Economic Development and Nonprofits

Region is 'right place' for growth

Economic developer surpasses its three-year goals early.

December 14, 2018
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Birgit Klohs
Birgit Klohs, The Right Place president and CEO, said the organization makes “retention calls” to 400 companies per year to ensure they are happy in West Michigan. Courtesy Tiberius Images

A year ahead of its three-year plan, The Right Place has met its goal for completed projects and exceeded goals for new payroll and capital investment.

The Grand Rapids-based economic development organization has completed 50 projects since 2017 — 28 of those this year — which is nearly double what it has done in previous years.

The companies behind these projects are investing $542.4 million — $421.7 million from project commitments this year alone — beating the three-year goal of $500 million.

With 2,088 new and retained jobs committed this year, the organization needs to help pin down 666 more to reach its three-year goal of 4,200.

The organization’s current three-year plan was a bit conservative to account for unpredictability, but 2018 turned out particularly successful, according to Birgit Klohs, The Right Place president and CEO.

“We knew coming into 2018 we had a very robust pipeline,” Klohs said, adding that projects sometimes can take five years to complete, and a large number happened to come to fruition this year.

“That doesn’t mean we’re just going to sit on the sidelines,” Klohs said. “We’re going to continue to work hard and push projects through the pipeline. We have several that are pretty close, and we’re continuing to add new ones all the time.”

Of the 28 projects completed this year, 68 percent were for company expansions, 7 percent to keep area companies from moving elsewhere and 25 percent for companies moving into the area.

One of those attraction projects — the $140-million Amazon warehouse construction with 1,000 jobs — had a significant impact on final numbers.

One retention project Klohs noted as a success story was the $63.5-million building expansion by Grand River Aseptic Manufacturing that will create more than 100 new jobs.

She said the company began about 10 years ago with 16 people on the Grand Valley State University campus. It’s now listed by Inc. 5000 as the seventh fastest-growing company in the state and the 705th fastest in the country.

“This is one of these companies that, when the Medical Mile and health and life sciences started in the area, we had hoped would be created,” Klohs said.

Klohs said she likes to emphasize the ratio of project types to show The Right Place takes care of its clients.

She said economic development companies from competing areas visit West Michigan each year to scout new business, and other areas sometimes have attractive incentives, so The Right Place does what it can to keep that business here, making “retention calls” to 400 companies per year.

“Just because a company has been here for 50 years doesn’t mean the next expansion is going to be in West Michigan,” Klohs said. “We don’t want to take them for granted.”

Even if companies are not expanding, The Right Place assists them in many ways.

She said companies considering moving here often call others already in the area to gauge the business climate, and Klohs wants to make sure they have good things to say.

Next year’s top economic issues

Klohs said the effects of midterm elections are yet to be seen in the state. Change is assured, as with any leadership change at any level, she said, but she wants to make sure economic development and related issues are seen as a priority.

She and peers from around the state shared thoughts with the incoming administration on the continued importance of economic development and related education and talent efforts, which she said was well received.

“Economic development by its very nature is nonpartisan. Our job is to work across the aisle and for the betterment of our citizens,” Klohs said.

Aside from talent issues, she said the most concern from area employers lately is about tariffs.

“They’re beginning to really impact our manufacturers who use aluminum and steel in a big way,” Klohs said.

She said one manufacturing company in the area that employs 60 people will need to pay $300,000 next year to source steel that only can be sourced from Europe.

Soybeans from area farmers are sitting in silos while China, their largest consumer, is sourcing from Argentina and other countries, she said.

Besides continued efforts toward improving roads, bridges, the airport and wastewater treatment, Klohs highlighted stronger internet access in rural communities as an infrastructure issue she believes is important, whether for businesses in the area or for individuals developing an idea or commuting to the city.

“If you want to live in a rural community and then commute into Grand Rapids, why should you not have the same access to that kind of infrastructure that I have living in the city?” she said.

She said manufacturers are transitioning to the next phase of automation and data exchange, dubbed Industry 4.0, and will need stronger internet access going forward.

“If we don't have the capability and the bandwidth to handle 4.0, our manufacturers are going to have an issue,” she said. “That one thing could become a bottleneck, for sure.”

Similar to the Rural Electrification Act of 1936, which compelled utilities to move into rural areas, Klohs said something similar could be considered for internet companies.

As for the future cannabis industry, Klohs said leaders still are figuring out the economic implications of recreational legalization.

With high growth and a number of other factors, the economy soon will inevitably level out in a resulting recession, according to Jim Robey, director of regional economic planning services at the W.E. Upjohn Institute for Employment Research.

Robey estimates it could happen in the next 24 to 36 months, and previous Business Journal reports have said it could come in as soon as a year from now.

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