Bureau of Business Research Graduate School of Business Administration University of Michigan April, 1971 SOCIOECONOMIC DEVELOPMENT IN THE GRAND TRAVERSE BAY AREA Working Paper No. 35 by John D. Ludlow, Research Associate Patricia L. Braden, Research Associate Bureau of Business Research University of Michigan FOR DISCUSSION PURPOSES ONLY None of this material is to be quoted or reproduced without the express permission of the Bureau of Business Research

BACKGROUND OF THIS PAPER A similar paper was originally published as Appendix C of "Sea Grant Delphi Exercises: Techniques for Utilizing Informed Judgments of a Multidisciplinary Team of Researchers," by John D. Ludlow, Number 22 of the Bureau of Business Research Working Papers, January, 1971. The research has been conducted with the support of the Regional Economics and Water Resource Management project of the Sea Grant Program at the University of Michigan.

CONTENTS Population Growth 5 Unemployment 8 Employment by Economic Sector in the Region 14 Income 24 Supporting Services 34 New Opportunities 46 Summary 48

.TABLES 1. Selected Economic Characteristics of the Grand Traverse Bay Area, 1960............. 9 2. Michigan Public Assistance Payments and Average Number of Recipients per Month under Major Programs, Year Ended June 30, 1969....... 11-12 3. Proportion of Michigan Public Assistance Program Allocated to Specific Funds, June 30, 1969.................. 13 4. Comparison of Employment as a Percentage of Total by Major Industry, 1967......... 15 5. Employment in Largest Manufacturing Industries in the Grand Traverse Bay Area.... 17-18 6. Employment in Industries Relying on Natural Resources, Grand Traverse Bay Area, 1959-60 o................... 20 7. Average Earnings per Full-Time Employee, Michigan, Upper Great Lakes Region....... 21-23 8. Per Capita Personal Income.......... 25-26 9. Earnings by Broad Industry Sector, Grand Traverse Bay Area................ 28-29 10. Earnings by Broad Industry Sector, Grand Traverse County................. 30-31 11. Earnings by Broad Industry Sector, Grand Traverse County Compared to the Grand Traverse Bay Area............ 32-33

TAB LES- ( Continued) 12. Selected Services Supporting Business and Industry in the Grand Traverse Bay Area and Its Population Centers.............. 37-38 13. Medical Facilities in Grand Traverse Bay Area and Michigan............... 14. Selected Housing Statistics, April 1, 1960...41. 43 15. Age of Housing in Michigan as of April 1, FIGURES 1. The Grand Traverse Bay area. 1960.. 44 2

The Northwest Economic Development District is a state planning region made up of ten counties which approximate the Grand Traverse Bay watershed area (see Figure 1). It is part of the Upper Great Lakes region —an area of 119 counties in the northern parts of Michigan, Minnesota, and Wisconsin —which has been identified as socially and economically disadvantaged. The entire Upper Great Lakes region has been the subject of intense study and special funding by the federal government in an effort to reestablish social and economic development at a rate comparable to the rest of the country. Since the Grand Traverse Bay area is representative of many areas in the Great Lakes Basin where economic development and the quality of life are closely tied to water resources, this area was chosen to serve as a model for the University of Michigan's Sea Grant Program. Both the physical shape of the region and the location of population centers are analogous to the larger Lake Michigan area, so the ten counties provide an excellent opportunity to develop methodologies which may be expanded later to accommodate the entire Lake Michigan planning area. The major assets of the Grand Traverse Bay area are its natural resources, It has hundreds of miles of Lake Michigan shoreline and numerous clear water inland lakes and streams. It has thousands of acres of pine and hardwood forests abundant in wildlife, -1 -

-2 - LEFT. The Grand Traverse Bay (see inset) serves as a model for the University of Michigan's Sea Grant Pilot Program. It is representative of many areas in the Great Lakes Basin where economic development and quality of life are closely related to water resources. *0 Petoskey - o- - Charlevoix - ~J 16)541 J ~: __ _E._ )",CHARLE\ OIX151 ~ ~~SO" oa C b Chicago I RIGHT. The ten counties making up the Northwest Michigan Development District approximate the Grand Traverse Bay Watershed area. The numbers 1970 census populatic )n figures. LE ANAU @108 832 ~ENZIE i ' ( 8)593 t Beulah GRA I ~ MANISEE W E 20,094 19 Manistee "t'........~ ~ ~ *Bellaire 12)612 - 0 o -mOi1"mMn " I I i I rse City rraverse City I I 39,1%75. s1 KALKASKA 5%272 _-"ap a _w _.,,ma -law - - w"mm EXFORD,717 I I A Lake City Cadillac I MISSAUKEE i MISSAUKEE 1 7126 i on Fig. 1. The Grand Traverse Bay area. (,:These counties include off-shore islands,)

: -3 - areas of clean fine sand, and deposits of gravel, limestone, and salt. The whole district is characterized by glaciated land with high rolling hills, broad valleys,, and plateaus. It centers on the 45th parallel and has a seasonal climate with warm, pleasant summers and cold, snowy winters.- Historically, the natural resources of the region have been exploited and depleted in turn by fur traders, loggers, and various forms of agriculture. However, recent experimentation and management efforts have enabled forestry and agriculture to regain a significant role in the area's present economic structure, but the resource related industries have yet to return to their former stature. The area has long been a favorite summering place for families from the populous metropolitan regions to the south. With the development of recreational facilities for skiing and snowmobiling —two of the fastest growing forms of recreation in the United States —and the introduction of coho and king salmon for sport fishing, the region has strengthened its claim to be the most popular tourist area in Michigan, which ranked as the fourth most popular vacation state in the nation in 1967. Currently, tourism and recreation, together with supporting services, constitute the leading economic activities of the region. Though the Upper Great Lakes region is characterized as a 1/ "Prologue for Accelerated Growth of Economy, " a report of the Northwest Michigan Development District, Traverse City, Michigan, Oct., 1968.

-4 -rural area, it has little potential for agricultural production. It has lagged behind the nation and the remaining parts of Michigan, Minnesota, and Wisconsin in economic development. Manifestations of this lag are the income gap, the steady outmigration, and the persistently high levels of unemployment. The environment of the region appears z2/ inaccessible and unproductive to business- with weaknesses which 3/ include - - -Small population - -Slow population growth — Slow structural change in industrial employment — Large low-income class — Small high-income class However, in the past ten years there have been some significant changes in the trends of the social and economic development of this region. It may be helpful as a frame of reference to compare the development of the Grand Traverse Bay area with the whole Upper Great Lakes region, as well as with the state of Michigan and the nation. 2/ Battelle Memorial Institute, "Industries Suited for the Upper Great Lakes Region, a report by David C. Sweet, John M. Griffin, and Hal S. Maggied, Columbus, Ohio, 1970, and "Development Strategies —Upper Great Lakes Region, " Annual Reprt of the U r Great Lakes Regional Commission, Washington, D C., Jan., 1969. 3/ Battelle Memorial Institute, "Industries Suited for the Upper Great Lakes Region;" ibid.

