Outlook mostly upbeat for four Grand Valley industry sectors
The manufacturing and hospitality sectors are expected to grow in the Grand Valley even as retail and commercial development is poised for growth.
Meanwhile, the health care sector faces a transition in which providers likely will care for more patients, but for less money.
A panel presentation hosted by the Grand Junction Chamber of Commerce offered national and local outlooks on the four industry sectors.
For the manufacturing sector, the outlook is “really positive,” said Matthew Collins, chief operating officer at Lewis Engineering, a precision machining, assembly and design firm in Grand Junction.
The Institute of Supply Management Purchasing Managers Index, a monthly measure of the national manufacturing sector, climbed in February to its highest level in nearly seven years and has reflected growth for the sector for 19 consecutive months, Collins said. A portion of the PMI tracking manufacturing employment rose in February to its highest level since 1973.
Manufacturers enjoy increased demand to restock depleted inventories in export and domestic markets, Collins said, and indicators suggest that trend will continue.
“Manufacturing is going to fund a lot of the recovery,” he said.
Nonetheless, manufacturers face rising costs for metals and other materials that likely will result in higher prices as well as difficulty in recruiting skilled labor, he added.
Debbie Kovalik, a department director with the City of Grand Junction who oversees the Visitor & Convention Bureau, said she expects growth of 3 percent to 5 percent in Grand Valley hotel business in 2011, along with 3.2 percent increases in both lodging and sales tax collections.
A number of indicators, including improving consumer confidence, portend increased travel this year, although higher prices for gasoline could have an effect, Kovalik said. Travelers also will pay higher air fares as airlines react to higher fuel prices by reducing capacity.
Kovalik said conventions, festivals and other events will bring more people to the Grand Valley this year even as international travel, particularly from China, continues to constitute a growing portion of the local market.
That market will offer a total of nearly 200 more hotel rooms this year, she said, with the opening of the Candlewood Suites near 24 Road and the Springhill Suites by Marriott in downtown Grad Junction.
While retail and commercial development has slowed during the latest economic downturn in the Grand Valley, Sid Squirrell expects that situation to change. “I think we’re positioned really to take off quite nicely,” said Squirrell, an agent with Bray Commercial in Grand Junction.
Squirrell said the latest downturn in the economy and energy sector differs from the oil shale bust of the 1980s in that the market hasn’t been overbuilt, the population continues to grow and the recession has been national in scope.
Some shopping developments include a lot of vacant space, Squirrell said. There’s a total of about 113,000 square feet of available space in the Eastgate Shopping Center along North Avenue in Grand Junction, for example. But other shopping developments remain full, he said.
Increasing consumer spending should encourage retail and commercial development, as will lower prices for land, he said.
When it comes to residential development, Squirrell said he expects more apartment buildings to be constructed to accommodate growing demand for rental units. However, housing starts aren’t likely to lead the way to stronger economic recovery, he added.
The health care sector faces uncertainty in the aftermath of national reform legislation that could be changed or even ruled unconstitutional, said Michael McBride, president and chief executive officer of St. Mary’s Hospital & Regional Medical Center in Grand Junction.
What is more certain, McBride said, is that more people will receive health care coverage and providers will treat more patients. But less money will be available to pay for that care.
In the process, the industry will transition to a market-based accountable health care network with a greater focus on primary care.
At St. Mary’s, McBride said the mission of providing quality health care won’t change. “We do what we do as a ministry.”
But the business model will change, he said, as the hospital and medical center looks for ways to reduce expenses and waste, implements electronic medical records and prepares to join in an accountable health network.