Economic outlook sets Optimistic tone

Business owners in the region are finally seeing real measures of economic improvement, especially led by the news of General Motors’ historic success with its IPO. Regional news also was bolstered, first by Zeigler Automotive’s expansion in the Kalamazoo market, and also by Gentex Corp.’s plan to expand into a vacant plant to continue building its capacity for new jobs in Holland Township. Gentex cited a 20 percent increase in production.

The regional news followed the report from University of Michigan economists whose November forecast showed the state will make modest job gains in 2011, the first time in more than 10 years. George Fulton, director of U-M’s Research Seminar in Quantitative Economics, commented in a press release accompanying the report: “The most encouraging development in the Michigan economy in the past year is the apparent return to stability of the manufacturing sector whose work force has been decimated in recent years.”

While many auto suppliers in the greater Grand Rapids area have diversified over the last decade, it also stands to see a ripple effect of improvement from the Michigan-based auto industry. That was underscored by Lambert, Edwards & Associates President Jeff Lambert, who told the Business Journal that “there will be a stream of listings and other activity in the automotive and related public markets with the success, frankly, of the GM IPO.”

These successes are not the result of the elections held three weeks ago, nor did they come as a result of Rick Snyder’s election as governor (though the Business Journal is sure that is seen as encouraging news). General Motors’ management was able to turn the business toward profits the past two years, just as Gentex product and customer diversification provides for its expansion. So it is again a cautionary note to those so anxious to make “change” that it is not done for the sake of change, but for systemic benefit recognizing a new economy.

Even as the public sector is poised to balance budgets decimated by the Great Recession, it is important to note that the business world is not static, and government will again be behind the recovery now becoming evident, even in Michigan. Flexibility must be a key ingredient in the new formulas developed to replace the old.

Economist Fulton cautions that the U-M forecast anticipates continued double-digit unemployment numbers the next two years, even as growth continues in the business service industries as well as education and health care. He also notes: “At the core of this improvement is the bounce-back in the domestic auto industry, which will be in the black this year, two years after seeking federal aid.”

The public sector must again stay out of the way of business and be cautious in its approach to the changes repeatedly cited the past 10 years — changes to which it was ineffectual and which resulted in a massive rebuke. The changes needed now should be predicated on the next 10 years, not the past.

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