Chamber President: The Detroit Region Is Growing, But Not Fast Enough

The Detroit region is growing in many critical economic indicators such as GDP and private sector job growth but continues to lag behind peer regions.

That is the key message Detroit Regional Chamber President and CEO Sandy Baruah laid out during the 2018-2019 State of the Region. In his presentation, Baruah revealed key data from the annual report. The findings show that even though the unemployment rate is at its lowest in decades at 3.7 percent, the labor force participation rate is a full percentage below the national average. The Detroit region is dead last in labor force participation in comparison to its peer regions.

Some areas in which the region continues to excel include: a 2.7 percent increase in real gross domestic product year-over-year, a 1.6 percent year-over-year increase in private sector job growth, and a 6.8 percent year-over-year increase in median home value.

Areas where the region could improve include: the community well-being index, where Detroit ranks 145 out of 189 communities; an educational attainment rate at 40.3 percent, ninth among peer regions; and a poverty rate of 34.5 percent in the city of Detroit specifically, ranked last among peers.

Key takeaways:

  • Michiganders everywhere should continue to celebrate the region’s victories and growth.
  • As we welcome a new governor and Legislature in January, business leaders must urge new state lawmakers to continue Michigan’s consistent economic growth.
  • Acknowledge that while we are growing, the region’s growth trajectory is not best-in-class and a revised strategy with new approaches is needed to exceed peer regions.
  • Government, education and business leaders must work together to strengthen The Commons, or shared elements of the region’s economy (education, innovation, public infrastructure, etc.) with increased investment and resources.

Read a full recap of Harvard Business School Prof. Willy C. Shih’s keynote address at the State of the Region.

As Detroit Region Grows, Nurturing People, Emerging Industries Will Be Key

At the Detroit Regional Chamber’s fifth annual State of the Region, Prof. Willy C. Shih of Harvard Business School presented a keynote address on what regions need to do to thrive in the 21st century. Specifically, he discussed investing in skills training for employees to ensure they have the skills for the jobs of tomorrow.

After Shih’s presentation, Devin Scillian, anchor for WDIV-TV 4, joined him on stage for a discussion on the Detroit region.

What does the region need to do to succeed? Data presented in the 2018-2019 State of the Region report shows a region that has plateaued in many crucial economic indicators. Scillian asked, “How can we continue to grow and exceed our peer regions?”

Offering Skills Training and Education for Employees
Shih again emphasized the need for businesses to invest in the re-education of their employees. Scillian challenged him by asking, “Whose responsibility is it to re-educate the workforce? Does the responsibility fall completely with the employer or is the individual responsible for ensuring their own competitiveness?” New employees are not as likely to stay with one company for their entire career as in the past, so investing in these individuals can be a business risk.

Shih argued that continued education is the responsibility of everyone: the individual and the employer. The individual is tasked with the challenge of keeping their skillset current, but it is within the best interest of an employer to invest in their employees if they hope to retain them.

The Chamber’s Detroit Drives Degrees initiative is making the business case for investing in employee education. This initiative is removing barriers and providing resources for adults to continue their education.

Embrace Diverse Regional Assets
Another crucial action item Shih urged local businesses to do was pull together the region’s existing assets to brag about the quality work coming out of Detroit. Shih cited the region’s affordable housing, excellent supply-chain network, and a fierce comeback spirit as three attractive assets. He encouraged local business leaders to embrace the diversity of Detroit’s regional industries, including the region’s strong defense industry and growing health care industry, and continuously work to help them grow.

As a supporter of the 11-county region, the Chamber works on economic development initiatives that strengthen the region’s key industries, including the automotive, health care and the defense industries.

Scillian and Shih’s comments were followed by a presentation of key 2018-2019 State of the Region data by Chamber President and CEO Sandy Baruah.

Harvard’s Willy Shih: Employers Must Invest in Lifelong Learning for Regions to Survive

To kick off the Detroit Regional Chamber’s fifth annual State of the Region event, Prof. Willy C. Shih of Harvard Business School discussed why retraining America’s workforce to adapt the skills needed for modern jobs should be a key priority for local business leaders in 2019.

Education in the United States is frontloaded at the beginning of an individual’s career. After college-aged students enter the workforce, the amount of money spent (by the individual and their employer) on continued education drastically declines.

What happens to the adults who grow out of having an employable skillset, but still have another 10-15 years to contribute to the workforce? These individuals are often displaced in an economy that is talent-hungry.

Investment in continuous education is one component of what Harvard Business School calls “The Commons.” The Commons is defined as “a set of communal resources allowing businesses and people to thrive.” Education is a communal resource, and businesses must invest in their employees for them to thrive.

Shih and his students recently traveled the country to find examples of how communities are investing in displaced workers. Some examples from his study include:

  • Businesses develop short programs to retrain individuals in modern skillsets, such as apprenticeship or internship programs.
  • Universities and community colleges offer “stackable credentials”: industry-recognized credentials that can be earned over time and will be applicable in finding work over the short-term. Additional credentials can be added later, when feasible for the individual.
  • Community colleges provide resources to meet the basic needs of individuals to ensure their success in learning a new trade. Some examples include a clothing pantry for proper interview attire, a food pantry, and daycare services. Until these needs are met, individuals cannot attempt to seek employment.
  • New employers convince candidates of their potential. Sometimes candidates are eligible for work in a new position but they have been displaced for so long they no longer believe in their ability. Encouraging these individuals to live up to their full potential was one responsibility some local leaders took upon themselves in the study.

Shih concluded that it will take local educators, government leaders, and businesses working together to retrain the workforce for the jobs of today and tomorrow. The Chamber is a long-time proponent of improving education opportunities for adults and its Detroit Drives Degrees initiative works is poised to lead this charge.

