Michigan celebrates $2 billion manufacturing investment, but it's not the jobs solution we need
News coming out of Lansing this morning touts $2 billion in new investments the "Detroit Three" automakers are making in state manufacturing facilities.
The health of all three will help Michigan. The retooling, the new equipment and the anticipation of sales increases all mean that at least we should be able to stop pointing to the automotive sector over hemorraghing jobs and tax revenues.
Yet we're one week from an election where the next governor of Michigan will earn the chance to bring our state forward from reliance on automotive manufacturing - reliance that we've known for two decades kept us in a perilous economic position.
I've expressed my support over the years for efforts that encourage innovation and strategies to keep pursuing the "knowledge-based" jobs that truly will keep Michigan's earning power strong.
And the news about Michigan's automotive plants just underscores how important that still is to this state.
The jobs associated with the manufacturing are, in some ways, moving in the right direction. Some are connected to alt fuel vehicle production; others will be related engineering jobs. Some will be close to home, in Dundee.
Yet the true manufacturing jobs that are newly created also will pay $14 per hour starting wage. That rate is guaranteed to keep the gulf growing between the educated workforce and the shop-floor laborers. And it'll keep pulling down Michigan's overall earning power unless there are high-paying, high-education jobs to balance these.
The new automotive investment is keeping jobs in Michigan - a good thing. And some laid off workers will be called back - another positive.
But it's also important to remember that this news is neither the jobs answer for the state - which still struggles to stem losses - nor a sign that the new governor is inheriting a jobs climate that's genuinely improving.
Comments
George Houchens
Wed, Oct 27, 2010 : 11:13 p.m.
The comments in this article rank high in theory, but don't offer much in practicality. For instance, what is Michigan to do with all the folks that were laid off from manufacturing jobs... ship them off to another state? Many of these folks have high school or technical school educations and simply would not qualify for "knowledge Based" positions. Nor would sending them to college work, because at their maturity and wage needs, an entry level "knowledge" job would probably go to a younger college graduate. Not saying this is correct, but as a recruiter for over 25 years in the high tech industries, I know how it works. Besides... what is wrong with manufacturing employment? What is wrong with producing a product? Many "knowledge jobs" don't produce anything. Most "knowledge" jobs rely on someone else producing and generating demand for their expertise. Maybe the educators in Ann Arbor don't like that kind of logic, but I have seen enough unemployed programmers in the area to know it is true. One more point... manufacturing capability is an essential component of national security. If this country doesnt have the internal capacity to produce forgings, stampings, tooling, etc. then we are in deep doo-doo if there ever is another world upset. And, to respond to another post, there are a lot of people in regular, reliable manufacturing jobs earning $14 an hour that buy cars. Maybe not the luxury brands, but other reliable brands that are priced well within the buying range of such wage earners.
cook1888
Wed, Oct 27, 2010 : 8:13 a.m.
A person sure can't afford a car on $14 an hour. Where will the market for their products come from?
birch creek john
Wed, Oct 27, 2010 : 7:47 a.m.
Hey, this tax abatement idea is a great one; as long as the companies being granted the abatements don't use any of the services that taxes do provide and maintain. Roads come to mind. I am so sick of hearing these naive comments that posit doing away with taxes as the solution to all of our woes.
join now
Wed, Oct 27, 2010 : 12:58 a.m.
How is tax abatement a cost to the treasury? If I decide not to steal from you is it a loss for me or a win fall for you? Your home mortgage interest deduction is nothing more than a subsidy that the government graciously grants.
Basic Bob
Tue, Oct 26, 2010 : 10:36 p.m.
Why would you turn down $2 Billion investment in the state because it only produces $14 unskilled labor jobs? Thousands of engineers, machine builders, and construction trades will be required to build the equipment in the plants. Many more will be required to maintain and upgrade the machinery over the years. Those high-paying skilled jobs will go to Michigan workers, who will pay taxes and spend their income here in Michigan.
wereintroubl
Tue, Oct 26, 2010 : 8:43 p.m.
Beggars can't be choosy. Under Bushian economics and globalization, and a leadership void in this state for the past ten years $14 is now a good wage. Michigan is now a poor state- one of the ten poorest in the nation. We are no longer competing from a position of strength. Our manufacturing base supported the educational infrastructre. With that eroded, we will no longer be able to fund the education that we have been used to in this state. Sorry, the computers, desks, and labs of the "knowledge economy" do not provide much of a tax base comparted to the millions of dollars of equipment that manufacturers did. It naive to think that globalization has not driven down "knowledge" job pay as well. As long as there is an engineer in India or China willing to do the work for $2 an hour, or come here and do it for $8, the expectations of six-digit income jobs are long gone.
llspier
Tue, Oct 26, 2010 : 6:29 p.m.
