For this Crystal Ball edition of MiBiz, our team of journalists spoke with dozens of executives across West Michigan about their outlook for 2019. From those conversations, we’ve subjectively boiled down their concerns into this list. The first three issues certainly rank as their major concerns, while the rest of the list were their main worries that rose to the forefront.
Crystal Ball 2019 Manufacturing Outlook: Headwinds, talent challenges tamp down forecast for manufacturing sectorWritten by Jessica Young
Whether the West Michigan manufacturing industry continues on an ongoing growth trend in 2019 or veers into a contraction remains uncertain. Economist Paul Isely, associate dean for undergraduate programs in the Seidman College of Business at Grand Valley State University, uses automotive, furniture, agriculture, and “amazingly nowadays” aerospace manufacturing to find the pulse of where the region’s economy is headed in the coming months and years.
Crystal Ball 2019 Manufacturing Roundtable: Manufacturing execs shift focus to internal operations, efficiencies in 2019Written by Joe Boomgaard
West Michigan-based manufacturing executives think 2019 marks a good time to take a pause from the recent breakneck pace of capital investments and acquisitions to focus on operations. That’s the general consensus from local manufacturing leaders across a range of industries who participated in a forward-looking roundtable discussion with MiBiz earlier this month.
West Michigan manufacturers are dealing with a host of issues, ranging from trade and tariffs to talent and technology. As they wade through those challenges, the Michigan Manufacturing Technology Center-West is there to help, according to Regional Director Justine Burdette. As MMTC seeks to “maintain that closeness and relationships with our manufacturers,” the organization is finding new ways to adapt and address their needs, she said.
Cascade Die Casting Group Inc. is a manufacturer heavily concentrated in the automotive industry. Although the company recently lost business related to the closure of several General Motors plants, the industry shift from low price-point cars to higher-margin trucks and SUVs has President Patrick Greene cautiously optimistic about continued growth in 2019.
This year, unemployment rates have dropped to an 18-year low and local manufacturers are scrambling to find new and innovative ways to grow without gaps. As founder of the advisory firm 100X LLC and chair of Vistage Executive Peer Group, an executive coaching organization, former manufacturing exec Steve Johandes helps dozens of local organizations and companies position themselves for “what’s next” in the market.
Women are critical to addressing the serious shortage of qualified applicants for skilled production positions, according to Kelly Springer, CEO of Metal Flow Corp., a Holland-based automotive supplier. Yet, relatively few women choose manufacturing careers. As chair of Inforum’s ManufacturingNext steering committee, Springer is helping to strengthen the talent pipeline of women who thrive in manufacturing professions.
After acquiring Nuvar Inc. in May from its long-time owner, Amy Sparks is executing on growth plans for the Holland-based manufacturer and developer of finished goods primarily for the contract furniture industry. While she’s mindful of some softening in the broader market, Sparks remains “cautiously optimistic” for the economy in 2019.
The 2019 forecast for the automotive industry remains steady, although sales are expected to experience “a little bit of a step down” to 16.8 million units compared to an expected 17.1 million units this year, according to Mike Wall, director of automotive analysis at IHS Markit. The big cloud over the industry currently hinges on tariffs and trade deals, specifically the United States Mexico Canada Agreement. Wall expects the USMCA to get enacted in some form, even though he does expect to see “some adjustments on the margins.”
Crystal Ball 2019 Real Estate & Development Outlook: Despite talent crunch for contractors, development firms expect strong 2019Written by Sydney Smith
Even with a number of large-scale projects being built, West Michigan developers say they’re still thinking big for 2019. Multiple real estate and construction executives say they see no sign of the industry slowing down in the new year, although many believe companies’ focus could shift away from market-rate housing in downtown Grand Rapids.
Rex Bell has served as president of Miller-Davis Co. for the last 22 years and has never seen a worker shortage like the company faces today. It’s a problem he expects to continue throughout 2019. With a busy year ahead for the Kalamazoo-based general contracting firm that focuses on higher education, K-12, nonprofit and industrial projects, he hopes for a renewed focus on training by companies and encouraging high school students to go into skilled trades.
For Housing Next Executive Director Ryan Kilpatrick, 2018 has been about laying the groundwork to get more affordable housing online in Ottawa County. Next year is “where the rubber hits the road,” when more than 600 new housing units will come online, with more yet in the pipeline, Kilpatrick said. Since January, Kilpatrick has worked with multiple municipalities to increase the amount of affordable housing in the county. He expects more tangible results to emerge in 2019.
Ask Planning Director Mike Franzak what’s going on in Muskegon right now, and he can rattle off a long list of projects either under construction or well into the planning stages. There’s so much activity, in fact, that the lakeshore city has started to think about issues like parking facilities after the many vacant former Muskegon Mall parcels downtown have been developed.
More so than many other areas of the country, West Michigan has experienced tremendous growth in 2018, according to Anirban Basu, who serves as the chief economist of the Associated Builders and Contractors, a national trade group. His outlook is less rosy for 2019, which could be a transitional year for the U.S. economy. Meanwhile, he thinks 2020 could be the beginnings of the next economic downturn.
As the construction industry continues to expand, companies with the best culture will find the most success. So says Mike Novakoski, the president and CEO of Holland-based general contractor Elzinga & Volkers Inc. Like many of the region’s construction managers, the company finds itself with a strong backlog heading into the New Year and few signs of a slowdown.
