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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013 AnAnalysisofanUrbanEconomy:GrandRapids,Michigan,19702000

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

ExecutiveSummary
WhenthinkingabouttheeconomyoftheUnitedStatesfrom19702000,someofthetrendsthat cometomindarethedeclineinmanufacturingemploymentandthestagnationoftheincomeofthe middleclass.Astransportationcostsdeclinedandglobalizationtookholdthroughouttheworld, manufacturingintheUnitedStatesmovedtoChinaandelsewhereinAsia.Nowhereisthistrendmore symbolizedthaninthestateofMichiganandthedeclineinautomotivemanufacturing.However,there weretrendsinmanufacturingthatwerebeneaththeheadlineswhichtellaninterestingstoryabout anotherareainMichiganwhichstrengtheneditsmanufacturingsectorinrelationtotherestofthe country.InGrandRapids,manufacturingemploymenthasstayedabovethenationalaveragein employment.Thethreemanufacturingsubsectorsthathaveoutperformedthenationaleconomyare: Furnituremanufacturing:11percentagepointsgreater(4%USAto15%GRMSA) o Also~11percentagepointsgreaterthanthestateofMichiganindicatingthatGrand Rapidsisafurnitureclusterwithconcentrationseeminglyindependentofboththestate andnationaltrends Machinerymanufacturing:8percentagepointsgreater(8%USAto16%GRMSA) Transportationequipmentmanufacturing:4percentagepointsgreater(11%USAto15%GR MSA) GrandRapids,whichhasbeenknownastheFurnitureCitysincethelate1800s,hastakenthat organicgrowthoffurniturebuildingskillsandtransformedthatareaoftheeconomybetween1970 2000intoacomparativeadvantageinproducingofficefurniture.Furnituremanufacturinghasalso

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

providedstrongpayrollsupportfortheGrandRapidsareaasthefurnituresectorhadthehighest payrollperemployee($53,471)andhighestpayrollperestablishment($12.0million)intheyear2000. ManufacturingandfurnitureinparticularhaskeptGrandRapidsafloatasmanufacturingintheUnited Stateshasbeenonaprecipitousdeclineformanyyears.

InterpretativeEconomicHistory
LocatedinthewesternpartofthestateofMichigan,GrandRapidsandthesurroundingareaarea criticalpartoftheeconomyofMichiganandhavebeenanimportantpiecetoestablishinganeconomic reboundwithinthestate.TheGrandRapidsWyomingmetropolitanstatisticalarea(MSA)ismadeup offourcounties:Barry,Ionia,KentandNewaygo.ThisMSAat1,005,6481people(asof2013)isthe2nd largestregioninthestateofMichiganbehindtheDetroitMSA.KentCountydominatesintermsof populationandemploymentwithintheMSA.KentCountyiswherethetwoprincipalcitiesofGrand RapidsandWyomingarelocated.Fromthe1960sthroughthepresent,KentCountyhasmadeup about80%ofthetotalMSApopulationand80%ofthetotalemployment. GrandRapidsgetsitsnamefromitslocationonthebanksoftheGrandRiverwhichinfactdidhave areaswherethegradeoftheriverdroppedsteeplycreatingtherapids.2Theindustrialagemadeits imprintontothecitythoughastheriverisnowconfinedwithinconcretewalls,itsrapidscontrolledby damsandtheformerdreadedfloodslimitedtotheinvasionofafewsubbasementsinthedowntown areaGrandRapidsistheanchorcityfortheareaandisknowncolloquiallyasTheFurnitureCity. ThecityiscomparabletootherMidwesternandNortheasternurbanareasinthatthedowntowncore

1
2

Dewey Ransom

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

ofthecityhadamanufacturingcenter(furnitureinthecaseofGrandRapids)surroundedbythe commercialcenterofthecity.3Thedevelopmentofthefurnitureindustrycanbetraceddownseveral pathswhichincludeskilledlabor(mainlyduetoimmigrationfromNorthernEurope),locationtoraw materialinputstothefurnitureindustryandlocationneartransportationnetworks(initiallytheGreat Lakeswaterwaysandsubsequentlytheexpansionofrailroadnetworks).4Lookingbackatsomeofthe earlywritingsonGrandRapids,a1899tradepublicationdescribestheadvantagesthatGrandRapids demonstratedtoearnthetitleofFurnitureCity.5


