Why can't Michigan turn it around? (Detroit, Caro: environment, loans, real estate)

[Cato the Elder]

Originally Posted by athletesfoot

Of course, many of us who grew up in Michigan knew that the factories and auto industry wouldn't always be there so we took out loans and suffered being broke through college. Unfortunately, our peers didn't listen when told that. They worked their factory jobs telling us how silly we were and how much more money we could make if we were working. They bought lake houses and SUV's and overextended themselves on their mortgages. They popped out several kids and sent them to private schools. Now the predictions have come true, the auto industry has bailed to cheap overseas labor and robotic technology and they are losing their jobs, their lake houses, and are in danger of foreclosure. They should have taken advantage of their company's education plans and gone to school while they worked, like my father did, so at least he had a back up plan when the steel industry went under and laid off their loyal employees.

But, I guess it's easier to sit back and blame all your troubles on others or the economy. Guess what, it's bad everywhere, even boom towns like Las Vegas. No houses are selling anywhere. Last year you couldn't keep a house on the market for a week here in Vegas, now there are several in my neighborhood that haven't sold in several months. It's not just Michigan that's suffering, although I know that times are hard due to the wastefulness of the auto industry.

Here's advice to keep it from happening to you again. If you work in skilled trades, start learning how to do something else in the information sector. There won't be many trades jobs left in the long run, wherever you go.

Spot on post.

[wanderer74]

Originally Posted by athletesfoot

Of course, many of us who grew up in Michigan knew that the factories and auto industry wouldn't always be there so we took out loans and suffered being broke through college. Unfortunately, our peers didn't listen when told that. They worked their factory jobs telling us how silly we were and how much more money we could make if we were working. They bought lake houses and SUV's and overextended themselves on their mortgages. They popped out several kids and sent them to private schools. Now the predictions have come true, the auto industry has bailed to cheap overseas labor and robotic technology and they are losing their jobs, their lake houses, and are in danger of foreclosure. They should have taken advantage of their company's education plans and gone to school while they worked, like my father did, so at least he had a back up plan when the steel industry went under and laid off their loyal employees.

(cut)

Here's advice to keep it from happening to you again. If you work in skilled trades, start learning how to do something else in the information sector. There won't be many trades jobs left in the long run, wherever you go.

I think you're absolutely right. And I think the reason MI is in such rough shape is not just because of the loss of auto industry jobs, but also the loss of other jobs that were directly or indirectly tied to the auto industry. I think I heard that for every one auto industry job lost, there are four other jobs lost in other industries - for example, a restaurant across the street from an auto plant goes out of business once the plant closes because they no longer have the customer base; teachers who lose their jobs because school districts lose funding as more people leave the state after losing their jobs at GM.

My husband and I never expected to get jobs in the auto industry, as we saw our parents' generation get screwed over by their lack of higher education and their belief that the high-paying skilled trades jobs would always be there. We knew that counting on those kind of jobs would be foolish. But despite the fact that we expected to work in other fields, it's the loss of all those other industries that has diminished the available job pool for us as well. If Michigan would have diversified its economy long ago, maybe the state could have prevented the employment problems it now faces. I just hope that once we're able to move out of state, we'll be able to find jobs elsewhere. I'm all too aware that things are tough everywhere; I just hope we can beat the odds in a different place that has more jobs than MI.

[magellan]

Originally Posted by wanderer74

I think you're absolutely right. And I think the reason MI is in such rough shape is not just because of the loss of auto industry jobs, but also the loss of other jobs that were directly or indirectly tied to the auto industry. I think I heard that for every one auto industry job lost, there are four other jobs lost in other industries - for example, a restaurant across the street from an auto plant goes out of business once the plant closes because they no longer have the customer base; teachers who lose their jobs because school districts lose funding as more people leave the state after losing their jobs at GM.

I just hope we can beat the odds in a different place that has more jobs than MI.

