youTalent and labor availability, inflation and supply chain disruptions are the biggest obstacles to growth for West Michigan executives, while many plan to turn to automation and price increases to mitigate those risks. .
Here are some of the key findings from a Western Michigan Association for Corporate Growth Y MyBiz survey of 322 people carried out in September. Nearly 70 percent of those surveyed identified themselves as C-Suite executives or owner/partners, while approximately half came from the manufacturing and professional services sectors.
Respondents were spread almost evenly between small and large companies, with roughly one-third supervising fewer than 10 employees, one-third with 10 to 99 employees, and one-third with more than 100 employees.
Reflecting anecdotal evidence and current concerns about the availability of labor and talent, 212 respondents, or about 65 percent, cited “talent/workforce” as their biggest obstacles to growth over the next year.
ACG Western Michigan board member Greg McCormick said the importance of talent and labor issues was perhaps the most surprising component of the survey results.
“It shows no signs of abating, suggesting that the broader West Michigan community has an opportunity to make Grand Rapids a more desirable place to attract talent,” McCormick said, adding that he wonders if the “latest news about layoffs in the tech industry will spread to our part of the country.”
Respondent Gunther Brinkman, general manager of Battle Creek contract snack maker Snackwerks of Michigan LLCconfirmed that the availability of talent is the main obstacle to the company’s growth plans.
“We have tried to be creative,” such as offering workers free ESL classes in the workplace, Brinkman said. “We care about the whole person, not just a set of hands showing up for work.”
Founded in 2016 by the former head of innovation and R&D at Kellogg Co., Snackwerks has a 20,000-square-foot manufacturing facility and has grown to 115 employees. Brinkman said that focusing on an employee’s first two weeks, which play a key role in determining whether a worker stays with a company long-term, has been a key priority in increasing retention.
Elsewhere in the survey, economic conditions are also top of mind for executives, with about 40 percent of respondents, or 131, citing inflation as one of their biggest hurdles, followed by 109 people citing inflation. supply chain and 68 people who mentioned interest. interest rates among its biggest hurdles. Among real estate and construction executives, in particular, interest rates were even more concerning than the availability of talent, according to the survey.
“Clearly there is a concern when you look at the impact of inflation, the impact of interest and the impact of government policies,” McCormick said. “Eighty-seven percent of all respondents see government policy as having a neutral to negative effect and it is consistent (among ACG members). When you look at how they will affect interest rates, almost half indicated that it will slow us down. It’s important to note that when you look at how companies will finance their growth, it’s mostly internal cash flow or owners’ equity – not many enter the market.”
To mitigate these risks to growth, respondents said they planned to increase the use of technology/automation, as well as increasing prices as the most popular strategies. Nearly a third of those surveyed said increasing compensation would help their growth plans, followed by streamlining their customer base.
Similarly, nearly three-quarters of respondents said that finding new customers in existing markets would be one of their biggest growth opportunities, followed by seeking new geographic markets and offering new products. Investments in that growth prioritized sales and marketing, followed by recruiting, training, automation and software, according to the survey.
McCormick found that “everyone’s willingness and desire to invest in their people and talent acquisition” was the “most notable” part of the survey results.
“I think that’s one reason we should be able to attract more talent to West Michigan, and I’d like to better understand what business owners need to do to keep talent coming here,” he said.
In addition to “creative” talent retention strategies, Snackwerks has seen enough organic growth over the past year that it will run out of capacity “in the not too distant future,” Brinkman said.
That may require investing in off-site properties for warehousing to clear production space at the company’s existing facility, or acquiring a nearby bakery “where we can leverage a management team across two facilities.”
“We are looking at both options,” Brinkman said.
In addition, Snackwerks has invested in more efficient and automated production lines that increase capacity and productivity.
“There are a couple of reasons why we are looking at more automation,” he said.
Overall, M&A appears to be a lower priority for business executives, with 56 percent, or 181 respondents, indicating they would not engage in M&A activity in the coming year, while 90 respondents said they would. . Similar percentages of M&A interest were among the manufacturing, real estate/construction, and professional services sectors. However, M&A interest was greatest among ACG Western Michigan members.
“Clearly, the concern about inflation and interest rates, while not surprising given the timing of the survey, is even more critical now with the latest interest rate hike,” McCormick said. “(This) could possibly be a reason why many companies are not looking at M&A as a growth strategy.”