The number of people filing initial claims for state unemployment benefits dropped by 1,621 for the week ended Feb. 20, the U.S. Labor Department reported Thursday. The total of 15,111 filings continued a significant slowdown in new claims since the beginning of 2010, although Michigan still has the sixth highest rate of unemployed persons receiving insurance benefits nationwide, at 5.9%. The total number of claimants is nearly 3.9 million.
For the United States as a whole, initial claims of unemployment took a surprise jump of approximately 22,000, to 496,000. The U.S. insured unemployment rate stands at 3.5%. The four-week moving average of jobless claims, which smooths out weekly volatility, increased 6,000 to 473,750.
New numbers on state and national unemployment rates will be released by the Labor Department on March 5. Analysts will be closely watching the data as Congress advances work on various job creation measures and economic stimulus funds currently being considered.
Friday, February 26, 2010
Thursday, February 25, 2010
Food sector adds jobs to menu
Food companies are increasingly serving up business investment and job growth on the Western side the state.
This past week, for example, officials at Request Foods indicated its expansion plans could bring more than 250 new jobs to the Holland Township area over the next five years. The company, which makes nearly 800 different custom frozen entrees, side dishes appetizers, sauces, desserts and soups, currently has a 370,000 square-foot Township facility that employs 524 people.
Subject to government approval, Request Foods intends to invest $35.5 million in a new facility spanning more than 200,000 square feet. The company would pay no taxes on the new facility for 12 years but would assume a progressive tax bill up to 100% of its assessment in year 15, according to a report by the Holland Sentinel. Some 150 jobs would be created in the first three years, averaging $10.31 per hour plus benefits for entry level positions.
"To me, this puts them on that 20-year path to growth," Randy Thelen, president of the economic development group Lakeshore Advantage, told the Sentinel. "In terms of economic recovery, it has to be one step at a time. Today, this project represents a major step in the right direction."
According to Thelen, automotive, office furniture and food production are the three major components of the area's manufacturing sector. The local food industry has also seen expansion from firms including Boar's Head, Sara Lee, Hudsonville Ice Cream and Quincy Street Meats during the past two years.
This past week, for example, officials at Request Foods indicated its expansion plans could bring more than 250 new jobs to the Holland Township area over the next five years. The company, which makes nearly 800 different custom frozen entrees, side dishes appetizers, sauces, desserts and soups, currently has a 370,000 square-foot Township facility that employs 524 people.
Subject to government approval, Request Foods intends to invest $35.5 million in a new facility spanning more than 200,000 square feet. The company would pay no taxes on the new facility for 12 years but would assume a progressive tax bill up to 100% of its assessment in year 15, according to a report by the Holland Sentinel. Some 150 jobs would be created in the first three years, averaging $10.31 per hour plus benefits for entry level positions.
"To me, this puts them on that 20-year path to growth," Randy Thelen, president of the economic development group Lakeshore Advantage, told the Sentinel. "In terms of economic recovery, it has to be one step at a time. Today, this project represents a major step in the right direction."
According to Thelen, automotive, office furniture and food production are the three major components of the area's manufacturing sector. The local food industry has also seen expansion from firms including Boar's Head, Sara Lee, Hudsonville Ice Cream and Quincy Street Meats during the past two years.
Home prices may be stabilizing
Home prices in the Detroit metropolitan area increased .2% on a seasonally adjusted basis in December 2009, according data released Tuesday from the Standard & Poor's Case-Shiller Home Price Index, a closely watched measure of housing market strength in 20 cities and the United States as a whole.
Detroit was still only one of three cities, along with Las Vegas and Tampa, that showed double-digit annual rates of decline at the end of 2009. Detroit's one-year change was -10.3%. Still, the December increase, combined with a .3% gain for the U.S. index, gives rise to hopes that the housing market is stabilizing.
"As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now," says David M. Blitzer, chairman of Standard & Poor's Index Committee.