whenitismadeknownthatGrandRapidsstandsfirstinthequantityofproduction,firstininventionofartisticdesign,firstonsuperior qualityofconstructionandfinishtheverymagnitudeofitsmanufacturingestablishmentsmakesitanecessitytoemploythemost accomplisheddraughtsmanandmakeuseofthehighestgradeofappliedmachineryThegrandcooperationofthemostperfectmechanical devices,intelligentlabor,skilledcarversandwoodworkers,andartistsspeciallydevotedtodesigningcreationsinthisparticularindustryhas broughttheprincipalmanufactureofGrandRapidstosuchvolumeandcharacter

ThelocationofthelumberindustryinMichigan,whichbeganwiththeFrenchexplorersand missionaries,butexplodedinthe1880swhenthestateproducedasmuchlumberasthenextlargest threestatescombined.6ThelocationofGrandRapids,though25milesinlandfromLakeMichigan,was proximatetothelumberindustrywhichallowedfortherawmaterialstobetransportedrelatively easierandcheaperthantoothercities.Inaddition,atightcooperationandastrategicorganization betweenthefurniturefirmownersandthelocalbankersallowedforGrandRapids,whichwasa relativelysmallUpperMidwestcity,topunchaboveitseconomicweight.Kleiman1986notesthat7 thereweretwoadvantagesgainedabyaclosecoordinationbetweenbusinessmenandbankers.The

3 4

Bratt Gupta&Subramanian 5 GrandRapidsBoardofTrade 6 VariousAuthors 7 Kleiman

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

firstwasthattheinterlockingrelationshipspermittedthebusinessleaderstohaveagreaterdegree ofcontrolofthefirmsandenterintomarketsinwhichlargercitiesusuallydominatedwithahigher degreeofeconomicdiversityandalargercapitalnetwork.Secondly,andperhapsmoreimportantly wasthatduetothesingleindustryimpactsofthewagesandsavingsfromfurniturebuilding,capital andlaborhadasynergisticrelationshipwhichremovedtheincentiveforlaborunrestinthecity.8 AsGrandRapidsbecameknownastheFurnitureCity,therehavebeenseveralattemptstoexplain howthisareaoftradebecamethisregionsexportindustryforthegreaterGrandRapidsarea.Gupta& Subramanian2008usedthePorterDiamondModelascriteriatoanalyzethiscluster.Porteruses fourfactorsforanalyzingclusters:1.firmstrategy/structure,2.rivalryanddemandconditions,3. relatedandsupportingindustries,and4.factorconditions.9GrandRapidsmovedfromthefurniture industryhavingascaleadvantageduetofactorendowmentsandproducinggoodslocallytotoday utilizingcheaperglobaltransportationnetworkstofocusingoninnovationinthefurnitureareawitha heavyfocusontheofficefurnitureareatoachieveanadvantage.10 Today,GrandRapids,likemostotherRustbeltcitiesisnolongeranindustrialchampion.Thecityis notturningoutthemassproducedfurnitureitemslikeitoncedid,butthereareencouragingsignsthat allowtheGrandRapidsMSAtohaveanadvantageintheareaofmanufacturingespeciallyinniche highervalueareas.SomeofthemanufacturingcompaniesthatarelocatedinGrandRapidsinclude furniture,(Steelcase,AmericanSeating),industrialpartsmanufacturing(Pridgeon&Clay),andlumber processingservices(UniversalForestProducts).HermanMillerwhichisanofficefurniturecompanyis

8 9

Ibid Gupta&Subramanian 10 Ibid

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

locatedinZeeland,MIwhichisoutsidetheGrandRapidsMSA(GRMSA),butiscontainedwithinthe combinedstatisticalarea.11

DescriptionofGrandRapidsEconomy
LikemostotherMidwesternstatesandcities,GrandRapidshasseenitspopulationgrowthslowedin recentyears.Itdidhowever,postpositivepopulationgrowthfactorsinrecentdecadesunlikethe overallstateofMichigan(whichwastheonlystatetolosepopulationfrom20002010).Butinearlier timeperiods,suchas19801990,thepopulationofMichiganonlygrewatarateof0.4%whereasthe GrandRapidsWyomingMSAgrewatarateof~12%.[SeeFigure1]

