The Yuan, Health Care, Education, GM Crucial to State, Bay City Future
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For nearly 100 years Bay City and Michigan have been living in a dream world of economic prosperity: avoiding a nightmare is now the big test of the future.
It appears to this observer that we need to concern ourselves with several factors affecting our economy and lifestyle: 1-The value of the Chinese currency, the yuan; 2-the cost of health care; 3-The competitive status of General Motors; and, 4-the condition of the K-12 educational system.
GM announced plans to cut 25,000 more jobs by 2008 and at least one Saginaw plant, Malleable Iron, is slated to be phased out. The fate of other GM plants here is unknown despite reportedly good productivity.
The Bay area economy in the last 90 years has been powered mainly by GM, whose founder, William C. Durant, in 1911 bought the National Bicycle Co. from Henry B. Smith, thereby rescuing the community from the decline of lumbering.
Factories abounded here and in Saginaw with jobs for anyone who cared to work. Bay City was so prosperous that Buick's offer to move its headquarters here was declined in 1914, according to Durant biographer Larry Gustin, and rumor has it that Henry Ford was also turned away.
We lived the good life on the factory economy until the 1970s when U.S. manufacturing began to be challenged by global forces. A series of plant closings, Defoe, Prestolite, American Hoist, Newcor, Stalker, has cut the Bay County manufacturing workforce in half. The loss of employment at local plants has caused economic and population decline.
Nationally, GM has cut nearly half its blue collar workforce since 1991, from 207,000 to109,000, according to the Detroit Free Press. Another 25,000 jobs will bring GM down to 134,000 workers, a reduction of 35 percent in a decade and a half, paralleling the company's loss in market share.
The fact that the Chinese currency, theyuan, has been purposely and artificially kept low, giving the Chinese an advantage over U.S. manufacturers; this also costs jobs here. One prime example is Wolverine and other knitting mills that once employed hundreds here. A small fabricating plant inSaginaw County closed because auto suppliers found it cheaper to ship parts to China and back than to do business here.
Two U.S. senators, a Democrat and a Republican, agree in a column in the New York Times that the Chinese are not playing fair on trade. Democrat Charles Schumer of New York and Republican Lindsey Graham of South Carolina are proposing a tariff on Chinese imports unless the yuan is allowed to float freely against other currencies.
The dilemma in such an action is, of course, that tariffs in the past have ignited economic depressions and wars.
GM's health care situation is most instructive:the company has a $5.6 billion annual health care bill and is seeking concessions from the United Auto Workers. The company says it can't be competitive and blames its first quarter 2005 loss of $1.3 billion on high health care and commodity costs.
A recent speaker at the Tri-County Economic Club said that health care defies cost-cutting because it is not driven by consumer decisions in the marketplace. He called for a complete revision of the delivery and financing of health care.
The good jobs and resulting strong local tax base from the factory economy allowed Bay City to build a superior educational system and hire top educators. In 1949 voters did not hesitate to approve a 15-year "pay as you go" four mill levy that paid for dozens of new schools.
Bay City graduates traditionally have been top academic performers at colleges and universities and have made their mark in every field, but leaders for years have lamented that few of these "lost scholars" return to the community because of lack of opportunity.
Voters here soon will have an opportunity to decide whether to increase taxes to improve the condition school facilities. A so-called "sinking fund" is reportedly proposed; it would be a version of the 1949 pay-as-you-go millage that was so successful.
A massive reform of public education is necessary for innovation leading to global competitiveness, a Detroit industrialist said at a recent Mackinac Island economic conference. But "we haven'tgot the courage to change the K-12 system," said Richard Dauch, CEO of American Axle. "It's still set on the agricultural system."
Parent attitudes are at the root of our educational problems. A recent survey shows only about 27 percent of Michigan parents say a good education is essential for getting ahead in life.
While 90 percent of Michigan's ninth graders plan to go to college, only 41 percent will do so and one in five (19 percent) will graduate, according to the EPIC-MRA survey.
The survey results reveal that parent attitudes present a basic roadblock to Gov. Jennifer Granholm's goal of doubling the college graduation rate. The goal is aimed at shifting the labor force from the faltering manufacturing economy to new technology-based fields.
So, not only are all these factors: the yuan, health care, GM and education tied together, they are critical to the future of Bay City and the state. We would be well-served if we could convince some of our "lost scholars" educated here to return and help with answers.###
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0200 Nd: 04-16-2024 d 4 cpr 0
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