Published in Manufacturing
Engineering and product design firms such as Zeeland-based Disher Design & Development remain bullish on West Michigan’s manufacturing sector based on an influx of projects from area manufacturers. The company plans to invest $1.4 million to add 42 new positions across its operations in Zeeland and Ann Arbor to accommodate demand from customers. Engineering and product design firms such as Zeeland-based Disher Design & Development remain bullish on West Michigan’s manufacturing sector based on an influx of projects from area manufacturers. The company plans to invest $1.4 million to add 42 new positions across its operations in Zeeland and Ann Arbor to accommodate demand from customers. COURTESY PHOTO

OEMs continue to spend on outsourced product development and engineering

BY Sunday, April 03, 2016 03:27pm

Despite some uncertainty about the health of the global economy, West Michigan product development and engineering firms remain bullish on the manufacturing sector, at least for the short term. 

While manufacturers have hesitated in the past to invest significant resources into research and product development as their balance sheets recovered from the economic downturn, their sentiment has changed over the last year. 

That’s according to West Michigan product design and engineering firms that have capitalized on an overflow of outsourced work from manufacturers in the last year. 

“Now manufacturers are realizing the market is asking for new product development, so we have many customers asking us to develop a new product, innovation process or market research to find new growth areas,” said Dayna Beal, chief marketing officer and vice president of product development at Zeeland-based Disher Design & Development

“Manufacturers are willing to invest one or two million dollars in new product development, which has changed over the last two years,” he said. “(Before,) it was more focused on general engineering.” 

With offices in Zeeland and Ann Arbor, Disher Design works primarily with manufacturers in the automotive industry and announced plans in late February to invest $1.4 million in adding 42 new positions across its footprint. The company currently employs 130 people. 

Disher Design received a $200,000 performance-based Michigan Business Development Program grant from the state to support its growth, as MiBiz previously reported. 

The growth at Disher Design serves as a reflection of customers’ current level of manufacturing activity, Beal said. 

“We’re hiring as fast and as much as we can,” he said. “I think that investment bodes well (as) those companies are going to get into full production.”

Research and development expenses among large West Michigan manufacturers increased over the last year, according to a review of multiple public company filings. 

Herman Miller Inc. (Nasdaq: MLHR) posted a $12.3 million year-over-year increase in operating expenses in the third quarter of the 2016 fiscal year that ended Feb. 27, according to an earnings statement. The Zeeland-based office furniture manufacturer noted “the majority” of the increase in operating expenses “relates to spending on new product launch and marketing initiatives.” 

Moreover, the company increased spending on research and new product design by approximately $3 million in the 2015 fiscal year compared to the prior period, according to the company’s latest annual report.

Meanwhile, auto supplier Gentex Corp. (Nasdaq: GNTX) in Zeeland increased its annual spending on engineering, research and development by approximately $4 million to $88.3 million in 2015, according to a federal securities filing. 

The heightened corporate spending on R&D has translated into added work for local engineering and design firms. 

As such, Broadview Product Development Corp. remains bullish on its forecast for the manufacturing industry, particularly regarding customers in West Michigan. 

“We do plan to keep expanding in the next five years because the West Michigan economy is expanding,” said Rick Arnold, owner of the Zeeland-based engineering and product development firm. “Most clients do what we can do, so when we’re busy, it means they’re doing well. In general, we’re seeing a stable environment with some moderate increases.”

Broadview offers consulting, product development, rapid prototyping and other services for the office furniture and automotive industries. The firm doubled its business in the last two years and  plans to double again within the next three to five years,  Arnold said. 

The company generated between $3 million and $10 million in annual sales in 2015, Arnold said.

“I don’t see the investment like it was in the early ’90s or 2000s, (but) it’s more activity than ’08 and ’09,” Arnold said. “All the companies are looking to beat their (competitors) with new investment.” 


Despite the strong regional manufacturing economy, particularly in the automotive and aerospace industries, some forecasts are showing signs of softness going forward.

Executive sentiment toward new product development in the office furniture industry has tempered since mid 2015, according to a quarterly index compiled by Holland-based Michael A. Dunlap & Associates LLC. The recent survey, conducted in the first quarter of 2016, showed new product development activity at 61.33, a slight rebound from the fourth quarter of 2015 when the index dipped to 57.93. The index for new product development stood at 69.7 and 68.8 in the second and third quarters of 2015, respectively. 

Dunlap’s survey focuses on small to mid-size manufacturers and suppliers with annual sales between $25 million and $75 million. 

Moreover, office furniture production is expected to rise a modest 1 percent to $10.3 billion in 2016 before accelerating at a slightly higher rate of 4.8 percent to $10.8 billion in 2017, according to the latest forecast from the Business Institutional Furniture Manufacturers Association (BIFMA).

On the automotive side, most companies expect activity to remain strong until 2018, said Bobbie Blanton, president of the Grand Rapids-based Die Cad Group Inc. However, some firms have already experienced a softening in the market, she said. 

Market research firm IHS Automotive Group LLC projects the automotive sector will cool in 2018 when light vehicle sales are projected to retract from a high of 18.2 million units.

As a designer of dies and molds, Die Cad Group can serve as a leading indicator for activity in the automotive industry. The manufacturer maintains operations in Grand Rapids and Greenville. 

“We’re 18 months ahead of when everyone else is going to see (a slowdown),” Blanton said. “I think we’re going to be busy for 2016 and 2017 and in 2018 we’ll see a slowdown. We’re in the process of redoing trucks and SUVs and then things slowdown.”

While some peer companies have already started to experience a slowdown, Die Cad’s “wide-ranging” customers have contributed to the firm’s steady book of business, she added. 

As many design and engineering operations welcome the heightened level of activity, they say their busyness underscores the general uncertainty in the overall economy. 

“Engineering firms do better in uncertain times,” said Arnold of Broadview Product Development. “When the economy is improving but companies aren’t confident yet, we do well. When the economy is declining and there’s uncertainty, manufacturers outsource as well. When they’re stable, they’ll make the decision to add to their workforce for product design, rather than contracting.” 

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