Driving Towards Disaster: Michigan's woes

[Buickman]

Keith Naughton
Monday, January 28, 2008

Driving Towards Disaster

Michigan's woes may soon become familiar to the rest of the country as recession looms.

Newsweek Web Exclusive
Jan 28, 2008 | Updated: 11:33 a.m. ET Jan 28, 2008

Robert Woods went to work in an auto factory straight out of high school and spent nearly three decades making steering gears in Saginaw, Mich. But when his employer, Delphi Corp. went bankrupt in 2005, Woods was downsized out of a job. He didn't get the big buyout bonus other autoworkers received because he didn't have enough seniority. And now, only 48 years old and with three school-aged children, he's finding it hard to make ends meet on his $2,600 monthly pension. The former machinist is looking for work, but there's nothing available that pays like his old factory job. "It's been devastating around here," Woods says. "I don't want to work at McDonald's, but it's just terrible to try to find anything. The American dream has been taken away."

If you want to see what hard times look like, come to Michigan. Last week's manic markets fueled fears that America, or perhaps even the global economy, is tumbling into recession. But Michigan has been an economic wasteland for virtually an entire decade. Its fortunes riding shotgun with America's ailing auto industry, Michigan has lost more than 400,000 manufacturing jobs since 1999. Its unemployment rate, 7.6 percent in December, has been at or near the highest in the nation since 2003. FOR SALE signs dot the landscape, even in the neighborhood of GM chairman Rick Wagoner. But there are few buyers: Foreclosures have quadrupled in the last two years, according to the Web site RealtyTrac.com. The Sunday Detroit Free Press recently printed a 121-page section listing thousands of homes facing foreclosure. And in the last year, 30,500 people have left Michigan, Census officials estimate.

"Michigan is the worst economy in the country, by far," says economist Mark Zandi of Moody's Economy.com. "But the financial pain Michigan is suffering now will become evident in many other parts of the country by this summer."

Indeed, these days Michigan is looking more like the canary in the coalmine, than the isolated "one-state recession" native son Mitt Romney spoke of during his primary victory there. Sure, the auto industry is to blame for Michigan's malaise. (Just last week, Ford, which lost $15.3 billion in the last two years, offered buyouts to all 54,000 of its U.S. factory workers). But many of the factors that drove Detroit into the ditch--$100-a-barrel oil, the credit crisis, globalization--also are preying on the rest of the nation. "That giant sucking sound Ross Perot used to talk about, we are the poster child for that," Michigan Gov. Jennifer Granholm told NEWSWEEK. "But no state will ever be the cheapest place on the planet to do business. What other sectors are you going to see moving away? Every state should be concerned."

But if the rest of the country catches Michigan's cold, things will only get bleaker for the Wolverine State. The faltering economy already has economists predicting that U.S. auto sales will fall to their lowest level in a decade this year. That drop will fall with the hardest thud on Detroit, which still sells too many of the big rigs that guzzle $3-a-gallon gas. American automakers are frantically retooling themselves to produce more gas-sippers and had hoped to finally drive back into the black in 2009. Now that seems overly optimistic. "If the U.S. economy goes into a recession, what happens to us then?" asks Bloomfield Hills, Mich., economist David Sowerby of Loomis Sayles. "We suffer even more. But how much more can you go down?"



url > http://www.newsweek.com/id/105843

[drew630]

Your back!!! I have missed your gloom and doom. Did you see this about your boy:
Wagoner voted #1 in Motor Trend's 2008 Power List

[agman25]

Who is this guy Wagoner ? Is he Charman of the Fedral Reserve or the Treasury Secretary? Does he set US trade policy ? Does the run OPEC and is reponsible for $100 a barrel gas. Is he the Governor of Michigan ?
All this clearly must be his fault.

[drew630]

Originally Posted by agman25

Who is this guy Wagoner ? Is he Charman of the Fedral Reserve or the Treasury Secretary? Does he set US trade policy ? Does the run OPEC and is reponsible for $100 a barrel gas. Is he the Governor of Michigan ?
All this clearly must be his fault.

He is the CEO of GM and Buickman loves him.

[minnfang]

Hey Buickman, this is by far the weakest shot you have ever fired. You're really starting to look silly - give it a rest.

[New_Mexico_Sunset_on_Rt66]

Originally Posted by agman25

Who is this guy Wagoner ? Is he Charman of the Fedral Reserve or the Treasury Secretary? Does he set US trade policy ? Does the run OPEC and is reponsible for $100 a barrel gas. Is he the Governor of Michigan ?
All this clearly must be his fault.

C'mon, it's "easy journalism". When you've thought long and hard but what to write, it comes to you in the shower, "Oh yea, I'l write another negative piece about GM". It's easy.

It's easy. Anything about the "evil US corporation" , or the "evil CEO" is "easy journalism".

[tama z71]

Originally Posted by Buickman

Keith Naughton
Monday, January 28, 2008
url > http://www.newsweek.com/id/105843

Im not quite sure how Rick Wagoner is responsible for the recession in Michigan, but Im very sure Buickman is responsible for the lamest, most single-minded crap on this website.

