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January 1994

State Roundups
Upper Peninsula

U.P. gears for military base closing

No amount of petitions signed at the local discount store or money raised through the sale of bumper stickers and soft drinks could prevent the closure of Sawyer Air Force Base.

In June the Defense Base Closure and Realignment Commission voted to close down the Upper Peninsula's (U.P.) single largest employer by September 1995.

Sawyer, 22 miles south of Marquette, employs more than 3,500 military personnel and nearly 900 civilians, but the spinoff effects of the closing could mean a loss of 4,000 civilian jobs, according to some estimates, leading to a U.P. unemployment rate of 20 percent or higher. And while the civilian jobs may be replaced, Herb Parsons, chief executive officer of the Marquette Area Chamber of Commerce and a member of the base conversion authority, worries about replacing the buying power of those 4,000, not to mention the loss of the $80 million to $100 million spent by military families annually in Marquette.

With 23 percent of Sawyer personnel living in off-base housing, Parsons predicts the real estate market will suffer. In addition, Northern Michigan University in Marquette expects to lose about 500 students and roughly $500,000 in tuition when the base closes. Sawyer students make up about 6 percent of the university's enrollment.

Community leaders across the U.P. already are taking steps to mitigate the effects of Sawyer's closure. Michigan Gov. John Engler created the Sawyer Air Force Base Conversion Authority and pledged $300,000 in the '93- '94 fiscal budget to support the authority's efforts to develop a reuse plan and to review business proposals for the base. Federal dollars will be available to ease the transition, and civilian employees will have access to federal and state job retraining programs.

The Air Force is allowing the authority to be more involved in decision-making regarding base assets, according to Nancy Douglas-Howayeck, chief executive officer of the Menominee Area Chamber of Commerce.

And a group of U.P. economic development professionals, called the Regional Economic Development Implementation team, is lending their expertise to the authority in developing the base reuse plan.

"We've already received proposals, some good, some bad," says Douglas- Howayeck, a member of the conversion authority. "But we're just glad that the interest level is there."

Some early suggestions have involved a regional airport, a prison facility and a US Forest Service Job Corps training center. "The key is getting the reuse plan under way. We want to have a futuristic look, not just a knee-jerk reaction," Douglas-Howayeck says.

"All of us in the U.P. recognize that our economic destiny hangs together," Douglas-Howayeck says. And while the closing has generated dire predictions for the U.P.'s economy, Parsons says, "We're not going to dry up and blow away."

State forests boost U.P. timber industry

In a move that will help stabilize the state's timber industry, the Michigan Legislature allotted an additional $900,000 to the state's timber sale budget for fiscal 1993-94.

The funds make possible the hiring of additional state forestry workers to prepare trees for cutting and offer loggers about 100,000 cords more timber, bringing state harvests to a total of about 900,000 cords. "This new funding is unprecedented in a tight budget year," says Peter Grieves, executive director of the Michigan Association of Timbermen. Grieves adds that the legislation is a recognition of the importance of the state's timber industry.

Based on a study prepared for the Timbermen Association, the trickle-down impact of the additional timber will be about $391 of new economic activity for every cord of wood harvested. In addition, the harvest is expected to create a total of nearly 1,400 new jobs and bring an additional $1 million in state tax revenue. The state's move also "provides security for the jobs that are there now," Grieves says.

In an aggressive market climate, Grieves says, the extra timber will command high stumpage fees. With timber supplies in the Upper Peninsula (U.P.) impacted by a timber shortage in the West, stumpage fees, the price paid for the right to harvest timber, have increased by over 20 percent, Grieves says.

In addition to the vote of confidence from the state Legislature, another program that will contribute to the viability of the U.P.'s timber industry is the Michigan Forest Development Fund. The fund is a prototype for a national program that allows the state to sell $20 million in revenue bonds. The proceeds from the bond sales go toward making an investment in the best-yielding forest practices. The bondholder would be repaid with revenues from results of the program. "These programs realize the potential that exists in the forest lands," Grieves says.

Forestry adds about $5 billion to the state economy annually and employs one of every 15 manufacturing workers.

—Kathy Cobb