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.