TRAVERSE CITY -- Northwest Michigan tried to be a ray of hope in a state that suffered through an economic tsunami in 2008.
A multi-year manufacturing slump prompted miserable state conditions, exacerbated by a late-year financial crisis that swallowed the country's housing and banking industries.
The Big Three automakers reached the brink of bankruptcy and sought billions in federal government aid to stave off collapse, while thousands of area residents with auto-related jobs and pensions worried about their own financial futures.
There were some business bright spots for northern Michigan this year. Local agriculture had a strong year with quality cherry and grape crops, although portions of northern Michigan's fruit harvest were damaged by spring and summer hail storms.
Local resorts also invested millions to upgrade their properties' amenities and infrastructure. The region received a boost after the state committed to spend $50 million over two years for more tourism promotion throughout the Midwest, and expand the advertising campaign across the country in 2009.
But the difficulties that face the state's manufacturing sector, plus the long-term downturn in real estate values and a multi-year slump in new construction activity, cast a long shadow over the region's business sector this year. The Record-Eagle's top 10 business stories for 2008 include:
1. Auto industry woes reverberate north
It started in the spring, when Dura Automotive announced it would close its auto parts plant in Mancelona, idling around 300 workers in southern Antrim County. Dura filed for Chapter 11 bankruptcy in late 2006 and tried to sell the Mancelona facility in 2007, but the company decided to close the site after organized workers there rejected a proposed contract.
Another shoe fell in September, when Novi-based Tower Automotive LLC confirmed it will close its auto parts plant in Garfield Township because of the auto industry's nosedive. That decision impacted more than 350 hourly and salaried workers. Tower also went through bankruptcy in 2005, and closed or sold 16 manufacturing plants around the world during its restructuring.
Several smaller manufacturing plants around northern Michigan also cut workers and operations to deal with diminishing parts orders from the auto companies. Suppliers like Great Lakes Trim in Williamsburg cut its work force by around 40 percent during the year, and closed for three weeks around the holidays because of dwindling parts orders.
Local car dealers also reported a downturn in sales during November and December because of the ailing economy and dried-up consumer credit.
2. Real estate stays flat; home foreclosures escalate
The numbers don't lie, and they don't look good.
Most homeowners already know that 2008 wasn't a good year for real estate in northwest Michigan. The region didn't experience the dramatic drop in home values experienced in some parts of Michigan, but sales and price information from the Traverse Area Association of Realtors showed the real estate slump continued throughout the year.
Residential home sales in the five-county area totaled 1,802 properties as of Dec. 30. That's a drop of 11 percent from 2007, and a 30 percent dip since the local market peaked in 2005. Sales prices for homes also declined last year. The median or midpoint sales price of a home fell to $145,000 in 2008, a drop-off of almost 9 percent from last year and the lowest total in at least five years.
But with falling interest rates, home prices and various incentives to revive home sales, local industry officials are optimistic the region could be poised for a turnaround in 2009.
"As soon as the money frees up, I think you're going to see some fence-sitters start to move toward buying," said Kim Pontius, executive vice-president of the Traverse Area Association of Realtors. "I think it's going to be a pretty swift turnaround."
Home foreclosures both in the state and region also continued to surge for much of 2008. Michigan home foreclosures were up 27 percent in November compared to 2007, totaling almost 14,600 properties ranking it fifth-highest in the country.
Almost 250 of those were in the five-county area, which included 118 new foreclosures in Benzie County or about one out of every 99 homes -- the highest foreclosure rate for the month among Michigan's 83 counties.
3. Construction still slumping
New building in Grand Traverse County continued a three-year downturn in 2008. After peaking in 2005 at more than $220 million, new construction fell off to $185.4 million in 2006 and $152.6 million in 2007, and the trend continued in 2008. For the first three quarters of 2008, new building in the county lagged about 28 percent behind the 2007 totals. That put the county on pace for its lowest new construction totals in a decade.
The area's job market also shows the strains of the building slowdown. Labor statistics from the Northwest Michigan Council of Governments indicate the five-county region lost more than 500 jobs in the construction sector in the past four years, a drop of almost 6 percent. That represents the largest decline among the 19 job sectors tracked by the agency.
4. A good year for area agriculture
The farming industry in Michigan was among the state's bright spots in 2008. Even though commodity prices that soared for much of the year plunged with the late-year economic crisis, area farmers reported good prices for their products and most enjoyed a good growing season. The region's tart cherry crop totaled around 210 million pounds, and the national cherry marketing board put more than 80 percent of the crop on the open market. Industry officials said the demand for cherries remains consistent with the cherry harvest because of expanding markets for products like dried cherries and cherry juice.
The region's wine and grape sector had a strong year, as well. Parts of southwest Michigan's wine belt were hit with a wet growing season that hampered grape ripening, but most vineyards in northern Michigan had excellent weather for grapes. A handful of new wineries and vineyards also took root this year. The state boasts more than 60 wineries that generate an estimated $300 million a year, and state officials estimate that Michigan's grape and wine industry is growing by about 15 percent a year.
