Gov. Granholm takes on tough questions

[nadepalma]

Source: http://www.freep.com/apps/pbcs.dll/a...601270443/1014

Governor reassures autoworkers group-She says state will attract new plants
BY JOE GUY COLLIER
FREE PRESS BUSINESS WRITER


Gov. Jennifer Granholm talks to an employee of the DaimlerChrysler Jefferson North plant Thursday.

January 27, 2006

Gov. Jennifer Granholm talks to an employee of the DaimlerChrysler Jefferson North plant Thursday. (CARLOS OSORIO/Associated Press)

As she talked to a room of autoworkers Thursday morning at a DaimlerChrysler AG plant in Detroit, Gov. Jennifer Granholm was hit by a question that's on the top of the minds of many people in Michigan.

"How can they attract auto plants and Michigan can't?" asked Ronald Tremonti, a 33-year-old worker at the Jefferson North Assembly Plant.

While plants close in Michigan, states like Texas are gaining. A Toyota Motor Corp. truck plant starts production this year in San Antonio.

Michigan can and will attract those plants, Granholm said. "Believe me, we're in the game," she said.

A day after giving the State of the State address, Granholm visited the plant for a question-and-answer session with about 50 autoworkers.

The meeting came the same day that General Motors Corp. reported a staggering $8.6-billion loss for the year and the same week Ford Motor Co. announced plans to lay off 30,000 workers.

Despite the bad news, Michigan's auto industry has bright spots, including the plant where she was speaking, Granholm said.

Chrysler Group made $1.3 billion through the first nine months of 2005. The Jefferson North Assembly Plant makes the Jeep Grand Cherokee, which had a 17% increase in sales last year.

"You are an example of the good news," Granholm told the workers.

Granholm provided initiatives she said would address some of the state's economic woes. She's signed legislation to provide $600 million in tax breaks for manufacturing industries and $1 billion in state money to invest in emerging high-tech businesses.

A Democratic governor up for re-election this year, Granholm blamed President George W. Bush for not addressing the rising pension and health care costs for the automakers. Bush, a Republican, was quoted in the Wall Street Journal as saying that Ford and GM shouldn't look to Washington for help.

Bush says the U.S. automakers need to produce "a product that's relevant" in order to better compete in the U.S. market.

We need a new president, Granholm said. "Manufacturing has created the middle class in America and we cannot abandon it," she said.

The group of autoworkers gave Granholm a warm reception and positive marks for her appearance.

Granholm is right about the need to diversify the state's economy, said Kimberly Thomas, 36, a line worker at the DaimlerChrysler plant.

"We don't want to be so focused on the auto industry that we let other industries slip by," said Thomas, who's working on a master's degree in finance to improve her skills.

The auto companies have to keep coming up with better products, said Kenneth Morrast, a 30-year-old UAW representative for the plant.

DaimlerChrysler has avoided the recent layoffs hitting Ford and GM in part because of hot products such as the Chrysler 300 and Dodge Magnum.

"The product is what drives it," Morrast said. "We have 10 new launches this year and they're critical. You've got to keep it going."

Contact JOE GUY COLLIER at 313-222-6512 or jcollier@freepress.com.

[nadepalma]

Originally Posted by nadepalma

"How can they attract auto plants and Michigan can't?" asked Ronald Tremonti, a 33-year-old worker at the Jefferson North Assembly Plant.

While plants close in Michigan, states like Texas are gaining. A Toyota Motor Corp. truck plant starts production this year in San Antonio.

Michigan can and will attract those plants, Granholm said. "Believe me, we're in the game," she said.

I don't know about this. I don't live in Michigan, but I do read quite a bit. I've read that there is basically and "anti-import" mentality in Michigan and a number of import companies don't really think they'd thrive in that enviornment. True, Toyota will be building a facility there (without union workers) and VW/Audi had a significant outpost in Auburn Hills -- but we aren't necessarily talking about huge numbers.

That point aside, there is also the union factor. Import/Domestic companies aren't the only ones who want to do business. OEMs, part suppliers/manufacturers also want to do business as well...and many of them are shy away from such as strong union base. Michigan is the very heart of the UAW and that might also shy folks away due to the political pressure the UAW puts on the state government. Plus I don't know what kind of economic policies Granholm has in place up there...but it could very well have created an harsh climate for businesses. Or maybe just the fact that the state is so expensive (like my home state of New Jersey) that businesses flee due to high property taxes, high corporate taxes, or just a very high standard of living that eats at margins.

Originally Posted by nadepalma

Granholm provided initiatives she said would address some of the state's economic woes. She's signed legislation to provide $600 million in tax breaks for manufacturing industries and $1 billion in state money to invest in emerging high-tech businesses.

