Howes: Outlook brightens for Michigan economy, jobs

Daniel Howes
The Detroit News

Nearly nine years into the economic expansion that helped lift Detroit from its metaphorical knees, Michigan’s economy continues to look up.

The state’s economic outlook is at a six-year high, according to the annual Michigan Economic Outlook Survey prepared by the Ann Arbor-based Baker Strategy Group and to be presented Thursday at the Detroit Economic Club. More than 80 percent of Michigan business leaders would recommend the state as a “great place” to grow business.

Business leaders surveyed express confidence their corporate cultures are adapting to changes in society and the marketplace, even as they say they expect growth and hiring to ease this year after upticks in 2017 from the year before.

What a difference nine years, hard work and brutal restructuring can make. In early 2009, the likes of General Motors Corp. and Chrysler Group LLC were on federal life support, awaiting the recapitalization of bankruptcy and dictates from the Obama auto task force. Suppliers tanked, some into Chapter 11.

Unemployment across the state soared, peaking above 14 percent. State policy makers reeled as the depth of the reckoning became clear ... and frightening. The tumult cracked the economic foundation of the state that put America on wheels, helped to create the modern middle class and served as the archetype of American industrial might.

Until it didn’t. From the rubble emerged automakers and major suppliers with lower break-even points and higher profit-margins. A revitalizing city of Detroit powered more by entrepreneurial pluck than big, paternalistic corporations began to emerge. So did a sense that a region too often considered “Loserville” outside its hermetically sealed bubble could win again.

It is, but the boom won’t last. One of the longest economic expansions in modern American history can’t continue indefinitely because they never do. And because the competitive landscape is changing with an alarming speed set not by Detroit, but by the innovative risk-taking driving Silicon Valley and the march of technology.

“The world is changing,” said Ellen Hughes-Cromwick, former chief economist for Ford Motor Co. and now interim associate director and senior economist at the University of Michigan’s Energy Institute. “We’re either going to get on the wave and be part of it, or we’re just going to make cars and trucks.

“There’s a very nice sweet spot here ... to get some legs under this expansion. If we don’t get this leg, this sense of urgency, other states are going to get it. We’ve got to make sure we lose no stitch in time over the next five years. If we wait and go through this next auto cycle, we will have lost the battle to be globally competitive.”

She has a point. And Michigan has a golden opportunity to leverage its revival, epitomized by the parallel reinventions of Detroit and its hometown automakers, into a new age of prosperity — if it gets serious about addressing its chronic problems in public education and the enduring work-a-day culture.

A new report issued Thursday by the Michigan Economic Center says the state is “well-positioned” to create “hundreds of businesses and tens of thousands of new jobs” in the energy, water, food, health care and information technology sectors.

It identifies what it describes as “billions of dollars” in global market opportunities “and thousands of new jobs in new sustainable “green,” “blue” and high social-impact economic sectors of the future.

“Leading the clean energy revolution,” the report says. “Solving challenges around water use and conservation. Teaching the world how to feed itself in a sustainable manner. Pioneering solutions to global health challenges. Providing the IT and data-driven connections and information that ties everything together. Leadership in these coming arenas can be made real in Michigan — it’s not a pipe dream.”

It’s not guaranteed, either. The Michigan 1.0 of the last century, driven by entrepreneurs named Ford and Durant, Kresge and Kellogg, Mott and Meijer, turned time, place and resources into some of the largest business successes this state has ever known. Their wealth built communities, endowed culture and art.

Many of those same resources exist today, too — 20 percent of the world’s fresh water laps Michigan shores; the state is No. 2 in the nation for crop diversity; it’s No. 1 in the nation for autonomous-driving test projects; and it leads the country in engineering talent as it now vies with Silicon Valley for a new kind of young tech recruit.

All that spells opportunity. But turning it into next-generation entrepreneurial success is no certainty. It will take leadership, and a clear-eyed recognition that the quickening global competitive metabolism threatens to leave Michigan behind if it refuses to shift into a higher gear.

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.