A $14/hr manufacturing job is NOT a substandard wage job. A2 is a non-manufacturing-based town and most here likely don't know that the average wage for a manufacturing job is $14/hr or less. Maybe the actual assembly lines in the Big 3 plants made $28/hr...certainly the subsidiaries and parts supplying manufacturers didn-and there were once far more of them than assembly plant workers. Most of the parts on any American-made car were made by a $10-$14/hr worker.. and many of those jobs were moved to Mexico. People are looking at this $14/hr wage as a low wage. Ann Arbor has just about the highest salaries in the state. The cities that have depended on manufacturing instead of Education, Health Care and other tax-payer-funded jobs have never seen wages that high. The disconnect shows here.
uawisok
Tue, Oct 26, 2010 : 5:30 p.m.
The auto mfg. plant floor has changed and the notion that un-skilled labor has a place is also changing. Are we asking is a $14.00 an hour job doing semi skilled labor not worth while? I would contend it is better than what a non skilled service sector employee earns, would you like paper or plastic, may I super size it? Entry level auto labor employees have an oppertunity for advancement under apprenticeship programs that are coupled with technical education at a Community College, ie machinist, robotics repair, tool and die. Some of these advancement oppertunities will earn a middle class wage with an education niche that is valuable. Sure it's not a distinguished career such as an on line bloogger/journalist, or derivative trader but it is a living. I agree we need to divisify Michigans economy but that should have been a discussion 50 years ago when Michigan was in a position of strenght rather than seen begging for crumbs and grapinging for the next big thing. I wouldn't be too quick too dismiss gear heads and their ability to innovate, as history has shown Henry Ford and many others did pretty well for his limited college exposure.
Paula Gardner
Tue, Oct 26, 2010 : 4:47 p.m.
Off-topic comments have been removed.
demistify
Tue, Oct 26, 2010 : 3:50 p.m.
@T Baggins, Are you suggesting that American wages reduced to 10 cents an hour would constitute a boom in our economy? A boom for whom? For the workers making 10 cents? For those trying to get them to buy something on that income?
dswan
Tue, Oct 26, 2010 : 2:44 p.m.
Setting the wage at the market rate of $14/hour, instead of the inflated $28/hour is already a step in the right direction for Michigan. Our work force will end up being more educated down the road as the supply for these jobs diminish due to the lower wage. This is natural supply and demand asserting control over Union contracts of the past, it was only a matter of time. We're undergoing a transition that while painful in the short term will benefit future generations. Now that the Big 3 are beginning to reap the benefits, how will the Union respond in the upcoming contract negotiations? Let's hope for profit sharing over base rate/benefit increases. Not to metion a business tax structure that welcomes more players into our state.
Paula Gardner
Tue, Oct 26, 2010 : 2:29 p.m.
It's not the handouts that are at issue here - it's the investment in manufacturing jobs, with dialed-back wages, that concerns me. If we don't balance that with higher-skilled jobs, we're all at risk for Michigan never rebounding. And not paying attention to that ignores the history that we... well, ignored the threat of manufacturing's collapse for a long time.
John Q
Tue, Oct 26, 2010 : 2:20 p.m.
News flash for Paula, these kinds of incentives were being handed out in the "golden years" and they are handed out in states where manufacturing isn't a core part of the economy. I don't like to see the handouts but to present them as some indicator of the current economy or the direction Michigan is or isn't heading is to ignore history.
Bob Martel
Tue, Oct 26, 2010 : 1:27 p.m.
This was an expensive victory for the Michigan Treasury as well. Based on Ford's plan to create 1,200 new jobs, I figure that the ten year $400 million tax abatement granted to Ford Motor alone would cost over $345,000 per job created. As Paula indicates in her article, those are for the most part $14 per hour jobs. Those employees won't even earn $300,000 during the ten years of the abatement. There had better be some really big spin off and indirect benefits to this deal or we just got hosed.
81wolverine
Tue, Oct 26, 2010 : 1:18 p.m.
I agree - this investment will help stabilize the transition from mostly blue-collar manufacturing economy to one based mostly on "knowledge" workers. I do think there are some higher-end types of manufacturing the state should be pursuing because with some re-training, it can help utilize many under-employed workers we currently have. The reality is that most of the lost auto plant jobs this state once had are gone forever. Michigan needs to base it's future economic plans on a permanently lower baseline of automotive manufacturing jobs. The new governor must spearhead what those plans are going to be and target specific industries Michigan can compete nationally and globally in.