Mark Sanchez: How do you view the world? Well, it depends on your personal and your own perspective. And last week we had two kind of contrasting perspectives on tariffs. Tariffs are beginning to take their place in the economy. And first we saw Gentex Corporation over there in Zeeland that makes the auto dimming mirrors, automotive supplier, technology company. And it has really stopped selling and exporting its mirrors to Chinese automakers because of tariffs. That's going to cut into the business. And they say there's a significant uncertainty surrounding the China market as a result of the impact of tariffs on the company's exports to China. And it's kind of pausing right now that the sale and export of the mirrors to the Chinese automakers to kind of sort this out and see how they can work with those clients over there in China to try to work out some new contracts to absorb those costs. Gentex says it's going to sell about $50 to $120 million in product in China for 2025. That's about $100 million less than the company had previously expected. And it's already in the first quarter, before halting here a couple of weeks ago, shipped about $43 million in mirrors to China. So, it's definitely something for one corporation taking a toll on the business already. Now let's go down the shoreline to Whirlpool Corporation where it's been competing for years against these appliance makers in the Asian markets that have far lower costs for labor, for components, for parts. And when Whirlpool last week reported first quarter earnings, it said basically the tariffs will provide a significant tailwind to the company. Now, first, the Asian-based household appliance manufacturers have built up about a 30% more inventory in the U.S. They anticipated the tariffs are coming and exported more products to the U.S. market because they're going to get more expensive with tariffs. So once that burns off, Whirlpool is expecting again that significant tailwind. In the words of the CEO and chairman there, Marc Bitzer, it will level the playing field against the appliance makers that have lower cost products that they import to the American market.
Patrick Center: So, for Whirlpool, is the expectation that there will be US suppliers down the road that there's enough of a buffer to get that started?
Mark Sanchez: That's the anticipation. It also has its large manufacturing footprint in the U.S. and produces about 80% of its domestic sales. And in the words of the CEO, no competitor is even close to that level of domestic production. So, there's an anticipation that it's going to come through this fine and that's going to represent a boost to the business through the tariffs.
Patrick Center: To help our listeners understand in Gentex case, is it the added cost of paying the tax, paying the tariff that's eating into the profit margin?
Mark Sanchez: It's the retaliatory tariffs that China has imposed on imports from the U.S. So, it makes those mirrors in Zeeland, ships a mirror to China, and that cost is higher today than pre-tariff economy. So, it's a higher cost and boy are the OEMs over there going to pick up that cost to the higher cost of that product. That's to be worked out. And that's why Gentex has kind of paused those shipments and sales into the Chinese market right now.
Patrick Center: As we talk about some of the moves made by the administration, we're seeing a number of grants being canceled. Northern Initiatives recently had its grant stopped.
Mark Sanchez: Yeah, this is an organization, Northern Initiatives. It's based in Marquette, but really does work all over the state, including Grand Rapids. It's known as a CDFI or a Community Development Financial Institution designated by the federal government. And had some grant funding that was awarded through the U.S. Department of Commerce program there about a year and a half ago, basically to support small business and entrepreneurs around the state through what's called technical assistance. That's business education and training, coaching, mentoring to help small business owners, especially in rural markets, socially and economically disadvantaged markets, to help those entrepreneurs grow, start, and scale their business. That grant's now been canceled under the executive order the president issued a number of weeks back. So Northern Initiatives is kind of trying to figure out what this is going to do to the organization, what it means. Just to give you a little example, using this grant funding so far, it's supported about 300 small businesses around the state, offering this support and technical assistance. So, it's a hit to the organization. Spoke with the executive or the president of the organization here this week, and she's kind of...we're trying to figure out what to do now? And it's a significant grant to the organization. So, they're studying alternatives. And one, of course, there is a lawsuit filed by the state of Rhode Island not too long ago. And the attorney general in Michigan, Dana Nessel, has signed onto that lawsuit challenging the legality of canceling these grants, which were authorized and appropriated in the budget from Congress. It's a legal appropriation and you're seeing these lawsuits pop up around the nation, kind of challenging the legal position of just simply canceling funding that has already been appropriated and is in federal law.
Patrick Center: Some of the impacts. We’re supporting small businesses and there's a domino effect. The return on the investment of these grants is rather large.
Mark Sanchez: Yeah, you know, when I spoke to the President of Northern Initiative this week, she was saying that these 300 small businesses they've helped, they've gone on to attract $12 million in private capital and credit to their businesses to help support and grow their businesses. So, there is a return on investment there. But the president's executive order says that it’s targeting specific areas at the cost of others. That's just not going to be allowed anymore.
Patrick Center: We're talking with Crain’s Grand Rapids Business staff writer, Mark Sanchez. We're all getting older and we're seeing the needs when it comes to senior living and expansion.
Mark Sanchez: Yeah, you put it perfectly. We're all getting older, and it's called the ‘Silver Tsunami.’ That's the term you often hear about the aging baby boomers that are now retiring, leaving the workforce, retiring, and in some cases looking for a different type of housing. They're empty nesters, they're selling their homes and they're looking to in many cases, move into these senior communities, retirement communities. And that's what's driving this expansion by Beacon Hill at Eastgate in Grand Rapids over on the southeast side of town. It's going to spend about $150 to $160 million on a major expansion, add about 400,000 square feet on the west end expansion at the retirement community’s campus on Boston Street SE in Grand Rapids. And the project would add about 103 one- and two-bedroom independent living apartments for seniors who are, again, we’re all aging, and in some cases, folks are looking for a different place to live that offers amenities that they would like to have at that point in their life.
Patrick Center: Crain's Grand Rapids Business Staff Writer, Mark Sanchez. Thank you so much.
Mark Sanchez: Thank you, Patrick.