GRDadof3

West Michigan/Grand Rapids Economy

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As if the GR - Wyoming economy wanted to out-do itself, November numbers are coming in and non-farm payroll is a whole 18,000 jobs above November last year. Almost 60,000 new jobs since the recession bottomed out. In raw jobs that's a faster growth rate than boomtowns Raleigh-Durham or Austin, TX.

 

 

16050167486_426ee7c6b8_o.jpg

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That's really good news.  Things are starting to look up for the entire country instead of just the usual suspects. 

 

Definitely a healthy national economy helps us here. Michigan is still the automotive capital of the world bar none, and when more people buy cars...

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Definitely a healthy national economy helps us here. Michigan is still the automotive capital of the world bar none, and when more people buy cars...

More people contribute to the destructive force of green house gases?!

Just joking..very good news. Now let's see some tech investment! Nanotechnology, 3d printed kidneys, and quantum computing. GR has none minus two. With MSU being a big research university, maybe we can get some more cutting edge medical research. Let's see some DNA folding!

Edited by temporary.name

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This is interesting. Grand Rapids - Wyoming MSA had the 9th fastest growing economy in the U.S. last year and jumped up to 69th in Brookings rankings of world cities for economic performance (Detroit was 237th, for comparison). Other cities close to GR-Wyoming in rank were Dallas (!), Oklahoma City, San Jose and Orlando.

 

Paul Isely at GVSU though says our growth may slow as we reach "full employment," as labor shortages will stifle employment growth and business expansions. Does West Michigan have the ability to draw 10 - 15,000 people here a year to keep that momentum going, like warmer metro areas do? In 2013, the net domestic migration was about 1790, so it'd have to go up tenfold to reach 17,000. It's about what Raleigh - Cary NC is drawing now (far right column).

 

http://www.mlive.com/business/west-michigan/index.ssf/2015/01/among_world_cities_grand_rapid.html?ath=1a90132b90933db8002100e5723c045a#cmpid=nsltr_stryheadline

 

We also may run into issues with housing shortages. In the city, projects take years to get designed and built, and vacant land is becoming scarce. Even in fast growing townships like Byron, Gaines, Caledonia and Ottawa County where many transferees here end up, the supply of development projects is drying up as many of the developers retired or got out of the game during the crash.

 

Time to start getting really creative.

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I read this morning's article with great interest as well.  The labor shortage is very real.  Employers with what would be considered low skill entry level jobs available are having a difficult time finding employees.  Employers that require skilled labor are hurting big time.  Right now the KCLBA has 3 $90K renovation jobs we need to bid out and we literally cannot find contractors to bid.  Or if they do bid the need the work so little that their pricing is 10-15% higher so that it makes it "worth their while" if they actually get the job.  

 

From a labor shortage perspective we need to think WAY outside the box if we are going to be able to capitalize on the economic opportunity our region is looking at.  

 

From a housing perspective the KCLBA has quite a few buildable SFH lots for sale in  Grand Rapids and we are creating more and more with our MSHDA Demo grant.  We are seeing quite a bit of interest in our lots.  The SE side is still moving slowly.  It won't be long and I believe we will see a run on houses in substandard condition because it is starting to make economic sense to renovate and either move in or sell.  I know of one landlord that has about 90 homes in this condition and he has been approached by several investors to sell his whole lot.  90% of his homes are in this condition.  The investors are looking to renovate and flip these homes which are some of the most substandard rental homes in their specific locations.

 

I agree in the surrounding area I am not hearing of too many new developments being started.  In fact the KCLBA had a builder in our office the other day who builds large high end Parade of Homes houses.  He has decided that he can make more money buying properties in GR, renovating and flipping.  That's a pretty bold statement.

 

The times they are a changing...and changing fast.

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I read this morning's article with great interest as well.  The labor shortage is very real.  Employers with what would be considered low skill entry level jobs available are having a difficult time finding employees.  Employers that require skilled labor are hurting big time.  Right now the KCLBA has 3 $90K renovation jobs we need to bid out and we literally cannot find contractors to bid.  Or if they do bid the need the work so little that their pricing is 10-15% higher so that it makes it "worth their while" if they actually get the job.  

