Looking Back: Oh, What a Ride
Editor's note: Grand Rapids Business Journal marks its 25th anniversary with a look back — and a look ahead — based on interviews with several prominent players in the area business community. Reporters Elizabeth Slowik and Jake Himmeslpach conducted the interviews for the two stories that begin on this page.
Diana Sieger has been president of the Grand Rapids Community Foundation since 1987. John H. Logie, of counsel to Warner Norcross & Judd, was the mayor of Grand Rapids from 1991 to 2003. Arend "Don" Lubbers served as president of Grand Valley State University from 1969 to 2001. Lody Zwarensteyn is president of the Alliance for Health, a local, nonprofit health care planning agency. Peter Secchia has served in numerous political roles including U.S. Ambassador to Italy and also as CEO and chairman of the board for Grand Rapids-based Universal Forest Products. Bill Bowling is a founding member of Grubb & Ellis|Paramount Commerce, president and owner of Sherwood Financial Services and an owner of Hartland Investments. Bing Goei is president of Eastern Floral and Gift Shop and has served the community in various roles. Patrick Miles Jr. is a business law partner at Dickinson Wright specializing in business/corporate law, contracts, mergers and acquisitions, and minority/woman-owned business certification.
What were the top business issues of the past 25 years, locally, statewide and nationally?
Let me take you back 25 years ago: 13 percent mortgage interest rates, which actually were going down from the 17-plus percent rates in the 1970s! While the mortgage interest rates were onerous, interest rates for savings and other saving instruments were quite attractive.
- Meijer Inc. continued to grow over the past 25 years, while Steelcase Inc. and other office furniture companies faced their challenges at the beginning of this decade.
- The role of nonprofits in keeping the community vibrant (like Inner City Christian Federation and Dwelling Place) and the tremendous growth of philanthropy — definitely a business issue!
- The growing importance of the health care industry — the creation of the Van Andel Institute and moving the Michigan State University medical school to Grand Rapids from East Lansing.
- The involvement of business and philanthropic leaders in revitalizing Grand Rapids — the arena, convention center and other capital projects.
- Grand Rapids leading the nation with the most LEED-certified buildings per capita in the country.
- The Right Place Inc. is created to spur on economic development. Quite a smart decision!
- Auto industry decline.
- Growth in science and technology.
- Jobs going to China and India.
- Boom and decline of the high-tech industries in the 1990s.
- Fuel costs soar.
JOHN H. LOGIE:
The major business issue from the early 1980s until now, at all levels, has been the continuing transition from a manufacturing-based economy to one that was service-based, and now to a knowledge-based economy.
Progress has not been linear, but episodic. There have been different tremors at the three different levels of government at different times. Government, more often than not, has not been helpful. The rise of one-issue legislators and loss of institutional memory at both the state and federal levels have made progress more difficult.
The three changes as they have occurred here in Grand Rapids have helped spur the renaissance in our downtown. The use of Renaissance Zone and brownfield tax credits, connected to a resurgence in downtown living and the development of the new arena and convention center, are all serendipitous partners with the change in our economy. The Medical Mile's literal rise in the sky is a harbinger of yet better things to come.
AREND "DON" LUBBERS:
First of all, the radical changes in the automobile industry have had an effect on Grand Rapids and West Michigan, and we're still adjusting to them.
Second, we've had tremendous success in the last 25 years in our leading industries — Amway, Steelcase, Meijer, Haworth, Herman Miller and many others. Grand Rapids has been very fortunate in having the development of major interests that started from highly successful entrepreneurial initiatives.
- Continuing rapid growth in health care costs. Health care costs have steadily risen in the recent decades, straining the ability of public and private payers to keep up. Increasing numbers of uninsured and underinsured people have resulted, creating a growing climate ripe for change.
- Advances in pharmaceuticals leading to superior results but greater costs.
- Growth and then diminishment of managed care. Managed care saw a rise in influence for several years, but declined generally as a result of medical professional, mass media and political attacks.
- Growth of the value purchasing movement sponsored by employers around the nation.
- Continual improvement in imaging technology and corresponding associates costs. A variety of technologies including CT, MRI and PET have become commonplace, and have become major sources of revenue for health care providers. The growth in the use of imaging has led to far superior diagnostic capabilities.
- Much technology has become miniaturized, enabling greater geographic dissemination. Mobile technology is increasingly common. Miniaturization has enabled cameras that can be swallowed. Smaller equipment can be placed into existing facilities, allowing them to accumulate more equipment.
