11, 2015
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West Michigan’s economic leaders like what they see in 2016’s crystal ball.

During the 19th annual West Michigan Economic Outlook event hosted last week by The Right Place Inc. at the JW Marriott in downtown Grand Rapids, approximately 400 local business and community leaders gathered to hear an update on the region’s current economic development condition, an in-depth economic analysis and the forecast for West Michigan.

Birgit Klohs, president and CEO at The Right Place, focused on the organization’s annual results and economic development in the region, while George Erickcek, senior regional analyst at the W.E. Upjohn Institute, spoke to current and forecasted employment levels.

Both, however, view 2015 as a successful year and remain optimistic for continued growth in the region for the next one to two years.

In 2015, The Right Place facilitated 16 completed projects in the manufacturing, food processing, technology, and distribution and logistics industries in West Michigan. The projects resulted in 1,327 new or retained jobs, nearly $44.2 million in new payroll, and $169.9 million in capital investment in the area.

Klohs said 2015 was a very successful year for The Right Place and indicated the organization doesn’t count projects unless they were involved.

“We have already surpassed our three-year strategic plan goal of generating $390 million in capital investment by generating nearly $485 million, and we remain optimistic in achieving our job creation and payroll goals,” said Klohs. “We are very excited at the economic development opportunities for West Michigan in 2016.”

The Right Place also signed a new economic development service contract with Newaygo County, assisted Lake County in establishing the Lake County Economic Development Alliance, and completed five projects in collaboration with partner communities in Ionia and Montcalm counties in 2015.

Even as the strategic growth areas of smart manufacturing, agribusiness and food processing, life sciences and biotech, technology and communications, and commercial design industries continue to grow in the region, Klohs indicated there are still opportunities out there for companies looking forward.

“We have a basket of businesses now in West Michigan that are very robust, and it doesn’t mean we will only concentrate on those five, but we are continuing to see local companies grow. We are continuing to see inquiries into coming to West Michigan and Michigan,” said Klohs.

“I would foresee the next one or two years continuing to be robust in growth.”

Erickcek said overall the past year is a great story for West Michigan, and it looks like 2016 and 2017 will continue to be good years.

“(It) was a great year,” said Erickcek. “Employment grew 3.1 percent in the Grand Rapids area. It was powered by manufacturing that grew 5.1 percent, and as we look forward to 2016-2017, we are seeing that employment will continue to be positive, but the pace will be a little bit slower.”

In 2015, employment declined 0.8 percent in government, but increased by 3.2 percent among service providers and 5.1 percent for goods producers, resulting in an overall growth rate of 3.1 percent. The overall percent change in employment for 2016 is anticipated to remain positive, with an overall 2.4 to 2.5 percent growth, a 0.1 percent increase in government, 2.7 percent in service providing, and 2.2 percent in goods producing.

“One of the challenges that we face in Grand Rapids is the fact our unemployment rate is 3.3 percent right now, which means it is very hard to find the workers we need to fill those slots that employers want,” said Erickcek. “Grand Rapids is one of the most competitive locations in the nation. We do a great job building stuff; we do a great job providing services, both in health care and administrative services.”

Erickcek indicated the challenge will be finding workers and different pathways for individuals to become productive workers, as well as focus on how “our second chance education system, principally our community colleges,” will bridge the gap.

“I think what is really important is that we have some very good community colleges here that can bridge that gap between someone who has antiquated skills, someone who has not been in the workforce for quite some time and really needs to be trained — not in a four-year degree, but trained in a two-year certificate or even a one-year certificate — and find employment,” said Erickcek.

Klohs also cited talent and low unemployment along with access to broadband as economic development challenges and opportunities for the region.

“You can’t separate the talent issue from the education issue from the broadband issue, because if you are going to college or school in a small northern community, how do you get online to take a course or two to prepare yourself?” said Klohs.

“I think what has happened over the last 20 years is we have gone totally toward (thinking) everybody ought to have a four-year degree,” she said.

Klohs said there is a more nuanced approach to education now, and most people are unaware of the level of sophistication occurring during the last few years, and the skill level required to work in a contemporary, advanced manufacturing company.

“We have to get to the point that a high school diploma alone doesn’t do it, but not everybody is made for a four-year degree, and there are jobs out there with two-year degrees from a community college or apprenticeship programs that actually pay a living wage,” said Klohs.

Work-ready talent is considered one of the foundations of economic growth by The Right Place, which announced a new partnership with Hello West Michigan during the economic outlook event. As of Jan. 1, 2016, Hello West Michigan will transition from the Grand Rapids Area Chamber of Commerce to The Right Place.

With a shared goal of attracting and retaining world-class talent and companies to the region, the new partnership aims to leverage the “assets of both organizations, addressing the region’s talent shortage, getting job candidates connecting and finding talent for employers,” according to a press release. 

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