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Published in Manufacturing

Report shows ‘widely mixed’ outlook for West Michigan industrial activity

BY Tuesday, October 06, 2020 12:23pm

West Michigan’s industrial economic recovery remained on track through September, though some industries are clearly doing better than others, according to a new monthly activity index.

Indexes for production and purchases improved in September from August. A sales index declined one point to plus-18, and the employment index registered a plus-9, down four points from the prior month.

Brian Long COURTESY PHOTO

“The overall tenor of our survey participants remains widely mixed, with the ‘essential’ firms not losing a beat and others reopening to service pent-up demand,” Brian Long, director of supply chain management research at Grand Valley State University’s Seidman College of Business, wrote in his monthly report. “However, some less fortunate firms are growing increasingly pessimistic about returning to normal over the next few months — or even years.”

The short-term, three- to six-month business outlook among industrial purchasing managers in Grand Rapids and Kalamazoo registered a strong increase, moving to plus-20 for September from zero in August. The long-term business outlook improved by 22 points to a plus-36.

Long noted in his monthly report that the auto industry “is so far edging back to normal a little more quickly than originally anticipated.”

One of the concerns in Long’s September report was that a number of survey respondents reported problems with employees returning to work after they were temporarily laid off. That’s because they either found new jobs, decided to retire or drop out of the workforce, had problems with day care, or “felt unsafe recongregating with lots of other people.”

Another concern was West Michigan’s office furniture industry, which recorded sales declines and layoffs as the sector adjusted to the pandemic and the shift to working from home, perhaps permanently for some. Long wrote that “it is obvious many future office furniture customers are rethinking the concept of the traditional office.”

West Michigan furniture manufacturers need to adapt product designs to the new environment and lower costs to compete in the home-office market, Long said.

“Modern technology is now allowing some employees to productively work from home, and a significant number of these employees have indicated that they wish to continue doing so. In addition, office designers and engineers are feverishly working on new office designs that incorporate more separation and social distancing for office workers who must work in a traditional office and cannot work from home,” Long wrote. “These new market segments could be significant. All of this reconfiguration will take time, but how much time is still uncertain.”

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