Statewide, agriculture exports totaled more than $1.2 million in 2007, an increase of more than 50 percent in the past five years.
5. Gas prices soar, then plummet
The old saying "What goes up, must come down" certainly applied to gasoline prices in northern Michigan this year. Gasoline prices shot up past $4 a gallon in May just as the summer tourism season geared up, forcing local businesses and travel agencies to revive gas card giveaways and other promotions to keep the summer visitors coming. The oil industry blamed the increases on growing demand for oil in places like China and India, although critics charged that the run-up was mainly based on speculation and not related to traditional market forces.
But the oil bubble burst by fall. Local gas prices fell under $4 a gallon by September and to less than $3 by mid-October. The decline escalated when oil prices plunged below $40 a barrel in recent weeks -- $100 less than they were this summer -- and gas prices hovered around $1.60 a gallon by year's end.
6. Downtown plans take shape
Several construction projects in downtown Traverse City were on the drawing board in 2008 and are poised to take shape in 2009. The city approved a new $11 million parking deck project in Old Town in conjunction with Hagerty Insurance Co., which agreed to a long-term commitment to stay and add jobs in the city. The city and Grand Traverse County will put up around $6.8 million toward the project, while the state approved a $1 million block grant and up to $3.9 million in state and local tax recapture for the 410-space parking structure.
Meanwhile, Leelanau County developer Thom Darga purchased the long-dormant construction site at 101 N. Park St. downtown from local broadcaster Roy Henderson. Darga announced plans for a five-story, 70,000-square-foot structure with ground-floor retail stores, office spaces in the middle and top-floor penthouses, with construction slated to begin in early 2009.
Developer Gerald Snowden is planning a $30-million plus RiverWest project at West Front and Pine streets with potential attractions including a new theater complex, restaurants and a walkway along the Boardman River. The state approved $7.2 million in brownfield tax credits and state and local tax capture.
7. Locals grapple with state business tax changes
Scores of area business owners entered the year curious about their tax liability under the Michigan Business Tax that started in 2008, following the scrapping of the unpopular Single Business Tax. But many found the new tax structure created a higher tax burden, increased their accounting costs and made it difficult to plan for future tax liability.
An alliance of northern Michigan chambers of commerce pushed for changes to the state's business tax. A lame-duck Legislature just before Christmas made a minor change to the law by removing sales taxes and other specific revenues from the "gross receipts" that businesses paid taxes on, items local businesses complained represented a "tax on a tax." The change will reduce business tax liability by about $50 million, the state estimates.
The alliance will continue to push for more modifications to the state's business tax in the 2009 legislative year.
8. State bolsters tourism budget
State lawmakers and Gov. Jennifer Granholm made a major commitment in 2008 to increase Michigan's presence in the highly competitive tourism industry. The state approved a two-year, $50 million tourism promotion budget that includes a $30 million outlay for the fiscal year that started Oct. 1, 2008.
The beefed-up budget will pay for the state's first winter tourism campaign in more than a decade. It also will launch a national advertising campaign in spring 2009 that will include national cable television buys, along with other broadcast and print advertising. State officials are pushing tourism growth to create job opportunities.
"This is our big year," said Dave Lorenz, manager of public and industry relations for Travel Michigan, the state's travel agency. "It really sets the stage for Michigan's first true, national promotional opportunity for 2009."
9. Resorts complete millions in upgrades
Area resorts spent big money to keep their facilities vibrant despite Michigan's tough economy. Shanty Creek Resort in Bellaire unveiled a $10 million face-lift that included renovations to the Lakeview Hotel and Conference Center overlooking Lake Bellaire. Crystal Mountain Resort in Thompsonville is putting finishing touches on a new $5.5 million Crystal Spa, part of $10 million in resort expansion that included new residential housing. The Grand Traverse Resort & Spa in Acme also completed about $17 million in renovations and infrastructure improvements as part of a multi-year upgrade.
10. Grand Traverse Band opens new casino
The Grand Traverse Band of Ottawa and Chippewa Indians raised the stakes in northern Michigan's competitive tribal gambling market when it opened the new Turtle Creek Casino & Hotel along M-72 in Whitewater Township in late June.
Tribal economic development officials said the band was losing market share to newer tribal casinos in Petoskey and Manistee, and because of the state's slumping economy. The new $114 million, 360,000-square-foot tri-level casino included new eateries, night clubs and a sky-light walkway connected to a 137-room luxury hotel. The new facility replaced the original Turtle Creek that opened next door in 1996.
The Grand Traverse Band in 2008 also received federal trust status for five properties totaling just over 145 acres near the new casino in Whitewater and Acme townships. The band plans to use the land for non-gambling economic development near the new casino, but officials said there are no imminent development plans because of the difficult economy.
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