Mark Sanchez: And not just local, would imagine corporations large and small out across the country are feeling the effects of the higher gas prices. And that of course is what we as consumers feel immediately and see the most is those gasoline prices going up, the cost of fill up our vehicles, but also for businesses that have a fleet of delivery vans or trucks on the road delivering products. Diesel fuel has been spiking as well.
So, this came out of an earnings call last week, MillerKnoll Inc. over there in Holland reported its most recent quarter sales and earnings. And in that conference call with the brokerage analysts, laid out that the higher fuel costs, the higher logistics costs, the disruption in shipments to the Middle East. That's going to add about an $8 million to $9 million cost in the current quarter that Miller knows going through. And I would suspect here in the coming weeks, months, especially here this month as corporations begin reporting their first quarter sales and earnings, you're going to see executives beginning to talk a little bit about this.
This is one of the consequences and the cost of war, especially in this particular region in this conflict. It's affected fuel prices. It's affected oil prices. We see predictions of oil perhaps this summer, going as high as $200 a barrel. That's all going to trickle through the economy. And for businesses, this is going to have higher costs for their logistics, for their fleet of delivery vehicles, and you could see some disruption in their orders if they're doing business in that region.
Patrick Center: So, if you break this down a threefold issue, and we're using MillerKnoll as the example here based on that conference call. So, there's transportation costs. There is a materials cost when it comes to oil-based materials. And then you have the business exposure itself in the Middle East. How much business does MillerKnoll do in Middle Eastern countries?
Mark Sanchez: It doesn't break down that exactly how much that region is accounting for the book of business, but it did say that there's going to be minimal shipments to the Middle East in the present quarter for Miller-Knoll. And also, I should add when we talk about the costs, it's not just the fuel costs, it's the commodity costs, you know, all those things you see in the office. There's a lot of plastics there. So, Andy Owen, the CEO, is talking about how these higher oil costs affect the costs of those petroleum-based materials. Foam, plastics that go into a lot of the products that these furniture companies here in West Michigan make. It all adds up. And again, MillerKnoll's looking at about an $8 to $9 million hit here in this quarter from these higher costs.
Patrick Center: Do they pass it along or do they eat some of this? What's the strategy? What do you think happens here?
Mark Sanchez: Well, the way the executives explained it is it's kind of an evolving strategy. They're going to monitor the situation closely. They will at some point, if it goes too far, consider surcharges. Remember a year ago, a lot of companies implemented surcharges because of tariffs.And so those costs were a pass through. And it sounds like a very similar approach where they monitor it, keep a close eye on it. And at some point, there's a threshold where we cannot absorb these costs any longer. And we need to start putting this into pricing or as we saw a year ago with tariffs, a lot of companies implementing surcharges.
Patrick Center: A little closer to home, the Grand River, we're seeing some movement. Eleven million dollars have been allocated from the U.S. Department of Agriculture and that unlocks the project and we will begin to see machinery in the area beginning to move the Grand River Revitalization project forward after how many decades?
Mark Sanchez: Yeah, this goes back a long time. This has been talked about this concept of restore the rapids and Grand Rapids and it's finally coming to fruition. And this is a story my coworker Kate Carlson did for Crain's Grand Rapids Business last week. It's an $11 million grant from the U.S. Department of Agriculture to the city and Grand Rapids, Whitewater, and it's going to fund the River Restoration Project. That's been kind of a decades long effort and the funding will really kick off the project's first phase, which is about a $14.5 million project. At least that's the contract that was approved that the city commissioner recently approved with Taplin Group LLC to remove the dams and install natural rock structures to improve the river flow, public access and the aquatic habitat in the river.
So, the construction is going to take about two years and it'll restore the lower reaches through downtown which is about I-196 south of Fulton Street.As you said Patrick, it's finally happening. This has been talked about for a long time and well it's been gaining traction for a long time but you're going to start seeing some work out there on the river real soon.
Patrick Center: The timing couldn't be better when you see these major projects, the amphitheater, the stadium, Grand Rapids Public Museum, you're seeing the River Greenway project also tying in at really just the optimal time for all of this to come together.
Mark Sanchez: Yeah, it really shows us that so much is interconnected. It's of course, all these are separate projects, but they all really do flow together and work together in a great...quite well. So, in a few years, the riverfront's going to be a little different than what we've known for a long time. That restoring the rapids, with the amphitheater coming online and the soccer stadium next year and then the walk, it's not going to create a whole new waterfront here in downtown Grand Rapids.
Patrick Center: We're talking with Crain’s Grand Rapids Business staff writer Mark Sanchez. You've introduced some research data that has to do with West Michigan employers and who is leading the way.
Mark Sanchez: Like a lot of B2B publications, business to business publications, we do these lists on a regular basis each week, each edition. And this particular one coming up is West Michigan's Largest Employers.And sure enough, topping those lists are health systems. We've got three health systems right at the top. Corwell Health, Trinity Health Michigan, and then Beacon Healthcare down in Kalamazoo, which is out of South Bend and acquired the former Borgess Operations in Kalamazoo last year.
And it really illustrates what healthcare has become, which is a real economic engine and economic powerhouse in the economy out here in West Michigan. Those three health systems that topped the list of the top 25 largest employers in West Michigan, they employ more than 40,000 folks and last year they added 2,000 workers.
And it's not just the health systems. A couple of companies here in West Michigan that are well known, Stryker and Perrigo, also employ thousands of people. They're in the healthcare sector and they're on the top of those lists too, in the top 25. So, it really goes to what a big part of the economy that healthcare has become here in West Michigan. It's only going to get larger.
In fact, in the Grand Valley State University's Health Check report this year, it showed that healthcare as a percentage of the overall workforce in Grand Rapids grew from about 7.5% to about 10.5% from 2005 to 2024. That's some pretty solid growth about one in every 10 residents in the four counties around Grand Rapids. They're working for a Grand Rapids-based healthcare provider.
So, this sector has really come up as the population ages, as we want more care. We're all getting older, we're not using less care, we're using more. Watch this sector as it grows and of course we all know what's going on with cost of health care and that's kind of, how do you provide if you're a health care provider provide that higher level, that more care, but yet how do we control those expenditures so it's not so expensive anymore. But bottom line right now we're seeing the three health systems top our list of the top 25 employers in West Michigan.
Patrick Center: And that Health Check report shows that Grand Rapids is outpacing the national average.
Mark Sanchez: Yeah, it is. It outpaces the national average for job growth and has been for a little while. So again, that's just an indication of what's going on with this sector. Between 2005 and 2024, healthcare practitioners and technical workers, you know, jobs there increased 110% over that 20-year period. Nationally, that was about a 46.5% increase. Grand Rapids has been growing jobs in this sector at more than double the rate of the national average.
Patrick Center: And we also see the expansion. Corewell Health has a proposal on the table to expand up on The Hill.
Mark Sanchez: Yeah, there's a big project planned by Corewell Health. wrote about this back in January during the new patient tower there on the Butterworth campus. That's about a 621,000 square foot project. And just to give you a comparison, that's larger than the DeVos Children's Hospital and the Meyer Heart Center there on that campus. So, it's going to be a big, iconic tower that we're going to see there on that campus in a few years.
Patrick Center: Crain's Grand Rapids Business staff writer Mark Sanchez, thank you so much.
Mark Sanchez: Thank you, Patrick.