Order Reprints

By Mark Sanchez | MiBiz
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

WEST MICHIGAN — The resurgence of the manufacturing sector, led by a strong recovery in the domestic auto industry, is surely welcome for Michigan after the loss of thousands of jobs over the years.

Yet like many economists, Robert Dye reminds people that the state’s economic future hinges on more than manufacturing and automotive production. In a recent economic outlook in Grand Rapids, the Comerica Inc. senior economist emphasized the need for continued efforts to diversify Michigan’s economy, even as the auto industry maintains solid momentum.

“Manufacturing cannot be the long-term driver of the Michigan economy,” Dye said, reiterating a common theme among economists and economic developers in the state. “We really need to think about where the jobs are going to come from in the non-manufacturing side.”

Dye offered that assessment as he predicted “moderate” national job growth in 2012 and a continued recovery in Michigan, though the automotive rebound and manufacturing growth will only take the state so far, he said.

“Michigan has come long ways in the last years,” Dye said. “My expectation is Michigan will continue to make progress, but not at the rate of what we’ve seen the last couple of years.”

George Erickcek, senior analyst at the W.E. Upjohn Institute for Employment Research, has projected an overall 1.1 percent gain in jobs for West Michigan this year. Both the goods-producing and service-producing sectors are forecast to grow 1.4 percent. A projected 2.4-percent decline in government jobs limited the overall outlook.

The two key industries that have historically driven West Michigan’s economy — automotive components and office furniture — face different prospects in 2012.

Dye projects North American auto sales to grow to 13.9 million units for 2012, a prediction that’s in line with many others. The automotive analyst group at PricewaterhouseCoopers forecasts North America auto production of 13.8 million units, an 800,000-unit increase over 2011.

During the peak of the recession, North American auto production declined to 9 million units.

Driving the industry is a steadily improving U.S. economy that Dye believes will begin creating more jobs this year, particularly in the latter half of the year, plus a pent-up demand as consumers who held off buying a new car during the recession look to get rid of an aging vehicle.

“There are a lot of old cars out there that need to be replaced,” he said.

Office furniture, however, is looking at a slight decline in 2012 after a solid rebound following the deep downturn of 2009.

A recent quarterly outlook from the Grand Rapids-based Business and Institutional Furniture Manufacturers Association, prepared by IHS Global Insight, projects a 1.7-percent decline in North American shipments this year, after an estimated 14.1-percent increase in 2011 to $9.5 billion.

The office furniture could stay flat until new commercial construction picks up, probably in a year or so, Dye said.

“My sense is we are at the bottom of that cycle now,” he said.

Despite the broader outlook, Grand Rapids-based Steelcase Inc. in December said it expects revenue for the present fourth quarter of the 2012 fiscal year to grow 7 percent to 11 percent up to $675 million to $700 million. Steelcase reported sales of $719.4 million for the third quarter that ended Nov. 30, a 7-percent increase from the same period a year earlier.

Zeeland-based Herman Miller Inc. last month reported an 8.1-percent sales increase for its most recent quarter, to $445.6 million, and said new orders for the period declined 4.7 percent, reflecting an easing of growth.

Across the region, the monthly purchasing manager’s survey by economist Brian Long, director of supply management research at Grand Valley State University’s Seidman College of Business, showed the industrial economy in West Michigan continuing to grow in December.

John Porterfield, regional president for Comerica in West Michigan, said 2011 did see a solid recovery in lending for the bank in West Michigan. Comerica posted double-digit loan growth in the region, he said.

“Things are getting back to normal, and we’re seeing some nice growth,” Porterfield said.

Nationally, Dye projects GDP to increase 2.5 percent for 2012, presuming Europe’s debt crisis doesn’t take a toll on the U.S. economy and consumer spending picks up. He sees the national unemployment rate, now at 8.5 percent after spending much of 2011 above 9.0 percent, dipping to 7.9 percent toward year’s end.

“There’s plenty of economic potential out there, and that’s my expectation going forward,” Dye said, describing 2012 as a “pivotal” year for the U.S. economy.

Still, he added, the economic growth he projects in 2012 is “not enough to be a strong recovery.”

Europe, a stall in consumer spending, weak job growth and a languishing housing market all represent drags on the economy, Dye said.

  Order Reprints

TAGS:

• george erickcek
• robert dye
• west michigan