 

From a labor shortage perspective we need to think WAY outside the box if we are going to be able to capitalize on the economic opportunity our region is looking at.  

 

From a housing perspective the KCLBA has quite a few buildable SFH lots for sale in  Grand Rapids and we are creating more and more with our MSHDA Demo grant.  We are seeing quite a bit of interest in our lots.  The SE side is still moving slowly.  It won't be long and I believe we will see a run on houses in substandard condition because it is starting to make economic sense to renovate and either move in or sell.  I know of one landlord that has about 90 homes in this condition and he has been approached by several investors to sell his whole lot.  90% of his homes are in this condition.  The investors are looking to renovate and flip these homes which are some of the most substandard rental homes in their specific locations.

 

I agree in the surrounding area I am not hearing of too many new developments being started.  In fact the KCLBA had a builder in our office the other day who builds large high end Parade of Homes houses.  He has decided that he can make more money buying properties in GR, renovating and flipping.  That's a pretty bold statement.

 

The times they are a changing...and changing fast.

 

There's a reason why people are buying homes in EGR and doing tear downs. :)

 

If you're a higher end manager, exec or doctor moving here, looking in the $500 - $700,000 range, there ain't much available that doesn't need a lot of work. If you want to build in the Forest Hills area, there are no lots left of any real value. In Ada Township and Grand Rapids Township, there are 0 development projects in the works. I know of one that might start way out in Ada Township near Vergennes, but it's way out there. There's one project that may start in Cascade Twp this year and the lots will most likely start at $150,000, only 15 or 18 lots. That may make people celebrate (that suburban development may slow) but it really crimps the ability to draw execs here, if they want top ranked schools.

 

Most of the developments that went bankrupt and were seized by banks (Macatawa took a bunch back) have pretty much all come back and are now sold out.

 

It may drive investment inward but there's still a lot of gaps in supply. GR may become like Ann Arbor, priced really high for what you get.

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So then how do we get the word out that contractors and other trades that come with them are in serious demand here?  

Do you think Nationally people still see the "Michigan" attached to Grand Rapids and just assume that there is less opportunity in the area?

 

It sounds like Grand Rapids needs workers at all levels to move to the region.  So I wonder just how fast the population is actually increasing.  Clearly there is a demand and people are moving here.   The past few months have seen housing development projects especially within the city announced at a rate of 200-500 new units  a month. Does Pulte not re-enter the market because they don't have the labor resources to build large scale developments? Or is Metro GR simply just not considered favorable for the big time home builders? 

 

Would it serve the regional development think tanks like Right Place to put out some kind of advertising campaign about the need for labor?   I assume it hasn't hit a point where it's so critical that we are losing new opportunities because there's no labor pool left.   The good news seems to come daily.

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A creative solution for more labor and housing?

 

How about a Spectrum Health campaign promoting parenthood? Lots of fun for the locals; years of lead time for the developers.  

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So then how do we get the word out that contractors and other trades that come with them are in serious demand here?  

Do you think Nationally people still see the "Michigan" attached to Grand Rapids and just assume that there is less opportunity in the area?

 

It sounds like Grand Rapids needs workers at all levels to move to the region.  So I wonder just how fast the population is actually increasing.  Clearly there is a demand and people are moving here.   The past few months have seen housing development projects especially within the city announced at a rate of 200-500 new units  a month. Does Pulte not re-enter the market because they don't have the labor resources to build large scale developments? Or is Metro GR simply just not considered favorable for the big time home builders? 

 

Would it serve the regional development think tanks like Right Place to put out some kind of advertising campaign about the need for labor?   I assume it hasn't hit a point where it's so critical that we are losing new opportunities because there's no labor pool left.   The good news seems to come daily.

 

 

Hello West Michigan has a campaign going in several cities like Chicago trying to get people to come back who used to live here before. Not sure if anyone is marketing anywhere else. The Manufacturers Council at The Right Place meets quarterly or so and is working on long-term strategies to meet demand.