Across the U.S., prices remained 3.1% lower than they were in December 2008. But the December 2009 result was the seventh consecutive month in which housing prices increased. While the numbers could inspire greater confidence in the economic recovery, they might also reflect a trend toward equilibrium in supply and demand. Rock bottom-prices in areas hard hit by foreclosures, such as Detroit, tend to energize sales. As buyers snap up the bargains, they help shrink the excess supply housing, which contributes to price stabilization.
Detroit was still only one of three cities, along with Las Vegas and Tampa, that showed double-digit annual rates of decline at the end of 2009. Detroit's one-year change was -10.3%. Still, the December increase, combined with a .3% gain for the U.S. index, gives rise to hopes that the housing market is stabilizing.
"As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now," says David M. Blitzer, chairman of Standard & Poor's Index Committee.
Across the U.S., prices remained 3.1% lower than they were in December 2008. But the December 2009 result was the seventh consecutive month in which housing prices increased. While the numbers could inspire greater confidence in the economic recovery, they might also reflect a trend toward equilibrium in supply and demand. Rock bottom-prices in areas hard hit by foreclosures, such as Detroit, tend to energize sales. As buyers snap up the bargains, they help shrink the excess supply housing, which contributes to price stabilization.
Tuesday, February 23, 2010
Consumer confidence still ebbing
Michigan consumers are in a definite winter funk, data released today by The Conference Board http://www.conferenceboard.org/ indicates.
The New York-based business research group's U.S. Consumer Confidence Index dropped to its lowest point in 10 months, falling to 46.0 in February from 56.5 in January. Readings in the 90s reflect belief that the economy is on solid footing, while anything above 100 indicates consumers believe the economy is growing. The index is based on surveys of 5,000 households nationwide.
Some of the increased gloom came from the Middle and South Atlantic regions, which were recently slammed by blizzard-induced business slowdowns and other hardships. Softness also showed up in the Mountain and Pacific regions.
Still, ground-zero for pessimism remains the East North Central region that includes Michigan and four other Great Lake states. This region's consumer confidence reading now stands at 41.0. As components of the overall Index, their confidence in the Present Situation dropped from 17.9 to 8.7, and confidence in Expectations for the future declined from 76.0 to 62.5.
The Board's Index is a closely watched indicator of consumer psychology -- an essential aspect of economic recovery because consumer spending accounts for an estimated 70% of all U.S. economic activity.
Nationwide, the share of consumers claiming conditions are "good" declined from 8.5% to 6.2%, while those calling conditions "bad" increased from 44.7% to 46.3%.
"Consumers short-term outlook also took a turn for the worse, with fewer consumers anticipating an improvement in business conditions and the job market over the next six months," says Lynn Franco, Director of the Conference Board Consumer Research Center. "Consumers also remain extremely pessimistic about their income prospects. The combination of earnings and job anxieties is likely to continue to curb spending."
Across the U.S., the share of consumers expecting fewer jobs over the next six months increased from 18.9% to 24.6%. Those anticipating more jobs will become available in the months ahead declined to 13.4% from 15.8%. Those saying jobs are "hard to get" rose from 46.5% to 47.7%, while those who think jobs are "plentiful" fell from 4.4% to 3.6%.
MI perspective: Economists are watching these metrics carefully because, traditionally, job growth comes after a recovery in investor confidence, improved market performance and increased consumer spending. In these regards, economic recovery is in part a self-fulfilling prophecy. Until investor and consumer confidence establish firmer footing, data indicating economic recovery are likely to remain choppy.
The New York-based business research group's U.S. Consumer Confidence Index dropped to its lowest point in 10 months, falling to 46.0 in February from 56.5 in January. Readings in the 90s reflect belief that the economy is on solid footing, while anything above 100 indicates consumers believe the economy is growing. The index is based on surveys of 5,000 households nationwide.
Some of the increased gloom came from the Middle and South Atlantic regions, which were recently slammed by blizzard-induced business slowdowns and other hardships. Softness also showed up in the Mountain and Pacific regions.
Still, ground-zero for pessimism remains the East North Central region that includes Michigan and four other Great Lake states. This region's consumer confidence reading now stands at 41.0. As components of the overall Index, their confidence in the Present Situation dropped from 17.9 to 8.7, and confidence in Expectations for the future declined from 76.0 to 62.5.
The Board's Index is a closely watched indicator of consumer psychology -- an essential aspect of economic recovery because consumer spending accounts for an estimated 70% of all U.S. economic activity.
Nationwide, the share of consumers claiming conditions are "good" declined from 8.5% to 6.2%, while those calling conditions "bad" increased from 44.7% to 46.3%.
"Consumers short-term outlook also took a turn for the worse, with fewer consumers anticipating an improvement in business conditions and the job market over the next six months," says Lynn Franco, Director of the Conference Board Consumer Research Center. "Consumers also remain extremely pessimistic about their income prospects. The combination of earnings and job anxieties is likely to continue to curb spending."
Across the U.S., the share of consumers expecting fewer jobs over the next six months increased from 18.9% to 24.6%. Those anticipating more jobs will become available in the months ahead declined to 13.4% from 15.8%. Those saying jobs are "hard to get" rose from 46.5% to 47.7%, while those who think jobs are "plentiful" fell from 4.4% to 3.6%.
MI perspective: Economists are watching these metrics carefully because, traditionally, job growth comes after a recovery in investor confidence, improved market performance and increased consumer spending. In these regards, economic recovery is in part a self-fulfilling prophecy. Until investor and consumer confidence establish firmer footing, data indicating economic recovery are likely to remain choppy.
Friday, February 19, 2010
Biz leaders oppose state pay hike
C-suite executives from many of the state's largest employers today called on Michigan lawmakers to reject a 3% pay raise for state workers set for Oct. 1.
The Civil Service Commission has already rescinded the 3% raise scheduled for non-exclusively represented state employees. Now, Business Leaders for Michigan (http://www.businessleadersformichigan.com/) wants the legislature to do the same for all other state employees, exercising its option to reject the increase within 60 days of the Governor's budget presentation. That option expires April 1.
Governor Granholm defends her record on state-employee spending and her requests for Fiscal Year 2011, noting that Michigan has cut nearly 11,000 jobs since 2001. She also says state employees have contributed more than $650 million in savings through unpaid days off and increased cost sharing of health insurance premiums.
However, Business Leaders representatives suggest the government needs to swallow the same medicine as private-sector employers.
"At this time when our state's revenues continue on a downward spiral and when government programs and services are being cut or eliminated in order to help balance the state's budget, it is inappropriate for government workers to receive an increase in pay," says group president and CEO Doug Rothwell.
The 3% adjustment was agreed upon during prior labor negotiations, but Business Leaders says the current and projected financial condition of the state should now be taking into account. The group's most recent quarterly survey of 70 of top Michigan executives found that 89% believe the state economy will remain the same or deteriorate over the next six months. However, 42% forecast increased hiring in Michigan during the same time frame.
The group is seeking attention for its "Michigan Turnaound Plan" it says will help make Michigan a Top Ten state for job and economic growth. The pillars of the plan are:
The Civil Service Commission has already rescinded the 3% raise scheduled for non-exclusively represented state employees. Now, Business Leaders for Michigan (http://www.businessleadersformichigan.com/) wants the legislature to do the same for all other state employees, exercising its option to reject the increase within 60 days of the Governor's budget presentation. That option expires April 1.
Governor Granholm defends her record on state-employee spending and her requests for Fiscal Year 2011, noting that Michigan has cut nearly 11,000 jobs since 2001. She also says state employees have contributed more than $650 million in savings through unpaid days off and increased cost sharing of health insurance premiums.
However, Business Leaders representatives suggest the government needs to swallow the same medicine as private-sector employers.
"At this time when our state's revenues continue on a downward spiral and when government programs and services are being cut or eliminated in order to help balance the state's budget, it is inappropriate for government workers to receive an increase in pay," says group president and CEO Doug Rothwell.
The 3% adjustment was agreed upon during prior labor negotiations, but Business Leaders says the current and projected financial condition of the state should now be taking into account. The group's most recent quarterly survey of 70 of top Michigan executives found that 89% believe the state economy will remain the same or deteriorate over the next six months. However, 42% forecast increased hiring in Michigan during the same time frame.
The group is seeking attention for its "Michigan Turnaound Plan" it says will help make Michigan a Top Ten state for job and economic growth. The pillars of the plan are:
- Changing the way the state manages it finances.
- Right-sizing and enacting structural budget reforms.
- Getting Michigan competitive to attract and retain jobs.
- Making investments to create a great job environment.
- Accelerating job growth through innovation and entrepreneurship.
Business Leaders for Michigan, formed last year, is an outgrowth of Southeast Michigan CEO group Detroit Renaissance. Members represent companies and universities that provide some 300,000 jobs in Michigan and generate more than $1 trillion in annual revenue.
Tuesday, February 16, 2010
Detroit to U.S. "We're not dead yet!"
Publicity is growing, and word is spreading, that the skill set, drive and determination of Michigan workers is being repurposed toward exciting new economic opportunities.
Among the lastest to take notice: the online edition of the venerable New York Times. A recent article in the Business section of the web site ("In Detroit, Is There Life After the Big 3," www.nytimes.com/2010/02/14/business/economy), highlights numerous examples of Detroit-area companies and workers finding new direction in emerging technologies and industries. Among those examples:
Among the lastest to take notice: the online edition of the venerable New York Times. A recent article in the Business section of the web site ("In Detroit, Is There Life After the Big 3," www.nytimes.com/2010/02/14/business/economy), highlights numerous examples of Detroit-area companies and workers finding new direction in emerging technologies and industries. Among those examples:
- A $1.5 billion extreme makover for a Ford plant in Wixom, MI. Two investors, Extreme Power of Austin, Texas, and Clairvoyant Energy of Santa Barbara, CA, plan to hire 4,000 workers by late next year to make solar panels and battery systems for utilities.
- General Electric's $100 million investment in a 1,000-employee research and manufacturing facility for wind turbines outside Detroit.
- $50 million in engineering projects at the Detroit campus of Ricardo Inc., a British engineering services firm, for products such as remote-piloted military aircraft, construction equipment and lithium-ion batteries.
Here's what these corporate investors from diverse sectors such as alternative energy, defense and green inintiatives all seem to agree on: 1) Plant facilities abandoned by the auto industry represent a bargain in both space and manufacturing equipment. 2) Michigan retains an impressive workforce of mechanical engineers, machinists and factory managers with skills that can only be acquired with years of shop-floor experience, not from a text book, and 3) The combination of industrial space and people accustom to hitting the highest production standards in the world represents a golden opportunity for application across a spectrum of advanced manufacturing activities.
Analysts caution that the full impact on Michigan's economic resurgence should be considered as a matter of scale. That is, many new initiatives are required to replace an estimated 216,000 jobs lost in the auto industry over the past 10 years. Moverover, the impact will take time to gauge as the state gathers statistics on revenue from industries such as clean technology and aerospace.
Communication will be key, to support the initiatives of employers that have already chosen Michigan as well as those making new decisions about where to locate facilities -- and to let the world know the state is indeed finding "life after the Big 3."
MI perspective: While other states, and the nation as a whole, grow primarily in businesses comprising the service economy, new applications for Michigan's manufacturing expertise could eventually make it a leader in industries that haven't even been invented yet. The outcome will be not only the return of a robust regional economy, but a diversified industrial base that is more resistant to economic recession.
Monday, February 15, 2010
Stem cell research funded in Kalamazoo
Kalamazoo-based RealBio Technology Inc. has received a $250,000 investment from the Biosciences Research and Commercialization Center as part of an ongoing commitment to growing early-stage companies in Michigan.
RealBio, located in the Southwest Michigan Innovation Center of Western Michigan University's Business Technology and Research Park, is commercializing cell technology that lets researchers study the growth and development of human primary cells and tissues over a long period of time. The initial market for the technology will be to generate a consistent supply of stem cells for research purposes, and the formation of tissues for in-vitro toxicology. (more info at http://www.realbiotechnology.com/ ). The work flows from research funded by a $5 million grant to Aastrom Biosciences from the Defense Advanced Research Projects Agency of the U.S. Defense Department.
