Shift in auto manufacturing: the falling fortunes of Michigan.

AuthorBarkey, Patrick M.

AT THE END OF LAST year, the unemployment rate in the state of Michigan was 7.3 percent. That was more than 2 percentage points higher than Indiana. In fact, no state in the country had a higher jobless rate.

That's not a big story in the Hoosier state. We have our own economic challenges, after all. But perhaps we should be paying a bit more attention. We're not exactly' immune to the forces that are dealing such harsh blows to the Michigan economy right now. In fact, some communities in Indiana are directly in harm's way.

For the state that is the center of the automotive universe, headquarters of two of the three largest vehicle manufacturers in the world, you would think that these would be good times for Michigan. Even if 2005 ends up being the slower year for light vehicle sales that many are predicting, the average of 16.7 million units sold annually since 2001 has to be considered very, very good.

But the Michigan economy is anything but that. Employment continued to fall throughout 2004, and is now down by 344,000 jobs--more than 7 percent--since its pre-recession peak. Local and state government budgets are in disarray; and more cuts to such vital services as education, health care and roads are looming.

The auto industry, Michigan Gov. Jennifer Granholm is reputed to have said, is not what it used to be. Many Indiana communities would agree. After all, the recession year of 2001, when so many cities in Indiana were beset with factory closings and cutbacks, was the second-best year for vehicle sales in the industry's history.

But that industry is changing right before our eyes.

Foreign nameplate brands are now established in virtually every market segment, and they are doing well. But they're not necessarily produced offshore, even though the in]ported share of the total U.S. market now claims almost one car out of every five, They're increasingly coming from the domestic production facilities of such companies as Toyota, Nissan and BMW. And they're not coming from Detroit.

What is more, since so called captive supplier plants, whose production must be closely coordinated with the assembly plants they serve, are typically located in close proximity Michigan's loss is not confined to jobs on the assembly lines.

It's fair to say that the center of gravity is shifting in the auto industry right now, away from a tight circle around southeast Michigan, towards a belt that runs through the south, stretching from San Antonio to South...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT