Anticipated business trends in 2017

To see where the Lansing region is heading in 2017, look at 2016, an overall good year for the local economy.

Investments announced last year by General Motors and parts suppliers will strengthen the auto industry. The Michigan Avenue corridor — considered the region’s backbone — will continue developing.

Medical services, sparked by expansion of the Sparrow Hospital facilities and the prospect of a new McLaren Hospital linked to Michigan State University (MSU), will continue reshaping the health care industry.

The demand for student housing continues with the opening of the hulking $90 million SkyVue apartments, west of the university and a $23 million and a 219 unit apartment complex under construction by Campus Villages on Grand River in Meridian Township. Growth also is expected in the emerging senior-living housing market.

And on a smaller sale, artisan breweries, coffee shops and locally sourced food service businesses are signaling to a younger generation of workers that the Lansing region is casting aside its stuffy, institutional image and becoming a cooler, more millennial place to settle.

For small businesses, which predominate throughout the region, the focus for the coming year is people.

“When we ask what keeps you up at night, the answer is talent,” said Rob Fowler, president and CEO of the Small Business Association of Michigan (SBAM). “What it means is that business will need to be more creative in ways to hire and retain people. It suggests wage inflation and the addition of benefits.”

The pressure of low unemployment and the strong economy — a good thing, Fowler noted — creates a buyers’ market for workers. And adding to the pressure is the oft delayed, though inevitable and now accelerating, wave of baby boomer retirements.

While a decline in the baby boom workforce will be felt broadly, The Conference Board, in a 2016 report, found that it will affect two labor markets particularly important in the Lansing region: health care and skilled trade labor.

“The former faces rapidly growing demand as the result of an aging population. The latter category, which encompasses jobs like machinists and power plant operators, faces a dearth of new entrants to replace retiring workers,” according to The Conference Board 2016 report. “By contrast, concerns over computer and science occupations may be overstated, as the supply of workers is likely to keep up with demand.”

Expect more industry related training programs to steer workers into careers. Industries as diverse as insurance, construction and metal working are focusing on apprenticeships and intern opportunities. For its latest reported fiscal year, Capital Area Michigan Works! allocated $688,444 for skilled training programs, up from $476,802 the previous year.

Even as its economy diversifies, manufacturing remains a steady source of jobs. In 2016, according to the Bureau of Labor Statistics, manufacturing employment during the summer topped 21,000 for the first time since 2008. General Motors announced that it will spend $211 million to upgrade tooling and equipment at its Grand River Assembly plant. Auto parts supplier Gestamp will invest roughly $105 million to expand its operations in Mason.

One of the hottest areas for new local development parallels U.S. 127. Lansing Economic Area Partnership (LEAP) President and CEO, Bob Trezise, calls it the Harrison Road corridor, extending roughly from Michigan Ave. south to Jolly Road.

“It’s going to be fascinating to watch,” Trezise said, detailing projects that would unfold along the corridor. He noted that at its October Board of Trustees meeting, the university agreed to purchase property on Collins Road for its Office of Regulatory Affairs as well as staff associated with Information Technology Services. The former post office building, also on Collins Road, is for sale and according to Trezise, new developments are projected for Dunckel Road and closer to the campus on Trowbridge Road.

The region’s two large hospital systems are engaged in planning large facilities adjacent to U.S. 127. McLaren and MSU have been discussing a new hospital near the intersection of Forest and Collins roads. It would serve as a teaching facility for MSU’s College of Osteopathic Medicine.

Further north, Sparrow Hospital announced in mid-November that it planned a still undetermined facility in the $380 million Red Cedar Renaissance development. Construction for the project, originally scheduled for 2016, is now planned for 2017, according to developer Joel Ferguson.

Reflecting an improved economy, retailers throughout the state and region begin the New Year generally optimistic about their businesses.

Each month, the Michigan Retailers Association polls its members on their three-month outlook. Its latest survey finds that two-thirds of those surveyed expect sales to increase and about that number expect an increase in marketing expenses. Slightly more than half (53.8 percent) expect higher prices while a slim minority (48.3 percent) expect reductions in inventory.

The positive outlook suggests some increase in hiring plans. The survey found that more than half of retailers (53.9 percent) anticipate adding jobs. Unemployment in the Lansing/East Lansing region was just 3.3 percent in September, according to the Bureau of Labor Statistics.

“Hiring does become more of a challenge. I haven’t heard it as a major issue, but it will be a concern. It’s not just hiring people. It’s qualified people. That’s the problem,” said Tom Scott, senior vice president of communications and marketing for the Michigan Retailers Association. But overall, he said the retail community is optimistic.

Mickey Hirten

Mickey Hirten

Mickey Hirten is an award winning writer and editor. He has been executive editor of the Lansing State Journal, the Burlington Free Press in Vermont, and was the financial editor and a columnist for the Baltimore Evening Sun. He is the current president of the Michigan Press Association. His wife, Maureen Hirten, is director of the Capital Area District Library.

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