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.

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.

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.

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 back, businesses are selling, unemployment 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.

Why the good news for Michigan manufacturing not salvation for the average Joe

The second week of this month, May, was Michigan Manufacturing Week. Former governor, John Engler, was recently quoted as stating that Michigan manufacturing is “on the mend.” This sounds like great news for all of us in Michigan and in Kent County who have been holding out hope that the glory years of plentiful jobs and generous benefits might return some day to our fair state.

Business experts and economists have begun to be cautiously optimistic that Michigan, in recession for over a decade, is making strides towards growth and improvement. This is the third year in a row that manufacturers in Michigan have expanded and added jobs. 13,084 jobs were added just in 2013, and there are more than 662,000 people in various manufacturing sectors across the state.

From the standpoint of the historical manufacturing worker in Michigan, however, the increase in jobs available does not translate to more work for him right now. Many of the new jobs are in high tech areas, requiring degrees in STEM (Science, Technology, Engineering and Medicine) fields. Jay Baron, of the Center for Automotive Research said recently, "In Michigan we have a fairly high unemployment rate, yet there are a lot of for-hire signs at these companies," he said. "They need technical-skilled people; technicians who can fix machines when they break down, computer programmers and other sorts of positions."

If you have a smart son and daughter who will be entering college and is math or science inclined, there is some real opportunity for them as well as a reason to remain in state after college. But Michigan’s former prosperity was built on the availability of jobs that the average person, at least one with a good back and decent work ethic, could do.

In 1960 a high school graduate could easily find work he could support a family with, and the money made from those jobs “trickled down” to other jobs created out of the need to spend the excess income of the time. Money from the auto industry indirectly funded teachers, dentists, home builders, restaurateurs, Motown singers, and professional athletes and kept a lot of people fed and housed, clothed and cared for.

In 2013, after years of educators, politicians, and government officials pushing higher education as a ladder out of poverty, only a little over third of Michigan residents (38.7%) had a two or four-year college degree and only a fraction of those degrees were in STEM fields. What’s more, the average graduate of a four-year college or university had $28,840 in student loan debt to pay off and a real lack of possibilities of how to pay those loans off, given that the market for jobs that pay well enough to produce the excess needed to pay off debt is already glutted and shrinking. Essentially, despite any progress made over the last fifty years, and despite the fact that the unemployment rate in Kent County is the lowest in the state, no one can now graduate from high school and get a job that pays enough to support a family now. And by the time young people acquire enough education to get that job, they’ve also acquired enough debt to put off investments in life like marrying, having children, and buying a home.

In the long term, the technical jobs of today will benefit, to some extent, the average worker. Discoveries made and products developed by research and development departments will create more work over time. But the trend among large companies and manufacturers has been and continues to be automation of jobs once done by people. These decisions are not made entirely out of greed, either. With more global competition and future entitlement liabilities, U.S. companies have to keep their costs down to compete.

So what about the average Michigan worker or the one here in Grand Rapids? For now it looks like he’s caught between a rock and a hard place and is faced with a far less secure future unless he can somehow lever himself into a job in demand. This is actually much more in line with American reality before the post-War industrial boom. We would do well to look back at the strategies our ancestors had for economic survival and success - hard work, thrift, cooperation, and pragmatism.

Tech jobs: precariously balancing the education bubble and the employment bust

As mentioned before, the current employment situation in Michigan is complicated, both for young people and members of older generations. The University of Michigan's index of consumer confidence revealed higher than expected sentiment for April, but it remains to be seen whether this will be part of an overall trend or will follow the more common pattern of surge/slump.

Regardless, for workers trying to examine future trends - and parents of future workers - there seems to be some good news as regards manufacturing. The Michigan Legislature recently created the Skilled Trades Training Fund in order to ensure the education and development of a steady supply of skilled labor for our manufacturing sector.  According to the state's Workforce Development Agency website: "The STTF will provide competitive awards for the development and implementation of employer responsive training that will enhance talent incomes, productivity, and employment retention, while increasing the quality and competitiveness of Michigan's business." This fund will be used for technical training only, encourages the participation of manufacturing companies, and offers reimbursement incentives for employee retainment.

West Michigan manufacturing companies seeking to avoid a shortage of labor and turnover have also taken some of the training process into their own hands. Pridgeon & Clay, a Grand Rapids metal stamping company known for their manufacture of automotive parts has begun communicating with school districts and community colleges and has established an in-house training program to make sure their supply of skilled workers is not interrupted.  DeWys Manufacturing, Inc. also has created a 12-week training program to help maintain an active workforce at all times.

Other manufacturers are playing the long game. At a conference in Houston last month, Jim Fetterling, one of Dow Chemicals vice presidents, discussed the potential waves of economic revitalization resulting from the country's recent shale boom. The energy savings from cheaper, more plentiful natural gas offers new possibilities to U.S. companies. He believes that this new shale boom should not be squandered on exports, but used to rebuild the manufacturing sector and create jobs. Many of those new jobs will be skilled and Fitterling sees the fourth wave of the economic revitalization will be focused on research and development.

After what we Michiganders have seen happen to the auto industry over the past twenty years, it's hard to feel confidence about manufacturing, but the outlook for skilled workers, at least, is brighter. If you have a friend or family member graduating from high school in the next few years and considering college, direct them either to the STEM fields or skilled labor. That's where the future lies.