Industry + administration = economics

Financial leaders anticipate what’s ahead for southeast Michigan’s economy

By: Sarah Wojcik, Tiffany Esshaki | C&G Newspapers | Published January 25, 2017

 James Jacobs, president of Macomb Community College, delivered his 34th and last annual Macomb County Economic Forecast at the Palazzo Grande in Shelby Township Jan. 11. He will retire in June.

James Jacobs, president of Macomb Community College, delivered his 34th and last annual Macomb County Economic Forecast at the Palazzo Grande in Shelby Township Jan. 11. He will retire in June.

File photo by Donna Dalziel

METRO DETROIT — It’s a new year and a new administration. 

But will either of those have much of an impact on southeast Michigan’s economy in 2017? Experts say it’s too early to tell — but they’ve got some predictions.

During an annual economic forecast hosted by the Birmingham Bloomfield Chamber of Commerce, investment strategist Daniel Haines, of Greenleaf Trust in Birmingham, discussed a mixed bag of outcomes that could be tied to the policies proposed by President-elect Donald Trump. 

“Trump’s stance on rolling back emissions regulations could be positive, at least early on,” Haines explained to a crowd gathered at The Reserve in Birmingham Jan. 12. “But ideas on trade and immigration could definitely hinder growth.”

Haines explained that while the country has largely rebounded from the 2008 recession, growth behind that mark has been slow, largely because of a diminishing pool of bodies in the workforce. He suggested that some policies from the Trump administration could further dent the number of people in communities available for labor jobs.

“One way to address the labor force slowing is with immigration. But if you’re taking people out of the workforce (by deportation), that is just going to hinder growth,” Haines said. “Also, with trade, there’s a global supply chain for the automakers. So if tariffs are put up, it’s going to raise costs and potentially force them to look to other places for suppliers from other countries.”

Oakland County Deputy Executive Matthew Gibb echoed Haines’ concerns for the workforce population, but suggested that the educational system — specifically in Michigan — should make an about-face on how it prepares students for the working world.

“Whether from a national level or (state level), I’d like to see if we’ll start to build into our education environment going back to skilled trades. Right now it’s completely (geared) toward standardized tests. We teach to the test, which allows us in Oakland County to have a knowledge-based economy,” Gibb said. “But we have one of the largest shortages of skilled trades people in the country. So for me, one of the biggest threats (to domestic growth) right now is that workforce question.”

But managing money in Oakland County once it’s here definitely isn’t the problem, Gibb added. The county is back to pre-recession levels of unemployment at 4.1 percent, around 57 percent of Fortune 500 companies are doing business in Oakland County, and 70 percent of ongoing automotive research is being conducted in Oakland County. 

And automotive is just a third of the business happening there, with the rest of Oakland County’s industry coming from emerging sectors, particularly medical and life science-related fields.

Haines, however, is nervous that repealing the Affordable Care Act could impact growth of the medical industry by removing a huge chunk of customers, who will no longer be insured.

Though Macomb Community College President James Jacobs agreed that Macomb County is poised for modest growth, he said southeast Michigan needs to get creative for existing problems plaguing the region. 

He explained his theory during a similar economic forecast hosted by the Macomb County Chamber of Commerce Jan. 11.

Despite record sales growth in the auto industry, he said Michigan’s per capita income fell; state spending on infrastructure, education and long-term urban issues posed significant problems; and lost property tax revenue hampered the ability to deal with those challenges.

Bright spots for Macomb County, Jacobs said, included more than $2 billion in planned auto investments, with spillover growth and jobs as well as high-end manufacturing, with opportunities for new information technology, health care and recreational activities.

“Manufacturing growth is up almost 40 percent,” he said. “It’s probably not going to get that much higher.”

Where Oakland County shines in medical and automotive business, Macomb County is known as a hub for the national defense and security industries. In the past year, Jacobs said, Macomb County companies were awarded $1 billion in defense contracts — more than half of all defense contracts awarded in the state.

The population of Macomb County is growing, largely from an influx of immigrants, and such families settling in the area provide the basis for long-term growth, Jacobs said.

“A question and challenge will be in how well we adapt the county to be a welcoming place for many new immigrants that come to this country,” he said. “It’s very possible.”

A key to the county’s success, Jacobs said, is to retain young people and develop communities for millennials by incorporating more parks and recreation offerings, regional transportation and lifestyle components.

He advised a shift in health care from acute care to overall wellness awareness, and in education to a focus on post-academic and career training.

As far the national scene, Jacobs said interest rate hikes and the impact of the strong dollar could deter new investments. He agreed with Haines that changes to tax and trade policies may also alter some of the existing strategies of auto companies and their suppliers.

Jacobs expressed concern with what he called Trump’s “real lack of collaboration and kind of narcissism.”

“There is something troubling about the temperament of our future leader,” he said. “I’m hoping that the job will make a difference, and especially I’d love his supporters and people who work very closely with him to really see if they could change some of those attitudes.”