Wednesday, December 16, 2015

General Motors announces new investment in Wyoming plant

General Motors announced yesterday that it would be investing $43.35 million into its Wyoming plant at 2100 Burlingame Ave. SW. This investment should, by General Motors’ calculations, result in the retention of 15 jobs and the creation of 55 more.

In the past decades, the strength of automobile manufacturing has declined significantly and General Motors closed their 2-million-square-foot stamping plant on 36th St. in 2009. This structure was built in 1935, and the employment it ensured built Wyoming and sustained it through jobs and taxes, but the last 1,500 positions were terminated six years ago, and the building was subsequently demolished. The City of Wyoming has been trying to woo businesses to this property (named Site 36) for a number of years with personal property tax abatements and TIF redevelopment dollars and has had some success as manufacturing in general in West Michigan is now on the rise.

The Grand Rapids Operations plant on Burlingame now employs 530 men and women and manufactures a range of precision-machined components for Buick, Chevrolet, GMC, and Cadillac automobiles. These include lash adjusters, roller hydraulic valve lifters, cylinder deactivation lifters, continuously variable cam phasers, and other metal stampings. The planned expansion will add powertrain components to this list.

In a press release Grand Rapids Operations plant manager Rick Demuynck said, "This commitment not only reflects confidence in the Grand Rapids team, along with the leadership of the UAW, but also showcases the sense of ownership and pride our employees have in the products they build."

This is General Motors’ second announcement of planned investment in West Michigan operations this year. In June they announced that they would reactivate a portion of it’s Wyoming plant with a $119 million investment that would result in 300 new jobs.
Since the Michigan economy and the very infrastructure in most Michigan cities was built in large part to be dependent on the automobile, and many of our jobs in this state depend on the Big Three, whether through direct employment, work in related industries like auto shop jobs, or jobs funded by the taxes generated from auto manufacturing, any increase in this type of employment is welcome news. The necessary diversification of Michigan manufacturing has made this state better able to weather future economic problems, but auto jobs built our middle class, and gave opportunities to generations of people in this state they would not otherwise have had.

Tuesday, October 20, 2015

The State of Automotive Manufacturing in West Michigan

With all its woes, Detroit remains the center of automotive manufacturing, yet Grand Rapids is a far more manufacturing-dependent city overall.  So says a Brookings Institute report that measures how specialized a metro economy is in manufacturing. Although known as The Furniture City, Grand Rapids continues to play a very important part in the automotive parts industry.

While thousands of automotive parts can be found in any one car, including rearview mirrors, seatbelts made from narrow fabrics, and panel instruments, supplying any one part to a heavy-volume global car manufacturer can be a lucrative business. As global trade changes the playing field, market changes are afoot. This is especially true within the Grand Rapids area where new developments reveal both the industry’s continuing expansion, consolidation, and global reach.

For instance, Monroe LLC, a precision plastic molding company owned by the Huizenga Group, recently expanded its operations by relocating to an 85,000 square feet facility within the AeroTech Industrial Park near the Gerald R. Ford Airport.

In March, local welding and assembly company Gill Industries acquired Grand Rapids Spring & Stamping. The transaction “strengthens Gill's position as a full-service supplier of engineered, mechanical assemblies to the automotive, furniture and multi-use vehicle markets."

In May, Grand Rapids-based ADAC Automotive, a manufacturer of exterior and interior door-handles, announced its acquisition of India-based Minda-Valeo Security Systems. The deal is part of a joint venture with Witte Automotive of Germany. The partnership with Minda allows ADAC to “gain access to strategic markets in India and the surrounding regions."

And last month an Italian plastics fabrication company named HRSflow opened a 40,000-square-foot plant in Byron Center. The company specializes in creating spoilers, fenders, and parts for instrument and door panels. They have plans to more than double both employees and plant space in the next few years. Why? “We realized that only with local production facilities could we achieve the short delivery and response times and the overall flexibility that are needed, for example, in the automotive industry,” said Maurizio Bazzo, the company's founder.

Even Tesla got into the act. The electric-vehicle manufacturer acquired its supplier of stamped parts, Grand Rapids-based Riviera Tool. The acquisition is a first for Tesla, a company that now has its footprint in the Big Three’s backyard. The plant is now “working overtime to secure sufficient production capacity” for Tesla.

At present, the vast majority of automotive suppliers are either looking to either expand or move into a new facility. This desire to expand capacity is being driven by growing production volume within North America, and many automotive suppliers expect to see a growing number of  new vehicle launches in the next three years. Competitive positioning and global trade continues to drive robust production capacity within the local automotive parts industry.