-5 -Population Growth The region's highest population level, 164, 000; was reached in 1910. With the depletion of the forests and the reduction of related jobs in the lumbering and paper and pulp industries, the population dropped sharply. By 1920 it was only 132, 000, and in 1930 it reached a low of 120, 00. Preliminary 1970 census figures reveal that approximately 155, 000 people now live in the region —a density of less than 35 people per square mile. The population growth during the decade from 1950 to 1960 was 2. 6 per cent, far lower than that of the state (24 per cent) or the nation (18. 5 per cent), but the absolute decline in population had stopped. From 1960 to 1970 the gap narrowed as the region's growth increased to 11.4 per cent for the decade, while the growth of the state and the nation eased to approximately 13 per cent. Since the region's growth rate increased steadily throughout the period, it is not unreasonable to assume that its annual growth rate at the present time exceeds that of the state and the nation. However, growth and population density are not uniform throughout the region. Grand Traverse County currently has approximately 25 per cent of the region's population. Its population increased by 14. 5 per cent between 1960 and 1970, somewhat above the growth rate for the state and the nation. The Traverse City metropolitan area has a base population of 32, 000 and has been designated the primary growth center for the region in predictions based on the variety and quality of the business and industry already established

-6 - 4/ there. — Its geographical location with access to Grand Traverse Bay and the size of its tourist, commercial, and manufacturing activities make it an excellent focal point from which growth can be extended throughout much of the region and reinforced by the secondary growth centers of Manistee, Cadillac, and Petoskey. These secondary centers of growth have populations ranging from 6, 000 to 11, 000, are strategically located, and their social and economic development shows trends similar to that of Traverse City. The population of the region shows highly seasonal fluctuations. During the summer months the population nearly doubles with the influx of vacationers. These summer people use the supporting services available to permanent residents which would seem to be a drain on local resources, yet vacationers' property comprises a substantial portion of the local tax base. Since temporary residents control a great deal of the land in the area, many of the development programs for natural resources must have the support of these people to be effective. Most:of these vacationers have permanent homes in the metropolitan areas to the south, which are some of the fastest growing regions in the United States. There are some indications that the Grand Traverse Bay region will experience a permanent increase in population growth as expansion gradually spreads north. 4/ "Prologue for Accelerated Growth of the Economy. "

-7 -An important indicator of the direction of future population growth is the net migration of people in and out of an area. Though the prime motivating force of migration is economic, quality of life is gaining importance as a secondary motive. Between 1950 and 1960 the Grand Traverse Bay region experienced a negative migration rate of 9. 3 per cent compared to a net positive rate of 2. 5 per cent for the state. However, the migration rate of the area in the past ten years has gradually reached the neutral position which it holds at present. A negative migration rate has an adverse effect on a region since the people most likely to move out are the young, relatively well-educated, and productive workers who have the widest range of job opportunities open to them. The negative migration rates of the past are reflected by an imbalance in the age distribution: the proportion of the region's people in the older age group is higher than that of the state or nation, and the proportion in the most productive age bracket is correspondingly lower. In addition, some of the current reduction in net outmigration is due to the movement into the area of people of retirement age, a phenomenon which is not totally beneficial. The youngest and oldest age groups make the greatest demands on a community for social and welfare services such as education, recreation, and medical care, and they are least able to contribute to meeting the cost of these programs. The financial burden falls on the age group most attracted by outmigration. -So the depletion of human resources continues until reversed by policy decisions favoring economic development.

-8 - Unemployment Among the various measures for determining the availability of an industrial labor pool within a region, the level and composition of unemployment is particularly meaningful. In 1968 all of the ten counties in the region were qualified for special grants, loans, and technical assistance under the Economic Development Act because 5/ they had consistently high rates of unemployment.- All four major population centers in the Grand Traverse Bay area (Cadillac, Manistee, Petoskey, and Traverse City) have been listed as areas of persistent or substantial unemployment since before 1965.- Although Indians make up the area's only significant minority, they comprise only 1 per cent of the population and are almost all located in segregated villages outside the principal cities. Thus, the unemployment recorded here is expected to be composed primarily of aged or unskilled workers who continue to seek gainful employment to subsidize their income from subsistence farming or welfare. Table 1 indicates that in 1960 the Grand Traverse Bay area had a greater ratio of nonworkers to workers than the state of Michigan. In addition, the percentage of the labor force which was unemployed 5/ Ibid. 6/ Battelle Memorial Institute, "Industries Suited for the Upper Great Lakes Region."

A: TABLE 1 - Characteristics = Selected Economic Characteristics of the. Grand Traverse Bay Area, 1-960 Average for Average for Traverse Bay State of Area Michigan Grand Traverse Bay Area Relative to the State of Michigan Ratio of nonworkers to workers' * Percentage of civilian labor force unemployed Median income of families Percentage of families with _ _ - 1.84 9. 2 $4, 469 1.66 6. 9 $6, 256 110.8 133.3 71.4 1 ID I, income s oi: Under $3,000 29.0 15.7 184.7 $10,000 and over 6.4 17.4 36.8 * Ratio of persons not in the labor force (including children under fourteen) to labor force. As of April 1, 1960. Based on income for the year 1959, Source: Michigan Statistical Abstract, 1970. Bureau of Business Research computations.

-10 -was substantially higher than that of the state. Both these facts would suggest that the low-income group far exceeds the high-income group in size. In fact, in 1960 the low-income group was over four times the size of the high-income group in the Grand Traverse Bay area, while the high-income group exceeded the low-income group in the state as a whole. The low-income group in the ten-county region was over one and one-half the size of the state's underprivileged, while the high-income group was only slightly more than one-third the size of the state's high-income group. The immediate effect of this problem is to depress the median income of the families in the area, who earn only 71. 4 per cent of the amount earned by the average family in the state. However, the low median income did not give rise to a general increase in public aid to the people in the region. Table 2 shows that the region has. an average of only a little more than half as many recipients of public welfare payments as other counties in the state which are not included in standard metropolitan statistical areas (SMSAs); the payments issued, on the other hand, were less than half as much. Thus the size of payment is less in this region than in other comparable areas. Table 3 illustrates the proportionately heavier burden of old age payments carried by the area. These are payments to a group of people who have little potential productivity, yet 54. 7 per cent of all recipients of public aid in the Grand Traverse Bay area receive old age benefits, while only 40. 4 per cent in similar areas receive such

0 m TABLE 2 Michigan Public Assistance Payments' and Average Number per Month under Major Programs Year Ended June 30, 1969' (Dollar Amounts in Thousands) of Recipients.. I Grand Traverse Bay Average for Average for Area Relative to Non-SMSA- Programs Grand Traverse Bay.. Non-SMSA Counties in Area C uCoun ties Mi___chi _gan ^(Percentage) Old age assistance Number of recipients 156 210 74.3 Payments $123.2 $177.4 48.1 Aid to dependent children Number of recipients 49 151 32.5 Payments $ 95.1 $320. 8 29.6 * Non-SMSA counties only. I.a I Number of families. (Continued)

TABLE 2 - ( Continued) Michigan Public Assistance Payments and Average Number per Month under Major Programs Year Ended June 30, 1969^ (Dollar Amounts in Thousands) of Recipients Programs saac-i-r _______ __._ -~I- - --- -— sl — — -c -- i — ~ — - --— s 1~I-- -. II ---- --------- ----- ------- i ---— y —p --- —-- — CI -~-FI_ b _ _. ___ _ ~1 III__ LIII — IIIPE-C- D ----*-L — — —~III - ~ IICL Average for Grand Traverse Bay Area Average for Non-SMSA Counties in Michigan Grand Traverse Bay Area Relative to Non-SMSA Counties (Percentage) Other aid Number of recipients Payments Total aid program Number of recipients 80 159 $157.4 50. 3 46. 9 $ 73.8 285 520 54.8 Payments $ 292. 1 $655. 6 44.6 *, Non-SMSA counties only. t Number of cases. Source: Michigan Statistical Abstract, 1970. Bureau of Business Research computations.