When the city decided to go to an income tax, I think that was a serious business issue because it moved a lot of the work force out of town. The income tax was necessary from the city's point of view, but taxes always do that. Of course, the biggest issue locally is the education costs and the loss of funding in the past 25 years. If you don't have educated employees and you don't have income-producing employees, you're left with some problems.
On the state side, we've had too many bad policy decisions. If you've read any of the articles that have been published about pro-union or business decisions that hurt small business, you'd know that's a continuing problem — one of the reasons why, for the past several years, Michigan has lost employment and has the highest rate.
Business leaders in Detroit abrogated their responsibility to the shareholders and gave the unions very positive benefits and an early retirement, and figured they could keep raising the price of their cars and that the Japanese, Chinese, Koreans or Germans would not come after their business, which they have done. …
The most recent bad business decision was the MBT, which not only has a bad tax base, but it discourages community development and property investment, which was the one thing that had Grand Rapids head and shoulders above other cities in the state, and it is now a very serious problem for those who buy old buildings, fix them up and improve them.
On a national level, the biggest business issue has been the success of the free trade agreements and, at the same time, having to read about how bad they are because they are chasing jobs out of Michigan. Jobs are leaving Michigan because of the costs of doing business with unions and our lack of education in our high schools.
The "great" societies seem to grow because of a hardworking population, gifted leaders and entrepreneurs. Then, as the society matures, greed tends to set in and the society crumbles from within: huge government, "big brother," everyone feeling that they are entitled to what the hardworking frugal have obtained. Social programs explode and the society disintegrates, the middle class evaporates, and the alienation between the haves and have-nots becomes enormous. It appears that the U.S. is headed down that road.
In the '80s we went through a terrible time of high interest rates and inflation and all those kinds of things, which kind of gives me a sense that business is cyclical. It's a different set of financial challenges, but today you're going through, maybe not high interest rates, but a downturn in the economy, a changing economy where the global market is coming to our front doors.
PATRICK MILES JR.:
Nationally, the five top business issues and trends since 1983 from my perspective are: (a) the prevalence of personal computers, mobile communications, e-commerce and the Internet; (b) the U.S. economy moving from a manufacturing-base to a service-base economy — meaning fewer goods are produced in the U.S.; (c) the increasing number of women (1) graduating from undergraduate and graduate schools and the corresponding decrease in the number of American men doing the same, (2) holding middle and upper management positions, and (3) starting and owning businesses; (d) the legal and governmental response to ethical breaches (and market de-stabilizers) such as the savings and loan and insider trading scandals in the late 1980s to the accounting, executive compensation, and mortgage lending scandals in this decade; and (e) the increasing cost of health insurance and care, which are a hidden tax on employers and consumers.
Although Michigan is neither a finance nor commodity center, we have a fairly diverse economy (including manufacturing, agriculture, and tourism) that is a microcosm of the U.S. Thus, most statewide business issues over the past 25 years are similar to those mentioned above. But, in particular, some major Michigan business issues include decreasing manufacturing jobs, the lessening dominance of the Big 3 Automakers, urban sprawl, and large Michigan cities losing population, retailers and other businesses.
Locally, the top business issues were: (a) the re-development and expansion of retail, social, entertainment and cultural activities in downtown Grand Rapids; (b) the infusion and acceptance of management, professional and philanthropic contributions from non-native West Michiganders; (c) the heightened awareness of the lack of racial and gender diversity and inclusion in management, ownership and supply chains; (c) the increasing focus on health and life sciences as a hedge against the loss of manufacturing jobs; and (d) the transition of many locally owned, private companies to either publicly held or non-local ownership/headquarters.
What has been the most profound change in the Grand Rapids community over the past 25 years?
- The growth of downtown.
- The trend to living in cities/urban areas versus suburbs.
- Diversification of industries/businesses.
- The growth in philanthropy that has enhanced our community and has helped the greater Grand Rapids area become a great example of the partnership between the private sector, public sector and nonprofit sector throughout the country.
JOHN H. LOGIE:
The most significant changes, with the longest lasting consequences, are the changes in our ethnic, racial, cultural and religious make-up.
This community has long had many houses of worship for many different religions. Just that fact, and the wish to help their fellow humans, brought people from Europe after World War II and Vietnamese after the fall of Saigon. During my 12 years in office, thousands of Muslims from places like Kosovo, Bosnia and the Middle East came to Grand Rapids. There are now hundreds of Eritreans living in our city.
