By Angela Holmes
WATERLOO—The U.S. economy looks to continue its upswing, thanks to shifting global markets and advances in technology and domestic manufacturing.
That was the overriding theme at the inaugural Corridor Business Journal Mid-Year Economic Review, held June 4 at the Five Sullivan Brothers Convention Center.
In her presentation, “The Pendulum Shifts: Global Economic Outlook,” Robin Anderson, economist with Principal Global Investors, discussed how the tapering of China’s growth boom is affecting the global economy.
In the past 20 years, China’s Gross Domestic Product (GDP) growth has averaged 10 percent per year, compared to 2-3 percent per year in the United States.
China’s growth exploded when it devalued its currency, the yuan, by 57 percent from 1997-2001, making its exports cheaper for the rest of the world. Although U.S. consumers benefitted from cheap imported goods and low rates, North American manufacturers lost about 6 million jobs in the 2000s.
During that time, China went through an investment spending boom, especially in public infrastructure and buildings. Over the past decade, fixed asset spending in China was fueled by credit growth, which averaged about 22 percent per year last decade.
However, China’s overinvestment and credit boom has posed near-term risks in the country, including excess capacity, defaults and financial stress, Ms. Anderson said.
President Xi Jinping, who took over the People’s Republic of China in 2013, is expected to be less reliant on stimulus programs, also slowing China’s economic growth.
China’s annual GDP growth has decreased from 10 percent in 2010 to 6-7 percent in 2012-2013, and is projected to fall even lower in the next several years. Ultimately, China will need to shift from credit and investment growth to consumption spending, Ms. Anderson said.
A positive consequence of China’s slowed growth is a return of manufacturing to the United States, which has gained 600,000 jobs since the bottom of the manufacturing crisis.
The Cedar Valley has directly seen the results of the reshoring of manufacturing to the U.S., according to Mid-Year Economic Review panelist Lisa Rivera Skubal, the Greater Cedar Valley Alliance & Chamber’s vice president of economic development.
Last year, economic development was hit and miss with business expansion and recruitment, she said. But now the area is seeing some consistency in manufacturers looking to expand or relocate. In fact, the Alliance & Chamber had two new lead opportunities by Wednesday last week.
“A lot of these companies, instead of taking them overseas, they’re doing the manufacturing here in the United States and we’re seeing a lot of that occur in our backyard,” she said.
The reemergence of manufacturing in the region has also had an impact on higher education.
Panelist Linda Allen, president of Hawkeye Community College in Waterloo, said the college has received significant numbers of requests for business and industry training in the past six months. The college has added 247 training programs or classes for its business partners in the last six months, she said. The new leadership and decision making program is also popular.
“We find the majority of folks in the Cedar Valley continue to want to hire in the Cedar Valley and only move beyond that if they absolutely have to,” she said.
While about 56 percent of jobs in Iowa require mid-level skills – which require more than a high school diploma but less than a four-year degree – only 38 percent of Iowans have those, Ms. Allen said.
With older employees retiring, thousands of jobs in the health care and advanced manufacturing sectors will open up in the next few years, she said.
The University of Northern Iowa is also responding to the changing needs of the workforce, said panelist Randy Pilkington, executive director, Business & Community Services, University of Northern Iowa.
The UNI Metal Casting Center operates a high-tech, three-dimensional (3-D) printer in the Tech Works building in Waterloo. Since the printer was installed last October, the center has worked with 50 companies, Mr. Pilkington said.
The printer is contributing to the growth of advanced manufacturing in the Cedar Valley as well as the United States. For example, Mr. Pilkington said, a Marshalltown company recently sent the center some casting work that the center completed more quickly and for much less than overseas companies could offer.
“Opportunities to bring projects back for advanced manufacturing is really important for this country,” Mr. Pilkington said.
As well as workforce and facilities, quality of life has become a critical component of site selection of industries, Ms. Rivera Skubal said. For example, when Netherlands company Zuidberg Frontline Systems announced earlier this year it would open its first U.S.-based distribution center Cedar Falls, livability was cited as one of the main reasons for the decision.
“They picked the Cedar Valley because they could see themselves in the community,” Ms. Rivera Skubal said. “If we don’t have that balance of quality of life and those economic factors, we’re dead out of the water.”
Sean Abbas, co-founder and president of Waterloo-based Threads Inc., a software company created to help organizations review their company culture, agreed that happy employees make better employees.
“When you identify what your culture is like in your business, and attract people that mirror that culture in your business, it’s pretty tough to beat a highly motivated, highly organized and well-understood culture.”
The event was moderated by KWWL anchor Ron Steele and sponsored by Bergan Paulsen, NextEra Energy, The Eastern Iowa Airport and KWWL.