Maryann Keller, a longtime auto industry analyst, criticized General Motors’s leadership at an economic luncheon last week for failing to acknowledge the crisis facing the company. According to the Detroit Free Press, she argued that facing a crisis publicly allows a company to better address it: “The thing about a crisis,” Keller said, “is that it becomes clear that something needs to be done immediately.”
- Jess Cox
I read that and wondered when our state’s leaders will apply the same nugget of wisdom to Michigan as a whole.
It seems that no one in Lansing is willing to admit that the state’s ailing manufacturing sector just might be terminally ill. Increased automation in factories, outsourcing and companies’ failure to adapt to foreign competition have combined to slash the number of factory workers in the state. Since 2001 alone, one in four manufacturing jobs in the state has vanished, and Michigan has had the highest unemployment rate in the nation for a good chunk of this year. These job losses will continue; GM and its bankrupt supplier, Delphi, are each looking to shed about 25,000 blue-collar jobs, many of which will come from plants in Michigan.
Delphi also provides a hint of what the manufacturing jobs that remain will look like. Like other auto suppliers, Delphi is being pushed to meet the “China price.” That effectively means an end to the union wages that built Michigan’s once-solid middle class; Delphi somehow expects the United Auto Workers to accept wage and benefit cuts of about 60 percent.
Maybe Delphi workers will strike, hoping to maintain their dignity if not their jobs. Maybe they won’t. Either way, the next round of contract negotiations between the automakers and the UAW in 2007 doesn’t look good for those hourly employees – like my father – who depend directly on the automakers to support their families.
People used to say that what’s good for GM is good for America. With Michigan’s economy so heavily dependent on the auto industry, that saying’s always had more significance here. Now, however, guessing the probability that GM will declare bankruptcy seems to be the new parlor game on Wall Street.
The way around Michigan’s increasing inability to compete in the manufacturing sphere, according to the new conventional wisdom, is the High-Tech Knowledge Economy. By attracting, building and retaining a creative and highly educated workforce in scientific and service fields, the theory goes, the state can thrive again in the age of globalization. I have my own problems with this model – I don’t see how this knowledge economy will ever support a broad middle class like industrial unionism once did – but my econ major friends tell me this is right, so we’ll go with it.
The problem is that, as far as I can tell, no one in the state is doing much to build this High-Tech Knowledge Economy.
Take the Life Sciences Corridor, for instance. In conjunction with the University’s Life Sciences Initiative, the LSC was supposed to build off the state’s research universities to attract biotechnology firms. Silicon Valley is to Stanford as life sciences were to be to our state universities, I guess.
Except the funding for the LSC was cut and then split between research in the life sciences, homeland security and automotive engineering. Meanwhile, Michigan still has some of the most restrictive laws governing stem-cell research in the country.
Gov. Jennifer Granholm often appears to understand what needs to be done. She name-drops “The World Is Flat” author Thomas Friedman when discussing globalization, and she recognized Richard Florida’s idea that the knowledge economy depends on the so-called creative class with her Cool Cities Initiative.
But she also keeps proposing cuts to higher education funding, heedless of the need to build a smarter workforce. Her idea to issue $2 billion in bonds to attract high-tech firms was dead on arrival in a Republican-controlled Legislature obsessed with tax cuts. And will the Cool Cities grant for a “microcinema” at the Michigan Theatre make Ann Arbor any more (or less) cool?
Truth be told, though, Michigan’s future might not concern many readers of this paper. Generally speaking, those who are able to go to college aren’t exactly in the market for assembly line jobs. And even if it is true that all sectors of Michigan’s economy will be hurt as the manufacturing sector shrinks and Michiganders have less disposable income – well, statistically speaking, you won’t stick around to watch the state choke anyway. The speed with which college grads take their highly educated, creative minds and flee Michigan after getting their diplomas gives our state the distinction of being 47th out of 50 states in the proportion of young people with postsecondary degrees. Call it a brain drain, call it the flight of the creative class – whatever it is, it makes any effort to revitalize Michigan that much harder.
So, to recap: The manufacturing sector is dying, the state’s leaders aren’t serious about building a replacement for it and the state’s best and brightest young adults are heading for greener economic pastures.
That sounds like a crisis to me, and it’s time our leaders started treating it like one.
Zbrozek can be reached at zbro@umich.edu.