Survey shows mood, economy on upswing
REGION – Most companies in the Grand Traverse region are on the upswing, reporting higher annual revenues in 2007 and planning major investments this year, according to the Traverse City Business News' first-ever economic forecast survey. One-third of respondents expect their firms to add jobs in 2008.
The survey paints a relatively bullish picture compared to the rest of Michigan. More than two-thirds (69.2 percent) of companies in the survey saw their revenues hold steady or rise in 2007. And more than 80 percent expect revenues to climb in 2008.
Similarly, most business decision-makers say they will be making substantial investments in property, plant, equipment or technology this year.
The online poll was undertaken in November and December. The size of firms featured ranged from less than $100,000 to more than $500 million in revenue.
The wide-ranging Business News questionnaire asked about their employment, revenue and investment levels over the last year. And it queried them on their plans and predictions for 2008.
Overall, their responses suggest that the region might be one bright spot in a Michigan economy shaken by budget woes in Lansing and massive changes in the auto industry. No one seemed ready to declare the region's economic independence from the remainder of the state, though. The respondents acknowledged the continuing importance of a healthy auto sector and state promotion of tourism to the region. Furthermore, they see high gasoline prices as a potential drag on that industry.
Yet the region's mix of tourism, manufacturing, services and population growth seem to be giving it its own economic rhythm. And that rhythm seems to contrast with other areas of Michigan.
The state as a whole is expected to see a net loss of 51,000 jobs in 2008, after losing 76,300 jobs last year, according to the University of Michigan's annual state forecast in November.
In southeast Michigan, businesses predict only minimal job growth in coming months. Just 13 percent said they planned to hire more staff in January, February and March.
And in Grand Rapids and other parts of West Michigan, manufacturing employment was down in 2007, showing a 0.6 percent decrease during the third quarter, according to the W.E. Upjohn Institute for Employment Research.
But if the respondents to the Business News follow through with their hiring and investment plans, the region could look relatively strong in 2008. The cautious optimism about northern Michigan has already translated into hiring and investment. Job creation was already underway at many employers in 2007, with 23.3 percent of respondents reporting increases in employment, according to the survey.
While a third of the respondents plan to add employees this year, only 8.8 percent plan to reduce staffing.
Bucking a state trend, the manufacturing sector had the highest percentage of companies in the Grand Traverse region predicting job growth this year: 41.2 percent. Respondents in this sector predicted their overall manufacturing employment would rise 18.6 percent.
Respondents in the restaurant/food industry plan to boost employment 68 percent, accompanied by about a 40 percent increase in the hotel and accommodations industry and about a 34 percent increase in health care. But the construction industry expected employment levels to drop by nearly a percentage point.
Respondents to the survey don't seem to expect much of a push from the general Michigan economy. More people are optimistic about the national economy than state or local conditions, the survey found.
Nearly half (48.5 percent) see the state economy worsening. By contrast, roughly 29 percent see tougher times ahead for the local and national economies.
Still, the economic performance of Michigan as a whole and the rest of the country remains important for local firms. The survey found that about one-third of local businesses do 50 percent or more of their business outside the region.
About 81 percent of respondents described state promotion of tourism as extremely or very important to the economy, enshrining this type of activity as the biggest outside influence on the region.
The price of gasoline and residential real estate prices ranked second and third as external factors in the region, with 74 percent and 69.4 percent citing them as extremely or very important. These issues were followed closely by annual snowfall, at 66.3 percent.
Although they didn't land at the top as "extremely/very important" factors, the survey suggested that international trade and the auto sector remain important to businesses. Roughly 83 percent of respondents said international trade was extremely or at least somewhat important. General Motors, Ford and Chrysler ranked higher: 92.3 percent. BN