Shih’s keynote presentation was followed by a moderated conversation with WDIV-TV 4 anchor Devin Scillian. Read highlights of the discussion or download the State of the Region report to see how Southeast Michigan benchmarks against peer regions.

Howes: Region’s ‘upward trajectory’ bucks new headwinds

December 4, 2018

The Detroit News

By: Daniel Howes

Just when the region is showing signs of “sustaining its upward trajectory,” as the Detroit Regional Chamber terms it in its fifth annual “State of the Region” report, two of its automotive heavyweights are signaling tougher times may lie ahead.

General Motors Co. is poised cut 8,000 salaried jobs and idle production at four U.S. plants next year, affecting 3,300 jobs. Ford Motor Co. is contemplating (still) a restructuring plan that is expected to impact its salaried workforce, even as it lays plans to rehab the dilapidated Michigan Central Depot into a hub for next-generation autonomy, mobility and electrification.

Contradictory? Not exactly, according the report to be released Tuesday. The region’s growth in real gross domestic product is outpacing the national rate, notching a 2.7-percent gain compared to 2.2 percent nationally. Per capita income in the Detroit region grew by 4.3 percent, compared to 4.1 percent nationally.

And as critical as GM and Ford remain to the regional economy — and the state’s identity — the automakers account for a smaller overall share of the state’s workforce and economic output. That’s not-so-good news, considering this town’s history, that might not be so bad.

“We are still on an upward trajectory,” Sandy Baruah, CEO of the Detroit Regional Chamber, said in an interview Monday. Median home value growth between 2013 and 2017 rose by 42.4 percent, second only to Seattle. And growth in the millennial population over the same period expanded by nearly 10 percent, more than Atlanta, Boston, Pittsburgh and Chicago.

“There’s a cool factor to Detroit,” said Rick Hampson, Michigan president for Rhode Island-headquartered Citizens Bank, sponsor of the annual survey. Quicken Loans Inc. Dan Gilbert’s family of companies “have been cool companies to work in for a long time.”

But they’re not the only ones, as both startups and legacy companies like GM and Ford woo tech talent in increasingly large numbers; as the rehabilitation of central downtown creeps beyond the Woodward corridor and Midtown; as steeply rising costs on the coasts make comparatively affordable Detroit more attractive.

Vacancy rates offer supporting evidence. Industrial vacancy rates in the region are among the lowest in the country for the fifth straight year, and for the first time in years office vacancy rates now track below the national average. All good.

Not so good: Detroit is the poorest major city among its peers, despite seeing its poverty rate improve to 34 percent from 41 percent five years ago. The metro region’s overall population growth is anemic, creeping up a meager 0.3 percent between 2014 and 2017, compared to 3 percent nationally. Its community well-being index ranks the Detroit region 145th out of 189 communities, hardly the makings of a chamber recruiting campaign.

All of which serves as a prelude to the most consistently urgent — and, it appears, hard to address — conundrum: educational attainment in the region and across the state. It continues to get worse, the chamber found, echoing numerous other studies compiled by educational think tanks and business groups.

“We’re a losing team in a losing league,” Baruah said, making exactly zero attempts to sugar-coat a message that should embarrass parents and teachers, administrators and lawmakers across the state. “It’s not just your neighbor’s school district that is a problem. It’s your school district that’s a problem. When you look at the statewide numbers, we keep going down.”

Ask yourself: How can Michigan make the case to become the next-century hub of transportation technology if it can’t educate the talent to staff the companies providing that technology? How can it attract that talent from high-cost Silicon Valley or the northeast if it fails to offer anything approaching an educational value proposition?

Answer: It can’t. And folks locked into a comfortable 20th-century model that effectively holds that mediocrity is good enough will learn the hard way that it’s not. Not much of a legacy, that, to leave your children.

“This has been a red flashing light since we started this report,” Baruah said. “If we don’t solve this problem, it’s going to be a problem.” It already is.


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Home values up in metro Detroit, well-being not so much

December 4, 2018

Detroit Free Press

By: John Gallagher

The Detroit Regional Chamber on Tuesday releases its annual State of the Region report, a compendium of facts and figures on the economy of southeast Michigan.

The full report can be found at the Chamber’s website: Here are some of the main takeaways:

1. Home values are up
The median home value in metro Detroit rose again last year and stood at $171,600. That marks a 42.4-percent rise in home values over the past five years.

2. Immigrants like Detroit
The southeast Michigan region is home to nearly 443,000 people born outside the United States. That’s up 10.7 percent over the past five years, outpacing the national growth of 7.7 percent.

3. Home building is big again in metro Detroit
The region saw a 31.7-percent rise in residential construction permits, ranking first among peer metro regions and far outpacing the national rise of 6 percent.

4. Millennials like cities
Metro Detroit’s millennial population, generally considered people in their mid-20s to mid-30s, rose 2.1 percent over the past year. That was faster than the national rate of increase of 1.3 percent.

5. Health care employs more
The largest occupation category in metro Detroit is not manufacturing nor government. Health care occupations now total about 350,000 jobs, with government coming in second and manufacturing third.

6. These jobs are in demand
Computer occupations, hearing aid specialists, geological and petroleum technicians, mechanical engineers, software developers, applications and
industrial engineers, and occupational therapists and assistants.

7. Well-being could use improvement
Metro Detroit continues to rank low on the Gallup-Healthways Well-Being Index, which measures perceptions of Americans’ sense of purpose, social relationships, financial security, relationship to community and physical health. Metro Detroit’s most recent score was 145 out of 189 communities.

That’s up from 158th place last year but it’s still pretty low. And it’s the poorest showing among several peer metro regions like Cleveland, Chicago and Pittsburgh.

On a brighter note, Ann Arbor ranked 12th overall, very near the top. But Flint ranked 177th, near the bottom.

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