Economic Development and Nonprofits

Right Place exceeds three-year goals

But tariffs and infrastructure present challenges over the next couple of years.

December 13, 2019
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Right Place 3 Year Goal
Birgit Klohs said access to affordable, reliable broadband in rural communities is increasingly important as Industry 4.0 takes hold. Courtesy Tiberius Images

The Right Place concluded its three-year strategic plan well over goals.

From 2017-19, the Grand Rapids-based economic development organization spurred 5,192 new and retained jobs, with a goal of 4,200; $309.5 million in new and retained payroll, with a goal of $150 million; and $799.9 million in capital investment, with a goal of $500 million.

In 2019, the organization completed 20 economic development projects, resulting in 1,591 new and retained jobs, $144.9M in new and retained payroll and $239.6M in new capital investment.

Though this year’s stats exceeded goals for the individual year, there were fewer projects completed than the previous couple years: 22 in 2017 and 27 in 2018.

That’s natural in economic development, according to The Right Place CEO and President Birgit Klohs, and predicting how many projects will be completed is difficult. Last year at this time, The Right Place had a “very robust pipeline” of projects that were pushed through. There are several projects from this year “stuck” in the pipeline that likely will come through next year.

A lot of companies have invested heavily over the past several years, so now The Right Place staff is working to find a new batch of companies, though there is some economic uncertainty stemming from multiple areas.

Jim Robey, economist for W.E. Upjohn Institute, said the fundamentals of the economy are solid, however. Nearly all forecasters are looking at positive but slower growth in gross domestic product over the next two years.

One of the main concerns Klohs hears from local companies are tariffs caused by federal trade issues. Klohs said local companies that have been affected are looking forward to an end to the issue, and they hope a plan that is favorable to them can be passed this month.

Robey said it is “absolutely essential” for the health of the economy that a plan is passed as soon as possible. That would take a major uncertainty off the table.

“Business uncertainty is bad for business,” Klohs said.

Trade issues are one of several ongoing and emerging challenges The Right Place is considering as staff prepares its next three-year strategic plan, to be released Feb. 5.

Continuously at the top of that list is infrastructure — not just roads and bridges but also water, wastewater treatment facilities, broadband, the airport and more.

The area eventually could lose a prospective company growth deal due to insufficient wastewater capacity, for example.

“We have a growing agricultural community and a growing food processing community, and we are Beer City, USA, which is a good thing, but it requires wastewater treatment capacities that we are running out of,” Klohs said.

Access to affordable, reliable broadband in rural communities is increasingly important as Industry 4.0 takes hold, Klohs noted.

Lack of talent is a “long-term systemic issue we need to embrace” and needs to be addressed holistically, Klohs said.

There’s a finite number of people entering the workforce, and he birthrate is going down. To ensure high school graduates are ready for work, they need to be educated better and early, she said.

The labor participation rate in Kent County is 72%, better than the national average, which has rates lower than they’ve been in decades. That means even though there’s an abundance of good jobs, people are sitting on the sidelines. 

“They dropped out 10 years ago during the recession, and they no longer have the skills to work in your plants,” Klohs said.

Besides colleges focusing on retraining those people, Klohs said companies can work to up-skill the people they already have and work on plans to retain those people.

An emerging issue The Right Place is seeing is the lack of succession plans many area companies have, a problem that is showing itself as many owners are retiring. There are 2,600 manufacturing companies in 13 West Michigan counties, and many of them are family businesses with 100 employees or fewer, Klohs said.

When local companies sell to out-of-state firms, that changes the makeup of the community and perhaps how the company interacts with the community, Klohs said. She said The Right Place is considering how to connect retiring business owners with local people interested in acquiring companies.

“These family-owned businesses contribute more than $25 billion to our open economy, so they're really the backbone,” Klohs said. “We know all the big ones, but the backbone of this economy is that small to medium family-owned business.”

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