2016-11-03 / News

Will Business Ever Grow Up North? A Close Look at the Factors Involved

By Ken Winter

Don’t expect huge economic changes in northern Michigan during the next decade.

Like it or not, it will in large part remain a tourist-based economy sprinkled with healthcare and agriculture with some industry and manufacturing employment. The possible exceptions are Traverse City and maybe Petoskey and a few others. The cards are stacked against the northern region, as it has been for decades. Limited rail transportation, a lack of affordable housing for workers, insufficient fiber optic connectivity to support current and growing traffic, and a trained workforce that falls far short of what’s required to meet the needs of the 21st Century.

That’s not a reason for smaller Up North communities to stop searching for new opportunities and fixing up their main streets, but shrinking populations and great distances from traditional marketplaces are huge impediments. Worse, much of the growth may come from people retiring to the region and needing services like healthcare and entertainment.

If you research the history behind many of the current major businesses and manufacturers, for example, they were founded two, three and sometimes four-generations ago by families from the area. Often, these families built their dreams here because they liked an environment that allowed them to enjoy the woods and water—not because it made competitive or economic sense. Declining rail service, as well as poor and limited roads puts them at even more of a disadvantage, as does spotty fiber optic service and lower wages. Cold winters are a double-edged sword for those who enjoy outdoor recreation, and those who prefer warmer winters.

Petoskey Regional Chamber of Commerce President Carlin Smith is one of the loudest cheerleaders in northern Michigan, advocates for his community, and tries to dispel such images whenever possible. He tells the story of his conversation with a Southfield businessman who was assisting an East Coast banker secure financing for a new business operation in the Petoskey area.

“So what is everyone’s biggest surprise when they learn about Petoskey? The sophistication,” he wrote in a guest column appearing in the Petoskey News-Review. “My friend, former Senator Jason Allen, once told me that one of the challenges he fought as a legislator was to dispel the belief in Lansing that there was nothing but ‘hicks and sticks north of M-46.’”

Ouch. We know differently.

This town is filled with well-educated professionals and retirees who are engaged with the community, politically aware, business savvy, and knowledgeable in countless professional pursuits. Besides the area’s natural beauty, he mentions the available high quality medical and healthcare, as well as the manufacturing economy with businesses likes Petoskey Plastics, Kilwins, Circuit Controls, Michigan Maple Block, American Spoon, Moeller Aerospace, and Manthei (wood products) examples in the Petoskey region: “You can’t overlook the tribal community. Since becoming recognized as a sovereign nation, the Little Traverse Bay Band of Odawa Indians has been able to escalate the programming and professional services they provide their tribal members and the community as a whole. Throw in the resort communities of Bay View and Bay Harbor, an outstanding arts center, a beautiful public library, nearby ski resorts, and abundant city and county parks, and you have yourself a thriving community. Heck, we even have a world-class recycling facility that provides curb-side pickup in most of the area.”

Unlike many Up North small towns smaller than Petoskey and Traverse City, Charlevoix has been fortunate to hang on to some of its manufacturing companies after taking some earlier hits with the closing of the Big Rock Nuclear Power plant and several other auto-related manufacturing facilities. Other coastal communities like Ludington, Manistee, Frankfort, and Benzie haven’t been so fortunate and struggle to find replacement industry.

Some towns view with envy Charlevoix’s remaining manufacturing portfolio that includes St. Mary’s Cement Company; Lexalite International-ALP (a leading global supplier of lighting components); Wojan Window & Door Company; Harbor Industries, DLC (dust control manufacturer), and neighboring East Jordan Iron Works (which now goes by the name of EJ, a global company with subsidiaries in Canada, Mexico, Central and South America, Australia, and Europe).

Like many communities, when Charlevoix hosted its candidate forum, candidates for local City Council and Mayor were asked where they see their community going next. While by no means comparable to the national presidential debates, this famous resort community of 2,500 wants to make its Lake Michigan community sustainable. Can they achieve that on a resort based economy, or should they grow to provide better high-paying, year-around jobs?

Still, those attending Charlevoix’s forum were asked how they would propose to attract families and younger people to their community. One of the major stumbling blocks—as with most northern Michigan communities—is the availability of affordable housing for both young and middle-income workers. Many former residents report that there is so little affordable housing available that they are forced to leave the region even after finding a new job. Affordable housing continues to remain in short supply thanks in large part to aggressive real estate agents who encourage many downstate residents to buy up existing housing inventory to rent out as high summer season rentals. While good for investors, this limits the number of homes available for year-around rent or purchase.

There’s also the issue of recreational activities and entertainment available in these communities. Places like Charlevoix, Petoskey, and Traverse City have grown immensely in arts and entertainment offerings over the last decade or so; others have not. It’s hard not to forget that the “Cool Cities Initiative” started by Michigan Governor Jennifer Granholm was initiated to spur growth and investment in northern Michigan cities. The effort was proposed in 2003 to combat students attending college in Michigan, and then seeking employment elsewhere.

It was a dismal failure.

As Michael Lafaive, a columnist for Michigan Capital Confidential wrote last December: “If Michigan is so cool, why did Granholm immediately skip town for California at the conclusion of her second term? Did it have anything to do with superior employment prospects elsewhere? The answer to both may be that a leftist California state university may indeed be a cool place for a former Midwest governor to get a cushy job promoting the big-government dogmas that did so much damage in the state she once governed.” He pointed out that The Stadium District, immediately south of Oldsmobile Park (now Cooley Law School Park) in Lansing, was redeveloped using a grant from the Cool Cities project. That wasn’t much help to northern Michigan.

Who could blame her predecessor, former Governor John Engler, for earlier taking the same the exit strategy? As he told this columnist, he headed in the opposite direction for a better job—Washington, D.C.—so he could afford his triplets’ looming college tuition price tag.

The former three-term Michigan governor (who then earned about $120,000 a year plus health insurance and retirement) assumed leadership of the Business Roundtable in January 2011, after serving six years as president and CEO of the National Association of Manufacturers. In 2012, the industry trade publication CEO Update reported that he was being paid $2.8 million in annual salary with $52,325 in deferred compensation and another $24,879 in non-taxable income.

Meanwhile, back in northern Michigan, residents continue to struggle with some decades-old (and new) issues. Here are a few:

Promoting in-demand occupations in Northwest Michigan to help attract workers to jobs that local employers are having a tough time filling.

Developing a stronger industry and business base to create higher income, year-around employment— beyond Michigan’s tourism and agricultural base—to retain youth and attract additional talent.

Providing a better education system to develop a workforce for skilled trades jobs in plumbing, electrical systems, heating and cooling systems, masonry, carpentry, and welding.

Expanding current education curriculums to help students enter into modern manufacturing that requires more math and computer skills.

Training and recruiting specialized healthcare workers such as operational nurses and surgical technicians, in addition to replacing physicians retiring from general and specialized practices.

Expanding affordable housing for low and middle-income workers.

One of the biggest questions still standing—as it has for decades—remains: “Is a view of the Bay worth half the pay?”

Some of the higher paying professionals— like physicians, engineers, and educators—vote “no” and opt out, instead settling for a seasonal slice of Michigan by just acquiring a place in the woods, on the bay, lake or stream.

Ken Winter, former editor and publisher of the Petoskey News-Review and member of the Michigan Journalism Hall of Fame, teaches political science and journalism at North Central Michigan College in Petoskey and Michigan State University.

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