WEST MICHIGAN -- Two major cyclical industries in West Michigan are facing challenges in the new year.
Dr. Brian G. Long is the director of Supply Management Research at Grand Valley State University's Seidman College of Business. The Institute for Supply Management conducts a monthly survey of more than 40 purchasing managers concerning business conditions in the Greater Grand Rapids area and more than two dozen in Kalamazoo. Those include the region's major industrial manufacturers, distributors and industrial service organizations.
Dr. Long tells WOOD Radio a slowdown in production in the automotive parts sector and a cutback in the production of electric vehicles is having a negative impact.
"Business was promised that just simply isn't going to materialize," he said. "We're hoping over this coming year that extra capacity will, in fact, find a new home with new programs."
Long says the home office furniture industry has taken a hit, as well, with the market yet to adjust to lower demand after the COVID-19 pandemic.
"And they are just starting to try to catch up with that right now but, again, they are late," he said.
Employment and population growth in the Grand Rapids area have significantly stretched the housing market in recent years, leading to high demand, low inventory and substantial price increases.
"The interest rates are coming down. That does help," Long said. "But they are not coming down to the levels where they were just a few years ago. So, some people are trapped. They have a 2.3-percent mortgage; they want to move but they look at the payment for an identical house and it's a thousand dollars more a month."
Dr. Long says the aerospace industry - another big one in West Michigan - is doing relatively fine.
He examines the economic trends in a quarterly survey of purchasing managers in the region.
"But overall, we're looking at some negative statistics for both November and December for my survey," Dr. Long said.
The direction of the housing market can be difficult to predict because contractors are having trouble finding workers to do the various related jobs.
"A lot of the people who do tile, roofs, insulation, wiring - all those kinds of things - got out of residential housing altogether. They have other jobs now," he said, adding that contractors are being told by subcontractors they are not interested in getting back into the business again.
Long noted that high schools discouraged the trade skills for years, and that reduced the number of available workers in the marketplace. That has started to change, but it is a slow process.
The trades are a higher-paying industry now.
In his latest report titled, "West Michigan Current Business Trends," Dr. Long analyzes data collected from the last two weeks of December.
"The economic softness we reported for November has carried over for another month," it says. Regarding new orders, "Our index of business improvement, remained negative but moderated to -11 from -20.
"The November PRODUCTION Index, called “Output” by some economists, also came in negative but upticked to -17 from -23."
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