*.fk 4 C Proportion TABLE 3 of Michigan Public Assistance Program Allocated to Specific Funds* June 30, 1969 Number of Recipients as a Percentage of Total Grand Traverse Non-SMSA - Payments as a Percentage of Total Grand Traverse Non-SMSA _v A ' _ Bay Area Countiess Bay Area Counties Old age assistance 54.7 40.4 42. 2 27. 1 Aid to dependent children 17.2 29.0 32.5 48.9 Other aid 280 1 30. 6 25. 3 24. 0 Total aid program 100.0 100.0 100.0 100.0 I t-~.0 * Non-SMSA counties only. Source: Michigan Statistica dL Abstract, 1970, Bf~ureau of Business Research computations.

— 14 -payments. The payments to aged citizens in this area are over twice the average payments in other non-SMSA counties. So the current influx of older retirees into the region is not advantageous from the standpoint of either productivity of the labor force or the tax dollar. The general population imbalance is also evidenced by the lack of aid to mothers with dependent children. There are only slightly more than half as many claims for public support of young families in the area. Unfortunately, this does not result from a higher proportion of independently-supported family units, but rather from. a low number of young families in the area. Thus the area has only a small locally productive labor force. Employment by Economic Sector in the Region Historically, the Grand Traverse Bay region has had a narrowly based economy which has resulted in economic instability when the natural resources supporting the economy were depleted. Substantial growth and diversification have taken place in recent years and the region's economy has become less reliant on seasonal and low-wage industries. In 1967 the five economic sectors employing over 10 per cent of the region's work force represented 84 per cent of the region's employment. The manufacturing group accounted for 27 per cent of the employment; wholesale and retail trade, 16 per cent; self- employed, 15 per cent; government, 14 per cent; and services, 12. 5 per cent (see Table 4). When these percentages are compared to those of 1960, the most significant gains in employment were in services, government, and manufacturing.

4 TABLE 4 Comparison of Employment as a Percentage of Total by Major Industry, 1967 United tpper Grand Traverse Bay Industry Se Great Michigan State s Riegion Lake s Agriculture, forestry, fishing 4.7 13.2 2,8 70 5 Mining. 8 2. 5.4 Construction 4.0 2.8 4.9 3 8 Manufacturing 26.5 20.0 36.8 26.8 Transportation and utilities 5. 8 5.0 4. 4 3. 5 Wholesale and retail trade 18.4 16. 2 18.5 15.5 Finance, real estate, insurance 4. 4 2.3 3.5 2 0 Services 13.5 9.8 11.5 12. 5 Government 15.9 15.3 13,2 13.9 Unclassified 6.0 12.9 4.0 14.5 Total 100.0 100.0 100.0 100.0: Michigan Employment Security Commission, Bureau of Business Research calculations. Source: Battelle Memorial Institute, "Industries Suited for the Upper Great Lakes Region," a report by David C. Sweet, John M. Griffin, and Hal S. Maggied, Columbus, Ohio, 1970. I Ot i

-16 -Agriculture employed a stable 7. 5 per cent of the work force, but it represents a more important portion of the economy than employment figures indicate because it is resource based and has a high proportion of value added in the final product that is sold. In addition, approximately 45 per cent of the product produced exceeds the needs of the people in the region and is therefore exported. These exports bring money into the region which can then be used to import other products not manufactured locally. The manufacturing sector offers the greatest opportunity for economic growth in the region but also the greatest threat to environmental quality and the dependent tourism and recreational activity. Manufacturing was the largest employer in 1960 and in 1967, with a relatively strong growth rate during that period. The ratio of employment in manufacturing for the region is below that of the state, but above that of the Upper Great Lakes region. Although available regional employment data reported in detail in Table 5 account for only 85 per cent of the total of manufacturing employment used to develop the ratios in Table 4, these data show important changes in the industrial structure of the region. In the period from 1959 to 1967, total manufacturing employment gained 43 per cent from 9, 307 to 13,278. Grand Traverse County accounts for approximately 25 per cent of the area's employment in manufacturing and experienced a growth rate of 45 per cent over the same time period. Those industries within the region which deviated significantly from the average growth rate are shown in Table 5. The unexpected poor growth performance

TABLE 5 Employment in Largest Manufacturing Industries in the Grand Traverse Bay Area ---— ~ ------— — —I -. ---- le -3. LIP —slC3 — ~ll(iill^ - -CPIE ~3~ljsi~~l-~CL~IC — -~~~IIP~I~-~I*I~ICI1111~~ — ----FI —~ICIII IIC I O~sesO-9ip ----p-~~~I~ -- SIC Code 36 27 35 30 33 Industry Employment in fast growinindustries: Electrical equipment and supplies Printing and publishing Machinery, except electrical Rubber and plastics Primary metals industry Number of Employees Change in Employment 1959 1967 Amount Percentage 314 276 699 247 544 1,576 528 1, 614 519 1,101 1, 262 302 915 272 557 402 137 131 110 102 J -q! 28 32 37 23 26 24 Employment in slow growing industries: Chemical and allied products Stone, clay, and glass products Transportation equipment Apparel and other textile products Paper and allied products Lumber and wood products 462 497 1,391 840 621 542 421 467 1,498 877 643 580 41 30 37 37 22 38 9 - 6 3 4 4 7 / (Continued)

-1 ~:# TABLE 5 — (Continued) Employment in Largest Manufacturing Industries in the Grand Traverse Bay Area SIC Number of Employees Chang in Empoyment Code Ind y 1959 1967 Amount Percentage Employrent in industries with average growth: 20 Food and kindred products 1,452, 716 264 19 34 Fabricated metal products 848 1,079 231 27 25 Furniture and fixtures 370 433 113 35 Total manufacturing employment 9, 307;- 13, 278* 3, 971 43* I 00 I * These figures are not the sum of individual columns because smaller industries in are included in the total but not in the categories. the region Source: Data compiled at the Bureau of Business Research, University of Michigan.

-199 -in transportation equipment was the result of changing demand and technology. An impressive gain from 387 to 889 (130 per cent) in motor vehicles and equipment was overwhelmed by a sharp drop in ship and boat building and repairing. Manufacturing in the Upper Great Lakes has traditionally relied on industries based on natural resources. If paper and allied products are included in the category of industries dependent on natural resources, the total employment in this area was 55 per cent of total manufacturing employment in 1960 and 51 per cent in 1967. Yet, these industries are not expanding as rapidly nationally as some of the fabricating and 7/ specialty industries,- and they are also relatively less important in the smaller Grand Traverse Bay area than in the entire Upper Great Lakes region. In 1960 they constituted only 32. 5 per cent of total manufacturing employment, while in 1967 they were reduced to 25. 6 per cent (see Table 6). Other means of employment based on natural resources are also less important in the Grand Traverse Bay area than in the Upper Great Lakes region. For example, agriculture comprises only 7. 5 per cent of employment in the smaller area and 13. 2 per cent in the Upper Great Lakes region. Mining is almost negligible in the Grand Traverse Bay area, yet it accounts for 2. 5 per cent of all employment in the Upper Great Lakes region. However, Table 7 indicates that the industries in which employment opportunities 7/ Battelle Memorial Institute, "Industries Suited for the Upper Great Lakes Region."