That's called the Economic Multiplier effect. For every x number of jobs created, there are y number of spinoff jobs created. Manufacturing plants, and especially automotive assembly plants, have some of the largest multipliers, because of all the suppliers needed to keep the plant running. There may only be 1000 people in the plant, but those cars need dashboards, headliners, cupholders, seats, carpet, body panels, engines, bumpers, and on and on (even toilet paper for all the bathrooms). Many of these parts are made offsite by suppliers employing thousands of people, all of which eat out at restaurants, buy homes, invest in the stock market, buy clothes, and on and on. That's why when things are (were) good in Michigan, they were really good. The middle class manufacturing workers in Michigan were some of the best paid in the country. Problem is there are fewer and fewer auto plants being built in the U.S.

Now switch that into reverse.

Shut down that 1000 person auto plant and see what happens. You've now not only taken those 1000 people out of the job market, but the myriad of people who supplied that plant are either out of a job or their employer has to scramble and find replacement work (which there is only so much to go around). Many more lose their jobs and have to sell their homes, cut spending, stop going out to eat, etc.. Service jobs (financial, law, medical, etc.) on the other hand, only have about a 1 to 1 multiplier effect. Now you need to create 5000 service jobs to replace that 1000 person auto plant and the 4000 people that supplied that plant. See why it gets tricky?

The scary reality is that the entire country is moving toward service jobs, where the multipliers are very low. It's great when a region is growing through migration, but not so great when an area stops growing. You constantly have to be adding a ton of service jobs non-stop or the economy falters. In other words, you have to work 5x as hard to create the same number of service jobs as you would manufacturing jobs. Especially housing market related workers (sales, builders, their suppliers, mortgage, inspectors, appraisers, etc.) That can be seen by the thousands of workers who are being let go from the biggest builders of the country (Pulte, KB Homes, Beazer Homes, Lennar) and from the country's largest mortgage companies (Countrywide, Ameriquest). I just read in a newsletter I receive that estimates peg mortgage company layoffs at about 75,000 through the end of the year around the country. I have to search my memory back to the late 80's early 90's for those kind of layoffs (oh, and right after 9/11).

I'm not saying you shouldn't leave Michigan to find employment. There may be no other alternative for some people (you can't squeeze blood from a turnip). I just get the sneaky feeling that Michigan's woes are just a pre-cursor for the rest of the country.

What's really bizarre is if you do a google search for "housing market slowdown", you get a bunch of hits for the UK, Canada and Australia, who also seem to be echoing the same issues we are having here.

housing market slowdown - Google News

BTW: With all that said, we love it here and we're staying (and we're not at all "dumb")

[dmetro]

Originally Posted by easydoesit

I am not from Michigan and my observations are simply from reading a lot of material, making observations and passing through the state from time to time.

I just can't figure out Michigan. Yes, the auto industry situation is well known. It will never be what it once was.

However, IMHO, MI has a lot to offer but doesn't seem quite ready to be what it is capable of being. Why is that? Is it purely poor execution at the state gov level? I don't know but it just seems like MI is too special of a place to let it go.

No, it's not the fault of the government. In fact, they shouldn't intervene. Eventually the economy will simply correct itself, and all will be well again.

[athletesfoot]

Originally Posted by dmetro

No, it's not the fault of the government. In fact, they shouldn't intervene. Eventually the economy will simply correct itself, and all will be well again.

I'm not entirely sure I agree with that. It might happen, but it will take a loooong time to happen on its own. The government and big business pretty much go hand in hand. The state of MI and various cities could do quite a bit to attract new employers to the state.

If I were in charge, I would have something of a 4-point plan, or road map to try to bring things back online again. There are 4 main areas where MI could excel - tourism destination(both in the ski/lake type areas as well as creating a beautiful downtown live/work/play sort of mini-broadway/ sports/ nightclub/music center in a place like Detroit, which could be a beautiful city again), agriculture (for a more stable economic base than tourism), distribution (with our great access to ports, airports, highways, railroads), and information/technology (for the "smart kids"). But, the people in charge need to have a vision and want to work hard to execute it.

