Economic growth expected for Grand Rapids
Professionals express concerns over lack of skilled labor in skilled trades industry, NAFTA.
(As seen on WZZM TV 13) After a year of surpassed expectations, another economically successful year is expected for West Michigan, though growth may be limited compared to last year.
There are a few reasons 2018 employment is not expected to grow as much in 2017, according to Jim Robey, director of regional economic planning services at the W.E. Upjohn Institute for Employment Research.
Last year, there was a 2.5-percent increase in employment, about 13,500 jobs, though the forecast was 1.1 percent, according to reports by the Upjohn Institute.
There is a 0.74-percent increase in overall employment expected next year — about 3,500 jobs. Broken down, that’s a 0.48-percent increase in manufacturing jobs, 0.73-percent increase in service jobs and 1.53-percent increase in government jobs.
At 3.6 percent, the Grand Rapids unemployment rate is the lowest it has been in nearly 20 years. There are about 21,000 people who are ready and able to work, but Robey said many of them do not have the skills required for the jobs that need to be filled. Fewer young people are choosing to attend trade school, leaving a shortage of skilled trade workers, for example. Other unemployed people may need to be retrained because their skills now are obsolete.
“We’re not sure where those additional 3,500 jobs may come from,” Robey said.
He also mentioned limited space as an issue that may curtail the numbers. He said buildings have appreciated in value and office space is becoming scarcer as time moves on.
Grand Rapids’ gross regional product is expected to increase by 1.8 percent.
Birgit Klohs, president and CEO of The Right Place, a Grand Rapids-based economic development organization, said the organization had a successful year in 2017 and is expecting the same in 2018.
“We have a very healthy pipeline of leads and prospects that if we get a third of them across the finish line, we’ll have another … very good year,” Klohs said.
The four main growth areas The Right Place will continue to focus on in 2018 are advanced manufacturing, food processing and agribusiness, life sciences and medical devices, and information technology and communications.
In 2017, the organization completed 22 projects with a goal of 17, facilitated 1,442 new and retained jobs with a goal of 1,400, saw $70.4 million in new payroll with a goal of $50 million, and assisted with $119.2 million in capital investment with a goal of $167 million.
The manufacturing industry contributed the most: nearly $70 million in investment and 545 jobs.
Jennifer Owens, president of the Zeeland-based economic development organization Lakeshore Advantage, said lakeshore businesses also are doing well.
Of the businesses Lakeshore Advantage connects with, she said about 75 percent expect to grow within the next three years, contributing an estimated $258 million in private investment and 1,900 jobs.
Owens echoed Robey’s comments concerning lack of skilled labor, particularly in skilled trades. More people are retiring than are joining the workforce, she said.
In Grand Rapids, millennials are leading the workforce, with nearly 120,000 people, more than one-third holding college degrees, according to Robey.
Owens said Lakeshore businesses are working hard to attract talent from outside the region.
She said lack of housing, particularly entry-level housing, continues to be a big issue in West Michigan, especially when trying to attract the outside talent.
“When you’re trying to attract talent into the region and there’s nowhere for them to live, it becomes more and more of a challenging sales pitch,” Owens said.
Klohs said she believes a big issue “flying under everyone’s radar” is the North American Free Trade Agreement (NAFTA) negotiations, which could be completed by March.
If the agreement passes as currently negotiated; if it dies completely and forces agreements with individual countries; or if tariffs are applied to goods, which could result in a trade war, she said Michigan will be “most affected.”
While the 23-year-old agreement could use some “tweaking,” she said whatever happens based on current negotiations could have “detrimental” effects on the auto, agriculture and furniture businesses.
There are almost 50,000 jobs in West Michigan that rely on exports, mostly to Canada.
Exports to Canada alone bring in $100 billion per year, almost $24 billion going to Michigan and over $4 billion going to the 13 West Michigan counties.
Klohs said The Right Place is “very concerned” about what could happen, and she encourages others to be prepared for how it could affect their businesses.
“We continue to see this region do really well,” Klohs said. “Obviously, if NAFTA happens, then all bets are off.”