Holland employment may drop 4 percent in '09

January 18, 2009
| By Pete Daly |
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HOLLAND — Overall employment may drop by as much as 4 percent in the Holland area during 2009, due to contraction of the manufacturing sector. That may soon make health care one of the leading sources of employment in Ottawa County, according to George Erickcek, the senior regional analyst at the Upjohn Institute.

Erickcek, who presented his economic forecast to the Holland Area Chamber of Commerce last week, said the region's reliance on manufacturing as a mainstay of employment will be a liability, with the area faring worse than other parts of West Michigan where manufacturing isn't such a large part of the local economy.

Signs of a recovery may appear late in 2010, but Erickcek predicts it may only be an increase of one-10th of 1 percent in employment.

In 2008, the Holland-Grand Haven MSA had a decrease of about 1.7 percent in total employment. Manufacturing fell by 4.2 percent, while construction employment fell by 5.2 percent.

"The county's health care sector has softened the blow to the county of its struggling manufacturing sector," he wrote in his presentation. He also noted that manufacturing remains a major source of earnings in the county.

From the first quarter of 2007 to the first quarter of 2008, health care there showed an increase of about 600 jobs, compared to a loss of about 1,600 jobs in manufacturing during the same period.

Erickcek said the population in the Holland-Grand Haven MSA is still growing, although more people moved out of the area than moved in during 2007, the last year for which those stats are available. In 2007, it topped out at about 259,000 people.

"Ottawa County is still growing faster than the nation," he said, and its annual average growth rate from 2000 through 2007 is about three times that of Muskegon County and about four times that of Michigan as a whole.

Erickcek said the steeper drop in employment he predicts in the year ahead is due to the national economy and to local "major events and assumptions" that include previously announced plans by Herman Miller to cut between 400 and 650 jobs, and Tiara Yachts cutting 350, plus further layoffs by auto parts suppliers and further shrinkage in the number of new construction permits issued in Ottawa County in 2008.

On the plus side, there are expansions underway at Perrigo, Request Foods and Genzink Steel, he noted. Erickcek also pointed out that the current recession, in terms of jobs lost, appears only slightly worse than the last recession in 2001 and less severe than the 1980 recession.

Erickcek compared the Upjohn Institute forecast for 2008 made one year ago, versus what actually happened during the year. Total job losses were about double what had been predicted, and employment in service-providing industries actually increased .3 percent, as opposed to his prediction of a drop by .2 percent. Goods-producing jobs dropped by 4.3 percent, much worse than his predicted decline of 1.2 percent.

Housing units authorized by building permits in Ottawa County were below 500 in 2008, for all structure types. About 300 permits were issued for single family homes. More than three times as many permits were issued for single family homes in 2003.

Home values in Ottawa County have held up better than other areas, with a drop of only 6.3 percent from the peak values of 2005. Since 2006, some other areas of the nation such as Stockton, Calif., and Las Vegas "are in free fall" when it comes to home values.

The Holland-Grand Haven MSA employment trends are "well below" the national trend but only slightly above the trend for the entire state of Michigan. And the area's manufacturing sector is doing as well as the national average and "well above" the trend for all of Michigan, he said.

Compared to past recessions, the predicted job loss in the Holland MSA in 2009 isn't as bad as the recession years of 1975 and 1980. However, since the recession of 2001, there have only been two years of job increases, and those were very slight — no more than 1 percent. The other recessions since 1970 were each quickly followed by major increases in employment in the immediately following years.

"The losses have been building for a while," according to Erickcek.

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