May 15th, 2018
The state of the West Michigan region
For many West Michigan businesses, 2018 began with the same fast pace and volatility felt throughout 2017. The good news? Business is up. West Michigan companies are investing in growth initiatives and creating jobs. The bad news? Familiar challenges persist. The rapid advancement of technology and automation continue their disruption, the future of NAFTA remains uncertain, and years of record-low
unemployment levels make talented employees harder to find.
In West Michigan, businesses are growing. The economy is booming. Yet, persistent challenges remain.
For many West Michigan businesses, 2018 began with the same fast pace and volatility felt throughout 2017. The good news? Business is up. West Michigan companies are investing in growth initiatives and creating jobs. The bad news? Familiar challenges persist. The rapid advancement of technology and automation continue their disruption, the future of NAFTA remains uncertain, and years of record-low unemployment levels make talented employees harder to find.
Although businesses are facing challenges and uncertainty, there are also opportunities. Many of West Michigan’s industries are growing at rates out-pacing the state and nation. The Right Place is dedicated to working with these growing industries, providing businesses the assistance they need to create jobs in our community. Specifically, we serve businesses in Kent, Ionia, Montcalm, and Newaygo counties, where we meet with over 400 companies each year.
These meetings give us qualitative insights into the challenges and opportunities faced by companies. Our business research and intelligence team is then able to compare that information with the quantitative labor market information platform, Emsi. This combination of qualitative and quantitative information provides more complete insight on regional economic trends. Let’s start with the quantitative side of the equation.
Regional Job Growth Trends
The four West Michigan counties served by The Right Place (Kent, Ionia, Newaygo, and Montcalm) all experienced significant job growth over the last several years. Despite having unemployment rates hovering between 3-5 percent the last two years, employers in the region added nearly 23,000 new jobs between 2015 and 2017, and the overall job growth rate was 5 percent across all industries. (See Figure 1)
To put these numbers into perspective, West Michigan’s 5 percent job growth rate was more than double that of the state and nation.
Job Growth by Industry Sector
Digging deeper into West Michigan’s job growth between 2015 and 2017, there are four industry sectors leading the pack: agribusiness and food processing, advanced manufacturing, construction, and services. (See Figure 2) Although employers across all industries created jobs and contributed to West Michigan’s high job growth rate, these industries were exceptional. Let’s take a closer look.
Agribusiness and Food Processing (+7% job growth, 960 new jobs)
Agribusiness and food processing job growth in West Michigan swelled by 7 percent, over and above both the state (5 percent) and nation (2 percent). Within that sector, food manufacturing jobs experienced growth at 10 percent (730 jobs), which is three times the national average.
One example of this growth was our economic development expansion project with refrigerated salad dressing manufacturer Litehouse. In November 2017, The Right Place and Litehouse announced the company would invest $12.1 million in an expansion, adding 77 new jobs at its Lowell facility over the next three years.
Advanced Manufacturing (+3%, 1,360 new jobs)
Manufacturing job growth in West Michigan grew by 3 percent, on par with Michigan’s job growth rate. However, both the region and state far exceeded the nation’s manufacturing growth rate of zero percent. Michigan’s reputation as one of the nation’s manufacturing strongholds continues to stand true.
Within the advanced manufacturing sector, three supply chain-related subsectors in the region experienced job growth worth noting: Transportation and Equipment Manufacturing (+4%, 635 new jobs), Furniture and Related Product Manufacturing (+8%, 476 new jobs), and Electrical Equipment and Component Manufacturing (+15%, 277 new jobs). This substantial growth speaks to the strength of West Michigan’s manufacturing supply chain.
Construction (+17%, 3,000 new jobs)
Overall, construction jobs jumped by 7 percent, nearly twice the state and national growth rate. West Michigan subcontractors and general contractors saw explosive job growth, but subcontractors, in particular, accounted for over half of the sector’s growth rate. These are businesses involved in building construction, but not responsible for the entire project, such as electricians, building material providers, safety and security suppliers, etc.
