The Right Place touts 2020 pivots; analyst forecasts 2021 recovery

24th annual Economic Outlook for West Michigan dwells on positive achievements, promising signs.
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At its recent annual outlook event, The Right Place touted its positive accomplishments in 2020 despite the global pandemic, and an economic analyst shared a hopeful forecast for next year.

West Michigan’s regional economic development organization The Right Place on Dec. 10 hosted its 24th annual Economic Outlook for West Michigan.

Birgit Klohs Courtesy The Right Place

The virtual event featured a year-in-review presentation by The Right Place President and CEO Birgit Klohs, as well as an in-depth economic analysis and forecast for West Michigan in 2021 by Jim Robey, director, regional and economic planning services, W.E. Upjohn Institute for Employment Research.

Right Place accomplishments

During her presentation, Klohs highlighted several milestones from the past year, as well as The Right Place’s response to the COVID-19 pandemic. 2020 marked the first year of The Right Place’s new 2020-22 strategic plan, along with the final full calendar year of Klohs’ tenure as president and CEO of The Right Place. The organization announced the selection of its next top executive on Dec. 18 — Randy Thelen, a Michigan native who was the first president of Lakeshore Advantage and most recently served as senior vice president of economic development at the Downtown Denver Partnership. He will take the reins on March 1.

In 2020, The Right Place’s work resulted in 953 new and retained jobs, $43 million in new and retained payroll, $105.6 million in new capital investment, 994 talent assists and an average hourly wage of $21.60 within its economic development projects.

Its three-year goal is to reach 3,400 new and retained jobs, $184 million in new and retained payroll, $500 million in new capital investment, 2,900 talent assists and an average hourly wage of $26.35 within its projects.

The organization said it experienced an “unprecedented” demand for services in 2020, providing over 4,700 business assists to West Michigan companies this year, including connecting 1,200 companies with over $10 million in COVID-19 small business relief grants and helping companies get other needed resources. By comparison, the organization usually provides around 2,000 business assists in an average year.

Klohs highlighted three major projects The Right Place assisted with in West Michigan this year: Perrigo’s decision to invest $44.7 million to move its North American headquarters from Allegan to downtown Grand Rapids, which will create 170 jobs; Packaging Compliance Labs’ $2.57 million investment in Kentwood that will bring 27 jobs; and Gerber/Nestlé’s $36 million expansion in Fremont, which will create 50 new jobs.

Klohs said she believes The Right Place did a remarkable job on its strategic goals in a year with so much need.

“Given the pandemic, which we are now in month No. 9, considering that we still had over $100 million of new investment in the region, that was quite a good number, considering that we spend so much time — time well spent, I might add — on responding to the COVID needs of our customers and our companies,” she said in an interview with the Business Journal after the outlook event. 

“As I mentioned in the presentation, we pivoted so quickly, it almost made our heads spin, but we did it and became ‘PPE Central’ and the resource for many of the businesses to stay in business and get the help that they need. So, still having two major projects and one smaller project — and by the way, we have a number in the pipeline that we’re trying to get through for 2021 — I’m very, very glad where we are today, and we’ll have another two years to get through the rest of our metrics.”

Klohs said she believes in one of the toughest years on record, West Michigan proved its resilience and validated the importance of its manufacturing sector to the health of the economy, while at the same time diversifying in the health/life sciences, information technology and food processing sectors.

“The takeaway for me was you still have to make things. The supply chain has to be shortened so we can make this stuff locally, and the response from our companies was so positive that, as hard as all of this was, it was a privilege to be in this job this year and work with those businesses,” she said.

“Resilience is really the middle name of this region, and our diverse business space will hold us in good stead. We don’t know what’s going to happen to our hospitality sector yet, but I know the other business sectors are in pretty good shape, and I think will carry us forward positively.”

Since 1985, The Right Place has worked with companies in the creation of 47,000 new and retained jobs, along with $5.1 billion in new capital investment.

2021 outlook summary

Jim Robey Courtesy the W.E. Upjohn Institute for Employment Research

This year, the country experienced a deep recession with a potentially quick recovery, Robey said. Employment in the U.S. is currently only slightly higher than December 2007, and the COVID-19 pandemic is impacting the economy more than the Spanish flu of 1918, he noted.

However, gross domestic product growth is predicted to remain solid, and Moody’s prediction of being in a recession for the next six months has decreased to 31%. Additionally, the national purchasing managers’ index stood at 57.5 in November, indicating the manufacturing sector is expanding.

Light vehicle sales and Class 8 truck orders have rebounded, although uncertainty remains whether working from home will impact the trend in light vehicles.

As of October, the Grand Rapids metropolitan statistical area unemployment rates stands at 3.7%, nearing pre-pandemic levels. The MSA quickly recovered jobs that were displaced during the COVID-19 recession, he said, and manufacturing employment rebounded faster than the state or nation, despite taking a big hit during lockdown.

Currently, long-term projections for the Grand Rapids MSA indicate the recovery should continue, and Robey expects West Michigan will return to original pre-COVID employment forecasts between 2024 and 2025. The economy is projected to continue growth, but somewhat below pre-COVID forecast levels.

In an interview with the Business Journal following his presentation, he echoed Klohs’ sentiments about the resilience of the region.

“I really think (the most important takeaway) is the surprise, even with all the administrative and regulatory lockdown situations, that demand continues to be strong for vehicles, for houses, consumer confidence continues to be strong, people seem to want to go back to work, both data-wise and anecdotally, so it’s a much different picture than we saw in 2008, 2009, coming out of the Great Recession. Even though this one was so deep due to being locked down, the recovery has been amazing,” Robey said.

“I would say that if the vaccines are successful, people practice distancing and other things, and it allows the federal, state and local folks to reopen the economy, there is pent-up demand for particularly the hospitality sector, as well as from the reshoring standpoint, there are people interested in relocating in West Michigan, both nationally and globally, but we need to reopen economy for that to happen.”

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