The good that came out of a fruit crop gone bad

Aside from the automotive industry, Michigan is also famous for growing an abundance of fruit crops. The state boasts 36,000 acres of tart cherry trees, with roughly the same acreage involved in apple production. Both crops are primarily grown on small farms located near Lake Michigan. The region keeps cool in the spring until it’s likely no frost will occur. Indeed, the most abundant fruit-growing region is known as the Fruit Ridge and is located a few miles northwest of Grand Rapids. Being 800 feet in elevation, the ridge protects fruit blossoms and buds from the colder air that creates late frosts.

However, in March of 2012, cherry crops in West Michigan were heavily damaged by a spring frost. Two months later another spring frost wiped out 90% of the apple crops (Michigan produces about 18 million bushels of apples each year). The frost affected food processors who relied upon the state’s apple production for creating pie filling, butter, jellies, applesauce, vinegar, and apple juice/apple cider. Consequently, hundreds of millions of dollars in income were lost by fruit growers, packers, and processors.

Given the devastating economic impact of the frost, the Michigan Legislature created an emergency loan package available to farmers who qualified. Secured by collateral, these low-interest loans allowed farmers to borrow up to $400,000 to cover actual losses, minus any insurance payments. For growers who did not buy available crop insurance, the loan amount was reduced (tart cherry growers don’t generally have insurance available).
The state authorized $15 million to pay lenders for administrative costs and loan origination fees. In all, the loans helped the state’s fruit growing processing industry meet $300 million in economic need.

In the aftermath of the crisis, many packers and fruit growers made improvements to their marketing and branding efforts. Both also upgraded their production facilities to become more efficient. For instance, many farmers began installing high-speed doors to maintain constant production facility temperature. Several others incorporated high-speed internet into their operations.

More importantly, the state’s loan interest loans are helping farmers combat a growing labor shortage. Fortunately, by focusing on labor-saving technology, growers were able to minimize labor shortages in the field. With the extra time not used harvesting crops, farmers allocated additional loan funds to upgrade housing for migrant workers.

Becoming better prepared to handle such weather calamities is a silver lining that came out of the 2012 crop devastation. Fortunately, the State of Michigan worked with willing lenders to help facilitate this process.

Tuesday, July 28, 2015

Michigan manufacturing rebounds, but strong dollar may impede

The news for Michigan’s manufacturing sector keeps on getting brighter. Since the Great Recession, approximately 40 percent of the jobs Michigan lost in manufacturing have returned. That’s old news, though. Nationally, Michigan ranked number one in growth in manufacturing in 2014, and West Michigan counties Kent, Ottawa, and Macomb all ranked in the top ten counties nationwide for manufacturing growth.

Practically, this means for 2014, 22,064 more people were employed in the manufacturing sector. Two-thousand-four-hundred-ninety-two of those new jobs were created in Kent County. While West Michigan’s economy is diverse with jobs in education, healthcare, agribusiness, and information technology, manufacturing jobs tend to add an extra layer of employment beyond jobs just for technical workers or those with special training.

Two factors which may have an impact on this trend in the future are: regulation and the strength of the U.S. dollar. Over the past several years Governor Rick Snyder’s administration has made it a priority to create policy that would invite business to Michigan. Both the personal property tax and the Michigan Business Tax were eliminated and the regulatory system has been examined and reformed to create incentives for entrepreneurship. Key to this was the removal of unnecessary state forms and an increase in responsiveness from customer service representative at the state level.

Chuck Hadden, President and CEO of the Michigan Manufacturers Association, believes that manufacturers in Michigan have noticed, and Rob Fowler, President and CEO of the Small Business Association, agrees. Recent surveys have revealed increased trust and optimism among businessmen about the future of business in the state.

Complicating matters, however, is the strength of the dollar relative to other foreign currencies. A more valuable dollar acts as a disincentive for foreign companies or governments to buy U.S. made exports, at least in the short run. Guy Berger, a U.S. economist at RBS Securities Inc. recently said, “If the dollar remains this strong, we’re going to have headwinds for manufacturing for a while.”

Still whether manufacturing in Michigan continues on the path of growth that it has been enjoying or takes a bit of a hit because of outside forces beyond its control, the jobs it has created has been a boon for state residents. Michigan has for too long seen its students and creative class leave the state in search of better job opportunities. A rebounded manufacturing sector will result in seeing some of our native Michiganders return home.

Saturday, May 30, 2015

The aftereffects of Michigan's largest Ponzi scheme

You may have been aware that last year David McQueen was sentenced to 30 years in prison as a result of his part in one of  Michigan's largest Ponzi schemes. This huge fraud, which affected 800 families and involved 46.5 million dollars in losses, has resulted in misery across the area for people who invested up to hundreds of thousands of dollars in savings as a way of accumulating money for retirement and now must live only on Social Security benefits.

