Labor Shortage Constrains Growth

Part of the lagging growth can be explained by specific challenges facing the Kalamazoo-Battle Creek chemical industry. In particular, growth is being constricted by a labor shortage that has plagued local companies. Several companies in the region have voiced their inability to pursue development projects due to a lack of qualified workers. Given the scarcity of the local labor pool and the difficulties of external recruitment, many companies have chosen not to promote additional growth locally. This labor shortage is characterized by the dual challenge of the region's inability to recruit and retain younger professionals. The region's failure to promote itself adequately combined with a lack of amenities typically found in metropolitan centers makes recruitment difficult. For example, missing features in the region's quality of life include restaurants, shopping and evening entertainment.

Higher Business Costs Drive Growth Out

The perceived higher cost of services such as air transportation and government regulatory environment have not helped stem the modest decline in growth in the chemical and pharmaceuticals industry. In an export-oriented industry with extensive ties around the country and world, ease of air transportation is extremely important. However, airlines serving the Kalamazoo-Battle Creek region cannot offer direct flights to many major business centers, such as New York, Boston or Washington D.C. due to insufficient demand relative to other airports in other regions. Most flights out of the Kalamazoo-Battle Creek region require change of planes in hubs such as Chicago, Detroit, Cleveland, St. Louis or Minneapolis. As a result, companies in the region have difficulties scheduling cost-effective visits with clients for one-day business trips. Other logistical challenges exacerbate the transportation delays and costs for businesses in the region. For example, trucks have difficulty efficiently moving in and out of the region. In particularly in Kalamazoo, where the I-94 and Sprinkle Road interchange, in Kalamazoo County presents a difficult traffic point for trucks.

In addition, inter-jurisdictional fragmentation of regional governments contributes another dimension of higher service costs. There is a strong perception that the cities and townships in the larger metropolitan region do not actively team on economic development and industry competitiveness issues. This fragmentation could be ameliorated by a regional one-stop shop for all business development regulations.