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Detroit regional growth slowing, troubling signs ahead, chamber says

From Crain’s Detroit Business

By Robert Snell

Dec. 9, 2015

Southeast Michigan’s economic growth is slowing and there are long-term challenges regarding per-capita income and other key indicators, according to the Detroit Regional Chamber‘s second annual regional report card.

The report, released Wednesday afternoon, said challenges, including being surpassed by Chicago as the top exporter to Canada, could impact the Detroit region’s economic growth rate, which led the nation following the Great Recession.

“However, that momentum is starting to slow and we need to prepare as a region for what comes next,” Chamber President and CEO Sandy Baruah said in a statement. “There’s a lot to celebrate, but given the region’s long-term deficit of economic growth, normal levels are not enough.”

The report, relying on data for the 11-county region that includes more than 300,000 businesses and 13 Fortune 500 companies, was scheduled to be released at 5:30 p.m. Wednesday during the chamber’s annual meeting at The Westin Book Cadillac Detroit hotel.

The report noted several long-term challenges.

Last year, Chicago passed the Detroit region as the nation’s top exporter to Canada and the region lags peer areas in the number of people 25 years and older with at least a bachelor’s degree.

Also, per-capita income growth slowed compared to a similarly sized regions and the national rate. The Detroit area ranked ninth out of 10 regions last year.

“In order for our region to be a truly economically prosperous region, compared to our peers, it’s not good enough to make progress,” Baruah said. “We need to make outsize gains.”

The report uncovered several encouraging signs. The Detroit region’s gross domestic product growth swelled 18 percent in the last five years — that’s the second largest growth rate nationwide behind Dallas.
Last year, 109 foreign-held companies announced almost $3.9 billion worth of investments in Michigan facilities, creating 15,000 jobs. Meanwhile, the Detroit region has added almost 186,000 private-sector jobs in the last five years and per-capita income is up 13 percent.

Since 2009, median household income is up 8.1 percent to $52,462.

Last year, the region’s labor force topped 2.5 million and posted growth in skilled trades and jobs that rely heavily on science, technology, engineering and math skills.

The 10 fastest-growing occupations in the region were:

  • architecture and engineering
  • production
  • computer and mathematical
  • transportation and material moving
  • life, physical and social science
  • installation, maintenance and repair
  • construction and extraction
  • building and grounds cleaning/maintenance
  • management
  • business and financial operations.

“The Detroit region has a tremendous economic story to tell,” Baruah said. “But as global competition intensifies, it takes everyone in the region pulling together and harnessing the potential of our collective assets for us to thrive.”

The chamber also unveiled a new strategy to sustain the region’s growth. Dubbed “Forward Detroit,” the strategy will seek money from businesses and philanthropic groups to fuel economic development. The goal is $20 million by the end of 2021.

The initiative required a strategic restructuring of chamber operations in hopes of boosting global connectivity and talent retention and attraction, Baruah said.

“The question is are we as a philanthropic and business community focused on moving these needles in unison or are all our efforts piecemeal?” Baruah said. “We are trying hard to have a holistic approach.”