A Democratic governor up for re-election this year, Granholm blamed President George W. Bush for not addressing the rising pension and health care costs for the automakers. Bush, a Republican, was quoted in the Wall Street Journal as saying that Ford and GM shouldn't look to Washington for help.

Bush says the U.S. automakers need to produce "a product that's relevant" in order to better compete in the U.S. market.

We need a new president, Granholm said. "Manufacturing has created the middle class in America and we cannot abandon it," she said.

Not for nothing, but this sounds like passing the buck and not taking responsiblity. I don't doubt that Bush could do more in trade policies and such, but she ultimately controls the state, and this is her watch. Texas, Mississippi, South Carolina, Alabama, etc. are all competing under the very same rules that she finds hindering the industry at large. Yet those states have attracted more plants and such that Michigan. If Bush's policies are really that awful and horrible for manufacturing then how can those other states do it so well? Perhaps she needs to study what they've been able to put together to make Michigan more attractive to manufacturers/OEMs/Etc.

Originally Posted by nadepalma

DaimlerChrysler has avoided the recent layoffs hitting Ford and GM in part because of hot products such as the Chrysler 300 and Dodge Magnum.

"The product is what drives it," Morrast said. "We have 10 new launches this year and they're critical. You've got to keep it going."

These people have short memories. The reason that Chrysler isn't laying off tons of folks is cause they went through their downsizing years ago when Zetsche first came on board. Chrysler cut a huge number of people and closed a number of facilities...and with the money they saved they were able to re-invest in new products that are hits and doing well in the market place. But if Zetsche didn't do what needed doing from the on-set, who knows if Chrysler would have been able to accomplish this? Who knows if the products themselves would have made it to market half-baked?

Corporate health does not always come down solely on product. If you liberate capital and slash overhead for the short term to invest in R & D, product planning, engineering, etc -- they you can money to spend on new products and technology. That's what I believe Chrysler did. But if they are going to play the "if you only built better products, you wouldn't be in this mess" card then we'll get nowhere. In order to get better products, you need capital. And if your balance sheets are out of whack, you're not going to have capital to spend on stellar products. It might be a case of the chicke-and-the-egg, but the point does have merit.

[DuSpinnst]

MI doesn't get jobs for 3 reasons.

1. Horrid Buisness Taxs
2. No help from Federal Government (since we have 2 Dem Sen's and a Dem Gov with a Rep Pres and Congress)
3. Strong Unions (and consequently HIGH wages)

People in MI would NOT be so Anti-Import if the Import's gave them jobs. We have VW's NA HQ and I see a lot of their cars around here (along with Audi's).

MI's problem is that the standard of living cannot be sustained with the current tax laws on buisness. It is not practical for buisness to build here. Trying to convince our government that, well that's another story.

[nadepalma]

Originally Posted by DuSpinnst

MI doesn't get jobs for 3 reasons.

1. Horrid Buisness Taxs
2. No help from Federal Government (since we have 2 Dem Sen's and a Dem Gov with a Rep Pres and Congress)
3. Strong Unions (and consequently HIGH wages)

People in MI would NOT be so Anti-Import if the Import's gave them jobs. We have VW's NA HQ and I see a lot of their cars around here (along with Audi's).

MI's problem is that the standard of living cannot be sustained with the current tax laws on buisness. It is not practical for buisness to build here. Trying to convince our government that, well that's another story.

I think you're right in that having more import companies settle in MI and promise them jobs would be a good start. But I also know that some of those companies won't settle simply b/c of the stigma and backlash they fear. In the end, I wonder if unions are pushing the state/local government NOT to be as cooperative simply b/c most of those factories will not be union shops.

I think you have a good point with the corporate taxes as well -- there are plenty of companies here in Jersey who are experiencing the same problems time and again. In fact, we have lost a number of businesses to other states like Delaware, South Carolina and Virginia that have more favorable tax policies.

Obviously high wages and high cost of living are a problem here as well, but Jersey doesn't have the same issues with Unions that Michicagn has. Let me rephrase that - Jersey doesn't have the influcence of manufacturing unions -- there are other unions like the Teachers Unions that give tax payers other headaches since the idea of "home rule" in Jersey has lead to ridiculously high property taxes thanks to the uncontrolled spending in public school education.

These factors are part of the reason that Ford and GM have abandoned our state in hopes of greener pastures since the climate here is so bad for re-investment.

Anyway, the point I was making (partially) was that Granholm can't lay it completely at the feet of Bush/Congress/Whomever -- sometimes the buck stops with the governor (as it does here in Jersey -- no one in Washington is dictating Jersey's economic/tax model) and blaming others for her/the MI state legislatures issues is just foolhardy. But of course, it IS politics and the first rule is to blame everyone but yourself! ;-)