Breaking the fever: Area businesses rebound from economic ills

TRAVERSE CITY – There's a long-time adage in business circles in Northern Michigan: "When Detroit gets pneumonia, Traverse City gets a fever."

That maxim encapsulates the delicate economic relationship between downstate and the Grand Traverse region, according to Traverse Bay Economic Development Corporation (TBEDC) Senior Vice President Tino Breithaupt. The effects of Michigan's struggling economy-the result of a besieged auto industry-have been felt locally, but Breithaupt suggests damages here aren't nearly as bad as elsewhere.

"The first part of the year was unquestionably slow," he said, "and construction is down compared to previous years. But we're in a transition. The last two months have seen a large uptick in regional activity. In fact, we've had a number of companies indicate they're having their best year ever. Things are finally looking good for TC in 2007."

So how is that local businesses are suddenly thriving while the rest of the state continues to struggle?

"We haven't been as hard hit because we have a diversified business base," Breithaupt explained. "We don't have many companies here that are 100 percent automotive-focused. There are 350 manufacturing companies in our region, in all different fields-aerospace, marine, health care and sciences. Since our local economy is comprised of small companies that are quite diversified in their products and customer base, a downturn in one sector (such as automotive) doesn't hurt as much. Because maybe that only accounts for 20 percent of a business' profit here compared to 80 percent downstate."

There's a lesson in that economic model the rest of Michigan can learn from, acknowledges Michigan Economic Development Corporation (MEDC) Chief Communications Officer Mike Shore.

"There's still at least one more year of decline before Michigan rebounds," Shore said. "But we're working every day to bring new developments into the state and place them where they'll succeed. Our main focus is the changing nature of our economy. We're moving away from big manufacturing plants toward smaller entrepreneurial companies. Certain industries in particular are really taking off: solar energy manufacturing, health care, life sciences."

The center of the manufacturing world for the past century, Michigan is now undergoing a drastic restructuring of its economic core. High-tech firms in particular are leading the charge.

"In Traverse City, we've seen outstanding growth from technology-based companies like Oneupweb and Tellurex," said Breithaupt. "Because of the asset we have in Munson, we've also put the health care industry on our radar as a possible strategy. We're currently working with a couple of medical-device companies who may invest here, as well as inventorying the medical needs in the region and finding opportunities to fill those gaps."

Shore, too, cites Tellurex as a role model for Michigan businesses. The MEDC recently awarded funding to the TC corporation for its innovative research in thermoelectric modules. One of Tellurex's trademark products-a thermoelectrically-activated cupholder-is featured in two Chrysler automobile lines.

"If you want to see what the future is, look at Tellurex," Shore said. "They are a real success story and an example of how you can be a leader in a field, selling to companies across the U.S. and around the world-all while being headquartered someplace like Traverse City."

Cutting-edge businesses such as Tellurex require skilled workers to staff them-a fact Shore believes clouds the unemployment issue in Michigan.

"There are 90,000 jobs in this state right now just begging for qualified workers," he pointed out. "The reality is, the nature of the workforce is changing…and that provides plenty of positions for people willing to get the right training. Unfortunately, a whole lot of people in Michigan believe all you need to build a comfortable life is a high school education-and going forward, that's just not enough."

That doesn't necessarily mean the next generation will need Ph.D.s to find gainful employment-but "even a two-year degree or technical training or skills will be key," according to Shore.

Promoting better training and education opportunities is just one of Breithaupt's goals as the TBEDC formulates a long-term economic strategy for TC. Other tasks on the agenda: establishing a regional micro-loan process, meeting with over 400 area businesses to discuss growth and development issues, and creating an Angel Investor Network-an organization of high net-worth individuals seeking to invest in technology-based companies, particularly those with a 50 percent or more chance of generating rapid growth and high-paying positions.

Breithaupt hopes the TBEDC's efforts will pay off in the form of a prosperous community environment-one to both live and do business in.

"We often hear that this region continues to be one of the bright spots in Michigan," Breithaupt said. "What we lack in comparison to downstate cities (such as large manufacturing firms or four-year universities), we make up for in our quality of life. Ultimately, that's something we want to keep promoting. Our job is to get out there and show how that can happen." BN