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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K-12 education in Michigan: ‘A losing team in a losing league’

December 4, 2018

Crain’s Detroit

By: Chad Livengood

The metro Detroit region’s low unemployment rate, booming rate of construction permits and millennial population and per capita income growth beating national averages is not enough to gloss over the hard truth about an educational attainment rate trailing peer regions.

The Detroit Regional Chamber’s State of the Region report offers yet another sobering assessment of where Southeast Michigan lags most — and it starts in the classrooms of K-12 schools and continues at the campuses of public and private colleges.

“On K-12, I think it’s safe to say Michigan is a losing team in a losing league,” Detroit Chamber CEO Sandy Baruah said in an interview for the Crain’s “Detroit Rising” podcast.

The percentage of adults in the region with a post-secondary degree or credential stands at 40.3 percent, well behind competing regions like St. Louis (43.5 percent), Pittsburgh (45.2 percent) and Minneapolis (52 percent).

“We continue to shallow against our national competitors and the United States as a whole continues to shallow against our (Organization for Economic Co-operation and Development) competitors,” Baruah said. “So it’s not just your neighbor’s school district that is struggling — all of our school districts are struggling, even in some of the most affluent neighborhoods in the state.”

The Detroit Chamber uses its annual State of the Region report to benchmark the region’s economic progress. Baruah will present the report’s findings to chamber members Tuesday at a luncheon at Ford Field.

Southeast Michigan’s lagging higher education attainment rate can be traced to other leading economic indicators:

  • Median household income rose to $58,411 in 2017, a 12.6 percent increase since 2013 that lags behinds the national average of 15.5 percent.
  • The city of Detroit’s 34.5 percent poverty rate has declined from 41 percent five years ago, but remains the highest among peer cities, followed by Cleveland (33.1 percent), St. Louis (20.3 percent), Pittsburgh (20.2 percent) and Atlanta (19.3 percent). The national poverty rate is 13 percent, according to the report.
  • The population of the Detroit metropolitan statistical area grew by 0.3 percent or 7,000 residents in 2017 as the Chicago, Cleveland and Pittsburgh regions posted population losses. But the percentage of metro Detroit’s population increase paled in comparison to Minneapolis (4.1 percent), Atlanta (6.7 percent), Seattle (7.1 percent) and Dallas (8.5 percent).
  • The 62.3 percent labor participation rate for adults in southeast Michigan also was the lowest among the peer regions the Detroit Chamber compares metro Detroit to. In Minneapolis, the peer Midwest region with a 12-percentage point advantage over Detroit in adults with degrees and certificates, the labor force participation rate was 72 percent in 2017, according to the report.

The labor participation rate made a slight dip from 2016 when it was 62.4 percent.

Baruah said the report underscores the need for Gov.-elect Gretchen Whitmer and the new Legislature to focus next year on supporting higher education, skilled job-training programs and Michigan’s bottom-rung K-12 educational performance.

“What the Legislature and the governor need to do? I would say it’s a lot,” Baruah said.

There are positive signs for the state’s economic growth, with a 31.7 percent year-over-year increase in construction permits issued for the region, while the Detroit region’s gross domestic product grew by 2.7 percent, beating the national average (2.2 percent), according to the report.

“We’re still growing, but some of our percentage is not as impressive as it used to be vis-a-vis national competitors,” Baruah said.

New this year to the Detroit Chamber’s report is a section tracking population growth in millennials (ages 25-34). This segment of the population grew by 9.7 percent between 2013 and 2017, trailing just the trendy and booming tech hub of Seattle among Detroit’s peer regions.


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Detroit Regional Chamber Reports Economy Continuing Upward Trajectory

December 4, 2018


By: Tim Keenan

The Detroit region’s economy continued to improve during the past year in just about every measurable category, according to officials from the Detroit Regional Chamber at its annual Economic and Automotive Outlook today at Ford Field.

The chamber reports year-over-year growth that outpaces the national average in real gross domestic product, per capita income, exports, patents, median home values, and residential construction permits.

“The region’s progress over the past year is prevalent throughout the report, having outpaced the national average in many key areas including real gross domestic product and per capita income,” says Sandy K. Baruah, president and CEO of the Detroit Regional Chamber. “Last year alone, per capita income rose by 4.3 percent in the region.”

Real GDP in the region increased 2.7 percent versus year-ago figures. Per capita income grew 4.3 percent. Exports jumped 8.1 percent. Patents moved up 8.8 percent. Median home values improved 6.8 percent. Residential construction permits increased 31.7 percent compared to 2017.

For the first time since the recession, office vacancy rate in the region (9.5 percent) fell below the national vacancy rate (10 percent).

“For the second year in a row, foreign direct investment in the region was more than $2 billion,” says Baruah. “With a robust and innovative automotive and technology ecosystem, southeast Michigan continues to prove that its leading industries can evolve and thrive. But this report not only highlights where the region is performing well, it also showcases areas for continued improvement.”

One of those areas is the poverty rate, which is at 34 percent, even after five years of improvement. Educational attainment also is an area in which the region continues to lag behind despite a 1.2 percent increase compared to a year ago. That increase, however, was the largest year-over-year gain since the report’s inception, and the area’s population with an associate’s degree or higher grew by 3.8 percent compared to last year.

“While progress is being made, we cannot take our eye off the prize,” says Baruah. “We need to ensure the region’s citizens have access to education and jobs, and are healthy to compete in a 21st century economy. This is a top priority of the Chamber Foundation’s economic development strategy, which is committed to making meaningful progress to address the region’s challenges.

“Detroit has recovered, and the region’s future looks bright,” he continues. “Through regional collaboration and continued support from civic, business, and government leadership, the city, region, and state will continue to thrive.”

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