GRAYLING — Few buildings are taller than two stories in downtown Grayling. That soon could change, as a developer works to construct 42 apartments in a five-story building on a vacant corner.
Across the street, developers are evaluating whether it’s feasible to open an $8.3 million, four-story boutique hotel in a building that has become a local eyesore.
There’s another project brimming downtown, one so preliminary city planning officials won’t share the details yet.
“We’ve actually never seen investment like this all at once in Grayling,” said Rae Gosling, Grayling’s Main Street program director, who has worked for years to attract new investment to the city’s fading commercial center.
“To be able to house visitors right (downtown), I’m beyond excited for that,” she said. “I can not wait to have a hotel down there.”
That Grayling, a small fishing town in the northern Lower Peninsula, appears to be experiencing a development boom is not by accident. Local and state economic development leaders say the community’s willingness to change — such as, by accepting taller buildings — makes Grayling poised to attract future investment, and seize it when it comes.
The city for years has wanted to convert passing interstate traffic into visitors who spend money on restaurants and hotels. In the last couple of years, the impetus for some of Grayling’s momentum has taken shape a few miles to the south along I-75, inside a new factory that makes wood particleboard.
Arauco North America, owned by a Chilean forestry company, opened a new $450 million facility in April near Four Mile Road in Crawford County. The factory hired 225 workers, a head count that could grow beyond 250 with future expansion. When it opened, Arauco appeared to become the county’s second-largest employer.
In 2017, Bridge Magazine visited Grayling as Arauco’s plant was under construction. Local leaders saw promise in the company as an economic boost to a region that struggles with higher unemployment, low per-capita income and a shortage of housing. At the time, Arauco promised upwards of 200 jobs and $400 million in investment.
Two years later, Arauco says it has exceeded both targets as it works to increase its particleboard output to full production. Once there, the plant will produce 850,000 cubic meters of particleboard per year — the equivalent of about 50 truckloads each day, said Matt Gibbon, the Grayling plant manager. It’s producing about 20 truckloads each day today.
Meanwhile, Kirtland Community College is expanding its campus near Grayling and said it plans to offer a wood science technology program this fall, to train students in the area for future jobs with companies like Arauco.
Regional leaders say increased collaboration with help from the state’s Rising Tide program, created under former Republican Gov. Rick Snyder, played a role in Grayling’s success so far. They managed to streamline the development process and ease zoning laws that banned tall buildings. Grayling continues to receive state help to revamp its downtown through programs such as Redevelopment Ready Communities, which helps communities adopt cleaner, more efficient development processes and encourage entrepreneurship.
“They probably will never get another Arauco again, but (they’re) understanding how they can be supportive of people in their communities who want to start small businesses,” said Katharine Czarnecki, senior vice president of community development for the Michigan Economic Development Corp., which worked with Grayling leaders.
“This philosophy of working together, the community really embraces that,” Czarnecki said.
Particleboard as a springboard
Two years after Bridge last visited Grayling, several people in town still talk about Arauco as a springboard for the region’s economic development.
Gosling, the Main Street program director, said having a company the size of Arauco in the city’s backyard, with its hundreds of employees, doesn’t hurt when pitching the city to developers.
“It makes it a much easier sell, for sure,” she said.
More than 90 percent of Arauco’s employees are from Michigan, said Gibbon, Arauco’s Grayling plant manager. A sizable number are from Crawford and surrounding counties, the company said.
The hiring process took about two years, and Arauco interviewed more than 2,000 people for the 200-plus jobs, Gibbon said. Most are technicians, positions that require a high school diploma or GED and some work experience, though the company gives preference to candidates with an associate’s degree and computer skills to run factory machines.
Gibbon would not disclose Arauco’s entry hourly wage. But a recent company job posting for a particleboard technician indicates some positions pay $17.43 per hour to start, with the ability to exceed $22 per hour.
That’s considered a living wage for Grayling, and on the higher end in terms of what local manufacturers pay, said Alayne Hansen, business services professional for the Michigan Works Northeast Consortium, which includes Crawford County.
Arauco’s arrival has prompted some other manufacturers to increase entry-level salaries, Hansen said, though most don’t start near $17 per hour. Two manufacturing firms, she said, are at $16 and $18 per hour.
The company has also invested in training, starting an apprenticeship program for millwrights and electricians that promises employees an industry credential in partnership with Kirtland Community College and the U.S. Department of Labor. Gibbon said the company had more trouble finding people in electrical and mechanical fields, looking as far as Oregon to find qualified candidates.
