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By Rich Antonini
Office Managing Partner
Plante & Moran PLLC

You don’t need a crystal ball to see that it’s much better to be a manufacturer in West Michigan today than it was a few years ago — and we only expect this trend to continue as we enter 2011.

Manufacturers have come through the worst of the storm, taking difficult steps to weather the downturn. From auto suppliers to makers of consumer goods, manufacturers have spent the past two years getting lean in order to survive. They instituted cost-cutting measures, efficiency improvements, and expanded into new markets, allowing organizations to save precious resources and to grow.

As a result, West Michigan companies face the coming year with a measure of something that can cautiously be described as optimism. So why the optimism? What can we expect in 2011?

• While the banking environment is hardly healed, it’s healing. Commercial lenders in our city are once again on the streets exploring and evaluating lending opportunities. Lending is back in vogue, and that’s good news for manufacturers as they look to grow and expand in our region.
• Many manufacturers are hiring, and that hiring trend is expected to continue into 2011. The challenge may be finding enough skilled workers with the technical experience needed to fill the vacancies.
• We anticipate that production opportunities will continue to increase, prompted by growth in the auto industry in combination with pent-up consumer demand for many products. Quoting and bidding will be on the upswing, and with the spigot finally back open, manufacturers will begin ramping back up as they win more and more POs.
• “Onshoring” — or bringing back work that had been moved to lower-cost countries — will likely continue. We expect that manufacturers will continue to be required to be closer to the end users of their components. The global marketplace isn’t going away; we just hope to see more wins as U.S. producers pick up small market-share gains.
• Margins will continue to be compressed, which will remain a challenge into 2011. Manufacturers have found that their leaner organizations are allowing them to be more competitive on price, as price is still a big piece of the production puzzle win. However, we expect to see more production gains by West Michigan manufacturers and the ability to turn profits in a still very competitive environment.

Michigan’s economy will recover, although none of us really knows what the time horizon on that will be. By looking at our client base, we’re starting to hear stories of companies increasing profitability and building their workforce.

Going forward, a lot will depend on the next governor, leaders in legislature, overall cooperation from Lansing, and alignment with the business community. We need to seek a common vision, buy-in from all levels, leverage our state’s tremendous assets, and try some new things.

I think manufacturing will continue to be a large industry in West Michigan and Michigan as a whole, although I’m not convinced it will be as dominant as it once was. Nevertheless, we’ve got to hold on to manufacturing. Some scenarios suggest our state can only offer research and development, while manufacturing is done elsewhere. Those scenarios are not viable. There will always need to be a close connection between the manufacturing and design process, and manufacturers in Michigan have proven they can be extremely innovative solution providers to their customers.

West Michigan has all the right pieces to repair its economy, and now is a great time for business leaders to capitalize on this. The new leaders who will be heading to Washington from our state certainly have their work cut out for them. They must strive to build consensus in order to avoid paralysis.

One of the biggest tasks before lawmakers in Lansing is revising the Michigan Business Tax (MBT). While no one can agree on what needs to be done, most concur that the MBT is not the best vehicle to promote business growth and development in our state. Companies looking to locate or expand want — no, need — to have fair, understandable taxes. If the right changes aren’t made, we worry that we’ll continue to lose some of our manufacturing to other, savvier states that have developed and adhered to better tax systems.

Never underestimate the talent Michigan has produced. We have outstanding leaders who know how to manufacture and run organizations. As Steve Jobs put it, “Leadership is about inspiring people to do things they never thought they could.” I know our leaders who own and oversee organizations here in West Michigan will help inspire all of us to bring our state back to prosperity.

Rich Antonini is a partner at Plante & Moran, PLLC. Rich is the managing partner of the Grand Rapids office and concentrates his practice in manufacturing.

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