BIRMINGHAM — The Oakland County economy is in good shape, but it’s just not growing as fast as we would all like.
That was the major takeaway from the annual Economic Forecast hosted by the Birmingham Bloomfield Chamber of Commerce Jan. 12 at The Reserve in Birmingham. The first chamber event of 2017 brought together members, finance figures and municipal leaders to hear what experts predict for the region’s economy over the next 12 months.
Attorney Kevin Fanning, of Clark Hill PLC, moderated the discussion featuring investment strategist Daniel Haines, of Greenleaf Trust, and Oakland County Deputy Executive Matthew Gibb.
Gibb kicked the morning off with what he called more of an update on county economic affairs instead of a forecast of what’s to come. Oakland County is the ninth-wealthiest county in the United States currently — not as impressive as when it stood as the third wealthiest pre-recession, but better than a few years ago when it plummeted to around 60th place.
Around 57 percent of the Fortune 500 companies are doing business in Oakland County, and around 70 percent of the automotive research being done for companies around the globe is based in Oakland County. Good news, right?
The problem is keeping those companies coming with promises of a talent pool and a dense workforce.
“We don’t have a pipeline of skilled trades, so there’s no pipeline of engineers. Kids just aren’t going into that,” Gibb said.
There’s also no pipeline, per se, of people working in skilled trades to attract newcomer companies with the promise of a labor force.
Later in the event, Gibb expanded on that idea and said he’s been encouraging high school and college groups he speaks to regularly to weigh their options as far as traditional bachelor’s education or skilled trade opportunities.
“If you’re getting a four-year accounting degree from a university, you’re going to average $40,000-$50,000 a year. If you get your (certified personal accountant), it’s different. But you’ll do the books for a good couple years, have a great career, and maybe in 15 years you’ll be making $70,000 and man, you’re cooking right,” he said. “But for your entire career, the welder is going to out-earn you by double.”
Haines agreed, saying that nationally, the declining labor force is hindering growth and could continue to do so for the next 10-20 years.
“The (recovery from the recession) has been uneven. There’s still a lot of people working part time who wish they were working full time, and some are discouraged and are exiting the force,” Haines said. “Labor force growth has started to slow. One reason is labor force participation has fallen; another is population growth is slowing a bit. The other side of that is productivity growth; (that) has slowed over the last five years as well. As a population ages, people who are older tend to be very productive, but their productivity isn’t necessarily growing. They’re not learning new skills or improving productivity at that point.”
That slow growth means that while Oakland County has rebounded from the 2008 recession, there hasn’t been much action past that mark. As Gibb said about getting Oakland County unemployment back down to 4.1 percent, “All we did was fill the hole; we didn’t grow.”
He’s got some ideas, though, on how our local economy can not just survive, but thrive. A major player would be — you guessed it — technology.
Innovation in the field of autonomous and connected vehicles is a major focus for county and even state officials, including Sen. Gary Peters, who said in his remarks at the 2016 BBCC Government Forecast that Michigan should be a leader in the autonomous vehicle race as the home of the automotive industry.
But cars can’t be the only priority. Gibb explained that life science and medical companies make up a third of Oakland County industry, hence the county-endorsed moniker Medical Main Street.
“This is still where it’s going,” Gibb said of the growing medical trend locally.
But Haines worries that some of the suggested policies of President-elect Donald Trump could cause problems for those in the medical field. A repeal of the Affordable Care Act, he said specifically, could lead to fewer Americans with health insurance and then fewer medical customers.
“We expect premiums to still rise, and potentially a loss of (medical) jobs,” he said.
Trump policies could further impact the slow-to-grow workforce, Haines suggested, saying that removing immigrants from the labor force to deport them could hurt growth.
And that all-important workforce is something to hone in on, Gibb agreed. Companies simply can’t employ workers where there aren’t any available.
“You can’t land a company from Toledo to Timbuktu if we can’t prove we have a workforce,” he said.
Encouraging educational institutions to focus on skills instead of just standardized testing is one way to boost up the future of our worker pool, Gibb said. Another angle is to make southeast Michigan attractive to talent. That means thriving commerce and usable infrastructure.
With Pontiac rebounding fast — operating now in the black following help from an emergency manager, Gibb said — there’s plenty of reason to hope for more investment in the heart of the county. He mentioned the addition of a theater, a barbecue restaurant, a brewery and more in the city.
The Interstate 75 modernization project should be helpful too, if not 20 years too late, according to the executive.
“The roadway is being designed to handle the future transportation needs of the region,” he said, noting that while mass transit options like the Q-Line along Woodward Avenue are being hailed as transformative to metro Detroit, it’s really a “pipe dream” and it’s important to preserve arterial roadways for commuters.
Vincent Gotka, a CPA with the Birmingham firm Fenner, Melstrom & Dooling, said he was hoping to hear from the panel about what tax news we might hear from the new presidential administration this year.
“We work with a lot of business owners, and some of them have some toys, but most of them take anything (extra) they have and plow it back into the business,” Gotka said. “So (tax cuts) should hopefully generate some economic growth.”