GRAND RAPIDS, Mich. — The latest west Michigan business survey of the industrial market shows good news, however for how long it can be sustained is the question, according to Brian Long.
Long, Ph.D and Director of Supply Management Research at GVSU says the report for January 2021 shows local companies’ new orders index jumped to +57, a record high.
“I'm fairly optimistic right now, yes, we are going through some pent up demand right now that makes the numbers look exceedingly good. We know that these are going to cool down. Unfortunately, we will be in the middle of the summer before we see where the actual damage has been done to our industrial market,” Long explained, saying pent up demand is typical with past recessions he has tracked.
Long said what is not typical is the surge in demand for delivery services for big companies and food service and grocery deliveries.
“We have lots of people right now that are moving into this delivery business. If you go to try to rent a van right now, you'll find that there are not any vans to rent. They have all been rented by these delivery companies, Amazon and many others, because they are delivering goods at such a rapid rate that the auto companies have not even been able to build vans fast enough to meet the demand that's out there,” Long told Fox 17.
When it comes to auto manufacturers, Long said there could eventually be a silver lining on the local job front coming out of the pandemic, with the concept of re-shoring.
“A lot of firms got burned awfully bad with these extended supply chains stretching all over the world. Quite frankly, they had lost track of where the stuff was coming from. And they found that some instances there were one or two cent items that came from China that held up production of some components that they were expecting to import," Long explained.
"The little bit of savings that they got for it didn’t justify the total cost of doing business," Long continued. "And for that reason, I am optimistic that we are in a good position as far as West Michigan is concerned. This is entirely possible that we will end up with more business as a result of this pandemic. Because as I said, particularly in the case of automotive, they identified some low cost producers in West Michigan."
Long said the January survey once again showed that the office furniture industry continues to be negatively affected from the pandemic, with so many people working from home.
In fact, Long said 17% of people working from home have indicated that they want to continue that, “Which of course means less office furniture may be needed as far as the future is concerned.”