"We are extremely pleased to have the support of the BRCC, and to have BRCC as an investor," says RealBio CEO Paul Neeb. "This investment recognizes the business- and job-creating potential of our revolutionary stem cell research technology."
RealBio's work is part of the burgeoning life science's industry in Southwest Michigan, supported by a $50 million limited partnership venture fund managed by Southwest Michigan First. The portfolio, assembled under SWMF as the Life Science Fund, features firms with viable technologies committed to establishing a presence in the region and help retain human capital.
RealBio, located in the Southwest Michigan Innovation Center of Western Michigan University's Business Technology and Research Park, is commercializing cell technology that lets researchers study the growth and development of human primary cells and tissues over a long period of time. The initial market for the technology will be to generate a consistent supply of stem cells for research purposes, and the formation of tissues for in-vitro toxicology. (more info at http://www.realbiotechnology.com/ ). The work flows from research funded by a $5 million grant to Aastrom Biosciences from the Defense Advanced Research Projects Agency of the U.S. Defense Department.
"We are extremely pleased to have the support of the BRCC, and to have BRCC as an investor," says RealBio CEO Paul Neeb. "This investment recognizes the business- and job-creating potential of our revolutionary stem cell research technology."
RealBio's work is part of the burgeoning life science's industry in Southwest Michigan, supported by a $50 million limited partnership venture fund managed by Southwest Michigan First. The portfolio, assembled under SWMF as the Life Science Fund, features firms with viable technologies committed to establishing a presence in the region and help retain human capital.
Wednesday, February 10, 2010
Strategy for Southeast Initiative unfolds
The New Economy Initiative for Southeast Michigan http://neweconomyinitiative.cfsem.com/ is rolling out its strategy to become a major force behind economic redevelopment, particularly in areas hardest hit by the auto industry downturn.
Backed by a commitment of $100 million in funding from 10 national, regional and local foundations, NEI is among the country's largest philanthropic organizations focused on regional economic development. The eight-year initiative supports organizations and programs that help create new opportunities for workers displaced by the auto industry recession.
"To help move the region's economy forward in a meaningful way, NEI is working with a number of groups to develop strategies around important sectors, including advanced manufacturing, alternative energy, defense and homeland security, health care and transportation distribution and logistics," explains NEI Executive Director David Egner. "It is essential that we capitalize on Southeast Michigan's existing assets and resources to help build a stronger economy in our region"Two recent NEI grants totaling more than $700,000 will promote growth in the defense and homeland securities sectors. One grant of $300,000 went to Michigan Seurity Network, which has developed an approach to homeland security business recruitment that focuses on bio defense, cyber security and border security.
Other awards could have grassroots impact. For example, a $25,000 grant to the Brooking Institution will help traditional auto communities through development of a peer-to-peer learning network.
Thursday, February 4, 2010
Relocation slowing, for better or worse
From a peak more than 18% in early 2009, relocation among job seekers slowed in the second half of the year, with only 7.3% of these workers taking positions in new towns during the fourth quarter, according to a report by the Chicago-based outplacement firm Challenger, Gray & Christmas.
The trends may represent both good news and bad news for Michigan. On one hand it could represent a slowdown in outbound traffic of workers. On the other, it could make it more difficult for the state to attract employees to transitional business sectors.
"In the 1980s and early '90s, the workplace was dominated by baby boomers, who seemed more open to changing their zip codes and move up the corporate ladder," observes company CEO John Challenger. "Now this population appears to have hit an age where they are more settled in and less likely to move. The younger generations coming up behind the boomers seem less willing to pull up their roots for a job. They are more likely to relocate based on lifestyle versus occupational choices."
Challenger says that could pose problems for recruiters as the economy improves, forcing employers to depend more on local talent pools and/or adjust tailor recruiting pitches.
"In order to attract highly coveted candidates from out of town, they will have to offer something beyond a good salary and benefits package," according to Challenger. "Those based in regions that offer shorter commuting times plenty of recreational activities, a good culture and arts scene will attract quality candidates."
