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Sunday, 03 August 2014 22:00

Experts predict steady growth for Southwest Michigan manufacturers

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Bell's Brewery Inc. Bell's Brewery Inc. COURTESY PHOTO

Buoyed by the strength of the automotive industry, the growth of Southwest Michigan’s auto suppliers helped lead the region’s manufacturing sector to another year of job gains.

In fact, the region’s manufacturers largely grew at a rate that outpaced the statewide performance in the same period, according to the June 2014 Business Outlook report from the W.E. Upjohn Institute for Employment Research.

While statewide manufacturing employment growth increased 2.6 percent over the last year and flattened out significantly in the first quarter of 2014 as a harsh winter affected sales, manufacturing employment in Battle Creek rose 6.1 percent. Manufacturers added nearly 800 jobs in the metro area, according to the outlook. Meanwhile, Kalamazoo County manufacturing employment figures stayed flat, growing just 1 percent since 2013.

An uptick in the automotive industry has spurred solid growth for manufacturers across the supply chain — particularly for Tier-2 and Tier-3 suppliers — and has driven the growth of the region’s manufacturing sector, said Ron Kitchens, president of Southwest Michigan First.

“Auto created a headwind for us a year ago,” Kitchens told MiBiz. “If you’re in the auto business and making any kind of components, you’re having record years. It’s across the board.”

Based on strong demand for vehicles through the first half of the year, industry analyst IHS Automotive Group projects that North American light vehicle production will reach 17 million units this year, up nearly 5 percent or 800,000 units from last year. Given that steady growth, the auto industry will continue to buoy Southwest Michigan’s economy, Kitchens said.

Looking ahead, low interest rates, an aging fleet of existing cars on the road and the attraction of continued sales incentive programs should translate into further growth over the next two years, said George Erickcek, senior regional analyst at Upjohn Institute.

Beyond automotive, Southwest Michigan has also seen stable growth from manufacturers in the consumer products and life sciences fields, Kitchens said. Companies including Whirlpool Corp, Kellogg Co. and Pfizer Inc. have expanded the region’s diverse employment base, he said.

The majority of the region’s growth has come from existing companies expanding production and hiring local employees, Kitchens said. However, he said more and more foreign companies are being drawn to Southwest Michigan as manufacturers realize the benefits of reshoring and regionalizing production.

International and domestic companies choose to locate in Southwest Michigan because of its strong infrastructure, talent development and community support, said Karl Dehn, president of Battle Creek Unlimited.

Dehn points specifically to the Fort Custer Industrial Park — a 3,000-acre zone located in Battle Creek — as evidence of the area’s popularity among manufacturing companies. Vacancy rates in the park have fallen from 4.6 percent to 3.6 percent over the last year, bringing the total vacant space to 290,000 square feet, Dehn said.

The popularity of the area has prompted talks with developers to form a public-private partnership to create additional space for industrial development.

As manufacturers in the region expand and the supply of talent gets even more constrained, Kitchens expects some companies will struggle to find the workers they need to meet the increases in production.

“Every manufacturer I talk to has problems with a shortage of talent from entry-level through engineering,” Kitchens said.

To assist companies in finding employees, organizations like Southwest Michigan First and Battle Creek Unlimited have worked with institutions such as Kellogg Community College and Kalamazoo Valley Community College to create workforce development programs that train people in the skills companies are seeking, sources said.

Despite those talent challenges, Southwest Michigan should prepare for continued growth as the outlooks for the automotive and consumer products sectors remain bullish, Kitchens said.

“The market is incredibly strong right now, and I think we are on a nice roll,” he said.


