Talking Manufacturing In Michigan

Michigan Manufacturers Association President and CEO Chuck Hadden has one word to describe the state of manufacturing in Michigan: Vibrant.

In northwest Michigan’s 10-county region, manufacturing was the top growth industry between 2009 and 2012, adding 1,700 jobs for a growth rate of 14.4 percent, according to data supplied by Northwest Michigan Works!.

But manufacturers locally and around the state face challenges that include a perception problem and a lack of talent – issues that Hadden’s group, the state and others continue to tackle.

The TCBN spoke with Hadden on the industry and on recent beneficial public-policy changes, including legislation signed in June that revises the Michigan Merit Curriculum and allows some career and technical education coursework to count toward a high school diploma — a change the MMA hopes will help bolster the manufacturing talent pipeline – and the Proposal 1-enabled phaseout of Michigan’s tax on personal property like equipment, furniture and tools.

Michigan voters’ August primary approval of Proposal 1 set the stage to continue a small business personal property tax exemption that began this year and start phased-in manufacturing exemptions in 2016, with all eligible manufacturing personal property to be exempt by 2023.

Let’s start with a big item for you. The MMA has long championed reforming Michigan’s personal property tax and, if Proposal 1 passes a legal challenge that’s been raised, phase-out of the tax will be cemented. What are things that manufacturers should now be thinking about, or maybe planning for, as they look toward the anticipated end of the tax?

I think the first thing is, is that they should not be afraid to invest right now. Because the first machinery that comes off the (tax) rolls, will be the newest ones. So they should feel free to invest in new machinery, and in 2016, it will start coming off the rolls.

So you think this will encourage Michigan manufacturers to add equipment and grow?

I absolutely think it does. It’s like any time you’re trying to make a household decision on a big ticket item, if you knew you were going to be taxed on it every year after that. This is the time, that if you have the money and the time, to start making those investments.

And manufacturers will now be able to better-compete with businesses in other states that don’t have this tax?

That’s correct. And other countries. Ontario doesn’t have this tax. It helps make us much more competitive in the long run.

Will the MMA be involved in any promotion, directed outside Michigan, of this business climate/competitiveness change?

We haven’t talked to the MEDC (Michigan Economic Development Corp.) about that, but I know they were very interested in seeing this passed. I think we’re going to try to work with them very closely. First to help the companies that are here, understand it and take advantage of it. And I know other states are noticing and I think we may be able to use that to our advantage.

In northwest Michigan, the manufacturing industry is projected to continue growing but an impediment is a lack of workers, with manufacturers telling Northwest Michigan Works! and its community partners that finding talent is their number one concern. Many say they could obtain more contracts and expand their companies if they could find more skilled workers. Do you see Michigan making progress in addressing the skilled trades gap?

I think we’re on the right path. The flexible options…made to the Michigan Merit Curriculum, that’s the right direction that we need to go.

We have a perception problem though, and that perception starts in homes. Where they don’t understand what manufacturing is today, and how different it is, and what a good living it can still provide for a family.

And, we’re at a point right now where we’re going to have a number of people retiring in the next five years. The average manufacturing worker right now is age 55.

So that poses a challenge?

Yes it does. Where are those new workers going to come from?

Local manufacturers have talked about the issue of manufacturing’s misperception, such as that it is dead-end work or not a promising industry. Such perceptions can affect young people’s career decisions. How can local manufacturers combat this? What can they or others locally do to encourage manufacturing as a career?

First of all, National Manufacturing Day is Oct. 3. I would encourage the northwest Michigan manufacturers to have some open houses during that day, get students in there.

There’s a lot of opportunities out there, that people just don’t think about. There’s a perception problem; we need to break that down by getting people out to our facilities and seeing what we’re doing.

These are now high-tech jobs. It’s a lot different than it used to be. So we need to emphasize that more and more. I see it in all manufacturing. This change happened shortly after the recession. Everybody has just upped their game, because they had to. It is a redesigned, reengineered manufacturer that most people have not had a chance to see yet.

Do manufacturers need to think about strong, positive branding of their companies, as they recruit workers?

I think from the manufacturer’s standpoint, when I emphasize this with them all the time, what they don’t understand is their front door is their website. When the student goes to the website…if you show something that’s old, not very relevant, then you’re going to turn the kids off, and you’re not going to catch the talent that may come to you. These kids don’t go in and fill out applications at the office; it’s online.

So is this a new concept to a lot of folks?

I think it is. Most of them have websites, but is it fun, is it interesting? You want to talk about why you’re relevant right now.

Another event ahead is the MMA’s annual Manufacturing Talent Summit, on Oct. 29. What is the focus of this event and what could manufacturers and others, like representatives from education and economic development, gain from attending?

I think what they’re going to see is best practices around the state…how the schools, the manufacturer, the community college have worked together on a system that has helped develop talent. And we’re also going to try to regionalize it, so that the people from northwest Michigan, for example, would all be sitting in the same area. So that the community colleges and the schools and the manufacturers…would have a chance to network and talk about some of these things.

Amy Lane is a former reporter for Crain’s Detroit Business, where she covered energy and utilities, state government and business for nearly 25 years.