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Newsmaker: Auto suppliers drive manufacturing reversal
Editor’s note: The Business Journal is recognizing 10 nominees for its 2012 Newsmaker of the Year Award, based on their long-term economic impact on the region. One nominee will be featured each day on grbj.com — leading up to the Jan. 21 announcement of the 2012 Grand Rapids Business Journal Newsmaker of the Year.
The staggering drop in new, light-vehicle sales in North America that began in 2008 put Michigan squarely in the crosshairs of the Great Recession.
Sales that had approached 17 million a year a couple of years previous plummeted to little more than 10 million in 2009, prompting closed plants, scarred lives and a bleeding economic landscape in West Michigan.
Industries ranging from tool & die to stamping and injection molding suffered, with major GM plants in Coopersville and Wyoming closing forever as two of the three Big Three filed for bankruptcy.
As the auto industry goes, so goes Michigan — and the auto industry is definitely back, albeit with an occasional nervous glance over its shoulder.
“Auto sales continue to pick up,” said George Erickcek of the W.E. Upjohn Institute for Employment Research, as he displayed a chart in mid December at the annual jobs forecast for the Grand Rapids region.
Stats from the U.S. Bureau of Economic Analysis indicate that North American car and light-truck sales will total 14.3 million units in 2012, and the University of Michigan is forecasting that number will reach 15 million in 2013 and 15.6 million in 2014.
“The auto industry is in the driver’s seat,” said Erickcek, showing how the 2012 increase in employment in West Michigan’s auto-related manufacturing was almost double the next highest growth segment, machinery production, and almost triple plastics manufacturing.
Municipalities like Grand Rapids and Wyoming were busy throughout 2012 offering tax relief incentives to auto suppliers interested in expanding here, such as Undercar Products Group and Benteler Automotive.
Grand Rapids Economic Development Director Kara Wood said 2012 was a good year for investment and job growth and “a lot of the new investment was by manufacturers seeing growth in the auto industry again.”
Magna Sealing and Glass Systems in Holland Township is investing as much as $10 million there to expand development and commercialization of a new sunroof technology for cars — which is expected to create about 177 new jobs.
Gentex, the manufacturer of advanced rear-view mirrors installed in new cars worldwide, had 2,800 employees in Zeeland in the summer of 2008. The crash of the auto industry cut the employee roster by 700 by December that year, marking the company’s first mass layoff.
More than a year ago, however, the auto industry recovery was so pronounced that Gentex was having to expand quickly into more manufacturing and R&D space and ramping up its hiring.
2012 ended with auto sales up by 13 percent over 2011, but the industry and its suppliers are treading carefully, as reflected by comments Jim Zawacki made at year end to a Business Journal reporter.
Zawacki, chairman of Grand Rapids Spring & Stamping, a long-time supplier to the auto industry, is openly nervous about costs going up — because the auto industry suppliers are already being hammered by their customers on price.
And if the economy sputters a little too much, if Europe’s financial troubles get worse, if too much more fiscal policy uncertainty comes out of Washington, some of those potential new car customers in 2013 may just change their minds, he said.
But so far, so good.