That could hand Michigan an advantage, given the state's abundance of natural resources for recreation, and its rich cultural traditions. Meantime, however, the state continues to see a disturbing flow of outbound traffic. According to the 2009 Migration Patterns analysis from Atlas Van Lines, Michigan ranks fourth among net outbound states (those shipping more movers out of the state than in) nationwide. Last year Atlas recorded 1,818 shipments out of the state, compared to 1,205 inbound.
The trends may represent both good news and bad news for Michigan. On one hand it could represent a slowdown in outbound traffic of workers. On the other, it could make it more difficult for the state to attract employees to transitional business sectors.
"In the 1980s and early '90s, the workplace was dominated by baby boomers, who seemed more open to changing their zip codes and move up the corporate ladder," observes company CEO John Challenger. "Now this population appears to have hit an age where they are more settled in and less likely to move. The younger generations coming up behind the boomers seem less willing to pull up their roots for a job. They are more likely to relocate based on lifestyle versus occupational choices."
Challenger says that could pose problems for recruiters as the economy improves, forcing employers to depend more on local talent pools and/or adjust tailor recruiting pitches.
"In order to attract highly coveted candidates from out of town, they will have to offer something beyond a good salary and benefits package," according to Challenger. "Those based in regions that offer shorter commuting times plenty of recreational activities, a good culture and arts scene will attract quality candidates."
That could hand Michigan an advantage, given the state's abundance of natural resources for recreation, and its rich cultural traditions. Meantime, however, the state continues to see a disturbing flow of outbound traffic. According to the 2009 Migration Patterns analysis from Atlas Van Lines, Michigan ranks fourth among net outbound states (those shipping more movers out of the state than in) nationwide. Last year Atlas recorded 1,818 shipments out of the state, compared to 1,205 inbound.
State of the State of the State
Governor Granholm's State of the State address last night struck familiar chords about the need for economic diversification and support for higher education. It did not, however, establish a significant roadmap for connecting the two imperatives for what she titles "A State in Transition." http://www.michigan.gov/.
Over the past seven years on Granholm's watch, "We have purposfully laid the foundation for Michigan's new economy," she said. "Where the old economy was all about autos and manufacturing, the new Michigan economy is much broader: clean energy, life sciences -- like bio-economy and medical devices -- homeland security and defense, advanced-manufacturing, film and tourism."
And on education, Granholm said it "made absolutely no sense" to abandon the Michigan Promise Scholarship program, and "break a promise to 100 Michigan families counting on it to send their kids to college." Thus, she announced her new budget would restore Michigan promise, "identify a creative way to pay for it, and give it a new focus: keeping our young people in Michigan when they earn their degrees."
Indeed, while Granholm could boast that, "No state has the skilled workforce we do," analysts say stemming the brain-drain will be vital to Michigan's economic health going forward. Moreover, much work remains to align the education-to-work pipeline into the six new economic sectors identified by the governor. MI perspective: hopefully, the governor will also devote a portion of her remaining year in office to provide leadership on communication between Michgan employers and the institutions training the workforce for a post-transition economy.
Over the past seven years on Granholm's watch, "We have purposfully laid the foundation for Michigan's new economy," she said. "Where the old economy was all about autos and manufacturing, the new Michigan economy is much broader: clean energy, life sciences -- like bio-economy and medical devices -- homeland security and defense, advanced-manufacturing, film and tourism."
And on education, Granholm said it "made absolutely no sense" to abandon the Michigan Promise Scholarship program, and "break a promise to 100 Michigan families counting on it to send their kids to college." Thus, she announced her new budget would restore Michigan promise, "identify a creative way to pay for it, and give it a new focus: keeping our young people in Michigan when they earn their degrees."
Indeed, while Granholm could boast that, "No state has the skilled workforce we do," analysts say stemming the brain-drain will be vital to Michigan's economic health going forward. Moreover, much work remains to align the education-to-work pipeline into the six new economic sectors identified by the governor. MI perspective: hopefully, the governor will also devote a portion of her remaining year in office to provide leadership on communication between Michgan employers and the institutions training the workforce for a post-transition economy.
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