By Chris Knape | The Grand Rapids Press
At Amway’s sprawling Ada complex, pallet after pallet of Nutrilite supplements are shuttled onto outbound trucks. Their destination: South America, Europe, maybe even Japan.
Across West Michigan, manufacturers are pumping out an increasing number of products headed out of the U.S.
It’s true: Globalization has cost thousands of jobs as some companies sought to lower labor costs and sell into closed markets such as China.
But it also is creating a much larger customer base for nimble U.S. manufacturers able to capitalize on a much larger playing field — particularly in niche fields.
Amway joined dozens of other Michigan companies supporting the recently passed free trade agreement with South Korea and the now-stalled government-sponsored Detroit-Windsor bridge because company officials said they simply make doing business easier, less-expensive and more viable for U.S. companies.
“People don’t realize it, but the U.S. is the largest manufacturing economy in the world,” said Richard Holwill, vice president of International Affairs at Amway. “They think we’ve lost, but we haven’t. We’re on the verge of doing much better. We need to look at these trade agreements for what they are and try to make the most of what they can be.”
With sales of more than $9 billion — $8 billion of which were in international markets — Amway is an exporting juggernaut. Last year, it exported 9,700 shipments of nutritional supplements, cleaning products and cosmetics from facilities in Michigan and California.
Products made in Ada were part of the $44.7 billion worth of merchandise exported from the state last year by more than 12,000 Michigan companies.
Last year, Michigan exports jumped 37 percent from 2009, according to government data, due to a global recovery by the auto industry and other manufacturers.
Tomas Hult, director of the International Business Center at Michigan State University, said he is confident Michigan’s export numbers will continue to rise as the automotive sector recovers and more small businesses utilize resources like those offered by MSU and Grand Rapids’ Van Andel Global Trade Center.
Bucher Hydraulics recently hired two international sales representatives whose primary function will be securing new customers in international markets. The former Monarch Hydraulics was purchased by the much-larger Bucher Industries, of Switzerland, in 2007, opening up many new markets for the factories in Grand Rapids and Newaygo.
“We ship components to Europe, India and China for final assembly and deliver to customers there,” said Dan Vaughan, president of Bucher. “We’re seeing a lot of customers in North America want one supplier who can deliver products throughout the entire world. From our perspective, that’s our next area of big growth, international.”
The company has about 160 employees with about 15 percent of products made here being shipped outside the country.
“We have a plant in China and we export to China,” Vaughan said. “We actually fill the boat going the other way. We’d like to see more free trade with China. We are committed to Grand Rapids and Newaygo but we can export and add jobs.”
The opportunity international markets represent is good reason for projects such as the proposed Detroit River International Crossing and free trade agreements, said Birgit Klohs, CEO of economic development group The Right Place Inc. in Grand Rapids.
What some people don’t realize is the agreements have the potential to have a positive impact on the local economy, she said.
As businesses grew leaner and more specialized in recent years, U.S. manufacturers became far more productive and cost competitive in many arenas.
Getting rid of trade barriers lifts one of the largest remaining barriers.
“Trade barriers don’t really help,” Klohs said. “From a global perspective, free trade agreements send the message that the United States is not going out of the business of importing or exporting.
“When I go to Europe, I always get the question, ‘Are you guys interested or are you not interested in foreign markets?’”
Shipping office furniture
Herman Miller and West Michigan’s other major office furniture suppliers clearly are interested. While all of them have offshore manufacturing operations, they also ship products from West Michigan around the world.
At Herman Miller, international sales make up about 25 percent of sales. About 11 percent of its $1.6 billion in sales are exports. The rest is made in overseas factories to more efficiently fill orders or due to trade policies of countries, such as China, that require companies to make products within their borders.
U.S. manufacturing serves all of Herman Miller’s customers in Latin America, Mexico, South America and Canada, plus some in the Middle East and Asia.
All of the company’s classic lines, such as the iconic Eames Lounge Chair, are exported, as are its lines of furniture geared toward the health care industry.
“We’ve been recognized as a great example of American Manufacturing and our ability to compete successfully with lower labor cost markets,” said Mark Schurman, a spokesman for Herman Miller.
He said government could do more to encourage exporting by supporting projects such as the DRIC bridge and allowing for tax-free repatriation of profits made overseas. Bringing those dollars back to the U.S. could open the door for more investments in domestic operations.
“Many international companies, including Herman Miller, park those profits offshore because we can’t see those profits taxed twice,” he said.
For Bucher and Vaughan, exports aren’t the issue. Serving customers wherever they may be is the priority — that’s what creates jobs.
“I’m just trying to grow the business,” he said. “We treat the business in India the same way we treat the business in Iowa. They’re both good customers.”