ESD Economic Forecast Finds Hope Ahead

Despite a decimated manufacturing sector, there's hope for Michigan's economy ahead, according to presenters Tuesday at the Engineering Society of Detroit's 2011 Economic Forecast for Design and Construction.

Much of the promise centered around renewable energy technlogies.

John C. Austin, non-resident senior fellow at the Brookings Institution and co-director of the Great Lakes Economic Initiative, pointed out that Michigan's motor vehicle and parts employment plunged from 320,000 in 1999 to 63,600 in 2009.

Southeast Michigan, Austin said, must follow the lead of other old northern industrial cities like Pittsburgh, Chicago and Toronto into a diversified economy and population without any one industry, and with green leadership. The next economy, Austin said, will be built on exports, innovation, low-carbon technologies and education -- all areas in which Michigan can excel.

Peter Strazdas, assistant vice president for facilities management at Western Michigan University, said higher education building will emphasize more and more green technologies, and adaptive reuse over new construction. He said sustainability reduces long-term total cost of ownership -- and besides, today's college students demand it, which makes it important for student recruitment.

"Being green and sustainable is the future for higher education facilities," he said, including Western's new $68 million education building.

He also predicted that 10 years from now, wireless will be so pervasive that building designers won't be including computer labs in higher education buildings.

Making even bolder predictions was Mark P. Cryderman, manager of market development and education at The Green Panel, a Brighton-based solar technologies provider.

Cryderman said today's environmentalists are hard-nosed businesspeople, not hippies or treehuggers, because the message has finally gotten through that being green saves money.

He said solar power started off at $4 a watt, is now at $2.50 and will soon hit grid parity. And he said it's a misconception that Michigan is too cloudy for solar power -- it's just as good as Sun Belt states like Mississippi and Alabama, and is in fact 30 percent better than the world's solar leader, Germany. And once installed, Cryderman said, solar power has no noise, no moving parts and no environmental impact.

Cryderman also talked up the solar power efforts of Dow Chemical Co. and Dow Corning Corp., including Dow's building-integrated photovoltaic shingle, and Dow joint venture subsidiary Hemlock Semiconductor, the world's largest supplier of silicon, which he called "Michigan's No. 1 secret." He took attendees on a tour of some of Michigan's biggest solar farms, many installed due to utility incentives, including a new recycling center at Michigan State University, where he said the school was surprised to learn that a rooftop solar installation they thought of mostly as a stunt was actually powering the building.

Cryderman also spoke briefly on wind power, including three uniquely designed turbines being made in Michigan -- Windspire in Manistee, Swift from Grand Rapids' Cascade Engineering and Earthtronics-Honeywell, being made in Muskegon.

He said having solar or wind power on a home makes it much easier to sell in today's market.

And he predicted a 400-mile electric car within 10 years based on a 10-times improvement in lithium-ion batteries, and predicted that houses would eventually "grow their own" energy and food and clean their own wastes.

"Going green means making green," Cryderman said. "Have some fun, make some money and help save the planet -- everybody wins!"

Speaking on commercial, industrial and retail real estate, Paul J. Beitz, first vice president of CB Richard Ellis, predicted there won't be a double-dip recession, and that Michigan has proven it can attract industries if we commit to it, such as filmmaking and renewable energy.

However, he said the recovery will continue to be very slow and will be in stops and starts. Job growth will also continue to be slow.

In office real estate, he said, it continues to be a tenant's market, with values plummeting and vacancies over 30 percent. There will be no speculative development in 2011, Beitz said, and worker mobility and the virtual workplace are here to stay. In the retail market, Wal-mart, Target and Kohl's are active, but others remain on the sidelines. In the industrial sector, vacancy rates have stabilized but little new development is expected.

Beitz agreed that energy efficiency and sustainability are emerging as major concerns for corporate real estate directors.

As for the auto industry, Bernard Swiecki of the Center for Automotive Research in Ann Arbor predicted a 10 percent increase in U.S. light vehicle sales for 2010 over 2009, driven by a 5 percent increase in passenger cars and a 16.2 percent increase in light trucks. Among manufacturers, Ford, Hyundai-Kia, Nissan and Chrysler are growing faster than the background rate, General Motors, Toyota and Honda more slowly. Among types of cars, crossovers and large cars are selling the most briskly, small cars and SUVs the most slowly. And studies are now showing no significant producitivity differences between domestic and foreign automakers.

Auto industry employment, meanwhile, is predicted to grow from 2009's trough of 561,200 to 653,600 in 2011 and 742,700 in 2012.

CAR also estimated that for a total government investment of $132.2 billion, $113.8 billion in economic dislocation from unplanned Chrysler and General Motors bankruptcies was avoided.

CAR also predicted that auto sales should recover to the long-term trend of 14 million to 15 million a year by 2015.

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