February 9, 2003
MiBiz Network
By Lori Giless

MUSKEGON - Muskegon is headed for a positive 2004 according to W.E. Upjohn Institute for Employment Research Senior Regional Analyst George Erickcek.

"Muskegon is one of the better reports I’ve done this year, and while the current data is still negative, I think 2004 is going to be a good year," he told attendees of the Muskegon Area Chamber of Commerce’s January early bird breakfast.

While Muskegon has been plagued with many of the problems West Michigan as a region has over the past three years, those issues haven’t been quite as prevalent in the Port City.

"2003 was a turnaround year for Muskegon. Employment increased 1.4 percent," said Erickcek. "There were a lot of problems in 2002, especially with the manufacturing sector, but most of that happened in Kent County with office furniture and huge layoffs like Bosch."

That having been said, unemployment is still way too high in Muskegon County. At 10.2 percent, its rate is nearly double the national average of roughly 6 percent and a far cry from 2000 when both were at about 4 percent. Erickcek noted that 2004’s prediction for Muskegon County is still 9.0 percent despite pending job growth, due to additional people entering the labor force when job opportunities finally become available. Productivity gains are also delaying the hiring process. But he did forecast a 0.9 percent jump in employment growth for the year.

Goods-producing industries in Muskegon County will finally make a comeback with 1.1-percent growth. Service-producing industries will be up 1.5 percent. Fiscal troubles in Lansing will push government sector employment down 2.3 percent.

A few national issues may also affect Muskegon in 2004. The automotive industry saw another solid year at 16.9 million units, but its operations are increasingly being moved south, leaving West Michigan suppliers behind. The prices of new and used cars fell in November 2003 by 2.1 percent and 9.0 percent respectively, putting the average price of an automobile at about what it was a decade ago. That leaves OEMs wondering who would buy cars if prices went up and has them scrambling offshore to keep costs down.

The falling dollar could become another potential issue as import prices rise. If it declines too much in value, other countries won’t invest back into the U.S. and an interest rate increase will be necessary to help pay off the country’s deficit. Globalization in general is a double-edged sword, said Erickcek.

"The trouble is, we’re all both consumers and producers. We don’t want jobs to move but we love lower prices. In fact, the prices of appliances like refrigerators and washing machines have declined more than 17 percent over the last five years. That’s what companies like Electrolux in Greenville have had to deal with."

To complicate the issue further, the workforces of places like India, China and Mexico are becoming quite skilled. They can do more than just low-tech assembly jobs.

"A challenge we’ll face over the next 10 years is how to deal with that - do we stay involved in globalization, implement tariffs or go about changing things in some other way?" said Erickcek.

Small businesses will drive Muskegon’s economy in 2004. Even though the state is looking for areas to trim its budget, it shouldn’t compromise on services for budding entrepreneurs. Michigan should also improve its venture capital situation, where deals and availability are far behind averages for the rest of the nation.

"We all like lower taxes, but we need services and educational opportunities so businesses can grow too," Erickcek pointed out.

Once employment stabilizes in 2004, the next year should be a return to the positive for Muskegon County. Total growth is estimated at 1.6 percent, with a 1.5-percent increase in goods-producing employment and a 1.9-percent jump in service industries. Even government should flip positive to 0.2-percent growth.

"Companies may not be ready to hire just yet, but they’re definitely seeing orders go up. We’ve got a solid forecast going ahead for Muskegon and business start-ups should do well," Erickcek said.

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This article appeared in the February 2, 2004 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who do business in West and Southwest Michigan. For further information about MiBiz Network, visit www.mibiz.com.