PopulationGrowthRates
40% 30% 20% 10% 0% 10%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Michigan GRMSA
Figure1:PopulationGrowthRates,19102010,StateofMichiganandGrandRapidsMSA12

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GrandRapidsChamberofCommerce U.S.CensusBureau

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

ThiswasdrivenmainlybypopulationgrowthinKentCountywhichgrewfromjustover400,000people in1970tonearly600,000by2000.TheGrandRapidsWyomingMSAwentfrom5.9%oftheentire populationofMichigantonearly7.5%ofthepopulationofMichigan.Inadditiontothepopulation growingwithintheMSA,therewereincreasesintheeducationalattainmentofthepeopleintheMSA. Fortheentirestudyperiod,theGRMSAhadalowerpercentageofresidentswhohadlessthanahigh schooleducationthanboththeStateofMichiganandtheUnitedStates.[SeeFigure6] Thepercentageofpeoplewhohadcollegedegreesincreasedsubstantiallyfrom5.5%in1970to15.4% in2000.WhilethispercentageoutpacedtheStateofMichiganitwasjustslightlylowerthanthe nationalpercentageofpeoplewithcollegedegrees,15.5%,butthe9.9percentagepointincreasewas alargerincreasethanthenationalincreaseof9.4points.[SeeFigure7] Thenextsectionofthepaperwillfocusoneconomictrendsinthetimeperiodbetween1970and2000 forpointsofcomparisons.Becauseofdatalimitations,thestudyperiodisconstrainedto19702000for employmentsectorchangesandto2000onlyforadeepdiveintothemanufacturingsector. Inadditiontostrongpopulationgrowth,thegrowthinemploymentinGrandRapidsbetween1970and 2000wasbetterthanthestateofMichiganaswell.TheGrandRapidsMSAwentfromapproximately 194,000employedpeopleovertheageof16in1970toapproximately364,000employedpeoplein 2000.Thiswasanincreaseofabout187.5%inemployedpeople.TheGrandRapidsMSAsurpassedthe stateaswellasthecountryinemploymentgrowthoverthistimeperiodastheUnitedStatesgrew 169.5%inemployedpeopleandthestateofMichigangrew142.5%inemployedpeople.

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

InanothermeasureoftherelativeeconomicsuccessoftheGrandRapidsMSAinrelationtotherestof thecountry,intermsofpercapitaincomebetweentheMSAandtheUnitedStates,between1970 2000theGrandRapidsMSApercapitaincomewasbetween135%and115%oftheUSAoveralland averaged122%oftheUSApercapitaincome.[SeeFigure2]

RatioofAvg.GrandRapidsMSAPCItoUnitedStatesPCI ($2005)
1.4 1.35 1.3 1.25 1.2 1.15 1.1 1.05 1/1/1969

1/1/1979

1/1/1989

1/1/1999

Figure2:RatioofPerCapitaIncomesGRMSAtoUSA13

TounderstandthereasonsforthesuccessoftheGRMSAduringthistimeperiod,theemployment datamustbeanalyzedatanindustrylevel.OnemethodthatisusedtoexaminetheGrandRapidsMSA dataisthelocationquotient(LQ)tool.TheanalysisofusingtheLQfor19702000showsthatthe manufacturingsectoremploymentincreasedfrom1970through2000.Manufacturinghasbeenthe leadingsectorforemploymentfrom1970through2000.TheMSAhasbeendominatedby

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U.S.CensusBureau

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

manufacturinginKentCountyasthecountyhashad~80%ofallmanufacturingemploymentfrom1970 through2000.[SeeFigure3]

ManufacturingJobsGrandRapidsMSA1970 2000
80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

BarryCounty
12/31/1970

IoniaCounty
12/31/1980

KentCounty
12/31/1990

NewaygoCounty

12/31/2000

Figure3:ManufacturingEmploymentinGrandRapidsMSA14

ThoughmanufacturingmadeupadecliningshareoftheGrandRapidseconomyfrom1970through 2000(from33.5%to24.6%),thedeclineinmanufacturingnationwidewasslightlylarger,from26.0%in 1970to14.1%in2000.InGrandRapids,therewere~65,000manufacturingjobsin1970andthere were~90,000manufacturingjobsin2000whichfellasanoverallpercentageastheamountof personalserviceandbusinessservicesincreased.[SeeTable1]However,theGRMSAasawhole relativetothecountry,hadalowerpercentageofpeopleengagedinbothpersonalandbusiness

