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By Andrew Domino | MiBiz
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The automotive industry, always a primary part of Michigan’s manufacturing world, is finally showing some signs of growth — but it’s unclear how important that growth is to Kalamazoo County.

George Erickcek, senior regional analyst for the Upjohn Institute for Employment Research, said employment with durable goods manufacturers, including automotive parts manufacturing, grew 6.1 percent in the county between June 2010 and June 2011. Auto parts manufacturing statewide showed even higher growth, about 7.6 percent.

“As of right now, this state once again is being supported by the auto industry,” Erickcek said.

Much of the automotive parts business, not surprisingly, is in the greater Detroit area. Erickcek said that led to southwest Michigan “missing the boat,” not using the renewed growth in auto parts business to spur new employment.

In contrast, a sector of manufacturing that seems to be struggling nationwide is housing. In Kalamazoo County, the Upjohn Institute reported 230 workers were cut from the construction and mining field over the first three months of the year. Contracts for new building fell nearly 30 percent.

“We’re treading water right now; I can’t see any industry that is seeing growth now — but we’re just happy industry isn’t in cut-back mode,” said Brian Long, director of supply chain management research at the Grand Valley State University Seidman College of Business.

A study of southwest Michigan manufacturing statistics written by Long and released in early July showed growth in every area included in the study, most dramatically in new orders, the report’s index of business improvement. New orders shot up 51 points, and smaller increases were seen in production, employment and purchases. A follow-up report in August featured growth in all areas as well, though with less force than was reported in the early July report. New orders only improved 39 points in late July.

Long highlighted improvement among automotive suppliers, who had been seeing a slowdown in the spring, tied to a reduction in shipments from Japanese companies affected by the earthquake in that country. In other parts of Michigan, less activity from auto suppliers led to bigger layoffs. Southwest Michigan’s diversified industries provided some protection from job cuts, Long said. Compared to other industries, big local employers in education, like Western Michigan University, and hospitals have seen fewer job cuts.

“Kalamazoo County ranks near the top in terms of (a lack of) layoffs,” he said. “Industrial distributors have seen more progress this year than the last two years combined.”

The major manufacturers, like most other companies in the county, are seeing a plateau in production now. So while local companies report they are doing well and statistics bear them out, Kalamazoo’s manufacturing and industrial market is still feeling the same pinch almost everyone in the U.S. is feeling. National and international factors, like the struggling global economy and the weak housing market, are having their effects even in a smaller region like Kalamazoo County, Long said.

“Existing industries are remaining strong but not expanding,” he said. “Business confidence is not high right now — that’s what’s holding back the expansion.”

WMU department chair for manufacturing engineering John Patten and students Nathan Christensen and Steven Srivastava see a bright future as companies look to the Green Manufacturing Initiative and GMIC for help greening their processes. PHOTO: JOHN LACKO

The business world may be moving slowly, but it’s still active enough to find jobs for college graduates, said John Patten, department chairman for manufacturing engineering at Western Michigan University.

“We’re getting more requests than we have grads available,” he said. “A few years ago, my comment was, ‘You need to expand your search outside Kalamazoo.’ Now I don’t see anything that would (prevent) growth.”

From WMU’s point of view, manufacturing jobs can be found in nearly every avenue, from small companies (with 500 or fewer employees) to national corporations with a Kalamazoo County presence, and from traditional manufacturing firms to those trying something different.

Christopher Sell, WMU assistant director for career services at the college of engineering, said the majority of graduates from his branch of the school find their first jobs in big-name companies like Johnson Controls, Eaton and Parker Hannifin. Zeeland-based automotive supplier Gentex is sponsoring a career fair at WMU in September. Engineering students are finding jobs at the Detroit Three automakers and at Nissan as well, Sell said.

Students and manufacturers are both looking forward to a more “green” market in coming years, hoping to find more jobs in sustainability and environmentally friendly technology.

Patten said the alternative fuel industry is steadily growing, with developers working on next-generation batteries at Next Alternative in Battle Creek, Holland’s new LG Chem and elsewhere. Research may be in other parts of Southwest Michigan, but Kalamazoo County workers are getting hands-on experience with alternative fuels.

“There’s a supply chain that needs to be worked — somebody has to make the parts,” Patten said.

Companies that might be willing to take a risk on new product lines or in another facility in a strong state and national economy are more hesitant now to invest in something they can’t sustain if the money supply runs low.

In the July report, Long writes that the new 6-percent flat rate tax on corporate profits, which replaced the unpopular Michigan Business Tax, will attract new business to the state, but it likely won’t happen for several years.

“We should see some moderate improvement in the unemployment rate over the next couple of years,” the report states.

Sustainable business and a boost from revised business tax rules may help the state in the future, but for now, industry must be careful not to slip back into old habits, warned Brad Watts, a regional analyst for the Upjohn Institute.

Writing on the Institute’s blog, Watts noted that a large part of Michigan’s recent manufacturing comeback was because of a rebound by the auto industry and its suppliers in Southwest Michigan and elsewhere.

“The state is still producing too few entrepreneurs, attracting too few new companies, and relying too much on tried and true companies for economic success,” Watts wrote.

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• brian long
• christopher sell
• george erickcek
• grand valley state university seidman college of business
• john patten
• kalamazoo
• western michigan university