West Michigan executive survey: Talent, inflation pose critical hurdles to growth

Talent and labor availability, inflation, and provide chain disruptions are the most important hurdles to development for West Michigan executives, whereas many plan to show to automation and value will increase to mitigate these dangers.

These are among the many key findings of an Affiliation for Company Development Western Michigan and MiBiz survey of 322 individuals performed in September. Almost 70 p.c of the respondents recognized as C-Suite executives or proprietor/accomplice, whereas roughly half got here from the manufacturing {and professional} companies sectors.

Respondents have been practically evenly distributed amongst small to massive corporations, with roughly one-third overseeing fewer than 10 workers, one-third with 10 to 99 workers, and one-third with greater than 100 workers.

Reflecting anecdotal proof and ongoing considerations over labor and expertise availability, 212 respondents, or about 65 p.c, listed “expertise/labor power” as their greatest hurdles to development over the subsequent yr. 

ACG Western Michigan Board member Greg McCormick stated the importance of expertise and labor points was maybe probably the most shocking element of the survey outcomes.

“It doesn’t present indicators of letting up, suggesting the broader Western Michigan neighborhood has a chance to make Grand Rapids a extra fascinating place to draw expertise,” McCormick stated, including that he’s questioning whether or not the “newest information round layoffs within the tech trade will unfold to our a part of the nation.”

Survey respondent Gunther Brinkman, normal supervisor of Battle Creek contract snack meals producer Snackwerks of Michigan LLC, confirmed that expertise availability is the first hurdle for the corporate’s development plans.

“We’ve tried to be artistic,” reminiscent of providing employees free onsite lessons in English as a second language, Brinkman stated. “We care about the entire particular person, not only a pair of arms that present as much as work.”

Based in 2016 by the previous director of innovation and R&D at Kellogg Co., Snackwerks has a 20,000-square-foot manufacturing facility and has grown to 115 workers. Brinkman stated specializing in workers’ first two weeks, which play a key function in figuring out whether or not a employee stays with an organization long term, has been a key precedence to extend retention.

Elsewhere within the survey, financial circumstances are additionally top-of-mind amongst executives, as about 40 p.c of respondents, or 131, listed inflation as one in every of their greatest hurdles, adopted by 109 individuals who listed provide chain and 68 individuals who named rates of interest amongst their greatest hurdles. Amongst actual property and development executives, specifically, rates of interest have been much more of a priority than expertise availability, in line with the survey.

“There’s clearly a priority once you have a look at inflation impression, curiosity impression and the impression of presidency insurance policies,” McCormick stated. “Eighty-seven p.c of whole respondents see authorities coverage as having a neutral-to-negative impact and it’s constant (amongst ACG members). Whenever you have a look at how rates of interest will impression, virtually half indicated it would gradual us down. Importantly, once you have a look at how corporations will fund their development, it’s primarily inner money move or house owners’ capital — not many are going into the market.”

Taking motion

To mitigate these dangers to development, survey respondents stated they deliberate to extend their use of expertise/automation in addition to enhance costs as the preferred methods. Almost one-third of the respondents stated rising compensation would assist their development plans, adopted by rationalizing their buyer base.

Equally, practically three-quarters of respondents stated that discovering new clients in current markets can be amongst their largest alternatives for development, adopted by pursuing new geographical markets and providing new merchandise. Investments in that development prioritized gross sales and advertising and marketing, adopted by recruiting, coaching, automation and software program, in line with the survey.

McCormick discovered “everybody’s willingness and want to put money into their individuals and expertise acquisition” to be the “most noteworthy” a part of the survey findings.

“I consider that could be a purpose why we should always be capable of appeal to better expertise to Western Michigan, and wish to higher perceive what enterprise house owners must do to maintain the expertise coming right here,” he stated. 

Along with “artistic” expertise retention methods, Snackwerks has skilled sufficient natural development over the previous yr that will probably be out of capability “within the not too distant future,” Brinkman stated.

That will require investing in off-site property for warehousing to clear up manufacturing area on the firm’s current facility, or by buying a close-by bakery “the place we will leverage a administration staff throughout two amenities.”

“We’re each of these choices,” Brinkman stated. 

As nicely, Snackwerks has invested in additional environment friendly and automatic manufacturing traces that enhance capability in addition to productiveness.

“There are a few explanation why we’re elevated automation,” he stated.

Total, mergers and acquisitions look like a minor precedence for enterprise executives as 56 p.c, or 181 respondents, indicated that they’d not pursue M&A exercise within the subsequent yr, whereas 90 respondents stated they’d. Related percentages on M&A curiosity performed out among the many manufacturing, actual property/development {and professional} companies sectors. Nevertheless, M&A curiosity was larger amongst ACG Western Michigan members.

“Clearly, the priority generated about inflation and rates of interest, whereas not shocking given the timing of the survey, is much more important now with the most recent rate of interest hike,” McCormick stated. “(This) might presumably be a purpose why numerous corporations aren’t M&A as a development technique.”