Finding qualified labor is a challenge that has vexed employers across the state, and prompted Democratic Gov. Gretchen Whitmer to work with business groups to place a focus on helping Michiganders get the needed skills to fill in-demand jobs.
“You end up hiring good people that have the ability to learn, and you teach them the business,” Gibbon said. “This is the first (new) plant in our industry in over 20 years in North America. … There hasn’t been a huge expansion of growth of talent in North America that have knowledge of our industry.”
Arauco, based in Chile, has several manufacturing plants in the U.S. and Canada. Grayling is its only factory in Michigan; it operates another in Sault Ste. Marie, Ontario.
The company’s investment is one reason Kirtland Community College said it saw the opportunity to create new programs in wood science and automation process control. Students will learn how to work with automation in manufacturing, with a focus on wood products.
“Michigan is a leader in the production of forest products from logging to pressboard and specialized lumber manufacturing, window fashionings and the creation of a wide array of furniture,” Kirtland President Tom Quinn said in a news release. He could not be reached for additional comment.
“These short-term programs are designed to provide graduates with the skills needed to land in-demand jobs with high growth potential.”
That could be helpful as Arauco generates more business investment nearby, said Lacey Stephan, a sixth-generation area resident who now is supervisor of neighboring Grayling Township, where the plant is located.
Already, a trucking company opened off Four Mile Road, near Arauco, to service the wood industry, with another company looking to buy 25 acres, Stephan said; together, the two companies would create about 20 jobs. A diesel operation also purchased property nearby, with plans for close to 10 jobs, he said.
“It would not have happened without them here,” Stephan said of Arauco. “They’re our best salesmen. They really are.”
A new $7 million municipal water and sewer system is operating along the industrial Four Mile corridor, which Stephan said makes the area ripe for commercial or industrial development because it’s cheaper for a company to tie into a government-operated system than pay to build its own fire suppression system.
Yet the discovery of PFAS contaminants at a nearby U.S. Army airfield could be a hurdle to future development. The chemicals, used in firefighting and waterproofing materials, have been linked to human health problems.
“If we don’t get that under control and something happened on that end, I think that’s going to stall all this,” Stephan said. “Or, I think, there’s potential to.”
The housing hurdle
Despite living in Higgins Lake, a roughly 15-minute drive from Grayling, Kris Toreli said she never spent much time in the city until she was hired last July to work in shipping and logistics at Arauco.
“Quite frankly,” she said, “I didn’t even know where some places were in Grayling.”
Local leaders want that to change, adding that addressing a housing shortage that remains one of the region’s biggest challenges could be one way to do so.
Rental homes are largely income-based or designated for seniors, with a dearth of options for middle-income earners, said Traci Cook, executive director of the Grayling Regional Chamber of Commerce.
With Arauco’s 200-plus employees moving into the region, and expansion at Kirtland expected to attract more students, the need for housing is growing, Cook said.
A set of four townhome-style condominium units, called Duck Pond, are nearly complete and listed at $192,000, said Judy Steffen, who is developing the complex with her husband, Tom.
The privately financed project is believed to be the first condo development in the city, located just outside of downtown. Steffen said the couple would like to sell all four units within six months, and there has been early interest from potential buyers.
The five-story downtown apartment project is able to proceed because of the recent zoning change to allow for taller buildings, said Erich Podjaske, zoning administrator and economic development director for Grayling. Developers can build up to three stories under new zoning rules, with four- and five-story buildings approved on a case-by-case basis, he said.
Michigan Community Capital, a nonprofit that invests in community development projects, is leading development of the 42 studio, one- and two-bedroom apartments, at a cost of $7 million to $8 million, Podjaske said. About 2,100 square feet of retail space will be on the ground floor.
Michigan Community Capital could not be reached for comment. The Crawford County Avalanche quoted Marilyn Crowley, its investment director, as saying the group’s focus is to keep the housing affordable.
“We’ll never recoup our investment, but that’s not the point of it,” the newspaper reported Crowley as saying. “The point of it is to create housing.”
The project could break ground in the fall, should developers get approval for financing, Podjaske said.
The community has worked hard to get people to see “that, yes, we are willing to grow,” he told Bridge. “Having Arauco, obviously that helps a lot — 250 more jobs, (an) almost $500 million project, it obviously is going to bring a lot of attention to the community.”