McQueen's company, Accelerated Income Growth, or AIG, did not start out as a Ponzi scheme. He himself invested in a company called Multiple Return Transactions, or MRT, which was itself a Ponzi scheme. MRT paid out and then went under, leaving McQueen with the responsibility of telling his own investors that he'd lost their funds. Instead, McQueen chose to gamble with the remaining money in various speculative ventures while sending out statements showing growth of the investors' original funds. In August of 2009, both the IRS and the FBI obtained search warrants and the full breadth of the AIG's fraud came to light.

McQueen's co-conspirator, Trent Francke, testified against him in return for a plea deal. He received a 7-year sentence. Another man, Jason Juberg, is serving a 5-year sentence. The federal investigation continues.

Recently, the case received more coverage because of attempts to recover funds lost to investors. Last November, the Resurrection Life Church in Grandville received an email from Assistant U.S. Attorney Matthew Borgula requesting that they return the $300,000 Mr. McQueen donated to them. In April MLive reported that Resurrection Life's Board of Elders had rejected the request, saying that part of the money was donated 9 years ago and the church used it for their building program and cannot return it. Bernard Blaukamp, the church's pastor, stated that he believed the church had been unfairly targeted by the FBI in a way that other business and charity recipients of the money had not.

Then this month a Lansing woman is fighting claims to a coin collection made by Trent Francke's father, Edward Francke. The assets in question included 15 American Eagle silver coins, 20 one-ounce American Eagle gold coins, as well as silver bars and silver rounds. The woman believes that Edward Francke is holding this collection for his son and will return it to him when he has served his prison sentence. Edward Francke says he wired the funds used to purchase this collection to his son and is entitled to keep it. Their hearing is set for June 30.

This case has a number of unfortunate aspects to it: the number of people who were conned out of their savings, the retirement age of those people and their inability to make up the loss, the enormous amount of money that is just - poof! - gone, and the way that money crisscrossed through the community leaving any number of potential conflicts between those who were victimized and those who benefited from this crime, all unknowingly. Expect more of this mess to be revealed as the FBI works their way through the files.

Friday, May 15, 2015

Kent County tops list for most job gains in the state

Recent Bureau of Labor Statistics data paints a rosier picture of the current Grand Rapids economy, certainly one that is recovering from its low point during the Great Recession. The real estate market has bounced backbusinesses are sellingunemployment is down statewide, but particularly in West Michigan. Approximately half of the almost 156,000 jobs the state lost during the last downturn have returned, but the Grand Rapids area has claimed a much larger percentage of that number than other counties.

Of the top 10 counties in Michigan with the largest job growth, Kent County and Ottawa County have added more jobs than the next 8 counties combined. Since 2005, approximately 54,000 jobs have been added - 24,000 of them just within the first three quarters of 2014. Southeast Michigan, the area of the state with the strongest economic performance for decades has been slow to regain jobs partly because the automotive industry is still considerably weakened, and so many businesses there were directly related to car manufacturing.

In West Michigan, manufacturing is coming back stronger because of its greater diversification and more adaptable population. If the strong union climate in the Detroit Metro Area is a disincentive to would be employers, West Michigan, by contrast, looks appealing. The furniture sector is back on track, and a number of manufacturing companies, including Dicastal North America and Plasan Carbon Composites, have announced plans to relocate to West Michigan. Grand Rapids also has strong healthcare, research, and education sectors as well as many opportunities in agribusiness.

Unfortunately, as with many of the jobs created after the recession, current wages do not match those of the jobs lost. Union jobs left, and part-time or lower wage jobs have replaced them. And despite the economic wounds inflicted on Southeast Michigan, the economy of just Oakland County is still three times as large as Kent County’s, and wages there are still higher.
Additionally, while jobs are coming back to the area, in manufacturing and other high tech fields, economists are worried that the lack of skilled workers will leave many positions unfilled and will cost industries and the economy in terms of unrealized growth and profit. This is hardly a local problem. Young people today are overlooking manufacturing as a potential employer and failing to pursue training in S.T.E.M. fields where many of the most lucrative positions will be.

Still, both industry and the State of Michigan have been motivated lately to create incentives to lure knowledge workers here, and the growth and diversification of the economy can only be seen as very positive developments for the people living here who wish to stay here and prosper.

Sunday, April 19, 2015

Does Grand Rapids have its own business mining gay rights outrage for profit?

