Economic confidence appears stable this year
Report from Lakeshore Advantage shows 73% of employers in Ottawa, Allegan counties plan to expand in next three years.
Economic confidence of employers in Ottawa and Allegan counties looks relatively steady compared to past years.
That’s according to the 2019 economic update report released late last month by Zeeland-based economic development organization Lakeshore Advantage.
The report is an analysis of 120 senior-level executive interviews with primary employers in Allegan and Ottawa counties from June 2018 through May 2019.
The 38-question interview focused on companies’ growth areas, barriers and opportunities, helping Lakeshore Advantage understand where its focus should be, said Emily Staley, VP of marketing and communications for Lakeshore Advantage.
The first question asks employers to name the biggest achievement over the past three years, which often takes them a moment to answer.
“Everyone is so focused on forward movement that this actually gives them a time to reflect,” Staley said.
The report shows that 73% of employers in Ottawa and Allegan counties plan to expand in the next three years. Of those planning to expand, respondents report a possible average of investment of $7 million and 25 new jobs.
Though there is the occasional large project, the majority of company growth is incremental and focused on the innovation and automation, Staley said.
Hudsonville Ice Cream, for example, has had expansions in the past couple of years that have allowed the ice cream maker to add a test kitchen and two silos. The test kitchen has allowed the company to experiment with new flavors and focus on the local resources, which is what customers are looking for.
Using automation, Staley said Hudsonville Ice Cream has been able to produce more with fewer people, which is significant with a lack of talent in the area. And the use of automation creates high-tech jobs that pay more and require more skills, keeping talent here longer.
The report shows 69% of respondents reported an increasing market share of their products, meaning their companies are making more products at a higher quality, Staley said.
Eighty-nine percent of the companies said their sales are steady or increasing, similar to last year. Within that figure, the number of companies expecting increasing sales is lower than in previous years.
“What that may be overall is a reflection of our economy,” Staley said, which could be due to any number of reasons, including uncertainty regarding the upcoming election and predicted recession.
However, 12% of respondents said their international sales have grown over the past three years with over half saying international sales account for more than 20% of total sales.
Echoing ongoing concerns statewide, the top reported barrier to growth is availability of labor supply, with 79% of respondents reporting this as a hardship. The toughest roles to fill are for engineers, skilled trades and material handling. One in three companies also reported anticipated negative impacts from tariffs.
Both of these topics continue to be addressed through economic development and local chamber initiatives, programming and events.
The second-most reported barrier to growth is land and building availability and cost. There’s a 1.3% vacancy rate in West Michigan, according to Colliers International West Michigan, which means when companies want to expand in the area, they must do so on land they already own. Most requested industrial buildings are for 50,000-150,000 square feet.
“It's taking them a longer time to find what they're looking for. If anything becomes available, it's often gone before it even gets on the market,” Staley said.
Staley said she thinks spec building is an area of opportunity for construction companies.
Growth opportunities include the region’s manufacturing; construction; and professional, scientific and technical services industries. Each of these industries grew by 20%-25% in 2013-18 and have the potential to grow even more. Manufacturing accounts for 1 in 3 jobs in Ottawa and Allegan counties.
A lack of talent in those industries comes in part from such rapid growth, Staley said.
Companies also rated the quality of 25 services provided by the community.
Public transportation came last, behind highways, local streets, housing, child care and property taxes, respectively.
“Property tax assessment is usually dead last. So, people are saying they're less satisfied with these than they are with the taxes that they pay,” Staley said.
“We know that it's our role to bring these up as an issue and to make sure that they're addressed in our community.”
Respondents were most happy with fire, police and ambulance services, as well as chambers of commerce, community amenities, K-12 schools and colleges, and health care.