 

I mean, if people will move out the North Dakota to take fracking and mining jobs by the tens of thousands, then it seems like if word gets out that the employment market is growing here, word will travel. The quality of life is leaps and bounds better here.

 

Problem is a lot of construction laborers moved to Texas and they're growing pretty fast, faster than we are. Hard to get those (outdoor workers predominantly) back to the cold white North.

 

A lot of people in different circles are saying that the mantra that every child has to get a 4 year degree needs to change, particularly at high schools guidance counselor offices. Only about 30% of the metro population has a 4 year degree, and those people are fully employed. But most of the job shortages just require technical skills, associates degrees, and apprenticeships in skilled trades. But a lot of high schoolers have been told that it's a dead end road going in that direction. Now it's coming back to haunt us.

 

Obama's plan to guarantee a two-year degree to every high schooler is actually a brilliant idea. Maybe one of the best in the last half century. How to pay for it is a big question mark, but as more and more companies pull their production back here to the U.S., it's badly needed.

 

That's my take anyway. :)

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Median income needs to rise before people move here in large numbers solely for c jobs.

 

Absolutely correct t.n.

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It would seem median income pretty much has nowhere to go but up as employers have to be more competitive for the existing workforce.   It's a job seekers market which bodes well for income growth.

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It would seem median income pretty much has nowhere to go but up as employers have to be more competitive for the existing workforce.

It has everywhere to go and it doesn't have to go up. The issue isn't its trajectory; the issue is speed. How fast can West Michigan attract younger workers to replace the aging baby boomers? And place those younger workers is good paying jobs with good outlooks.

Edited by temporary.name

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Watch Texas.  Thousands of cutbacks in oil related jobs announced this week.  Continued low prices could/will put a dent in the housing industry there, sufficient to get at least those who left Michigan to consider coming back.   

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Watch Texas.  Thousands of cutbacks in oil related jobs announced this week.  Continued low prices could/will put a dent in the housing industry there, sufficient to get at least those who left Michigan to consider coming back.   

That's not going to happen in any significant way whatsoever.  The best chance for a reverse in migration patterns is for global warming to continue for a few more decades and water supplies in the Southwest dwindle. 

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Two big pieces of economic news yesterday: the potential buyout/merger of Perrigo by Mylan. Since Perrigo already moved its headquarters to Ireland a few years ago, I hope that it doesn't spell trouble for Allegan production, if the deal goes through and the new company consolidates.

 

http://www.nytimes.com/2015/04/09/business/dealbook/mylan-offers-to-acquire-perrigo-for-29-billion.html?_r=0

 

The other was Plasan Composites, a defense contractor and automotive supplier that has been growing rapidly lately, has announced they're moving their headquarters to West Michigan from Vermont.

 

http://www.mlive.com/business/west-michigan/index.ssf/2015/04/defense_contractor_moving_to_w.html

 

http://mibiz.com/item/21821-plasan-prepares-for-growth-in-west-michigan-as-automotive-demand-for-carbon-fiber-grows

 

 

In other news, the February unemployment rate dropped again to continue its positive trend, to 3.9% (from 6.1% in February 2014). 

 

http://data.bls.gov/timeseries/LAUMT262434000000003?data_tool=XGtable

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2014 Census estimates are out for Metropolitan Statistical Areas and Grand Rapids - Wyoming grew by 10,456 last year and 38,765 since 2010.

 

It also was the third year in a row that the Net Domestic Migration was in positive territory (more people who lived in a different MSA moved here than people here moved away). 

 

Population is now estimated at 1,027,703 for 2014 (growing as we speak).

 

http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk

 

http://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas

 

http://recenter.tamu.edu/data/pop/popm/cbsa24340.asp

 

*Not sure when city estimates come out but should be in May some time. 

 

Seems like this mini boom kind of snuck up on everyone. 

 

We're in the middle of this pack now:

 

17179434840_8403ae83d1_b.jpg

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I believe that estimated growth rate already surpasses the amount of residents gained from 2000-2010.   It feels like the 1990's have returned.

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I believe that estimated growth rate already surpasses the amount of residents gained from 2000-2010.   It feels like the 1990's have returned.

