While the nation’s economy continues to flatten, many West Michigan manufacturers are finding business robust amid high demand for auto parts, according to Brian G. Long, director of Supply Management Research at Grand Valley’s Seidman College of Business.
“Locally, we are doing quite well, largely because of our automotive parts suppliers that are still going great guns,” Long said. “There is still a huge amount of backlog in the auto industry right now. People are waiting for cars to come in that they've literally ordered a month to a year earlier, and that keeps our local auto parts suppliers going.”
However, even many busy parts suppliers are still hamstrung by supply chain and labor force issues.
While some of the statistics in Long's June Purchasing Managers' Index Survey show a positive trend, the overall mood of respondents is growing more negative.
Long said concerns about a recession are at the forefront in the minds of many of the companies he surveys.
“There is a fear that the recession that everybody is talking about is coming. We may even be talking ourselves into a recession with all of these news broadcasts that continue to caution us. And of course, consumers at both the industrial and consumer level are starting to brace for the possibility that things aren't going to look too good in a few months.”
There may be some good news in the grocery aisle, Long noted, as prices for commodities like wheat, corn and sugar are beginning to decline.
“Now it's a long way from the beginning of the supply chain to your grocery cart,” Long said. “And it's going to take a long time for these costs to work their way through. But at least this aspect of the cost of food is beginning to moderate. I consider that to be a good sign.”
Here are a few statistical highlights from the indexes in June’s survey:
- Short-term business confidence index remained positive at +3, but well below the +44 reading of 14 months ago
- Long-term business confidence dropped to -3 in June vs. -2 in May
- New orders rose to +26 from +14 in May
- Employment rose to +23 from +12 in May
- Purchases rebounded to +12 after being flat in June
Survey respondents are from the region's major industrial manufacturers, distributors and industrial service organizations. The West Michigan survey is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as "same," "up" or "down."
