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Wednesday, 04 January 2012 20:50

Crystal Ball 2012: More on Economic Development

Written by  MiBiz Staff
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Patrick Miles, Jr.
Dickinson Wright PLLC
Grand Rapids Black Chamber of Commerce

Over the next 12 months, Michigan’s and the nation’s economy should continue to improve. Many auto industry companies are making solid profits. They made consolidations and cuts. They should be able to hire more workers in 2012. The housing market may continue to lag. Banks may continue to use tight lending practices. Those factors could hamper the economy. So it is unlikely 2012 will be much better or different from 2011.
In the local legal market, we’ve seen a lot of commercial work-out work, but less than 2009 and 2010. That’s usually a good sign for the economy.
It seems a large amount of capital is on the sidelines. People (are) looking to buy companies at a bargain price. But sellers — who recall their company value on paper in 2008 — appear unwilling to sell for a pittance.
Combined with either tough loan terms or a reluctance to get over-leveraged, deal flow may continue to be limited in 2012. But quality alternative energy startups and emerging businesses will keep going strong.

Karl Dehn
President and CEO,
Battle Creek Unlimited Inc.

As I look forward to 2012, despite a few looming matters tempering my optimism — the eurozone debt crisis and the U.S. credit rating among them — I expect that we will see continued, moderate economic improvement locally and statewide over the coming year. In Battle Creek, we have seen more domestic and international companies re-hiring or expanding in 2011 with increasing confidence that the recession is behind us.
Auto suppliers in particular have experienced employment gains, and signs are encouraging that at least moderate job growth will continue for many suppliers here. With substantial pent-up demand in the U.S. auto industry resulting from the nation’s economic slump (and) inventory disruptions, it appears auto sales should continue to grow in 2012, further boosting growth locally and statewide.
In addition to the automotive recovery, Battle Creek saw several company expansions completed or announced in the past 18 months with 2012 job opportunities anticipated in sectors including equipment manufacturing, aviation, metal fabricating, food manufacturing and food protection and research.
We continue to see great momentum as we transform Battle Creek’s downtown. Over the last three years, the downtown has attracted $86 million in new private investments, (resulting in) 942 more jobs in the downtown through relocation and new employment opportunities, and 415,000 square feet of real estate has been consumed by 26 new and expanding businesses. I expect investor confidence and investment interest to continue in 2012 and predict that several small to mid-sized redevelopment projects will get underway for residential, office, restaurant, retail and mixed-use spaces.

Diana Sieger
President, Grand Rapids Community Foundation

The economy in West Michigan is likely to be flat. While there are some bright spots, people are still fairly cautious about spending. Various industries are still soft, yielding to only hiring to accommodate small growth. That said, the resilience of our region cannot be understated. It seems that our entrepreneurial spirit and innovative nature will likely rule the day in time.
In the business of philanthropy, we are experiencing positive results in giving to this community foundation. When the market behaves itself, our assets grow accordingly. We have recovered nicely from the throes of the past few years, but consistency is needed. What I am looking for is sustained growth and not the current bumpy road. We have been able to distribute on average $10 million annually, which is good. On the social sector front, charitable giving is still not as robust as it was a few years ago, and immediate needs of people are still on the rise.
The big problem for people in our community currently seems to be in the area of rental assistance, and while foreclosures are still occurring, attention is turning to other housing options other than owning a home. A partial answer to all of this is: jobs!

Doug Small
Experience Grand Rapids

In our industry and in business in general, the tone I’m seeing is cautious optimism. It’s an overused cliché, but that’s what they’re seeing. With the whole situation in Greece and other situations around the world, there are a lot of unknowns. Otherwise I would take away the word cautious. Until it all becomes clear, it will stay cautious optimism.
Even though those things do have the ability to affect us, we’re not cautious any more. We’re optimistic. We’ve had 17 months of positive growth in hotel revenue. Twelve of those 17 months have been double-digit growth. That’s why I’m more optimistic. We just got our budget approved for 2012, and we said revenue will increase 5 percent over this year’s actual (numbers).

Doug Wagner
Managing Partner,
Warner Norcross Judd LLP

This year has turned out to be a lot like 2010 for Warner Norcross & Judd LLP. During the first two quarters of both years, market activity was slow in several key areas, including mergers and acquisitions and real estate development. But in the back half of 2010, we saw a significant increase in economic activity, which seems to be the case again this year. If the world can stabilize European economies and resolve the Euro question, I think we will see slow but steady growth in 2012. If not, I think next year will look a lot like 2011.
Our business is directly tied to the economy. When there is increased economic activity, there will be increased needs for legal services. During 2011, we have seen improved demand for corporate services, commercial lending and real estate development, which we expect to continue into next year. We also expect that increased enforcement and regulations will generate increased demand for legal services in the coming year.
One significant area of our business that is not tied to the economy, though, is litigation. By its nature, litigation is unpredictable. We saw a decrease in litigation during 2011, although not because we have lost clients – our clients were fortunate enough not to be involved in litigation.
On the whole, we anticipate that 2012 will be a better year than 2011 for our firm.

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