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U.S.CensusBureau

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

servicesin2000(22%(GRMSA)vs.24%(USA)inpersonalservicesand7.2%(GRMSA)vs.9.3%in businessservices(USA)).[SeeTable2] Thedatashowthatthoughmanufacturingoverallwasalessershareofemployment,theGRMSA improvedfrom19702000inprovidingexportopportunitiesfromthemanufacturingsector.In explainingsomeoftheotherchangesinemployment,theGRMSAhadaloweremployment percentageinbothFIREandPublicAdministrationrelativetotherestofthecountryinbothtime periods.InthePublicAdministrationarea,thecountrystayedfairlyconstantatabout13%ofthetotal whereastheGRMSAstayedconstantaswellatabout10%.FortheFIREarea,theGRMSAwaslower thanthenationaswell.[SeeFigure8] Anothertoolthatcanbeusedtofocusinontheareaswhereregionsexcelatistheshiftshareanalysis (SSA)whichcanprovideinsightintotheareasofeconomicconcentration.WhencontrastingtheGR MSAtotheUnitedStatesthroughtheSSA,thereweresimilareffectsobservedinthemanufacturing sectorthathadbeenobservedthroughtheLQanalysis.ManufacturingintheGRMSAhadgainedin relativetermstotherestofthecountryfrom19702000.Thoughallbutthetransportationindustry hadpositivemeasureswhenitcametothecompetitivepositionmeasureoftheshiftshare,the manufacturingsectorsawanincreaseofabout~30,000jobs.Sincethecompetitivepositionindicator explainshowmuchofthechangeinagivenindustryisowedtosomeexclusivecompetitiveadvantage thattheregionretains,theGRMSAperformedstrongrelativetotheUnitedStateseconomyoverthe

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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

studyperiod.ManufacturingintheGrandRapidsareahadseentotalregionalgrowthoftheindustry exceedthenationalgrowthinmanufacturing.15 Therearealsoafewotherobservationsthatcanbemadeafterexaminingtheshiftshareanalysisof GrandRapids.Asstatedabove,theonlysectortoloseemploymentinthecompetitiveposition measurewasthetransportationarea,butthisdoesnotincludethetransportationequipment manufacturingwhichwascountedinthemanufacturingsector.[SeeTable5]From1970to2000, GrandRapidsoutperformedtheUnitedStatesaswholeineachcategoryofemploymentsaveforthe transportationsector.ThegainsofmanufacturingandconstructionrelativetotherestoftheUnited Stateshelpedtopropelgrowthinthearea.

EconomicChangeInterpretation
InGRMSA,therehasbeenafocusonthemanufacturingsectorandthissectorhasledthewayto successfortheregionovertime.Intakingadeepdiveintothemanufacturingsectorinthe2000time period,therehavebeencomponentswithinthemanufacturingsectorwhichhavehadthe concentrationoftheemployment.Intheyear2000,thehighestpercentageofmanufacturingjobsin theGrandRapidsMSAwasinmachinerymanufacturing(NAICScode333)andtransportation equipmentmanufacturing(NAICScode336)whichbothhadashareof16%ofmanufacturingjobsin theMSA.Thesetwosectorsemployedapproximately25,000peopleintheyear2000.Theotherlarge percentageofemploymentinmanufacturingwasinthefurnituresector(NAICScode337)whichmade up~15%oftheemploymentinmanufacturingsectorand~3.54%oftheoverallemploymentintheGR MSA.TheconcentrationofthefurniturejobshasbeenwithinKentCountywherethecityproperof

15

Sentz

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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