-20 - TABLE 6 Employment in Industries Relying on Natural Resources Grand Traverse Bay Area, 1959-60 Industry Food and kindred products Lumber and wood products Stone, clay, and glass Paper and allied products Total All manufacturing industries Source: Table 5, 1 3 Number of Employ ees 1959.1967,,452 1,716 542 580 497 467 621 643 1, 112 3,406 Percentage of 1959 15.7 15 8 5. 3 6.7 32. 5 Total 1967 12. 9 4. 4 3. 5 4, 8 25. 6 13,278 100.0 9, 307 100.0

.t TABLE 7 Average Earnings per Full-Time Employee Michigan, Upper Great Lakes Region 1962 1967 Percentage Percentage Percentage Percentage Industry Averag Average of Industry of US. ver of Industry of U.S. SWrg ageWage Average Average Average Average Agriculture $1,544 88 30 $2,902 117 46 Mining 7,012 116 137 8,346 110 133 Contract Construction 4,708 80 92 7,613 102 121 Manufacturing Food and kindred products 4, 433 85 86 5,492 87 87 Textile s 0 0 0 0 0 0 Apparel 2,719 76 53 4, 694 110 74 Lumber and wood products 4, 672 114 91 4, 169 80 66 Furniture 3,769 81 73 4, 334 79 69 Paper 6,358 106 124 7,819 109 124 Printing* 7,310 123 142 6, 364 90 101 Chemicals 6,888 100 134 7,130 87 113 Petroleum 4,500 60 87 7,541 84 120 Rubber* 4,735 82 92 5,603 84 89 Leather 3,949 104 77 4, 678 101 74 Stone and clay 6,112 107 119 7,004 103 111 I N. * Fast growing industries in the Grand Traverse Bay area. (Continued)

a * t s: - TABLE 7 — (Continued) Average Earnings per Full-Time Employee Michigan, Upper Great Lakes Region - - - -- -- -------- -- ---------- ------- —~ --- —' --- ---' —~-' ---II-'' —m --- — - -- I ~ p-apaal-rxl-r..rrr r ~~ar-rrra~-3~.r;~aa~sr~ ---r~~ Industry 1962 Percentage Average of Industry Wage Average Percentage of U.S. Average Average Wage 1967 Percentage of Industry Average Percentage of U. S. Average Primary metalsFabricated metals Machinery* Electrical machinery`t Transportation equipment Instruments and miscellaneous Transportation Transportation services Utilities $5, 517 5, 051 5, 704 3, 824 4, 864 4, 150 6, 890 6, 598 80 80 87 62 68 75 101 107 107 98 111 74 95 81 134 128 $6, 888 6,012 6, 868 4, 182 0 5, 005 8, 300 8,-735 86 80 87 59 0 75 109 95 109 66 0 79 I N I 102 117 132 139 Finance, real estate, insurance Services Hotels Per sonal services Business services Amusement services Professional services 4, 758 2, 898 2, 028 4, 955 3, 438 2, 387 87 85 70 90 73 64 93 56 39 96 67 46 5, 791 3, 583 2, 060 5, 233 4, 219 2, 690 86 -88 56 81 73 57 92 57 32 83 67 42 * Fast growing industries in the Grand Traverse Bay area. (Continued)

I* 0 iK TABLE 7 —(Continued) Average Earnings per Full-Time Employee Michigan, Upper Great Lakes Region 1962. 1967 Percentage Percentage Percentage Percentage Industry Ave rage rag of Industry of U.S. e of Industry of U.S. Wage Wage Average Average Average Average Gove rnment Federal civilian $7,318 121 143 $7,893 105 125 State and local 4,296 85 84 5,417 88 86 Average of Michigan counties in the Upper Great Lakes region 4, 400 86 86 5,419 86 86 P Fast growing industries in the Grand Traverse Bay area. Source: Charles F. Floyd, "The Changing Structure of Employment and Income in the Upper Great Lakes Region," a report to the Office of Economic Research, Economic Development Administration, Washington, D.C., Apr., 1970. I w I

-24 -are increasing most rapidly in the Upper Great Lakes region are generally those in which wages are relatively higher than the average for that region. Though the economic performance of the Grand Traverse Bay area lags behind that of the remainder of the Upper Great Lakes region, the average wage in the most rapidly growing industries in that area exceeds the average wage for those industries in other Michigan counties situated in the Upper Great Lakes region. Even though the average wages in these industries have maintained a rather constant percentage of the average wage for those industries between 1962 and 1967, they have generally declined as a percentage of the average wage across the nation,- which may provide some explanation for the singularly poor performance of the area when compared with other areas in the Upper Great Lakes region. Income The personal income generated by industries in an area can explain the power that industry has to attract qualified laborers to a region. The relatively slow industrialization of the Grand Traverse Bay area may also result from the slow growth of per capita income as compared to the remainder of the state of Michigan. Table 8 shows that both the Grand Traverse Bay area and the Upper Great Lakes region as a whole only provide three-quarters of the per capita income which the rest of the state receives. However, closer examination will reveal that the Grand Traverse Bay area in particular is experiencing a much faster rate of growth in per capita personal income than the rest of the region. For example, between 1959 and 1967 the total earnings in the Grand

s I % e TABLE 8 Per Capita Personal Income Grand Traverse Upper Great Year G T Michigan G. United States _Bay Area Lake s Region 1929 Amount $ 366 $ 806 $ 432 $ 705 Percentage of national average 52 144 62..... 1940 Amount $ 313 $ 683 $ 382 $ 592 Percentage of national average 53 115 65 *.... 1950 Amount $ 993 $1,714 $1,090 $1,496 Percentage of national average 66 113 73.. 1959 Amount $1,466 $2,264 $1,608 $2,161 Percentage of national average 68 105 75. (Continued) I I

a aw TABLE 8 — (Continued) Per Capita Personal Income - -cP- I ~IIC —~-~I-3-F~I III1 —~1_~- 1 ~liliF-3~-~~ll - ~~~~-T-dsl I-~IIC ---~-i ~-~C —~ll —EP~ I I ~-- e- 3 ~1I-~~C~I~L-C. 1_ —~ -------— l ----~ ---C —il- -— - - ~B-s —r ---~ll ----- ___ ___I^_ __ _ -— lrrrr__ ---~a___ — ---- -I____ --- -- I --- —~- -- — -- --— ~~-_I --- —--------- a —. ---m - --- —- — - --— i -^l —a_ p —I --- —------ I ~ — - --- — --- —g^ --- — s-i-l Year Grand Traverse Bay Area.Upper Great Michigan _____Lakes Region United States 1962 Amount Percentage average $1, 627 of national $2, 449 103 $1, 779 75 $2, 368 69 e e e o ~ a 1965 Amount Percentage average $2, 079 of national $3, 054 110 $2, 076 75 $2, 760 e e * 0 a 75 1967 Amount Percentage of national average $2, 378 75 $3,395 107 $2, 419 $3, 159 77 Source: Battelle Memorial Institute, "Industries Suited for the Upper Great Lakes Region. "