[K-1]

Originally Posted by Buickman

Robert Woods went to work in an auto factory straight out of high school and spent nearly three decades making steering gears in Saginaw, Mich.

Therein lies the problem. Some guy who didn't bother to go to college (nor did he ascertain a degree while making the 'big bucks' for 30 years) and has no marketable skills other than manual labor, is complaining about not being able to find a job. Cry me a freakin' river.

$2,600/mo? He's hardly poverty stricken.

[mgescuro]

Oh geez. This article isn't about Wagoner -- (so I changed the title).

Michigan's economy, is very closely tied to the auto industry. Michigan's local and state government have failed to truly diversify the economy of Michigan, despite forays into high-tech and biotech. These industries rely on college degrees or better, which is harder to come by in a region that has been traditionally reliant on high school degrees and manual labor.
In laymen's terms, people who worked the line can't find jobs in high tech because they don't have the knowledge and skill set to work those jobs.

And therein lies the problem. The best people with the skill set move to Massachusetts or California or Texas, leaving Michigan to pick up the scraps.

[K-1]

Originally Posted by mgescuro

And therein lies the problem. The best people with the skill set move to Massachusetts or California or Texas, leaving Michigan to pick up the scraps.

I wouldn't go that far. There are plenty of techy grads from MSU and U-M that find jobs in Michigan (we hire a bunch of them). The only people worried about the economy are those doing manual labor. Everyone else has hardly seen this "economic wasteland."

[mgescuro]

Originally Posted by K-1

I wouldn't go that far. There are plenty of techy grads from MSU and U-M that find jobs in Michigan. The only people worried about the economy are those doing manual labor. Everyone else has hardly seen this "economic wasteland."

Yes there are techies there. But Michigan isn't known for technology, despite being 4th in the nation. A lot of the techies also end up with the auto industry.
Heart and soul of Michigan is still the auto industry. And until Michigan can find something less recession proof to support itself in downturns, they'll perpetually be stuck in a statewide malaise.

And as the article states, we do have to be careful this year. If the auto industry believes sales will not be as forthcoming, that is one of the initial signals of a recession. Home sales are already struggling as it is. Autos are next. Followed by other big ticket items (washing machines, etc.)

I believe we're already in a recession. WIll be interesting to see what bush says during the State of the Union.

[ponyok67]

What is the point of this story?
To stroke the other bleeding, crying, liberal media writers?
To make friends with more of those socialist types?
To get invited to the politically correct, just the right kind of wine parties?
To make a hard working and contributing American feel guilty about something?
To make people run into the streets screaming and scared?
Just wondering.
I gotta go back to work.

[01IntrigueGX]

With the current laws enacted in Michigan regarding right to work and other liberal ideals that are obviously not working, Michigan, as a state driven by years of political neglect and ignorance, will be in trouble. How this is a resultant of Mr. Wagoner's work baffles me. He has taken a company that was essentially destroyed by the Smith era, and transformed it into producing some of the finest vehicles in the world (not all, but many). Michigan needs reformed laws, policies, and other incentives to gain the acceptance of companies, and make them DESIRE to work in the state. Look at the southern states with their manufacturing sectors, mirror them, not reinstate and support archaic laws that show the arrogance of a state that still believes its "number one" in the world of manufacturing and business. The citizens also must realize that the "heart and soul," as mgescuro stated, is still the "big" three automakers. Michigan as a whole needs to step it up, and pull itself in the right direction. The blame can be directed in many ways, but I say, put the blame aside, and let's work together to fix this problem. As a resident, I am deeply concerned about this problem.

Regarding Buickman's obvious and blatant attempt to tick members off, I believe he is just upset that his city, Flint, is a virtual ghost town, and he needs to take his anger and allocate it somewhere. Sorry Buickman, if your union workers were more willing to accept negotiations and other concessions for the good of GM in the long run, maybe Flint would still be viable. Don't be upset at Wagoner for your city's woes.

[ByTheLake]

Originally Posted by K-1

Therein lies the problem. Some guy who didn't bother to go to college (nor did he ascertain a degree while making the 'big bucks' for 30 years) and has no marketable skills other than manual labor, is complaining about not being able to find a job. Cry me a freakin' river.

Yeah, I tend to agree. I've invested countless hours (and summers, and nights) of my life on education - have 3 college degrees - so I have little sympathy for those that are struggling with their high school educations.

It's not just a Michigan thing, although given Michigan's heavy reliance on the manufacturing sector, the affect on Michigan is amplified. Manufacturing jobs will gradually disappear across the country.

[pontiacjs]

Originally Posted by K-1

Therein lies the problem. Some guy who didn't bother to go to college (nor did he ascertain a degree while making the 'big bucks' for 30 years) and has no marketable skills other than manual labor, is complaining about not being able to find a job. Cry me a freakin' river.

$2,600/mo? He's hardly poverty stricken.

could you survive more than a year on $2,600 per month?