Erickcek Forecasts Bright Future

December 13, 2002
| By Katy Rent |
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GRAND RAPIDS — Time to get out the shades, the future’s so bright.

In giving the Upjohn Institute’s annual economic forecast, George Erickcek told a crowd yesterday at the Amway Grand Plaza that West Michigan manufacturing has faired better in the recession than its comparable markets and he definitely sees increases in the future.

While he added it is the best of times and the worst of times —best for consumer spending and the worst for business investment — he noted there are several areas where 2003 could prove to be a positive year.

“While car sales have had a hiccup, I dare you to find where the recession is,” said Erickcek. “There may have been a brief dip but we are still in good shape. In November we were down to 16 (million) units, from 18 (million) units, but if we keep producing at 16 (million) units, we will be in very good shape.”

He added that production continues to go up and the consumer will be looking for further incentives from the dealer, and Erickcek said it could get better than this years’ 0-0-0 deal.

Looking ahead, Erickcek spoke of both hints and worries, while the interest rate spread is still positive and economic forecasts are still positive, state and local governmental budgets are still a mess and consumer confidence has been falling.

Erickcek attributed the hit in confidence levels to many consumers worrying about the possibility of facing war. He noted that economists have ignored that in their predictions.

And while consumers may not be spending as much, they are working as hard as ever.

“We have a dynamic area of job growth; however, we have more employable residents than we do jobs — 4,500 more,” said Erickcek. “Have we been here before? Employment gains are more sluggish this time around and it could be a repeat of 1993, only worse.”

In the end, Erickcek added, it is beneficial for the area to have such a diversified manufacturing base because otherwise industry might not have continued to stay afloat after losing 3,100 jobs. In addition, the service industry has taken a hit as well.

“Normally it would have started to pull up by the 11th month, but instead we kind of fell lower than the bottom of the barrel,” said Erickcek. “Let’s just hope that we can find more hope in the office furniture market.”

And at first, Erickcek said, it appeared as if the furniture market was going to make his dream come true. But he said it was just a false start.

In February of this year it looked as if the market was going to crawl out of the downturn. However, it then dipped way below where it had been.

“A positive (sign) is growth in office employment is starting to rise,” he said. “And for you that need desks and chairs and office furniture, that is good news.”

Other good news is that in comparison to a group of similar metro areas, the West Michigan market is outperforming.

He listed comparable cities as Cleveland, Columbus and Dayton, Detroit, Ft. Wayne and Indianapolis, Kansas City and St. Louis, Louisville, Milwaukee and Minneapolis.

This is proof, Erickcek said, that the area can weather the bad times.

“Because of the rate of growth in manufacturing, Grand Rapids has 1,100 more jobs. If we were growing at the same rate as the competition we would have 1,100 less jobs,” he said. “During the hard times, we want to still do the best — and with 27 percent of our total jobs in manufacturing, we are.” 

Looking back at what Erickcek had predicted for this year, he admitted the numbers were close — but there were embarrassing moments for him.

The question he proposed for the year to come is: Can Grand Rapids have the best of both worlds and maintain the area’s manufacturing competitiveness and also be a “must be” place for young professionals?

The answer, he said, is yes. While the future does look bright, it may not always be exciting, and he admitted that the ’90s may be something everyone simply tells their children and grandchildren about, like the Roaring ’20s.

He said the area is becoming better in productivity and continuing to stay competitive in productivity and cost of production — leaner and meaner, as he put it.

However, he added, one major component to keeping a competitive work force is quality of life. That, he said, poses another question: Can a manufacturing powerhouse generate an innovative, professional services environment?

“Studies suggest it is difficult, but nothing is impossible,” said Erickcek.

“Quality of life and how it is important to job growth is another way of thinking of economic development. And if the people here start treating it as a trade-off — a better place to live for maybe a reduction in salary — we might just be able to make this economy work for us.”

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