If you were anticipating a big slowdown in the West Michigan industrial economy, you might want to reconsider your current state of mind. The man who keeps close tabs on the strength of things says we’re “still strong,” and adds, “Summer should be good.”
For those who prefer the Reader’s Digest summary or Cliff’s Notes version, Dr. Brian Long, Director of Supply Chain Management Research at Grand Valley State University, offers those simple assessments following the compilation of data received in his latest monthly survey for the month of April. In fact he opens his Current Business Trends report with the statement, “The stronger-than-usual performance for the West Michigan economy has continued into the opening of the second quarter of 2018.” He does, however, caution that “The pace slowed to some extent.”
Professor Long publishes his regular monthly survey results to benchmark the region’s industrial output. His closely-watched New Orders Index of business improvement retreated to a +28 reading in April from March’s +34. In a similar move, the West Michigan Production Index edged lower to +28 from +31.
Long says his Purchasing Index “came off a recent high and eased to +34 from +37. However, the Employment Index rose to +23 from the previous month’s +19. Long tells us that, “Based on the comments from survey participants, most firms remain reasonably confident about future economic conditions.” However, he adds, “Pricing pressures for key commodities, such as most grades of plastic resins and all types of steel, are beginning to cut into the profitability for many firms.” Additionally, he notes, “Personnel shortages continue to plague many firms, and there is no end in sight,” for that issue.
Long says that just as in previous months, most capital equipment manufacturers continue to be positive, but there are some exceptions. He says, “Local automotive parts producers are still modestly expanding despite the slight downtick for the industry as a whole.” Meanwhile, “The office furniture industry is holding steady, but signs indicate that the peak for the current business cycle has been reached.” Long adds that most industrial distributors reported a good month in April, “much as they have since the beginning of the year.”
When it comes to future projections, Long says that the tariff announcements by the federal government definitely put a damper on the elation from earlier in the year. While pointing out that the numbers are still positive, Long says the Short-Term Business Outlook (next 3 to 6 month window) eased to +35 from +42, side-by-side with a trimming in the Long-Term Business Outlook to +40 from +44.
Long continues to share verbatim anecdotal comments from some of the survey participants, and here is a sampling of some of those sentiments for you:
- “We are seeing increasing difficulty with scheduling common carrier trucking pickups. Drivers are in short supply and lead times for pickups are growing along with freight costs.”
- “Trump train has left the station and now the President is doing everything he can to derail the train. Tariffs are driving up prices, and healthcare is driving inflationary pressure on wages. Now you have oil/fuel on the rise for the trifecta.”
- “Business is steady. Stainless and galvanized steel pricing settled down after the initial shock of the tariffs. The prices really did not move up drastically.”
- “We still need more production workers.”
- “It seems like the price of everything is going up.”
- “We are having a hard time getting summer help! We need around 40 part-time employees and are having a hard time getting them. We have increased the pay per hour but it has not helped.”
- “We have finally caught up with the rest of the area. March was very strong and the end of quarter numbers are where we like them. “
- “We experienced a 10-percent drop in production for April. May looks like it is going to be back up to normal production requirements.”
- “It’s a very busy climate, and it’s hard to find qualified workers.”
- “We’re slow on new order intake and outgoing shipment. We have several large orders pending, which will help.”
- “The first quarter of 2018 was strong!”
- “Tax cuts created immediate strong growth in the capital equipment/OEM industries.”
- “We can’t keep up on all of the price increase letters coming to us for plastic resins.”
- “We’re seeing a slight slowdown, but no alarms are sounding yet.”
You can read Professor Long’s full report by clicking the link below:
