City a bright spot in Michigan economy

Even though Calhoun County is weathering Michigan's stormy economic forecast, Battle Creek's strong manufacturing performance was a sunny spot in the state, economist George Erickcek said.

Erickcek, the senior regional analyst for the Kalamazoo-based W.E. Upjohn Institute for Employment Research, was in Battle Creek Thursday to present his lecture, "Stormy Weather: Calhoun County Economic Outlook 2008-09," to the Battle Creek Economic Club.

About 200 people packed a hall at McCamly Plaza to listen to Erickcek's predictions on what's in store for the area in the next few years. Erickcek said the future here is rocky, but not rock-bottom bad.

Erickcek said while Michigan as a whole is performing worse than the nation, he said Calhoun County is more on track, most notably in the manufacturing sector.

Erickcek said despite the state's flat manufacturing economy which remains stagnant because of poor performance by Detroit auto manufacturers Battle Creek has done remarkably well. Manufacturing in Battle Creek makes up 38 percent of the city's output growth, compared to a 12 percent state average.

"The numbers are exceptional. Battle Creek has 6 percent growth in manufacturing compared to a national average of 3 percent," Erickcek said. "It towers over the nation."

Describing the state as a "one horse town with a sick pony," Erickcek said Detroit automakers have not reached the level of product innovation that foreign makers, like Toyota, have.

Part of Battle Creek's success is in its ability to market local auto supply companies to foreign makers, said Jim Hettinger, chief executive officer of local economic development group Battle Creek Unlimited.

"One of the reasons we are doing so well is that we have worked hard to firm up relationships with the other car companies, not just in Detroit," Hettinger said.

According to Erickcek's research, total unemployment in Calhoun County, which is at 6.9 percent, fell by 0.3 percent during the third quarter of 2007 a loss of 160 jobs, with modest employment cuts reported across a wide variety of services.

"Beginning in 2001, Battle Creek was doing better than the nation in terms of job loss," Erickcek said. "But then in 2005, we began trending downward with the nation."

Michigan's current unemployment rate is 7.6 percent and the national rate is 5 percent.

The area's biggest black cloud was in the residential home market, Erickcek said. During the past couple of years, new home construction in Michigan has sunk to levels not seen since the early 1980s. Erickcek predicts the housing market will worsen in 2008 and begin to even out in 2009.

"This drop is unprecedented," Erickcek said as he pointed to a data sheet. "This graph is one of the scariest I've seen."

On the national level, Erickcek said though many economists have begun to predict a recession, he's still optimistic. In 2008, the University of Michigan is forecasting a loss of 81,020 jobs statewide, almost double the forecast for 2007.

"Our forecast does not include a recession, but a major slowdown," Erickcek said. "I'm hoping we'll be able to sneak through it, but, some say we're already there."

Stephanie Antonian Rutherford can be reached at 966-0665 or srutherford@battlecr.gannett.com