Following the September 11 attacks on New York City, the American economy was violently thrown into a period of uncertainty as previously stable and cheap oil from the Middle East became an increasingly scarce resource. Businesses shut their doors as consumers stayed home and speculators artificially drove the price of commodities even higher. Michigan is still reeling from the lost productivity of our biggest industry - automotive manufacturing. Although the Michigan government has been and continues to take steps to rebuild our state economy in a progressive fashion with emphasis on new industries, the fact of the matter is that Michigan is still far behind on the curve.
. As of August 2008, Michigan's unemployment rate sat at 8.9% - the highest in the nation - and an increase of 0.4% just from May 2008, and 1.7% from August 2007. The national unemployment rate sits at 6.1% as of August 2008. A joblessness rate of 8.9% has not been seen since 1992. An article by the Michigan-based news agency Gonger included statistics from the U.S. Bureau of Labor Statistics agency, reporting that although 354 or 369 national metropolitan areas have faced a loss of jobs over the last year, the Detroit-Warren-Livonia area reported the largest decline, losing 58,900 jobs - more than 10,000 more than the second highest loss, the Los Angles-Long Beach-Santa Ana region, with a loss of 43,400. (1)
In addition, several historical key Michigan industries are in decline: 177,800 people were employed in Motor Vehicle Parts manufacturing in the beginning of 2003; only 130,800 were employed at the end of 2007, a loss of 26.4%. Similarly, 78,800 poeple worked directly in Motor Vehicle Manufacturing in 2003, that number is down to 59,000 in 2007, a loss of 25.1%. (2)
Three key programs have been presented and are being instituted at in order to curb this trend of job loss: programs to curb the number of unemployed workers displaced from historical manufacturing industries, programs to promote firms currently existing in Michigan that emphasise emerging industry principles and established firms looking to begin operations in Michigan, and programs to provide the primary infrastructure for new start-up industry within Michigan - venture capital. Embedded within each of these programs, too, are oversight measures to ensure that disbursed funds are effectively allocated to firms that will produce results.
To combat the loss of jobs in manufacturing, specifically the auto industry and related tool and die and parts industries, the Michigan government has enacted programs promoting job training and reintroduction of displaced workers back into the workforce. This strategy is specifically applied via the The No Worker Left Behind program, established by Governor Granholm in 2007. The NWLB program works by redirecting already earmarked funds for training programs into special programs for displaced workers, and provides up to two years of free tuition at any Michigan community college or vocational school. Oversight is also implemented in large part with involvement by local Michigan Works! agencies determining eligibility on a community-wide basis for given programs of study, and eligibility for individual workers to qualify. (3)
At the same time, political and private interests have identified a need to make Michigan a more attractive location for start-up businesses. On September 16th, 2008, a presentation by Jeff Thredgold, an economist and futurist, to a Michigan Chamber of Commerce Future Forum emphasised the need for Michigan to divest itself into emerging technologies in order to remain competitive into the future. Gongwer reported on the event, noting that "Thredgold said that 'the American economy will be based around seven key industries', none of them manufacturing, which has been the underpinning of the Michigan economy, (and that) 'it will become more important than ever for individuals to go beyond a high-school education'." This presentation is an echo of ones given in the past years, which formed the basis for a shift away from the auto industry and related manufacturing fields for emerging companies in Michigan. The Economic Development Jobs Training Program, passed in 2003, is a prime example of legislation attempting to provide government assistance in order to facilitate the growth of these new industries. The EDJTP is a yearly grant program providing competitively-awarded funding for companies to provide additional training to employees, with emphasis given on new hires. (4, 3)
The final variable given by public and private interests alike in the equation to shore up currently faltering Michigan industries and promote growth of new cutting-edge industries in Michigan lately is, more often than not, the availability of venture capital. The Detroit News has reported extensively on this issue, including covering the 2008 Annual Conference of the National Association for Seed and Venture Funds. Statistics released during the conference included the existence of more than $700 million of venture capital circulating in the state since 2001, and 17 different emerging growth industries within Michigan - prime consumers of venture capital, and each specializing in one or more emergent technology field - information technology, life sciences, and alternative energy. The recently-passed Michigan Economic Development Authority (MEGA) is facilitating the growth of this sector by offering tax credits to new companies that fit within this emerging industry sector. Written into the bill commissioning the Authority, however, is a "clawback" provision stating that a company that fails to meet public MEGA benchmarks will be required to return some or all of the disbursed funds. (5, 6)
Although plans have been laid for the continued revitalization of the Michigan economy through the preservation of old jobs and the introduction of new industry, only time will tell if the measures outlined here will be as successful as hoped in their attempt to restore the Michigan workforce in levels seen in years past. At the same time, the overshadowing problems of the credit crisis on Wall Street will provide further problems for local businesses, ironically stemming from an area so far away. Hopefully, Michigan policymakers and entrepreneurs can work together in the face of these adversities.
Gongwer News Service, Volume #47, Report #180, Article #2, 09/17/2008 (1)
Citizens Research Council of Michigan, Survey of Economic Development Programs in Michigan, 2nd Edition, June 2007, http://crcmich.org/PUBLICAT/2000s/2007/rpt347.pdf (3)
Gongwer News Service, Volume #47, Report #179, Article #2, 09/16/2008 (4)