Services (+10%, 11,470 new jobs)
At 10 percent, the region’s services sector experienced surging growth between 2015 and 2017. Most of the growth was reported under the Administrative and Support Services sector, which grew by 20 percent. The Temporary Help Services subsector added 10,000 new jobs, accounting for the vast majority of that 20 percent job growth.
Many of these 10,000 jobs were located in manufacturing facilities, but since they are employed by temporary help service companies, they’re counted in this sector. In fact, if we took even half of these temporary jobs and counted them under the manufacturing sector, we’d see West Michigan’s already strong advanced manufacturing growth far exceed national averages.
Another growth area within the service sector is Professional, Scientific, and Technical Services, which experienced 4 percent job growth (750 new jobs) from 2015 to 2017. This sector includes a wide variety of knowledge-based jobs that require a high degree of expertise and training such as IT, accounting, legal, architecture, engineering, design, and management.
The Right Place completed several service sector-related economic development projects in 2017, including an expansion of Advantage Sales & Marketing in the City of Wyoming. This project alone is expected to generate a total investment of $4.3 million and create 100 new jobs.
The Voices of West Michigan Businesses
The quantitative data paints a clear picture: West Michigan’s agribusiness and food processing, advanced manufacturing, services, and construction sectors are growing the fastest, and out-pacing both state and national averages. This demonstrated exceptionalism is why they are included in The Right Place’s Strategic Plan for economic growth. It’s also why our business development team meets with over 400 of these companies each year to ensure their job growth remains here in West Michigan.
Of the 400 companies our team meets with annually, most are middle market companies with annual revenue between $1 million-$100 million (See Figure 3), and are distributed across several key industries.
These strategic business retention efforts account for 80 to 85 percent of our work in a given year. They also offer us qualitative insights into the challenges, opportunities, and trends facing companies in West Michigan, detailed further in the following section.
Rising sales and employment
Most of the business we met with in 2017 work in growing industry sectors. As expected, the majority reported both increases in sales and hiring. Many of these companies also report plans for upcoming expansions, with 60 percent expecting to expand in the next three years.
These expansion plans have the potential to add an additional boost to West Michigan’s economy in the future, and our team is connecting these companies to needed resources that remove barriers to their growth. We work as trusted partners with these companies to ensure they’re able to complete their expansion plans right here in the region.
The challenge of finding and retaining a talented and skilled workforce persists. Nearly 75 percent of manufacturers and over 65 percent of all companies told us they’re experiencing recruitment problems. While West Michigan’s two years of record-low unemployment are partly to blame, there’s no shortage of issues causing this talent crunch.
These issues are not unique to West Michigan. Employers nationwide are experiencing similar workforce challenges. However they’re experiencing recruitment problems. While West Michigan’s two years of record-low unemployment are partly to blame, there’s no shortage of issues causing this talent crunch. These issues are not unique to West Michigan. Employers nationwide are experiencing similar workforce challenges. However, the regions that are able to solve this workforce dilemma will be best positioned to compete globally. This is why The Right Place continues to work with local and statewide partners to make sure the West Michigan workforce possesses the skills companies need both now and in the future.
What are the skills companies look for? Many report they’re searching for engineers, entry-level workers, industrial maintenance, and management, to name a few. For more details, see Figure 7 and the skills sidebar in blue.
Beyond specific skills, our business development team is also hearing firms are struggling to meet inclusion goals. Companies are actively recruiting female and non-white employees, yet they face a low supply of candidates. Combine this with the all-time-high demand for this section of West Michigan’s workforce, and companies have significant difficulties reaching their goals.
Moving forward into 2018
Given what we’ve heard from West Michigan businesses, and the labor market data our team has analyzed, we expect many of last year’s challenges to spill over into 2018. Uncertainty remains the status quo and West Michigan’s workforce is stretched thin. Yet, simultaneously, many of the region’s industries are experiencing rapid job growth out-pacing the state and nation as a whole. Companies are capitalizing on opportunities and investing in their businesses.
If you would like to meet with The Right Place to discuss your future business opportunities and challenges, please contact us to set up a confidential meeting. A member of our team of experts will visit your company and assist you with accessing a wide variety of resources to keep you competitive locally, domestically, and globally. We look forward to working with you.