November 2008
Probable Economic Impact of the Lakeshore
The most direct economic impact of the proposed lakeshore will be upon the forestry and recreation industries of the Upper Peninsula region. These industries and associated economic opportunities are examined here.
Forestry
Forest industries are the largest single source of employment in the Upper Peninsula region. In 1960, thee were an estimated 9,900 engaged in logging, and 8,300 in forest product manufacturing, making a total of 18,200 full-time equivalent workers. This was about 18 percent of the total workforce of approximately 100,000. The gross income of the Upper Peninsula forest industry was estimated at $109 million in 1960.
The area around the proposed lakeshore is even more dependent upon logging and forest manufacturing operations than is the Upper Peninsula generally. Mills now drawing partially upon raw material from the “recreation zone” employ 190 full-time and 66 part-time workers. Their payroll is reported at $875,000. There are, in addition, many mills and plants drawing raw material from the general vicinity. Although not currently using pulpwood from the Upper Peninsula, the Kimberly-Clark Paper Mill at Munising employs 500 to 600 workers. Within a radius of 70 miles of the proposed lakeshore, there are 400 to 500 men employed in the woods with annual payrolls in excess of $1,000,000.
Because of regeneration of forest stands in the Upper Peninsula region, new wood processing plant development, there is now taking place and is expected to continue. The proposed Pictured Rocks National Lakeshore is not expected to have a substantial influence on the possible location of new wood-using plants in the region, or on the operation of large plants that are there now. There will be, however, increased economic pressure on small mills operating in the immediate vicinity, if timber harvest is suspended in the “recreation zone.”
Tourism
Two recent estimates of 1960 tourist expenditures in the Upper Peninsula average to $110 million. Other studies have shown 25 to 27 percent of tourist expenditures becoming direct personal income. On this basis, the direct incomes to operators and employees from tourism in 1960 were $27,500,000. In terms of $5,000 jobs this is an employment of 5,500 full-time equivalents, although, like forestry, it is probable that several times as many individuals had at least part-time employment. Thus, tourism in the Upper Peninsula is a major source of employment. Rapidly increasing national demand suggests that tourism could be a still larger economic contributor to the region.
Alger County tourist expenditures have been as high as $2.9 million in 1957 but dropped to $1.3 million by 1961. The drop was part of a stagnation or decline across the entire region. This decline is confirmed not only by year to year estimates of total expenditures but by traffic counts over the region, crossing at Mackinac Bridge and attendance at state parks.
The proposed Pictured Rocks Lakeshore would be expected to make its major contribution to Upper Peninsula tourism by helping to strengthen the “image” of this “north woods and lakes country” as a tourist destination area. The lakeshore would add a major destination point at which recreation services – things to see and do — would be available. As a part of the National Park System, it would give national status to the Upper Peninsula. The lakeshore would be a significant addition to the complex of regional attractions: from Mackinac Bridge, Mackinac Island, Soo Locks and Tahquamenon Falls in the east; to the copper mines, ghost towns and Fort Wilkins of the Copper Country (northwest); the Porcupine Mountains State Park in the west; plus a wide variety of resorts and private recreation developments throughout the region. Finally, the positive action of developing the proposed lakeshore could be expected to help spark constructive developments by private firms in the tourism industry.
Estimates of the gross income and employment due to the proposed lakeshore vary depending upon the future character of the Upper Peninsula’s tourism industry. If the industry retains its present relatively passive nature, added gross income to the region might be only $2,967,000 ten years from the present, generating an additional 167 full-time job-equivalents earning an average of $5,000 per year. On the other hand, if a more aggressive tourism industry develops, the added income and employment due to the proposed lakeshore could be more than twice the above projections, or $6,242,700 and 365 jobs, respectively. Both of these projections include an estimated $166,700 spent for 27 full-time job-equivalents for operating and maintaining the proposed lakeshore. These projections extend ten years into the future.
The lower of the two estimates is based upon an estimate of 500,000 annual visitors to the lakeshore, should it have been in full operation in 1962. Since the actual projection is for ten years later, the 500,000 is increased by 50 percent to 750,000 as an estimate of growth that may occur in a decade. There are a number of good indices for such estimates: (1) Crossings of the St. Mary’s River at Sault Ste. Marie increased by 160,000 between 1960 and 1961 when the Canadian North Shore Route was opened; (2) The Cape Hatteras National Seashore had an attendance of 649,000 in 1962. (3) Attendance at the Porcupine Mountains State Park is approximately 200,000 (it has only one overlook). (4) A number of specific attractions in the Upper Peninsula have had rapid growth in visitation despite recent stagnation in the general tourism industry of the region. (5) Elements of the National Park System that are resource-based have been experiencing an annual increase in the use of 9 to 12 percent, thus, a 50 percent increase in ten years appears reasonable in a passive setting.
Taxation
Removal of all privately owned land in the “recreation zone” from tax rolls would reduce the combined incomes to Munising Township, Munising City, and Burt Township by about $12,400. This is made of property tax revenues plus a $771 payment from the State of Michigan in lieu of taxes on state-owned lands.
A partial immediate compensation for this tax income reduction will result from park development work. Preliminary plans program an expenditure of $5,826,950 for this purpose over a four-year period. If even the lowest estimate of added employment due to the lakeshore is realized, personal property taxes of employees alone would account for more than tax losses. Property value improvement due to expanded business should add even more tax revenues.
NOTE: In 1962 there were only 164 structures in the proposed lakeshore. While buildings are distributed throughout the area, most intensive developments are on Miners Beach, Grand Sable Lake, and in and near Munising City.
Economic Opportunities
Implementation of the proposed lakeshore would expand economic opportunities for private entrepreneurs. This increase will be in the tourism industry. Firms and individuals with land holdings in the vicinity may have especially favorable opportunities for business profit.
Forest industries will suffer a reduction in the form of fewer job opportunities in logging operations and accelerated pressures that have already caused the closing of many smaller mills. This loss will be offset by increases in tourist revenue and related job opportunities. Most of the firms owning large tracts of land for forestry purposes that are in the “recreation zone,” also have other holdings outside the proposed lakeshore. They are, thus, in one of the better positions to take advantage of new business opportunities that would develop; they have access to land, to financing and to top-level management — all of these are ingredients badly needed by the region’s tourism industry.
General Conclusions
Evidence of this study suggests a definite advantage to the economy of Alger County and the Upper Peninsula in the establishment of the proposed Pictured Rocks National Lakeshore. This advantage would come through improved opportunities in the tourism industry. Local logging and milling operations would be curtailed but this loss would be much more than offset. In addition, it is expected that no important reduction in the region’s ability to attract wood processing industries would occur.