Local business owner Brian Klawiter posted a rant on his Facebook page last Tuesday, April 14, stating that his company, Dieseltec in Grandville, would refuse to serve a list of people he considered guilty of committing immoral acts, including the dishonest, thieves, and “openly gay person or persons.” As might be expected, Klawiter’s statement provoked a large backlash from the gay community and other people angry at Klawiter’s discriminatory service policy. In a follow up post on Facebook on April 16, Klawiter stated that he and his family had received death threats as well as threats to burn down both Dieseltec and his home. There have also been calls to boycott Dieseltec, and angry activists have gone online to denounce Klawiter and affect Dieseltec’s online profile, including writing negative reviews of Dieseltec on Yelp.

Saturday, April 18, protestors demonstrated peacefully in front of Dieseltec, while supporters of Klawiter and his position held a barbeque on the property. A GoFundMe campaign was started to show financial support for Klawiter, but the site took it down after it received complaints.

Many lawsuits have been launched in other states against business owners who have declined to offer services to gay people, particularly with regards to wedding related goods and services. Gay marriage has been legalized in many states over the past several years, but it is still a polarizing issue among people. This issue is often framed as civil rights versus religious freedoms by those for or against gay marriage, respectively.

From a civil rights standpoint in Michigan, however, what Brian Klawiter is doing is not illegal. Neither the State of Michigan nor the City of Grandville includes protections for gay people in its legal codes, although there has been some discussion of adding “sexual orientation” and “gender identity” to the state’s civil rights act as recently as last fall. Also, it's unclear what Klawiter means by "openly gay." Is this something that can be judged by outward appearance? By anyone? Physical appearance can be deceiving and, for that matter, be altered by dress, grooming, or plastic surgery.

As a religious freedom issue, there’s considerable support among certain denominations to support Klawiter’s position as the morally right one. Religious groups are feeling pressure to conform to emerging social norms that are in direct conflict with their stated beliefs. This has created a situation in which a minor rant from a small business owner on social media can escalate quickly to another skirmish in our cultural war.

Lately, though, profit appears to be another motivating factor in some of these cases. Add the ability to easily raise funds to support cultural warriors through sites like GoFundMe to a desire among many to make a stand for what’s right, and it doesn’t seem like jumping to conclusions to wonder if there will be cases like this in which the real motivating factor isn’t a concern for civil rights, free speech, or religious freedom, but a desire to hoover up money from passionate people who are easily manipulated for gain.

So the question here is, does Grand Rapids now have its own charlatan, or is Klawiter sincere and this just one more skirmish in America's never ending culture wars?

Sunday, March 1, 2015

Micro-distilleries aim to succeed in Michigan

Michigan has developed a reputation in food and beverages of late. Many people are already aware that the state’s agriculture is the second most diverse in the nation, producing over 300 food commodities commercially. Michigan’s food and agriculture sectors form a $91.4 billion industry, employing one out of four workers in the state.

While Michigan’s burgeoning foodie and craft beer movements have received a significant amount of press, another industry is struggling to succeed on its own: distilled liquor. It may seem strange, given how popular craft beer is here. Grand Rapids has been named Beer City, U.S.A. twice now, but despite its reliance on local agriculture and what would seem to be a similarly receptive customer base, micro-distilling is a much smaller industry here, decades behind micro-brewing. Part of the problem is that Michigan is a “control state,” meaning that for hard spirits the state sets the minimum retail price and it controls its distribution as well. The current system guarantees significant tax revenues to the state, but gives distilleries significantly less of an incentive to remain in Michigan, as opposed to moving to states with less burdensome regulations and taxes.

Hard liquor entrepreneurs who want to remain and succeed in state have created strategies to work around bureaucratic barriers. These include:
  • Selling and shipping product elsewhere, particularly to places that do not have consumption taxes.
  • Opening up tasting rooms that allow consumers to try their product in small amounts and then to purchase in bulk if they enjoy it. Because local distilleries do not have the advertising budgets available to their national and international competitors, they must harness word of mouth and hope to convert local hard liquor enthusiasts to be their volunteer salesmen.
  • Lobbying to reform Michigan’s liquor control laws, some of which are left over from Prohibition days.
Still for all of these complications, Michigan ranks sixth in the U.S. for distilleries, so the potential for success is there. And locally there is movement. On Grand Rapids’s Westside Long Road Distillers is renovating space to open a tasting room and micro-distillery. This will be the first grain-to-glass distillery in the city and will offer a vodka, a whiskey, a gin, and a malted gin to try. And while Long Road Distillers will not as of yet have a landscaped garden like Founder’s in which to sip their product, there will be space to socialize and view the distilling process. The number of distilleries is also growing at the state-wide level, from a handful to over 30 licenses.