A new year means a fresh start for the Kalamazoo Downtown Partnership. Andrew Haan, president of the nonprofit organization, said with the beginning of the Downtown Economic Growth Authority and the rebranding of the Kalamazoo Downtown Partnership, formerly known as Downtown Kalamazoo Inc., there’s a more stable future moving forward as the city continues to grow.
Catalyst Development Co. LCC’s latest project in Kalamazoo, located at the southwest corner of North Edwards Street and Water Street, will bring more housing, offices and parking spaces to the growing downtown, which could spark some more retail development in the area. That’s according to Managing Director and Vice President Patti Owens, who said she does not see a slowdown in development coming any time soon for the Kalamazoo area.
After a busy year on K-12 school projects, Triangle Associates Inc. is expecting more of the same in 2019 with the passage of multiple school bonds in the November midterm election. According to Senior Vice President and Partner Mitch Watt, these long-term school projects will carry the general contractor in the event of a slowdown in the construction market.
It’s been two years since the Legislature passed sweeping energy reform bills, yet the laws remain front and center for those working behind the scenes on energy policy.
U.S. power companies are in the middle of a major shift that includes an increased focus on smaller, modular renewable energy projects and less on centralized fossil fuel plants. Jackson-based CMS Energy Corp., the parent company of Consumers Energy, is no different. Following the closure of its “classic seven” coal plants in 2016, Consumers released its long-term energy vision in June that spans the next two decades.
Interest rates likely will rise again in 2019. How much and how often remains the question following the latest quarter-point increase in the federal funds rate last week by the Federal Open Market Committee (FOMC), which for two years has been raising interest rates from historic lows reached a decade ago during the Great Recession.
Volatility came back to the stock market in 2018 and Todd Harvey doesn’t see it going away in 2019. The director of Fifth Third Private Bank since 2012 and a wealth management professional for 16 years, Harvey believes the market next year will have to cope with rising interest rates amid a U.S. economy that will continue growing, although at a slower rate.
Bank of America’s West Michigan operations had a record year in 2018 in terms of the number of new business clients. The year came on top of similar results in 2017, when the bank consolidated local operations into a single office in downtown Grand Rapids, a move that better organized and generated greater collaboration among staff in pursuing new business. Echoing the sentiment of other local executives, Tabben said business clients are working to cope with the region’s tight labor market.
Krista Flynn joined Chemical Bank in July as regional president for West Michigan, leading a market that includes Grand Rapids and Holland. She previously spent seven years in corporate banking at PNC Bank and 15 years at JPMorgan before going to work at Chemical, the largest bank based in Michigan. Chemical Bank, with more than $20.9 billion in total assets, has been building its commercial banking and wealth management staff, and is presently building out a new regional headquarters in downtown Grand Rapids. Parent company Chemical Financial Corp. also plans to develop a new corporate headquarters in downtown Detroit.
Kalamazoo-based Consumers Credit Union surpassed a key milestone when it hit $1 billion in assets back in May 2018. By the end of the third quarter, the 92,000-member credit union had grown assets further to $1.07 billion, and President and CEO Kit Snyder expects assets to close the year at $1.1 billion. The growth during 2018 came as Consumers Credit Union settled into a new headquarters in The Groves Engineering Business Technology Park in Kalamazoo.
Crystal Ball 2019 Health Care Outlook: Transparency, escalating drug costs among top issues for 2019Written by Mark Sanchez
Health care goes into 2019 facing many of the same issues and trends that have been driving industry change in recent years: the movement to value-based contracting, more use of telemedicine, growing concerns about cybersecurity, and greater price and cost transparency for consumers.
Dr. Rakesh Pai joined Metro Health – University of Michigan Health System in October as medical group president and chief population health officer. He came to the health system with experience in two major drivers in health care today: value-based contracts between insurers and care providers and population health. Dr. Pai, a cardiologist, previously served as associate chief medical officer for two years at Cambia Health Solutions in Portland, Ore., where he ran Regence Blue Cross Blue Shield of Oregon. Dr. Pai looks at 2019 as a year for Metro Health to further build on the two-year-old affiliation with U-M Health System.
The Western Michigan University Homer Stryker M.D. School of Medicine achieved significant milestones in 2018. Among them: Receiving full accreditations from The Higher Learning Commission and the Liaison Committee of Medical Education, plus graduating its inaugural class of 48 medical students in May, all of whom were placed in residencies across the country. Since opening in 2014, the medical school — commonly known as WMed — has ramped up to peak capacity of 84 students per incoming class. After “quite a great year” in 2018, founding Dean Hal Jenson said WMed is now focused on improving and building on the foundation that’s been established.
The past year confirmed to Toni Sperlbaum that workplace wellness is beginning to move in a new direction. Rather than focus on diet, exercise, and financial incentives for increasing participation and progress toward health goals, some employer wellness programs locally now take a broader approach. They encompass mental health, financial well-being and intrinsic motivation to encourage employees to maintain or improve their health, said Sperlbaum, the vice president of wellness at Health Plan Advocate in Grand Rapids. She expects that trend to pick up, albeit slowly, in West Michigan during the next year.
Tina Freese Decker became president and CEO at Spectrum Health on Sept. 1 following the retirement of Rick Breon. She leads West Michigan’s largest health system as the industry adapts to a combination of forces driving change, including greater consumerism and personalizing care to individual patients. As well, the industry has shifted to focus on keeping people healthy rather than treating them when they’re ill or injured, an economic model that rewards quality and pays care providers for outcomes rather than volume. Spectrum Health in 2018 moved into the Southwestern Michigan market with the merger of Lakeland Health in St. Joseph, and this fall formed a new partnership with Mary Free Bed Rehabilitation Hospital.