-27 -Traverse Bay area increased 71 per cent. Table 9 indicates that of that increase expenditures for state and local government services, business services, and contract construction absorbed the greatest amount of earnings increases, and these were followed closely by the increases in manufacturing, finance, insurance, and real estate. Grand Traverse County itself showed a similar pattern, but there manufacturing played a greater role in producing earnings for the county's residents (see Table 10). In both the county and the area, farming decreased in importance both absolutely and relatively as a source of earnings. In the past, most of the economic activity in the region has been centered in Grand Traverse County, where Traverse City is located. Originally, the port at Traverse Harbor stimulated trade in this location and justified the establishment of financial, governmental, and mercantile institutions there. During most of the area's developmental years, Traverse City has remained the hub of civic and economic activity. However, Table 11 indicates that the concentration of economic activity in Grand Traverse County declined substantially in many areas of activity between 1959 and 1967. Though the decline in the concentration of farming can be explained by the absolute decrease in the earnings of agricultural enterprises, the decrease in concentration of transportation, communication and public utilities, wholesale and retail trade, finance, insurance, real estate, and federal, state, and local govern ment services cannot be attributed to a general decline in services rendered. All fields mentioned experienced large absolute increases

4 O TABLE 9 Earnings by Broad Industry Sector,Grand Traverse Bay Area /T-r. 1 1 _ _ A __ - * r__ i_ _ __ _ 1 _ x (lDoilar Amounts in 'nousanctsj Industry Percentage Percentage Change in 1 ~~___________ —__ __1959-67 Industry~~~~~.............e....... erenag Farm $15, 915 9. 1 $11,171 3 7 (30) I 00 I Mining " 14 Contract construction Manufacturing Transportation, communi cation, public utilities * 10, 649 6. 1 21, 502 7.2 102 45, 460 11,276 25. 9 6. 4 84, 017 16, 288 280 1 85 5.4 44 Wholesale and retail trade 33, 558 19.1 54, 993 18. 4 64 Some data withheld to meet confidentiality requirements. t Fastest growing sectors in terms of employment... C ontinued)

, I. ~ TABLE 9 — (Continued) Earnings by Broad Industry Sector,Grand Traverse Bay Area (Dollar Amounts in Thousands) - _ _ 1959 1967 1959 1967 Pe rcentage Industry Percentage Percentage Sector Amount of Amount of Change in Total TotalEarnings _ -_...__.._......_v._... _S 1959-67 Finance, insurance, real estate $ 4,416 2.5 $ 7,710 2.6 75 Services' 23,019 13,1 46,298 15.5 101 Government 29, 473 16.8 55, 670 18.6 89 Federal 7,746 4.4 11,327 3.8 46 State and local 21,727 12.4 44, 343 14.8 104 Other* 492 0. 3 1,107 0,4 125 Total earningsT $175,247 100.0 $299,472 100.0 71 * Some data withheld to meet confidentiality requirements. Fastest growing sectors in terms of employment.! Data do not add to total because of nondisclosures. Source: Office of Economic Expansion, Michigan Department of Commerce. Bureau of Business Research computations. Nl Do

4 TABLE 10 Earnings by Broad Industry Sector,Grand Traverse County (Dollar Amounts in Thousands) 1959 1967 Percentage Industry Percentage Percentage Change in Sector Amount of Amount of E oEarnings Total Total E1959-67 Farm $ 6,996 12.9 $ 3,340 3.6 (52) Mining*....,...e 2.. Contract construction 4,083 7.5 8,327 9.0 104 Manufacturing 10,368 19.1 20,870 22.6 101 Transportation, communication, public utilities 4, 534 8.4 5, 478 5.9 21 Whole sale and retail trade 9,926 18.3 18,817 20.4 90 Finance, insurance, realestate 1,935 3.6 3,148 3.4 63 Y...... _-..... _ _......... _ _. -....... I O 0 1a isaome data withheld to meet contidentlaiity requirements. t Fastest growing sectors in terms of employment. (Continued)

I. I * TABLE 1 0 — (Continued) __ Earnings by Broad Industry Sector, Grand Traverse County (Dollar Amounts in Thousands) m 1959 __1967 industry- ---- - ----------— ~- ---- - - Percentage Industry Percentage Percentage Change in Sector Amount of Amount of E Earnings Total Total 1959-67 II Services $6,764 12. $14,865 16.1 120 Governmentt 9,073 16.7 17,360 18.8 91 Federal 1,894 3.5 2,530 2.7 34 State and local! 7, 179 13. 2 14,830 16. 1 107 Other..,.......... Total earnings $54,179 100.0 $92,425 100.0 71 Some data withheld to meet confidentiality requirements. - Fastest growing sectors in terms of employment. T Data do not add to total because of nondisclosures. Source: Office of Economic Expansion, Michigan Department of Commerce. Bureau of Business Research computations.

4 TABLE 11 Earnings by Broad Industry Sector Grand Traverse County Compared to the Grand Traverse Bay Area (Dollar Amounts in Thousands) 1959 1967 ~~~Industry G~ w k........ Change in Industry Grand Grand County as Grand Grand County as Sector Traverse Traverse Percentage Traverse Traverse Percentage 1959-67 County Bay Area of Area Count y Bay Area of Area Farm $ 6,996 $15,915 44.0 $ 3,340 $11,171 30.0 (31.8) Mining* Z.......... 2 14 Contract construction 4,083 10,649 38.3 8,327 21,502 38.7 1.0 Manufacturingt 10,368 45,460 22.8 20,870 84, 017 24. 8 8.8 Transportation, communication, public utilities* 4,534 11,276 40 2 5,478 16,288 33.6 (16.4) Wholesale and retail trade 9,926 33,558 29.6 18,817 54,993 34.2 (15.5) Finance, insurance, real estate 1,935 4,416 43.8 3,148 7,710 40.8 (8.7) *Some data withheld to meet confidentiality requirements. Is I I I t Fastest growing sectors in z terms of employment. (Continued)

A. t TABLE 11 —(Continued) Earnings by Broad Industry Sector Grand Traverse County Compared to the Grand Traverse Bay Area (Dollar Amounts in Thousands) 1959 1967 C Change in Industry Grand Grand County as Grand Grand County as gen Sector Traverse Traverse Percentage Traverse Traverse Percentage 1959 1959-67 __ __. __ _County Bay Area of Area County Bay Area of Area Services $6,764 $23,019 29.4 $14,865 $46,298 32.1 9.2 Governmentj 9,073 29,473 30.8 17,360 55,670 31.2 1.3 Federal 1,894 7,446 25.4 2,530 11,327 22.3 (12.2) State and local 7,179 21,727 33.0 14,830 44,343 33.4 (1.2) Other*..... 492..., *...* 1,107.E.. ** Total earningst $54 179 $175,247 30.9 $92,425 $299,472 30.9 I U3 * Some data withheld to meet confidentiality requirements. t Fastest growing sectors in terms of employment. Data do not add to total because of nondisclosures. Source: Office of Economic Expansion, Michigan Department Research computations. of Commerce, Bureau of Business

-34 - in earnings in both the county and the area, yet the percentage of services rendered within the confines of Grand Traverse County declined, indicating that these services, which are so essential to industrial development, are becoming more widespread throughout the area. Unfortunately, amusements, business services such as consulting, and manufacturing have been concentrated more heavily in Grand Traverse County during the same period. Perhaps this indicates that the move toward diffusion of services throughout the area is a recent phenomenon which is yet to be accommodated by less flexible business and industrial institutions. If so, the remainder of the Grand Traverse Bay area can look forward to substantial economic growth in the near future. Supporting Services Supporting services for industrial development generally include such categories as transportation and communication, amusement and recreation, accommodations, personal and business services as well as retail and wholesale trade activities. But in the context of the Sea Grant Program environmental quality, energy-generating utilities, water and sewer facilities, housing quality, investment capital, and institutional resources may also be considered supportive to industrial growth. Since these factors have not been considered explicitly with other major economic sectors in the analysis of income and employment, they will be discussed separately here. A brief word about the most apparent problems and opportunities in each of the areas will be offered below, ~'*

