In the dozens of interviews with West Michigan executives for this special edition, the notion of momentum — whether within the overall economy, their industry or their company — seemed to dominate their outlook for next year.
Generally, executives have dropped “cautious” from their optimism for the first time in the post-recessionary years. They believe in the fundamentals of their businesses and their ability to generate strong cash flows and profitability. They’re not overly worried about navigating bumps in the economy, higher interest rates or other changes happening in the industries where they compete.
In fact, most of our sources seem to be trusting their guts that their companies have some runway left and that the national growth spurt has some legs left to it. Few executives or economists think the overall economy will crash, although they do admit some uneasiness with the increasing length of the current recovery.
As a result, we’ve started to hear business owners across a range of industries taking action now to bolster their companies for the future. It’s not that they’re betting a major downturn will occur, but in West Michigan, it’s in our DNA to be fiscally conservative and not make the same mistake twice. That’s why many companies are building up reserves, paying off debt and being cautious not to over-leverage.
And, as Portage developer Rick DeKam points out, “The winners from the last recession were those with cash.”
It’s not just the financial capital they’re focused on right now. Almost universally, executives cited talent (i.e., human capital) as the largest factor that’s reining in corporate growth. The winners of the next few years will likely be the companies that can attract and retain good workers. It’s the one area in which no one seems to have figured out the silver bullet.
Or, if they did, they’re keeping it extremely close to the vest. That is also a quintessentially West Michigan trait.
Even so, many of the executives we spoke with could barely contain their scorn for the devolution of the American political system playing out in Washington, D.C. among members of both parties. Many voiced particular contempt for the Tweeter in Chief, a self-acclaimed businessman who seems unable to grasp many of the global complexities they face on a daily basis.
They’ll take the tax breaks, thank you very much. They appreciate the easing of regulations. But for the sake of all that is holy, will someone please take away that man’s smartphone?
Closer to home, they largely praise the work term-limited Gov. Rick Snyder has done to improve Michigan’s business climate. Here, the momentum narrative carries over, considering the state’s entering year nine of what’s projected to be a decade-long economic recovery.
But the University of Michigan forecast does have one sobering reminder of the expansiveness of the state’s economic malaise: After nine years of economic growth, Michigan still has only recovered 80 percent of the jobs it had at its peak in 2000.
Michigan’s next governor, who will be elected next year, will face a tall order in recouping the remaining 20 percent of jobs, but the person should focus on sustaining the efforts that have brought us back so far, according to most executives.
As Snyder himself told us in an interview last week, Michigan’s next governor needs to work above the divisiveness of national politics and show some civility. While he also recommended the next governor balance budgets early, work on infrastructure and so forth, he perhaps best summed up what’s needed to keep Michigan’s momentum going when he said: “We don’t need fighters, we need people that show how people can work together.”
Here’s hoping that the momentum continues and we’re all feeling as good at the end of next year.
Brian Edwards, Publisher
Joe Boomgaard, Editor