What are the biggest trends and challenges facing Metro Detroit business owners in the new year? I attended the dBusiness Economic Forecast Forum at the beautiful Gem Theater downtown Detroit to find out.
- Trend – Michigan is a Middle Market Business Hotbed. Michigan (and especially Metro Detroit) is a national hotbed for attracting middle market businesses (those with annual revenues of between $100 million and $3 billion). According to a recent study by American Express, Detroit is a top 10 city for middle market entrepreneurs to bring their business. In fact, Detroit is the 3rd fastest growing middle market business environment in the country. Eight years of business-friendly governance from the Snyder administration, combined with an affordable cost of living have contributed to this boom.
- Challenge — Talent Acquisition. The biggest challenge facing business owners going into 2019 is the lack of qualified workers to grow their business. The unemployment rate is currently below 4%, with temporary job unemployment at an unheard-of 1.7%. Currently, the lack of qualified employees is a bigger worry for businesses than the uncertain international trade market due to tariffs. Investment in training programs and 2-year degrees will help the diminished supply eventually, but for now, employers must compete for the workforce.
- Trend — Hottest Industries are Healthcare, IT, and Manufacturing. Innovation, such as with mobility initiatives to promote autonomous technologies, is the driving force behind much of the economic expansion. Manufacturing has grown over the past 10 years due to the depressed market and business owners taking advantage of the opportunities in that market to increase their market share, but it is uncertain how much manufacturing growth will continue in the future, especially in light of the GM and Ford plans to downsize production.
- Challenge — Maintaining Low Energy Prices to Spur Growth. Energy prices are a surprisingly accurate bellwether for economic expansion. Over the past 50 years of data, low energy prices have been directly correlated with periods of consistent GDP growth. Recent deregulation and expanded production have led to significantly cheaper energy, which has contributed to economic expansion. However, whether the political climate will continue to favor deregulation and encourage international oil and gas supply levels to remain high is an unknown–especially given the fact that we just had a mid-term election.
Overall, the 2019 economic forecast appears largely positive. Low unemployment, low (but rising) interest rates, and low inflation are the three cornerstones of economic expansion, and all three are present across the nation.
What are some of the trends and challenges facing Metro Detroit businesses from your perspective? Feel free to leave a comment below.