October 18, 2014
The value of goods and services produced in Rock County in 2013 increased at a rate bettered only by a few other metro areas in the United States, further evidence that the area continues to bounce back from the Great Recession and the loss of its largest industry, local officials said.
Gross domestic product, a term typically applied to the economies of nations, also is tracked closer to home. In Rock Countyâ€”technically known as the Janesville-Beloit Metropolitan Statistic Areaâ€”the gross domestic product jumped 6 percent last year.
Of the nation’s 381 metropolitan areas, only 22 had bigger increases than Rock County, according to the U.S. Bureau of Economic Analysis.
â€œThere’s no question when you look at these numbers, either from a state or national perspective, we’re leading the pack,â€ said James Otterstein, Rock County’s economic development manager.
â€œArguably, GDP is one of the strongest economic indicators that economists, observers and others look at to measure the overall health of an economy in a given geographical area.â€
The government defines â€œreal GDPâ€ as the value of an area’s economic output adjusted for price changes such as inflation or deflation.
The bureau pegged the value of all goods and services produced in Rock County in 2013 at $5.4 billion.
Overall, real GDP increased in 292 of the nation’s 381 metropolitan areas in 2013.
Otterstein said Rock County’s GDP growth is important for two reasons.
â€œThe first is that it’s incremental, as it should be,â€ he said, noting the county has posted GDP growth of at least 1.5 percent every year since 2009.
â€œThe second is that it continues to move in the appropriate direction.â€
From 2012 to 2013, Rock County experienced double-digit GDP growth in the agriculture, mining, construction and information sectors.
The largest gainer, however, was the local professional and business services sector, which increased a whopping 40 percent in 2013 and was bettered by just one other metro area in the country.
State Collection Service is a perfect example.
The company that provides full-service accounts receivable management solutions announced Tuesday the lion’s share of a $5 million expansion that will generate 300 jobs will be done in Beloit.
In Janesville, SASid is another.
The homegrown company that develops, administrates and markets insurance products with proprietary paperless technologies–has grown so much that plans are in the works to move the business to a larger location.
SASid recently posted three-year revenue growth of more than 200 percent and again landed on a list of the nation’s fastest-growing companies.
â€œIt’s not just one company driving this train,â€ said John Beckord, president of Forward Janesville. â€œThe economic diversity that we’ve talked about for years in this community has finally become a reality.â€
Similar to many other metro areas, Rock County continues to transition to an economy dominated by services.
In 2004, 61 percent of the county’s private GDP came from service-producing industries.
The remaining 39 percent was generated by goods producers.
The gap between the two was even wider in 2013, when the spilt was 73 percent to 27 percent in favor of industries that produced services.
MANUFACTURING UPS AND DOWNS
National growth in manufacturing GDP was up about 2 percent in 2013.
The local manufacturing sectorâ€”which in 2013 accounted for about 18 percent of the metro area’s total GDPâ€”fell by 3 percent.
That’s significant for a couple of reasons:
— Since 2004, manufacturing’s claim on Rock County’s total GDP has fallen from 28 percent to 18 percent.
— Despite the significant drop in such a dominant sector, Rock County was still able to post total GDP in 2013 that nearly matched the 2004 output.
â€œThere’s no question that when it comes to manufacturing, Rock County is following a trend shared by many metro areas,â€ Otterstein said.
The local economy has successfully transitioned away from reliance on one major industry, he said.
Adjusted for inflation, Rock County’s manufacturers produced about $1.5 billion worth of product in 2004. Last year, their output was $962 million.
Despite the overall decrease in the local manufacturing sector, there was growth in some manufacturing subsectors.
Local producers of nondurable goods increased output by 3 percent in 2013 and by 9 percent since 2004.
Nondurable goods are immediately used by consumers or have a lifespan of three years or less. Examples include food and clothing, cosmetics and cleaning products, fuel, medication, office supplies, packaging and containers, paper and paper products, personal products, rubber, plastics, textiles, clothing and footwear.
Two Janesville manufacturers of nondurable goods are Prent Corp. and GOEX, which share common ownership.
Prent makes custom thermoform packaging and has facilities around the world.
GOEX extrudes resins into custom rigid plastic sheet and roll stock.
The latter’s double-digit growth for several years triggered construction of a $17 million plant that the company will move into early next year.
Prent also has posted significant growth, despite continued challenges of hiring workers, and plans to expand into the neighboring GOEX plant.
â€œGiven where many of these companies were, the growth in this sector is significant,â€ Otterstein said. â€œIt’s also an incredible testament to the fact that so many of these manufacturers made strategic decisions to stay here, invest and position themselves for the sales and hiring growth that we have seen.â€
In contrast, Rock County’s durable goods manufacturing sector has been declining.
Durable goods are products that do not need to be purchased frequently because they are made to last for a long time. Examples include washing machines and automobiles.
Since 2004, the sector’s output adjusted for inflation is down 52 percent.
In fact, the sector was cut in half between 2008 and 2009, a year of recession when General Motors and its suppliers closed plants in Janesville.
SIGNIFICANT PIECE OF THE PIE
Beckord said the local manufacturing sector is important and strong.
He listed recent expansions at Seneca, GOEX, Prent Corp. United Alloy and several other companies as examples of the rebounding economy.
â€œThese companies have made significant investments that position them for even more employment,â€ Beckord said. â€œYes, automation has helped them do more with fewer people, but when there’s a growing market for the products that are made here, that ultimately leads to more jobs.
â€œAll of that increases our tax base, and if you care at all about our county, cities, schools, you’d better be applauding that kind of growth.â€
Otterstein said the recent GDP numbers complement other local economic indicators to show that Rock County’s economy is continually improving.
Specifically, he points to:
— Declining unemployment rates.
— Residential real estate activity that is rising and in some cases matching levels before the Great Recession.
— Significantly lower industrial vacancy rates that have triggered new and speculative construction.
— Growing retail sales that indicates disposal income and consumer confidence levels steadily rising.
— Growing consumption of energy, which shows companies are producing more.
â€œWhile the pace and scale of the county’s post-Great Recession recovery hasn’t necessarily impacted every segment equitably, the aggregate impacts of the most commonly accepted indicators confirm that positive economic trends do exist,â€ Otterstein said.
â€œA compelling case can be made that Rock County’s economic landscape has improved. Could it be better? Of course. But that was the case with the pre-Great Recession period, too.â€