-35 -Transportation includes both the facilities and processes involved in the distribution of a product and the acquisition of the factors of production. Except for industries relying on natural resources, the regional manufacturers are at a disadvantage in competing with firms located closer to the major markets. Yet these disadvantages may be offset by advantages in other factors of production such as the cost and availability of labor. However, products with some combination of high value to unit weight, short transit time, and special service requirements are amenable to air transportation, in which case locational advantages are related to airport accessibility. In such cases, the integrated industrial park-airport concept at Traverse City gives an area which is otherwise poorly located definite advantages in product distribution. Another important advantage of the industrial park-airport concept is the convenience of flying to business engagements and social, cultural, and recreational centers. The ease of access to an area is a positive inducement in recruiting management personnel of high caliber. Communication also plays an important part in maintaining contact with the larger sphere of business and financial activity. Though the location of the Grand Traverse Bay area would seem rather remote, the ten-county area is serviced by four daily newspapers with a total circulation of 37, 959 and thirteen weekly and semiweekly newspapers with a circulation of 46, 384. These newspapers completely cover all those individuals living in the area who are between the ages of

-36 -25 and 54. In addition the area is served by two television stations which carry the programming of the three major networks, and twelve radio stations broadcasting from Manistee, Petoskey, Cadillac, and Traverse City. Since the area is well known for its recreational and tourist facilities, one might assume that these facilities are satisfactory from the standpoint of the prospective large employer. However, the relevant amusements for individuals living in the area might be the availability of restaurants, movie houses, and other forms of evening entertainment. In addition, services such as hotels and motels for out-of-town guests, personal services such as barber and beauty shops, and repair services for appliances and automobiles are all a part of the services which support community activity. Table 12 illustrates that between 1963 and 1967 these services increasingly concentrated in the population centers, while the area as a whole added supporting services at only a slightly faster rate than the rest of the non-SMSA counties. However, the concentration of receipts from the service establishments in the cities have fallen off, indicating that the value of sales per establishment in the rural county areas has increased substantially in the same period. Generally, average receipts from establishments in the Grand Traverse Bay area increased at a much faster rate than those in other non-SMSA counties in Michigan. Likewise, the number of paid employees of such establishments increased outside the population centers in the area,and the average number of employees

t e,. TABLE 12 Selected Services Supporting Business and Industry in the Grand Traverse Bay Area and Its Population Centers (Dollar Amounts in Thousands) L _ ___. I_..._._ ___ _____ - _ __._ _._. ___ ___ _ _ _ __ _..__ ____ _ _ ___ ._. _ _ ___ __ _ _ __ Entry Number of Establishments Receipts Number Yearly of Payroll Paid Employee s Number of Active Proprietors 1963 Selected services in cities of 2, 500 or more as a percentage of Grand Traverse Bay area-, Grand Traverse Bay area average g -4 I 33. 2 47. 8 48. 9 $ 546 58. 9 158 38. 7 131 127 $2, 357 Average of non-SMSA counties in Michigan Grand Traverse Bay area average as a percentage of non-SMSA counties 191 66.5 $3, 348 70. 4 $ 693 78. 8 236 198 66.9 66. 2 * Cities with 2, 500 or more inhabitants: Boyne City, Cadillac, Charlevoix, Manistee, Petoskey, and Traverse City. (Continued)

.: l TABLE 12 —(Continued) Selected Services Supporting Business and Industry in the Area and Its Population Centers (Dollar Amounts in Thousands) Grand Traverse Bay Number Number Number of Yearly of of Entry Establish- Receiptsarl Active Payroll Paid Active ments Employees Proprietors 1967 Selected services in cities of 2, 500 or more as a percentage of Grand Traverse Bay area* 40.6 45.7 47.8 50.1 36.9 Grand Traverse Bay area average 126 $3, 546 $ 877 223 108 Average of non-SMSA counties in Michigan 181 $4, 351 $1,028 274 154 Grand Traverse Bay area average as a percentage of non-SMSA counties 69.6 81.5 85.3 81.4 70.1 I 00! * Cities with 2, 500 or Petoskey, and Traverse City. more inhabitants: Boyne City, Cadillac, Charlevoix, Manistee, Source: Michigan Statistical Abstract, 1970. Bureau of Business Research computations.

-39-" per establishment in the Grand Traverse Bay area increased much more rapidly than in other rural counties in the state. However, there appeared to be both a general decrease in the number of proprietors in both the Grand Traverse Bay area and in all other non-SMSA counties in Michigan. Such a phenomenon may result from either increasing multiple ownerships of retail outlets or an absolute decrease in the number of establishments. By examining the basic data, it becomes clear that the number of establishments has not increased over time at a rate which exceeds the number of business mergers and failures. Thus the decline in number of proprietors must be the result of both an increase in multiple ownerships and business failures in the area. Yet, receipts over the same period have increased rapidly, indicating that a willing market is available. Retail trade and business and personal services are not alone in feeling a pinch in monetary resources in the area. In general there is a lack of independent sources of venture capital or risk capital to support entrepreneurial enterprises. Such capital generally comes from professionals who have funds to invest in hopes of future capital gains or from speculators looking for high-risk, high-return ventures. Unfortunately, there is not an abundance of either capital or venture opportunities in this area. Those opportunities that are readily available require large investments simply for market entry and have significant secondary working capital requirements to maintain sufficient cash flows. These ventures, such as ski resorts, camping and fishing resorts, trailer parks, and recreation areas require large investments in land, facilities, and major improvements to such existing public

-40 -services as roads, sewers, and water lines. Thus, the frequency of small business start-ups in the Grand Traverse Bay area is quite low. On the brighter side, the educational institutions in the area provide much of the training needed to create a productive labor force and are a factor in attracting desirable industries and services. In general, schools in the Grand Traverse Bay area are well cared for and adequately staffed. Beyond the high school level there is Northwestern Michigan College at Traverse City and North Central Michigan College at Petoskey, both of which are basically two-year vocational-technical schools. Northwestern Michigan College has recently established a Great Lakes Maritime Academy with a three-year program designed to train seamen specifically for Great Lakes shipping. Hospital facilities are generally adequate also —Petoskey and Traverse City have medical centers of some 8/ reknown in the area.- However, an analysis of the available medical personnel does not justify such a high opinion of the medical services throughout the entire ten-county area. For example, Table 13 shows that the counties in the Grand Traverse Bay area average only one hospital per county, while the average for the state of Michigan is three hospitals per county. The number of beds available per county is only 19 per cent of the average in other counties in the state, and the number of both doctors and dentists is only 18 per cent of the 8/ "Prologue for Accelerated Growth of Economy. y

-41 - TABLE 13 Medical Facilities in Grand Traverse Bay Area and Michigan Number Number Registered Licensed County of of Hospi- Medical Dentists Hospitals* tal Beds* Doctors t Emmet 2 240 48 13 Charlevoix 2 75 9 9 Antrim 0 0 2 7 Leelanau 1 33 3 5 Benzie 1 40 3 7 Grand Traverse 2 328 86 28 Kalkaska 1 18 3 2 Manistee 2 88 16 12 Wexford 1 141 20 9 Missaukee 0 0 3 1 Grand Traverse Bay area average 1 96 19 9 State of Michigan average 3 499 105 51 Grand Traverse Bay relative to state of Michigan 33% 19% 18% 18%, ~ ~ ~ I, i _I i — — ~- - -- - --—.-L~ll-II As of June 10, 1970. T As of March 20, 1970. T As of January, 1970. Source: Michigan Statistical Abstract, 1970. Bureau of Business Research computations.