In order to make any kind of progress though, the people in charge in places like Detroit need to work with each other and with the governor otherwise there will be nothing but stagnancy or outright anti-progress tactics. Cities like San Diego and Las Vegas used to have decaying downtown areas that have or are now being totally revitalized because they have mayors and city council people who are invested in their city's future. People now walk around at night and feel safe and excited to be there. If I were governor, I'd definitely be working with these people in to show us how it's done.

Business must be "wooed" in order to make change happen quickly. You might have to give them the land at below-market values but know that you will recoup that in the form of increased jobs and a wider tax base. They need a good reason to come here. Businesses are opening their headquarters or distribution centers, etc. in other states - why not MI??? We need someone in charge with a plan.

[PSaroki]

I have been born and raised in Detroit. Our major problems is the teachers union and lack of public transportation. Most of us live where are property taxes are so high we can't afford to live in homes we've had for years. I believe teachers are entitled to a good wage but "supply and demand" is a basic when it comes to successful business. As a result the local teachers do not get generic drugs. Further my friend who is a local teacher 2nd husbands 2 daughters who he does not have custody of are both covered under her insurance plan. They are both in counseling 100% covered. I pay my own health insurance since I am self employed. I am currently in foreclosure as a choice someone else can fund her great benefits. I will move to another city where my taxes will be reduced from $10,000 to $3,500.

Secondly this state has no public transportation. We have so many people driving without a license it is unreal. Some just to get around, others to put food on the table. The state uses any excuse to keep these people illegal. Loss of driving privileges for drivers responsibility fee's, owed child support, certain crimes etc... You may not be sympathetic to these people but they need a way to get around to what ever job opportunity they may have.

Granholm has been a horrible Govenor. All her appointments have been people who have given her campaign enormous donations or political favors. In fact the last 4 Judges she's appointed to the 36 District Court are all Kilpatrick people.

This state has no chance until we quit quashing the poor and realize they need the ability to help themselves.

[Florence Jones]

Two words: free trade.

We are losing all our manufacturing jobs and the automotive industry was our biggest industry. It's all trickling down now and effecting most residents.

[MISAufk]

It will only get worse before it can even think of getting better. No one is even trying to make it better.
The auto industry is not doing a dam thing to even try to take back the market. the government is not doing anything to bring in business, and the only way michigan can even now turn around is if the rest of the country hits an economic high note and it rides in on its coat tails.
Maybe that new dodge charger or H3 will bring MI out of the pit of dispair? Nope just wishfull thinking. I am buying a toyota, screw detroit, if they can not get their heads out of their assess then they deserve what they get.
What we have here is a lack of comunication, they asked for it and they get it, I dont like it any more than you men do.

[M TYPE X]

I like it how everyone is trying to isolate certain factors. What Michigan has is a perfect storm of various factors hitting all at the same time. The model is extremely complex, like explaining what caused World War I.

A revitalized Michigan WILL both have thrown GM/Ford/Chrysler out to sea and have a revitalized Detroit. GM/Ford/Chrysler will not turn around, even though they can and should. Their organizations are in death spirals. The big city is necessary to attract people. City plus suburbs, like Chicago. Again, I'm telling you what a successful Michigan will look like, but not how to get there.

[malamute]

Originally Posted by MISAufk

It will only get worse before it can even think of getting better. No one is even trying to make it better.
The auto industry is not doing a dam thing to even try to take back the market. the government is not doing anything to bring in business, and the only way michigan can even now turn around is if the rest of the country hits an economic high note and it rides in on its coat tails.
Maybe that new dodge charger or H3 will bring MI out of the pit of dispair? Nope just wishfull thinking. I am buying a toyota, screw detroit, if they can not get their heads out of their assess then they deserve what they get.
What we have here is a lack of comunication, they asked for it and they get it, I dont like it any more than you men do.

That's right -- because Michigan is still a very generous welfare state. That means you're keeping and even attracting welfare types but losing the working types. That's a no-win situation.

Plus while working taxpayers are leaving in droves, the salaries and benefits for teachers in Michigan are very high -- there will come a point where that will become a problem. When your biggest "industries" are schools and health care it can be a problem because both of those are very tax dollar dependent.