GrandRapidsislocated.Takentogether,theNAICScodesof333,336and337represented11%ofthe totalemploymentintheMSAintheyear2000. WhencomparingthemanufacturingsectorinGrandRapidstotheUnitedStatesasawhole,some arraysofemploymentemergeastowhereGrandRapidshasexcelledinrelationtotherestofthe country.ThebestperformerinrelationtotheUSAwasfurnituremanufacturing.Thissubsectorin manufacturinghadbeenastrongperformerasitoutperformedthenationaleconomyby11 percentagepoints(4%USAto15%GRMSA).Theothertwostrongareas,machineryand transportationequipmentmanufacturingalsooutperformedthenationalaverage,butthesetwoareas aremorelikelyduetothestrengthoftheautomotiveindustryinMichiganratherthananyspecific organicfeatureoftheGRMSA.AnalyzingthesectorstotryandisolatetheGRMSAstrength,theState ofMichiganhad32%shareofmanufacturingjobsinNAICS336vs.16%intheGRMSAand11.4%inthe countryoverall.TheGRMSAdoesoutperformbothMichiganandUSAinmachinerymanufacturing (16%GRMSAvs.12.4%MIvs.8.4%USA)buttheclearestadvantageappearsinthefurnituresector relativetoMichiganoverallaswell.Michigansshareoffurnituremanufacturingjobsis4.2%whichis nearthenationalnumber,makingthefurnitureindustryaclearcomparativeadvantagefortheGR MSA. Thefurnituremanufacturingwasconcentratedinofficefurnituremanufacturing,whichin2000made up83%ofthefurnituremanufacturingemployment.Sinceofficefurnituremakesupthevastmajority ofthefurnituresectorandthefurnituresectorhasbeenthebestperformingmanufacturingarea relativetotherestofthecountry,thecomparativeadvantagefortheGRMSAin2000wasinoffice furniture.TheofficefurnitureclusterdeliveredaneconomicundergirdtotheMSAintheformof
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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

strongemployment,firmsandpayroll.Thefurnitureindustrywasthesecondhighestinannualpayroll with$676millionin2000.Also,forsectorswithgreaterthan50firms,thefurnituresectorhadthe highestpayrollperemployee($53,471)andhighestpayrollperestablishment($12.0million).

GRMSA Manufacturingpayrollperemployee
60
Payroll$in000's

30 0

Figure4:Payroll(000s)peremployeeinManufacturingsectorGrandRapidsMSAYear200016

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U.S.CensusBureau2000CountyBusinessPatterns

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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

GRMSA2000 Manufacturingpayrollperfirm
15
Payroll$inmil

10 5 0

Figure5:Payroll(000,000s)perfirminManufacturingsectorGrandRapidsMSAYear200017

ThetransformationofGrandRapidsovertimehasbeenaninterestingstorytotell.GrandRapidshas beenknownastheFurnitureCityformanyyears,butthismonikerwasbasedonthefactthatGrand Rapidshadbuiltresidentialandhouseholdfurniture.Theendowmentfactorsforthecitysuchasfrom timber,proximitytodemandinChicagoandDetroit,andaccesstotransportationtothesedemand centersledGrandRapidstobuildaclusteraroundfurnitureandgaveanadvantageinthatindustry thatpersistedformanydecades.InfactthenameofabookaboutGrandRapids,TheCityBuilton Wood,18501950givesasenseonhowthecityanditsgrowthweretiedtotheprocessingofwood intohighervalueproductssuchasfurniture.Bythetimethestudyperiodbegan,theprocessingof woodhadbeguntodecline.Infact,bytheyear2000,woodprocessingwasonly1.5%ofmanufacturing employmentwhichwasnearly2fullpercentagepointslessthanthenationalnumber.Themarketfor residentialfurniturewasdominatedbyfirmslocatedinareaswithcheaplaborratherthanlocation

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U.S.CensusBureau2000CountyBusinessPatterns

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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

nearrawmaterialsasGrandRapidshadbeeninthepast.Withfallingworldtransportcosts,laborcosts weretheconstraintonproduction.SeekinganareaofgrowthwithintheindustrythatGrandRapids hadbeenafrontrunner,thecityturnedtobuildingofficefurniture.GrandRapidsin2000wasstillthe FurnitureCity,butitthesobriquetshouldhavebeenmodifiedtoOfficeFurnitureCity.Office furniturerequiresmoredurablemanufacturingprocessingaswellasmetalworkingwhicharedifferent skillsetsthanthewoodfurnitureprocessingofdecadespast.TheabilityoftheGrandRapidsMSAto modifyitselfandcreateacomparativeadvantageinaseparatebutsimilarareaofmanufacturingisa testamenttotheabilityoffirmsandworkerstochange.Theinvestmentsthatcompaniesputinto secureofficefurnitureaswellastheweightofthemetallendsadvantagetodomesticallyproduced durablegoodsandasaresult,GrandRapidshasbeenatthetopoftheindustryforofficefurniture. ThisisaninterestingexampleoftheSchumpeterianforcesofcreativedestructionbybuildingan advantagefromanareathatmayhaveseemedtobeonaterminaldownwardpath,buthasbeen redeployedintonewgrowthopportunities.