I I -42 -average in other Michigan counties. Yet, if the facilities in the surrounding counties are poor, those in Grand Traverse County, and especially Traverse City, most nearly approach the average for other counties in the state. However, in no classification do the available medical facilities in Grand Traverse County exceed those available in the average county in the state. One of the more insidious problems of the region is a deficiency of adequate housing. In some communities the shortage is severe enough to prevent workmen from moving into the area and to restrict business expansion. The 1960 census report indicated that only 25 per cent of the housing units were connected to public sewers and only 76 per cent had hot and cold running water. In addition, Table 14 shows that only half as many housing units in the Grand Traverse Bay area had basements as in other non-SMSA counties in Michigan at the time of the 1960 housing census. Although on the average fewer homes were considered to be deteriorating or dilapidated in the Grand Traverse Bay area, the proportion of total housing units represented by these categories in the smaller area was almost identical to that of the state, with 5, 8 per cent dilapidated, 15. 2 per cent deteriorating, and 79. 0 sound units. The age of the housing in the Grand Traverse Bay area does not differ greatly from the age of housing throughout the state. Table 15 indicates that 2. 0 per cent of the housing units in existence at the time of the 1960 Census of Housing were built between January 1, 1959 and March, 1960, while 3. 0 per cent of the housing units were built at this time in other non-SMSA counties in Michigan. Of the remaining homes in

-43 - TABLE 14 Selected Housing Statistics April 1, 1960: Tra s Non-SMSA -Grand Traverse Grand Travrerse Counties in Bay as a PerBay Area Michigan centage of NonAverage Average SMSA Counties All housing units: Total number 6, 792 10, 920 61.9 Condition* Sound 5,367 8,639 62. 1 Deteriorating 1, 029 1,752 58.7 Dilapidated 396 579 68.4 Median number of rooms per housing unit 4.9 5.2 94.2 Number of housing units with bapement 3,499 6, 632 52. 8 Number of occupied housing units 4, 062 8, 157 49. 8 * Determined by census enumerator for Census of Housing.: 1960. Source: Michigan Statistical Abstract, 1970. Bureau of Business Research computations.

-44 -TABLE 15 Age of Housing in Michigan as of April 1, 1960 Grand Traverse Bay S o State of Michig an Area YAear BuiltA Number of Percentage Number of Percentage Houses of Total Houses of Total 1959 to March, 1960 1,336 2.0 75,445 3.0 1955 to 1958 6,320 9.3 289,659 11. 3 1950 to 1954 7,705 11.3 337,783 13.3 1940 to 1949 11,624 17.1 404,389 15.9 1939 or earlier 40,935 60.3 1,441,200 56.5 Total 67,920 100.0 2, 548,476 100.0 Source: Michigan Statistical Abstract, 1970, Bureau of Business Research computations,

I I -45 -the Grand Traverse Bay area, 9. 3 per cent were built between 1955 and 1958, 11.3 per cent between 1950 and 1954, 17. 1 per cent between 1940 and 1949, and 60. 3 per cent were built in 1939 or earlier. In other areas in the state, 11. 3 per cent of the houses were newly built between 1955 and 1958, 13. 3 per cent between 1950 and 1954, 15. 9 per cent between 1940 and 1949,and 56. 5 per cent were standing in 1939 or earlier. Thus, though the size and occupancy rate of homes in the Grand Traverse Bay area are considerably smaller than in other areas in the state, the age and condition of housing in the area is very comparable to other areas. Perhaps the most critical issue facing the communities in the region is the treatment and disposal of waste water. Only half of the communities in the Grand Traverse Bay area provide a sewer system at all. Though other areas use septic tanks and other sewage disposal methods, the use of inadequate septic tanks and outdoor privies in close proximity to lakes and streams presents an added hazard to the environment when the population is more than doubled during the warm summer months, The present sewage system at Traverse City has a primary treatment plant able to pass peak flows of 13 MGD (million gallons per day) which is adequate for all but the most intensive summer use, but the plant can efficiently remove only 20 per cent of the' suspended solids, Though recreation and tourism create a tremendous seasonal burden on the water and sewage treatment facilities, industries also contribute to the total burden on the area's

-46 - viL water resources. During 1969 the state of Michigan's Water Resource Commission rated 64 industrial establishments in the area, of which 31 had less than adequate waste water controls. For example, one fruit canning plant was reportedly dumping 547, 000 gallons of waste every day in Traverse Bay during the canning season in July and 9 / August.- Such practices only compound the problem of the already over-taxed water resources in the region. New Opportunities Important technological and social changes are providing new opportunities for rural areas with limited agricultural potential in the Upper Great Lakes region. Industries and workers are recognizing increasing diseconomies associated with urban locations, and many highly skilled people are placing added importance on the quality of the environment when making vocational and locational decisions. In an increasingly mobile and affluent society people are willing to travel greater distances for both work and recreational purposes. The interstate highway systems, better employment information systems, and a more mobile labor force make it easier for industries to locate away from urban areas. With imaginative planning and preparation, the Grand Traverse 9/ "Traverse City's 'Shaggy' Waters Endanger Tourism," Chicago Tribune Oct. 26, 1970.

-47 -Bay area can benefit socially and economically from these trends. Many of the region's characteristics that were once considered disadvantages, such as low population density and remoteness from metropolitan areas, could become assets. If the younger segments of the population can be properly educated and trained and can be induced to remain in the area as the nucleus of a productive labor force, and if ways can be found to utilize the experience and talents of the older members of the labor force, the problems associated with present imbalances in the age structure of the area may become opportunities. Since 1967 the Economic Development Assistance Program has provided funds for, among other projects, the expansion of Antrim County and Traverse City airports, water and sewer facilities in the village of Kalkaska, marinas in the cities of Petoskey, Manistee, and Northport, and dock facilities for the Great Lakes, Maritime Academy at Northwestern Michigan College. Because of the considerable evidence of pollution and deterioration of water resources in the region, the people of Traverse City in cooperation with five surrounding townships have assumed the leadership in seeking solutions to the area's water pollution problems by initiating the development of a regional sewage treatment plant, The present sewage treatment plant will be expanded to meet the flow capacities predicted for the year 1990 and modified to provide secondary treatment capable of removing 90 per cent of the impurities from sewage and industrial wastes, including 85 per cent phosphate removal. Once the plant is built, industries will be required to divert their wastes into the muncipal treatment system or to treat it themselves to meet pollution control standards.