Employers, from Steelcase and Amway to the VAI, are enriching all of us with people from all over the world. They can and do enhance the life of the whole community. However, to fully benefit from this marvelous mosaic of humanity, this city, this county, this state and this country must finally, fully and successfully confront, once and for all, the issue of racism. When we do so, we will be able to fulfill our true destiny.
Change is inevitable. On Nov. 5, we will have either the first African-American president or the first woman vice president. Embracing positive change is one way to insure a better future for our children and grandchildren.
AREND "DON" LUBBERS:
I don't know whether I would call this change, but Grand Rapids has been able to sustain its core city, and this is because of significant cooperation between the private sector and local government.
Few cities in the U.S. have been able to sustain and improve their core cities such as Grand Rapids has. We've been fortunate in having successful private enterprises and generous people who own and manage them.
That, combined with government willing to cooperate with private enterprise, has made the big difference in Grand Rapids.
- Organization of Spectrum Health in response to the Alliance for Health Hillman Commission's deliberations. A unique merger of two top 100 hospitals, unprecedented in the nation, has created an opportunity for substantial community benefit. The facility landscape has changed remarkably in the recent past and will continue to change.
- Organization of the Van Andel Institute and its emphasis on transforming the research components of the Grand Rapids medical community. The growth of research and the ability to spin off the results of that research in economic development cannot be underestimated. In a short time, a world-class research community has been created.
- Location of the MSU College of Human Medicine in the Grand Rapids area. Although the local community has been the site of medical education for decades, the advent of the medical school in the community leads to the visions of improved quality as the medical community works to be at the cutting edge of care.
- Commitment of the West Michigan community to enhance quality of care. Through the Alliance for Health's Health Care Vision 2020, the manner in which health care is provided in practitioner offices and institutions will be transformed through improve quality and provide transparency.
- Development of the West Central Michigan Health Care Regional Skills Alliance. Bringing health care employers, educational institutions and Michigan Works! agencies together in an alliance will systematize means to assure a supply of workers for needed health care jobs and revamp the actual ways in which workers are prepared.
The most profound change in our community obviously has been the downtown redevelopment, the convention center, the arena, the museums. … And in the last 25 years, this has expanded to filling all the empty storefronts and finding tenants for the buildings that all the commercial developers have renovated. That is probably the biggest change in our community. They took risks, improved properties, and they've helped us all both with employment and downtown housing. However, the MBT is threatening to stop that, which is going to be a pretty serious problem.
Twenty-five years ago, we were hardworking, God-fearing, pro-business, non-union, do things the right way the first time, small, integrated, everyone knows everyone, things got done. We have evolved into a much larger extended community. It is much tougher to get a deal done with the governmental regulations and special interest groups that each has their private agendas.
The example that I raise is the theme of the new JW Marriott that opened last year: What is it? It is the Sister Cities theme. Why did they do it? Because they realize that if they are going to attract an international market, they must make their hotel feel welcoming to an international guest. They were brilliant in doing that.
I think that is the most profound change that I've seen today. … Look at the contributions the Grand Rapids Chamber has made in the area of diversity and how they are now being viewed nationally by other chambers as a resource that other chambers call on for help in addressing that challenge for their members. We still haven't fully understood yet what more things we can do to enhance our economic growth through being culturally competent, but we have made some significant changes.
It was 25 years ago, my understanding of the Grand Rapids' economic community was: "We can sell down the street and we can sell maybe in the next county, and we can survive." That is not true anymore today. I think that's becoming more evident, as I'm hearing more companies reaching out into other parts of the world.
I think that's the biggest change: the recognition that there is an international market that we have not tapped into and that we are now forced to tap into, and the recognition that we are now going to have to compete with those markets, where before we were just the contributor to that market.
PATRICK MILES JR.:
One change in the community at large is worthy of note: the explosive growth of suburbs and rural areas in terms of single family housing, population and K-12 schools. That expansion creates infrastructure pressure (transportation, water, sewer) and the loss of agricultural properties. It also means people are commuting to work or entertainment farther than before.
Another effect is the Grand Rapids Public Schools are much less racially and economically diverse than in 1983. At the same time, multiple dwelling units are being built downtown. Many "empty nesters" and young professionals are living downtown, which was not the case 25 years ago.