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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

AdditionalFigures:

PercentageofPopulationw/HighSchoolDegreeorgreater 100% 80% 60% 40% 20% 0% 1970 1980


GrandRapidsMSA Michigan

1990
UnitedStates

2000

Figure6:HighSchoolEducation=>distributioninGRMSA,MI,andUSA1970200018

CollegeDegreePercentagePointincrease19702000
10.0%

5.0%

0.0%

GrandRapidsMSA

Michigan

UnitedStates

Figure7:PercentageofCollegeDegreeAttainmentbetween1970200019

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U.S.CensusBureau

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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

LOCATION QUOTIENT FACTORS GRAND RAPIDS MSA 1970 2010


1.29 1.03 1.53 1.75 0.83 1.15 0.81 0.89 1.34 1.38 1.23 1.39

0.57 1.06 0.63 0.58

1.05 1.04 1.10 1.08

0.83 0.98 0.90 0.78

0.77 0.92 0.65 0.65

0.88 1.05 0.81 0.85

0.97 0.89 0.86 0.91

1970

1980

1990

2000

Figure8:LocationQuotientsforSectorsinGrandRapidsMSA1970200020

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U.S.CensusBureau U.S.CensusBureau

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0.73 0.86 0.77 0.77

JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

Tables: [Table13,LocationQuotientAnalysis]
Table1
BASE DATA Grand Rapids MSA Sector Agriculture & Mining Construction Manufacturing Transportation Wholesale Trade Retail Trade Business Services Services FIRE Public Administration Total 1970 5,000 9,604 65,155 10,073 10,668 32,639 6,822 27,099 8,571 18,675 194,306 1980 5,513 11,976 78,749 13,233 12,665 43,334 17,891 26,128 12,988 30,081 252,558 1990 6,478 15,567 83,684 14,239 16,601 57,264 31,947 34,559 17,339 31,301 308,979 2000 3,921 22,082 89,637 19,476 18,196 46,365 26,394 78,988 21,303 37,968 364,330 1970 3,471,276 4,572,235 19,837,208 5,186,101 3,133,382 12,239,498 3,248,701 11,010,643 3,838,387 10,016,168 76,553,599 United States 1980 77,040 155,332 1,136,271 214,546 136,785 618,831 271,575 437,242 183,830 519,280 3,750,732 1990 3,838,795 7,214,763 20,462,078 8,205,062 5,071,026 19,485,666 13,259,522 14,987,840 7,984,870 15,171,580 2000 2,426,053 8,801,507 18,286,005 10,736,666 4,666,757 15,221,716 12,061,865 31,002,750 8,934,972 17,583,221

115,681,202 129,721,512

Table2
LOCATION QUOTIENT A. Shares Matrix=employment by sector in region/total employment in region Grand Rapids MSA Sector Agriculture & Mining Construction Manufacturing Transportation Wholesale Trade Retail Trade Business Services Personal Services FIRE Public Administration Region's Total 1970 2.6% 4.9% 33.5% 5.2% 5.5% 16.8% 3.5% 13.9% 4.4% 9.6% 100.0% 1980 2.2% 4.7% 31.2% 5.2% 5.0% 17.2% 7.1% 10.3% 5.1% 11.9% 100.0% 1990 2.1% 5.0% 27.1% 4.6% 5.4% 18.5% 10.3% 11.2% 5.6% 10.1% 100.0% 2000 1.1% 6.1% 24.6% 5.3% 5.0% 12.7% 7.2% 21.7% 5.8% 10.4% 100.0% 1970 4.5% 6.0% 25.9% 6.8% 4.1% 16.0% 4.2% 14.4% 5.0% 13.1% 100.0% United States 1980 2.1% 4.1% 30.3% 5.7% 3.6% 16.5% 7.2% 11.7% 4.9% 13.8% 100.0% 1990 3.3% 6.2% 17.7% 7.1% 4.4% 16.8% 11.5% 13.0% 6.9% 13.1% 100.0% 2000 1.9% 6.8% 14.1% 8.3% 3.6% 11.7% 9.3% 23.9% 6.9% 13.6% 100.0%