Since local distilleries depend on local agriculture to make their product, locavores and food and beverage enthusiasts can feel doubly good about patronizing these establishments. And it’s also good for the local economy - and, of course, the state, which makes sure to take its cut.

Wednesday, February 18, 2015

Backyard Chickens in the city?

If you are one of the people in Grand Rapids who has been dying for the city commission to allow the city to move further along with the Slow Food movement and allow residents to keep chickens, this month might hold out hope for you.

On Tuesday, February 10, city leaders passed several amendments to a proposed ordinance, modifying the circumstances under which home owners could keep chickens on their property. Among these, they lowered the lot size required to keep 4 chickens from 5,000 square feet to 3,800 square feet which would allow more residents to keep chickens. Commissioners discussed among themselves a provision requiring neighbor consent. If a neighbor sharing a lot line objects to the chickens during the 21-day period after a permit is filled out, no chickens would be allowed.

There was disagreement between the commissioners about whether to allow chickens on duplex properties, but this passed 4-3. Multi-family buildings like apartment complexes will not be allowed to keep chickens. The commission also specified that chickens not be housed within 50 feet of any backyard catch basin, to ensure that any chicken waste would not spread into the water system. Roosters, of course, will not be allowed.

The number of chickens to be allowed per property is still undecided. Commissioners will meet again and vote on this ordinance on February 24. If passed, the two-year trial run would begin May 1, 2015.

It's well known that there are already chickens on many properties throughout the city, and not just on properties that can accommodate the provision that chickens must be housed no closer than 100 feet from any other dwelling, dwelling unit, spring, stream, drainage ditch, or drain. In neighborhoods largely populated by immigrants, they are particularly present - but illegally. Some families have tried keeping chickens semi-secretly but neighbors complained and they were cited and fined.

The passing of this proposed ordinance would allow residents who wish to follow local law to keep chickens and not violate their consciences. Many of these families already have gardens within the city, and are willing to put the time and the money into modifying their landscapes to make them more suitable for chickens, whether that means adding a chicken house, a small pond, or fencing off part of their yard to make room. They believe strongly that adding chickens would strengthen community and be a learning experience for their children and neighbors about where real food originates.

Frankly, given the city's reputation for food innovation, this is long overdue. It's time to make that dream a reality in Grand Rapids.

Sunday, February 1, 2015

Housing developers bank on continued growth of downtown Grand Rapids

Last fall Forbes ranked Grand Rapids/Wyoming area the fifth fastest growing economy in the United States based on data gathered from Bureau of Economic Analysis study, and more recently The Brookings Institution rated the Grand Rapids economy 69th in the world for growth. Employment levels and GDP are up, and the continuing development happening within the city would seem to back this up.

A significant part of the recent development involves creating spaces for the knowledge workers moving to the city as a result of increased demand from the area’s manufacturing, healthcare, research, and educational sectors - specifically spaces for them to live.

While the trend during the mid-20th century was for successful people to move away from cities and out to the suburbs, the reverse is true now. Many Millennials are choosing to live a car-free lifestyle, and that can only be done downtown and only when the right amenities are available, which means that they have to be within walking or public transit distance of work, grocery stores, retail outlets, farmer’s markets, restaurants, museums, entertainment and sports venues, and schools. There have to be doctors, dentists, clinics, pharmacies, and hospitals nearby. And in this moment in Grand Rapids, that is possible, particularly downtown.
This is why there is so much interest in building new apartments, condos, and townhouses and revitalizing buildings that have sat empty for years. Demand is back.

On the north side of the city, 616 Development is planning to build a mixed-use space of apartments and retail on the Creston Corridor. Not far from there Franklin Partners is looking to develop the Display Pack building, an old furniture factory. The 375,000 square foot complex on Monroe could be transformed into 200 loft apartments - or possibly be used for office space. A little further towards downtown on Monroe, Orion Real Estate Solutions has tentative plans for a high-rise residential building on the riverfront, and the Belknap Lookout Brownstones development will offer high end condos and apartments across the highway from the Medical Mile, within easy walking distance for healthcare workers and their families.

Near Grand Valley’s downtown campus, Rockford Construction has plans to build two 5-story buildings housing 91 market rate apartments on the south side of W. Fulton St. This housing is to accommodate Grand Valley’s surging enrollment. And right downtown, a multi-story residential tower expansion of the B.O.B. will be moving forward after several previous postponements.

For those tempted to experience the downtown lifestyle in up-and-coming Grand Rapids, now is the time to explore the multiplying options.