DETROIT – While Michigan?s economy will continue to lag behind the national economic recovery in 2005 thanks to lackluster 1 percent growth in the auto industry, spinoffs from Michigan?s robust auto-focused research and development operations and good old-fashioned entrepreneurism will power the state?s technology industry, speakers at the Economic Club of Detroit predicted last week.
The Economic Club?s annual economic outlook meeting featured Delphi CEO J.T. Battenberg III; Fifth Third Bank President Patrick Fehring; Skanska; Associated General Contractors Detroit Chapter Chairman James Cole and Detroit Regional Chamber CEO Richard Blouse.
Battenberg, who has aggressively led Delphi into diversification beyond the auto industry with high-profile work on such signature products as the Segway scooter and XM Satellite Radio receivers, said that while such limiting factors as health care, litigation, energy and commodity costs will continue to act as a brake on the auto industry and the state?s economy as a whole, Michigan?s R&D investment is starting to bear fruit beyond the Big Three.
?Southeast Michigan does remain the global epicenter of high-tech automotive and manufacturing research and development,? he said. ?Seventy percent of the automotive industry?s research and development is here in Southeast Michigan, and that is not going to change in 2005.?
He added that the American auto industry spends roughly $5 billion more per year on research and development than the health care industry, and $5 million more than the nation?s software companies.
Battenberg said that Michigan is attracting new investments from automakers and suppliers, including Delphi, that are interested in tapping into this R&D expertise.
?We have the very distinct advantage of drawing from a strong talent pool,? he said. ?Southeast Michigan is as much about brains as it is about brawn.?
Outside of the auto industry?s R&D spin offs, Michigan?s 2005 technology industry growth will come from old-fashioned entrepreneurs, Blouse predicted.
?Technology, health care and professional services will continue to expand through entrepreneurial growth,? said Blouse, noting that roughly 75 percent of small business respondents to a Chamber survey are planning on adding staff in 2005. ?Small companies are focusing on business basics.?
Blouse also pointed to the state?s educational institutions as a source of entrepreneurial technology companies, noting that the University of Michigan spun out 13 companies based on discoveries made by U-M researchers in 2004.
Fifth Third?s Fehring predicted the nation?s Gross Domestic Product will grow by 3.5 in 2005, and said that American companies will start drawing down the record amounts of cash they have on their balance sheets, either through dividend pay outs, hiring new employees or investing in new assets.
Skanska and Associated General Contractors? Cole said that while 2004 was ?one of the most difficult years in memory? for Michigan?s construction industry, 2005 is expected to be better. He also noted that the construction industry is facing an impending labor shortage over the next ten years, as skilled laborers begin to retire with not enough new workers ready to fill the gap.
This story was written by Mitechnews.Com special writer John Mozena. To contact Mozena with your story ideas, telephone (313) 886-9660.