-48 - There are many indications that the people in the Grand Traverse Bay area are beginning to promote the positive aspects of the region. Hunting, skiing, and snowmobiling facilities are being added to tourist and recreational areas to complement their summertime attractions and provide a year-round business. There also appears to be widespread public support of the excellent health care facilities at Petoskey and Traverse City. The money brought into the region by outsiders who use these facilities could provide an important source of strength for social and economic development throughout the region. However, these activities alone will not support continued growth in the region. New ideas must be initiated to ensure a sound foundation of technology for future growth. For example, short-field landing and takeoff capability and commercial aircraft could ease the problems associated with inadequate roads to recreational and industrial areas, while mobile and manufactured homes could be used as a temporary solution to the shortage of adequate housing in the region. But these are only two of the many problems which require the application of new ideas. To handle such a complex series of developmental problems, the area must attract the interest of technically qualified policy makers and induce them to lend themselves to the task of developing the economic potential of the region. Summary Early in this century the Grand Traverse Bay area was

-49 - characterized by vigorous economic activity and growth. However, it suffered a sharp decline in economic activity after 1910 and has since been considered as part of a socially and economically depressed area by the federal government. Though the region is Michigan's most popular area for recreation and tourism, only recently has it recovered a population and industrial growth rate comparable to the rest of the state and the nation. The major causes of the economic decline of the region have been: — The displacement of labor in resource-based industries because of technological change — The deterioration of resources —fur, lumber, and agriculture —and increased competition from other areas that supply the same resources — The small size of the region's enterprises — Remoteness from metropolitan markets As a direct result of the economic decline, the people in the most productive age group with the most marketable skills have migrated away from the region. This has created an imbalance in the age and skill levels of the population. Chronically high unemployment rates have been experienced because of the scarcity of job opportunities, the inability to match available job opportunities with qualified applicants, and reliance on seasonal economic activities. In addition, the low per capita earnings in even professional categories indicate a general underemployment of human resources in the area., The long period of lagging economic opportunity and growth and the low density of population has tended to separate the region

-50 - from the mainstream of national, social, and economic development. This has had a cumulative effect on the supporting activities needed to sustain economic growth and has been reflected in such things as inadequate housing, lack of investment funds, and outdated waste water treatment and disposal systems. In recent years there have been encouraging signs of favorable trends in some of the key factors used in measuring the region's economic and social health and its potential for development. On the basis of the region's strong growth in employment between 1959 and 1967 and a shift to faster growing industries, it is likely that employment growth rates will exceed those of the Upper Great Lakes region and the United States in the next decade. The new emphasis on environmental quality will tend to make the Grand Traverse Bay area increasingly attractive for new businesses, industries, homes, and recreational activity. At the same time there is encouraging evidence that the people of the area are actively concerned not only with the economic and social development of their region but also with the management of the water resources and environmental qualities which are the region's main source of economic potential. These people are fortunate to live in a region where flexibility is still possible in making the critical decisions concerning the trade-offs between economic development and environmental quality.

-51 - BIBLIOGRAPHY Battelle Memorial Institute. "Industries Suited for the Upper Great Lakes Region. A report by David C. Sweet, John M. Griffin, and Hal S. Maggied. Columbus, Ohio, 1970. Chicago Tribune. "Traverse City's 'Shaggy' Waters Endanger Tourism," October 26, 1970. "Development Strategies —Upper Great Lakes Region." Annual Report of the Upper Great Lakes Regional Commission. Washington, D.C., January, 1969. Floyd, Charles F., "The Changing Structure of Employment and Income in the Upper Great Lakes Region. " A report to the Office of Economic Research, Economic Development Administration. Washington, D. C., April, 1970. Michigan Statistical Abstract. 8th ed. Lansing, Mich.: Division of Research, Graduate School of Business Administration, Michigan State University, 1970. "Prologue for Accelerated Growth of Economy. " A report of the Northwest Michigan Development District. Traverse City, Michigan, October, 1968.

-52 - WORKING PAPERS Working Paper Number 1 "Reflections on Evolving Competitive Aspects in Major Industries," by Sidney C. Sufrin 2 "A Scoring System to Aid in Evaluating a Large Number of Pro.posed Public Works Projects by a Federal Agency, " by M. Lynn Spruill 3 "The Delphi Method: A Systems Approach to the Utilization of Experts in Technological and Environmental Forecasting," by John D. Ludlow 4 "What Consumers of Fashion Want to Know, " by Claude R. Martin — out of print. To be published in a forthcoming issue of the Journal of Retailing, S "Performance Issues of the Automobile Industry," by Sidney C. Sufrin, et. al. — out of print. To be published as a future Michigan Business Paper. 6 "Management Experience with Applications of Multidimensional Scaling Methods, " by James R. Taylor 7 "Profitability and Industry Concentration," by Daryl Winn 8 "Why Differences in Buying Time? A Multivariate Approach, " by Joseph W. Newman and Richard Staelin —out of print. To be published in a forthcoming issue of the Journal of arketi Research. 9 "The Contribution of the Professional Buyer to the Success or Failure of a Store, " by Claude R. Martin, Jr. 10 "An Empirical Comparison of Similarity and Preference Judgments in a Unidimensional Context," by James R. Taylor 1 1 "A Marketing Rationale for the Distribution of Automobiles, " by H. O. Helmers —out of print. To be published as a future Michigan Business Paper. 12 "Global Capital Markets, " by Merwin H. Waterman

-53 - V Working Paper Number 13 "The Theory of Double Jeopardy and Its Contribution to Understanding Consumer Behavior, by Claude R. Martin, Jr. 14 "A Study of the Sources and Uses of Information in the Development of Minority Enterprise —A Proposal for Research on Entrepreneurship," by Patricia Braden and H. Paul Root 15 "Program Auditing," by Andrew M. McCosh 16 "Time Series Forecasting Procedures for an Economic Simulation Model," by Kenneth 0. Cogger 17 "Models for Cash Flow Estimation in Capital Budgeting," by James T. Godfrey and W. Allen Spivey 18 "Optimization in Complex Management Systems," by W. Allen Spivey 19 "Support for Women's Lib: Management Performance, by Claude R. Martin, Jr. 20 "Innovations in the Economics of Project Investment, " by Donald G. Simons on 21 "Corporate Financial Modeling: Systems Analysis in Action," by Donn C. Achtenberg and William J. Wrobleski 22 '"Sea Grant Delphi Exercises: Techniques for Utilizing Informed Judgments of a Multidisciplinary Team of Researchers," by John D. Ludlow 23 "The Spanish in Nova Scotia in the XVI Century —A Hint in the Oak Island Treasure Mystery, " by Ross Wilhelm 24 "Financial and Operating Characteristics of Automobile Dealers and the Franchise System, " by Charles N. Davisson and Herbert F. Taggart —copies not available. 25 "Market Power, Product Planning, and Motivation," by H. Paul Root 26 "Competition and Consumer Alternatives," by H. Paul Root and Horst Sylvester

Working Paper Number 27 "Stepwise Regression Analysis Applied to Regional Economic Research, by Dick A. Leabo 28 "Some New Statistical Methods for Analyzing Incomplete Brand Preference Data," by M. J. Karson and W. J. Wrobleski 29 "Multivariate Methods in Marketing Research: A Further Attempt at Classification," by Thomas C. Kinnear and James R. Taylor 30 "A Deductive Approach to Linear Optimization, " by W. Allen Spivey 31 32 33 34 - "A Stochastic Model of the National Political System in the United States, " by Neal Campbell and Cyrus K. Motlagh "Implementation of Risk Analysis Models for the Management of Product Innovations," by H. Paul Root "The Utilization of Linear Optimization Models in Adaptive Planning and Control, by William K. Hall "The Determination of Optimal Customer Selection and Allocation Policies for Finite Queues in Parallel, " by William K. Hall