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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013


Table3

B. Location Quotient Matrix=Percentage by sector in region/United States Percentage for that Industry Grand Rapids MSA Sector Agriculture & Mining Construction Manufacturing Transportation Wholesale Trade Retail Trade Business Services Personal Services FIRE Public Administration 1970 0.57 0.83 1.29 0.77 1.34 1.05 0.83 0.97 0.88 0.73 1980 1.06 1.15 1.03 0.92 1.38 1.04 0.98 0.89 1.05 0.86 1990 0.63 0.81 1.53 0.65 1.23 1.10 0.90 0.86 0.81 0.77 2000 0.58 0.89 1.75 0.65 1.39 1.08 0.78 0.91 0.85 0.77

LQ>1.0Relative Specialization in Sector/Region LQ<1.0Production 'deficit' in Sector/Region LQ=1.0Average Production in Sector/Region


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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

[Table45,ShiftshareAnalysis]
Table4

TOTAL EMPLOYMENT IN 2000/TOTAL EMPLOYMENT IN 1970 Employment Change 2000-1970 Grand Rapids United States -1,079 12,478 24,482 9,403 7,528 13,726 19,572 51,889 12,732 19,293 170,024 Total Employment

Sector Agriculture & Mining Construction Manufacturing Transportation Wholesale Trade Retail Trade Business Services Personal Services FIRE Public Administration

0.78 2.30 1.38 1.93 1.71 1.42 3.87 2.91 2.49 2.03 1.88

0.70 1.92 0.92 2.07 1.49 1.24 3.71 2.82 2.33 1.76 1.69

Table5

SHIFT-SHARE ANALYSIS-GrandRapids MSA compared to the United States Competitive Position3

Sector Agriculture & Mining Construction Manufacturing Transportation Wholesale Trade Retail Trade Business Services Personal Services FIRE Public Administration Total Change

National Share 1

Industrial Mix 2

3,473 6,670 45,251 6,996 7,409 22,668 4,738 18,821 5,953 12,970 134,949

4,978 2,213 50,346 3,785 2,189 14,716 13,769 30,383 5,428 1,139 15,512

427 3,594 29,577 1,378 2,307 5,773 1,065 2,685 1,351 5,184 50,587


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JohnPMaxwell AdvancedPolicyEconomics:EconomicsofUrbanandRegionalPolicy Fall2013 October30,2013

WorksCited: Authors,Various."ABriefHistoryofLumberinginMichigan."MichiganEducationPortalforInteractive Content(MIEPIC).Web. Bratt,PeterA."RenewingaGrandCenter:PostwarPlanninginGrandRapids,Michigan:1949to1959." MichiganHistoricalReview36.2(2010):12658.Print. Bureau,U.S.Census."HistoricalIncomeTables:People."Online. Bureau,U.S.Census."CountyBusinessPatterns,Barry,Ionia,Kent,Newaygo,Michigan,UnitedStates 19702000"Online. Dewey,Charlsie."MetroGrandRapidsPopulationPasses1Million."GrandRapidsBusinessJournal (2013).Web. Grand,Rapids.GrandRapids,Michigan,UnitedStatesofAmerica.GrandRapids,Mich.:Dickinson Bros.,1899.Print. GrandRapidsChamberofCommerce,http://www.grandrapids.org/factsfigures_1 Gupta,Vipin,andRamSubramanian."SevenPerspectivesonRegionalClustersandtheCaseofGrand RapidsOfficeFurnitureCity."InternationalBusinessReview17.4(2008):37184.Print. Kleiman,Jeffrey."TheRulefromAbove:Businessmen,Bankers,andtheDrivetoOrganizeinGrand Rapids,18901906."MichiganHistoricalReview12.2(1986):4568.Print. Ransom,FrankEdward.TheCityBuiltonWood:AHistoryoftheFurnitureIndustryinGrandRapids, Michigan,18501950.AnnArbor,Mich.:EdwardsBrothers,1955.Print. Sentz,Rob."UnderstandingShiftShare."(2011).Web.

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