SIDEBAR: Manufacturing company profiles

  • Autocam Corp. — The Kentwood-based supplier of components for fuel systems, engines, transmissions, power steering and electric motors invested $10 million to open a new, 50,000-square-foot manufacturing facility in Marshall, its second in the city. The need for the new location was driven by a key contract with DENSO Manufacturing Athens Tennessee for components in gasoline direct injection fuel systems, which could lead to over $20 million in new revenue for the company and an additional 50 jobs. The plant is about 45 percent occupied and should be fully utilized by 2018, the company said.
  • Bell’s Brewery Inc. — The Southwest Michigan craft beer manufacturer wrapped up its $12 million production facility expansion in Comstock Township this year — adding 12,000 square feet of space dedicated to canning, fermentation and refrigeration lines that are now operational. The company hired approximately 100 people last year across its operations, mostly concentrated in its production facilities. Bell’s predicts a further investment of $15 million in production expansions over the next year and plans to hire an additional 40 employees.
  • Brembo North America — Last month, the Italian high-end automotive brake systems manufacturer announced a $99.6 million investment to build a new foundry near its plant in Homer, southeast of Battle Creek, beginning in 2015. The company expects the approximately 98,000-square-foot facility to yield an annual 80,000 tons of castings once the facility is fully operational in 2017. With the investment, Brembo plans to create 250 jobs between the new location and its Plymouth R&D center and headquarters. This announcement comes on top of the company’s plans to invest $115 million and add more than 100 jobs over the next year to expand the Homer plant, where it expects to employ 450 people. Brembo supplies brakes for performance cars including the Cadillac ATS, Chevrolet Camaro Z/28 and Corvette Z06.
  • DENSO Manufacturing Michigan Inc. —  In the second year of its three-year, more than $100 million expansion project, the Tier-1 automotive supplier of air conditioning and engine cooling components completed its 52,000-square-foot production facility. The company added two new production lines and has plans for additional lines and updates. DENSO hired an additional 360 employees over the last year, surpassing its previous goal of 266 jobs.
  • Janesville Acoustics — Last year, the Southfield-based Tier-1 automotive supplier held the grand opening of its 300,000-square-foot Battle Creek plant. The company, which manufactures acoustic and thermal fiber insulation and molded fiber products, originally invested $10 million in the project and hired 150 employees. Since July 2013, Janesville has invested an additional $6 million into its facility — which it plans to finish by the end of the year — and added 200 more jobs.
  • MANN + HUMMEL USA —  An uptick in the automotive sector spurred the company to expand its existing Portage facility and acquire the now defunct Mueller Plastics building that’s adjacent to its facility. The German Tier-1 automotive supplier of powertrain components including air filters and intake manifolds and technical plastic components invested close to $70.5 million in both projects. The company plans to invest an additional $17 million in new building and equipment and to add an additional 70 jobs over the next three years.
  • Micro-LAM Technologies LLC — The Battle Creek-based manufacturing startup aims by the end of the year to commercialize its micro-laser machining technology, focusing on processes involved in manufacturing brittle materials. The company opened its doors in 2012 thanks in part to a grant from the National Science Foundation. Micro-LAM currently employs seven people and plans to add additional skilled positions as it moves toward its goal of $20 million in sales by 2017.
  • Post Holdings Inc. — The food manufacturing giant’s $30 million production expansion project is fully underway at its Battle Creek facility. The company chose Southwest Michigan over Jonesboro, Ark. after closing and consolidating its Modesto, Calif. plant. One of the area’s top manufacturers for wages and benefits, Post plans to add approximately 92 jobs as part of its expansion. The expansion represents a serious commitment by Post to the Battle Creek area, said Karl Dehn of Battle Creek Unlimited.
  • TODA America Inc. —  Entering the second phase of its expansion, the Tier-2 manufacturer of lithium-ion battery components plans to add about 10 skilled manufacturing jobs in 2015 at its $24 million project in Battle Creek. The expansion, driven in part by a grant from the Department of Energy, aims to double production capacity for the company’s current line. TODA, a joint venture between TODA KOGYO Corp. and ITOCHU Corp., serves industries spanning from automotive to consumer products for North America and portions of Europe.
  • WKW RoofRail Systems LLC — In June, the newly minted automotive supplier of aluminum roof rail systems announced plans to open a manufacturing plant in Battle Creek. A subsidiary of WKW Erbsloeh North America Inc. based in Wuppertal, Germany, the company plans to invest up to $23 million and create 186 jobs in Battle Creek. It was awarded a $950,000 performance-based grant from the Michigan Economic Development Corp. WKW RoofRail has started improvements at the former Toyota Tsusho North America plant in Fort Custer Industrial Park and should begin production toward the end of the year, Dehn said.
Read 49998 times Last modified on Wednesday, 13 August 2014 10:34
John Wiegand

Staff writer

jwiegand@mibiz.com

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