Mark Sanchez: This is another big iconic corporation here in Grand Rapids. Homegrown 113 years old. As Paul Isely there at Grand Valley (State University) told me yesterday, when I talked to him, this is part of the town's identity. This is a corporation that has helped identify this town and it's been around a long time. Thousands of people have worked there. Thousands of people have raised their families, put their kids to college, retired based on a very good living at Steelcase. And now Steelcase is being bought by a competitor, HNI Corporation out of Iowa for $2.2 billion. And this is kind of really sent some shockwaves across not only Grand Rapids, but throughout the office furniture industry yesterday, because it's the second major deal in a few years. Go back to 2021 when Herman Miller and Knoll Inc. got together in a $1.8 billion deal. So, you're seeing some consolidation within the industry. And then later HNI bought Kimball International for $485 million there in June 2023. Right now, what we're hearing is HNI Corporation intends to maintain Steelcase as a brand under the corporate ownership, very similar to how Herman Miller as a brand was maintained under what's now known as MillerKnoll after that merger. More importantly, you're going to maintain the corporate headquarters here in Grand Rapids. And again, speaking to Paul Isely on Monday, one of the points he made out is there is a massive design, R&D, innovation acumen down there on 44th Street that's not easy to move. That production's not easy to move. We don't have enough workers here in Grand Rapids and it's a destination town now. They don't have enough workers in Iowa. So, there's the practicality there. And there's a natural concern whenever you see a large merger or acquisition about what's going to happen to the acquired company? Will we see job cuts? Will we see closings? Will we see, will we see, will we see? That's a natural concern. But right now, what we're hearing from the corporations is, Steelcase remains intact under the HNI ownership. The corporate headquarters remains, and it's going to operate as a brand under the HNI ownership. And we'll see how that plays out going forward.
Patrick Center: So, you've had a chance to chat with some industry leaders, some insiders. What kind of feedback are you getting from them?
Mark Sanchez: I'll just relay this one story. I talked to the owner of one of the Steelcase office dealerships here in Grand Rapids. Custer Inc. and Todd Custer talked about it. First, it was, wow, like everybody, wow, this is a complete surprise and kind of a shock when we learned about this Monday morning. But then as you start hearing, you start talking, you start sorting out some of the details, he really looks at this as a great opportunity for his business. Steelcase has always been kind of that Fortune 500 corporate provider, supplier of office furnishings and items. HNI using its HON brand, that was the most well-known brand for HNI. It's kind of, I don't want to say lower end of the market because it makes good quality products, but it's kind of brings those chairs, cubes, and other products in at a lower price point. So, what he was really saying, Todd Custer at Custer Inc, that this gives these dealers an opportunity to bring in a whole other line in the product portfolio that's going to appeal to those smaller size, medium size and small businesses. And that's opportunity for the dealers. There are other HON, HNI dealers around. He said, we can work together, we can find a way. So, there's a lot to digest out of this deal and there's a lot of details to come together. What we do know right now is it's got to go through regulatory review, needs shareholder approval at both corporations, and they hope to close this deal by the end of 2025.
Patrick Center: Let's stick with acquisitions. In the insurance industry, we're seeing Priority Health expand across the Midwest.
Mark Sanchez: The health plan, majority owned by Corewell Health that's been around a while. It's the second largest health plan in Michigan. And here, within the last week, we saw another deal. Last year, Priority Health bought a health plan in Northern Indiana. Now it's acquiring what's known as Group Health Cooperative of Eau Claire, Wisconsin, if I'm pronouncing that properly. It's a transaction that now brings Priority Health into another state. When it bought the Physicians' Health Plan of Northern Indiana last year, that moved Priority Health for the first time across state lines into Indiana and Ohio. The benefit was you have a lot of employers down there near the border. People work in one side, they live in the other side. So, they cross the state lines to go to work each day. That allowed Priority Health to give them much better ability to sell policies to those companies that have employees on both sides of the border. And this deal for the Group Health Cooperative in Wisconsin, that really gives Priority Health a fourth state and enters a new market. And Priority Health, in talking to the interim president, Nick Gates, and other folks, they kind of have this strategy of now expanding across the Midwest. Will they do another deal? Well, they will if they find something or a prospect arises that makes sense, like any corporation. It has to make sense, business-wise, culture-wise, and all of that. So, you're seeing this corporation, this health plan here in Grand Rapids, here in the last year or two, really beginning to spread its wings and wants to become something larger and a much larger player across the Great Lakes and the Midwest.
Patrick Center: We're talking with Crain's Grand Rapids Business staff writer, Mark Sanchez, state lawmakers they’re crafting a new budget for the upcoming year. And some lawmakers want to slash the Pure Michigan campaign.
Mark Sanchez: Boy, this is a story that just keeps on giving, doesn't it? We've seen this for what, 20 years now where Travel Michigan has this campaign. I believe it started in 2006, Pure Michigan. We've all seen and heard the ads. They promote the state as a tourism destination. Years ago, under Governor Snyder, they really expanded that Pure Michigan brand for economic development and promotional uses for the state. And it's been very effective. And just first, the numbers about what's going on in travel. Michigan has an annual analysis done shows that visitor spending in Michigan last year in 2024 was up 4.8%. That's a sign of steady growth and it comes as you're right, legislators looking to slash the promotional budget for the Pure Michigan Tourism advertising campaign. And this study from Tourism Economics came out last week, 131.2 million visitors, travelers came to Michigan in 2024. That's up about 2.2%. It's up from about 4.4% from the pre-pandemic tally in 2019. The spending, visitor spending, $30.7 billion, a 4.8% increase from the year before. It's a big industry. It's a big business. Tourism, I think, is right up there in the top five, maybe top three of economic sectors in Michigan. And what folks like about it is, boy, it imports money into the state. Visitors come, they stay over where I live, they come to the beach, they enjoy the beach for a week, they spend a few dollars before they go home. That's all part of the economy and drives economic impact. Now with that, of course, is each year this Pure Michigan campaign relies on an appropriation from the legislature. And right now, once again, the folks who run the campaign at Travel Michigan could be forced to adjust their strategy under the proposed budget cuts out of Lansing that would slash the current funding levels. Right now, it's at $30 million. The Democratic-led Senate has passed a budget that cuts Pure Michigan down to $11 million. Governor Whitmer proposed $16 million and that also counts on another $10 million in private funding. So, we're not quite sure what the House led by the GOP is going to do just yet with the budget proposal, but we know we're approaching that September 30th deadline to get a budget done. So once again, here's a campaign that the data shows it works, it's effective, but it still has to rely on that annual legislative appropriation. And there's a debate on whether to fund it at that full amount that the folks at Travel Michigan believe it needs. And once again, we're seeing significantly less funding being proposed for the campaign.
Patrick Center: The campaign has a good return on investment. What's the argument for cutting the funding supporting it?
Mark Sanchez: What we've heard in the past is it's just, first the ideological. Should the state government be involved in using public money to promote private enterprise? This is a straight marketing promotional campaign. But also, there are a lot of priorities when you're preparing a state budget. Everybody's fighting and arguing for their piece of the pie. So, it's just the appropriations process. Everybody's looking to have their project funded. Everybody's looking to have their priority funded. And like anything, you have to compete for that allocation.
Patrick Center: Crain's Grand Rapids Business staff writer, Mark Sanchez. Thank you so much.
Mark Sanchez: Thank you, Patrick.