2016 Regional Report: The Midwest

NO.34 MINNESOTA:
FORMERLY FACING RECESSION

Minnesota entered the fall facing recession, declared Twin Cities Business magazine. TCB editors made their forecast in September, based on poll responses from 228 business leaders around the state. Local economic pessimism has reached a five-year high in the Gopher State, said Dale Kurschner, editor-in-chief.

About 28 percent of How TCB readers expect conditions to weaken in the months ahead, more than double the percentage from one year ago. There’s another side to the picture: Minnesota is a thriving state with low unemployment and a growing rate of new business filings. Unemployment lingers at near record lows, while overall wage payments continue to rise. “They’ve got a very well-educated workforce and a high quality of life in the Twin Cities and elsewhere,” said site selector Cook.

Traditionally passive users of incentive programs, the state has restructured several, making them easier to use, said site selector Gigerich. There’s still room for improvement.

A Brookings Institution report calls for the governor and legislature to cooperate in setting a clearer vision for economic growth, better align existing programs and improve coordinating investments in innovation, trade and training. While they’re at it, said Brookings, they can fix the state’s benchmarking programs too.


NO.40 MICHIGAN:
WELCOME TO GILBERTSVILLE

MICHIGAN / Downtown Detroit's revitalization continues to gain momentum
MICHIGAN / Downtown Detroit’s revitalization continues to gain momentum

Michigan’s economic rebound continues. The Great Lakes State has averaged 74,200 new jobs a year for seven years running, generating professional, construction, trade, transportation and utility positions. Employers are more optimistic than they’ve been in a long time.

Gov. Rick Snyder’s administration has cut back on the red tape, said Michigan Chamber CEO Rich Studley, who praises the governor’s fiscal stewardship—along with previously-passed Right to Work legislation—for the sunnier business climate. A prolonged auto sales boom generated positive ripples through the economy, although the boom began fizzling out this past summer.

In Detroit, the great municipal comeback continues as Quicken Loans chairman and founder Dan Gilbert sweeps up once-derelict Motor City commercial properties while giving rise to Detroit’s newest nickname: Gilbertsville.

Detroit’s “bankruptcy and recovery are really a model for other cities in other states,” said Studley. In Grand Rapids, buoyant economic growth has led George Erickcek and Brian Pittelko, labor market analysts at W.E. Upjohn Institute for Employment Research, to declare: “It may not get any better than this.”

In Midland, however, business leaders fret that the proposed $122 billion merger combining DuPont with local global giant Dow Chemical will produce vast layoffs. For now, the deal’s status remains uncertain as European regulators step up antitrust efforts.

In the state’s western region, unemployment has dipped below 3 percent, the lowest in recent memory. In Kent County, economic-development officials lured Las Vegas data-processing giant Switch Ltd with a vast bundle of tax exemptions and other incentives. It wasn’t enough; this spring, local officials ceded an additional $1 million in exemptions.


NO.48 ILLINOIS:
FACING OFF FOR TAX CUTS

Moody’s Analytics labels Illinois’ economy “the weakest of the underperforming Midwest.”

Poor financial stewardship, a cratered downstate economy and undesirable demographics hamper recovery. The Prairie State started the summer burdened with the nation’s highest unemployment rate. Job-loss data “show Illinois’s economy remains stagnant… with a net job loss and significant workforce dropout,” according to Illinois Policy, an independent research and advocacy organization.

Producers here feel the full impact of the national manufacturing slump, as well as fallout from low crop and livestock prices. Employers are speed-dialed by economic-development officials from six neighboring states. Business climate? Don’t ask. “When you say ‘Illinois,’ emphasize ‘annoy,’” half-jokes a Midwest site selector.

Business leaders coalesced last year around second-term Republican Gov. Bruce Rauner’s efforts to slash taxes, cut spending and overhaul liability funding. Those efforts have floundered due to partisan bickering in the Legislature. Increasingly, the state’s manufacturing sector shows its age. Notes Moody’s: “The manufacturing slump has been pushing to export-oriented manufacturing centers, such as Decatur, Peoria and the Quad Cities.”

Chicago has largely skirted the economic headwinds, thanks to long-standing reputation and association with services rather than goods or agriculture. Recently such firms as ConAgra Foods, Oscar Mayer and Kraft Heinz moved into Chi-town from suburban outposts; the moves did nothing to expand the Illinois economy.

With that in mind, business leaders can only watch the Republican governor they overwhelmingly supported face off yet again with Democratic legislators, with no resolution imminent.

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