 

 

Well it went from 930,000 to 988,000 in that period of 2000 - 2010, or about 68,000 residents. From 2000 - 2014 it grew by 39,000, so yes the growth rate percentage has nearly doubled. If it stays at that rate, we'll be looking at 1,100,000 residents in the MSA by the end of this decade, which is not that far off.

 

I think it may actually accelerate to 1990's growth rates of 1.5%+ per year, which will make it surpass 1.2 Million residents, if the jobs market continues to grow. I can see us surpassing Buffalo, Rochester, Birmingham and even Hartford CT by 2020. 

 

We'll never catch Raleigh or Salt Lake City or Jacksonville. Maybe Milwaukee in 30 years. 

 

It's interesting to see Pittsburgh, Syracuse and Cleveland continue to lose people from the metro areas. How do you lose people from your metro area? Even Detroit's MSA is growing slowly. 

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http://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas

 

 

Also impressed with Indianapolis, Columbus, and Minneapolis growth as 'northern' cities. 

 

What's with Des Moines?  Did they remap the area for such a lofty increase?

 

All have very diversified economies. 

 

Not all NC metro areas are doing well. Greensboro, Winston-Salem, Asheville and Fayetteville are growing moderately. Better than a lot of Michigan MSA's but certainly not booming like Raleigh and Charlotte. 

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2014 Census estimates are out for Metropolitan Statistical Areas and Grand Rapids - Wyoming grew by 10,456 last year and 38,765 since 2010.

 

It also was the third year in a row that the Net Domestic Migration was in positive territory (more people who lived in a different MSA moved here than people here moved away). 

 

Population is now estimated at 1,027,703 for 2014 (growing as we speak).

 

http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk

 

http://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas

 

http://recenter.tamu.edu/data/pop/popm/cbsa24340.asp

 

*Not sure when city estimates come out but should be in May some time. 

 

Seems like this mini boom kind of snuck up on everyone. 

 

We're in the middle of this pack now:

 

17179434840_8403ae83d1_b.jpg

 

 

It's really fascinating. Upon further research, Rochester New York and Grand Rapids are like identical twins separated at birth:

 

Both are close to a Great Lake

Both are similar sized: city population of about 200,000, metro population of just over 1 Million

Both have rivers running through their downtowns similarly sized

Both have a grocery chain as a major employer (Wegman's vs Meijer)

Both have a healthcare organization as their largest employer (UR vs Spectrum)

Both were founded about the same time 1826 vs 1817

Both get about 70 - 90 inches of snow each year and have about 160 days of sunshine

Both are close to touristy areas (Finger Lakes vs the Lakeshore, SW and NW Michigan)

Both are within a few hours of their state's largest cities: Detroit vs NYC (you could also throw Chicago in there as a big influence)

Both have a lot of manufacturing (Big 3 furniture vs Eastman Kodak and Xerox)

Both have similar sized airports, about 2.3 Million passengers

Both have second tier universities that are major employers

They even both have an AHL hockey arena without a complete bowl, Blue Cross Arena and VAA. I am not making this stuff up.

 

The differences are the economies though. Rochester's labor force is down about 60,000 from its peak back in the 90's. We're up about 25,000 in labor force from our previous peak. Our employment has come roaring back from the recession, their's is actually getting worse. 

 

Also, if you do a google image search for something like "Downtown Condos", look at the strides GR has made in this area vs Rochester:

 

Downtown Rochester New York condos

Downtown Grand Rapids condos

 

Is Grand Rapids just doing a better job of seeming more vibrant? Or is it just more vibrant? We certainly have better photographers here. :) 

 

Check it out for yourself:

 

http://en.wikipedia.org/wiki/Rochester,_New_York

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Well I think the biggest factor in that comparison is that Rochester peaked in population in 1950 like so many other industrial cities.  Grand Rapids has been a little up and down over the decades, but this comparison really only works in the past 10-15 years or so.   In 1950 Rochester's population was almost double that of Grand Rapids.   To me that answers the question of vibrancy.   GR has been on the rise, where Rochester has been battling decline. 

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