Bay County Part of New Mott-Funded Labor Education, Auto Industry Thrust
Michigan, Northern States, Still Core of Automotive Despite Moves South
February 26, 2006
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By: Dave Rogers
The auto industry remains strong in Michigan and the North, says a leading researcher.
And the industry likely will remain strong if a new Automotive Communities Program is successful in combatting outsourcing and strengthening local communities like Bay City, Saginaw and Flint.
That was the report from Kim Hill of the Center for Automotive Research (CAR), Ann Arbor, to the Bay Future economic development organization recently.
The report made in Bay City was among the first to reveal the center's fresh outlook on the industry.
And, Bay County, along with Saginaw and Genesee, will be in the forefront of a new automotive labor education program funded by the Mott Foundation.
Mott Foundation recently announced a $1.2 million grant-funded initiative to help Midwest communities compete for new automotive investment.
Saginaw Future, Inc., presumably with spin-off effects to Bay City, is among the 35 members of the new Automotive Communities Program (ACP).
Other Michigan members of ACP include the Flint-Genesee Economic Growth Alliance, the Right Place of Grand Rapids, Clinton County Partners in Progress, and the Michigan Economic Development Corporation.
A three-year,$900,000 grant to the Center for Automotive Research (CAR) in Ann Arbor is designed to improve the long-term global competitiveness of Michigans automotive manufacturers and suppliers through a series of collaborative efforts.
A two-year, $300,000 grant to the National Employment Law Project (NELP) in New York City is designed to increase current participation of dislocated workers throughout Michigan in retraining through the federally funded Trade Adjustment Assistance (TAA) program.
This package of grants is based on two economic realities, said Maureen H. Smyth, Motts vice president for programs and communications.
She added: One is that outsourcing is a fact of life. The second is that efforts to subsidize manufacturing jobs in the face of global competition must be coupled with long-term strategies to improve the domestic manufacturers economic competitiveness through better education and workforce development systems.
The Global Automotive Marketing Alliance will assist Michigan supplier companies and communities in marketing to global automotive firms and suppliers, both in North America and overseas.
The Program for Automotive Labor Education will focus initially on the Bay-Saginaw-Genesee counties region. It will bring together human resources executives, K-12 administrators, and community college and university faculty to create new models for curricula delivery, outreach programming and funding. Training and certification needs required by the global automotive industry will be addressed, as well as the anticipated skills shortage created as current workers retire.
NELP plans to use its Mott grant to expand technical assistance and services for community groups, state policy organizations, workforce agencies and others interested in improving the use of TAA in Michigan. It will focus initially on workers in the Greater Flint and Saginaw areas.
ACP activities will include automotive information outreach,automotive community studies, and ACP membership meetings and forums.
"Major automotive investment has an enormous economic and employment impact on the regional economy," said Mr. Hill. He cited a multiplier of 6.5 additional jobs for each job at a U.S. motor vehicle firm.
Local economic policies are the areas of greatest emphasis in plant site decisions, said Mr. Hill. "The community must WANT the plant," he said. Teamwork between the state and community, and agreeable and flexible labor force, strong and persistent leadership and the right business environment are other aspects of the decision-making process, he said.
Although Mr. Hill's research several years ago focused on the industry's move to the South, this new look highlights the strengths of the North, including:
About 30,000 mechanical and industrial engineers in Michigan, some seven times the number in the next leading state, Alabama, and equal to the number in five Southern states (Alabama, Arkansas, Kentucky, Mississippi and Tennessee).
Michigan has more than double the number of automotive skilled trades workers of the five key Southern states, nearly 200,000 to about 80,000.
The more than 1,600 tool and die industries in Michigan are more than double the number in eight Southern states, including Georgia and North and South Carolina.
"This new report is good news for Bay City, as well as the tri-county area and Michigan," said Cliff Van Dyke, president, Bay County Growth Alliance. "His remarks were so well researched they exploded a lot of myths about the industry."
However, there are substantial challenges, Mr. Van Dyke indicated. According to Mr. Hill's research, the Southoutpaces the North in average incentives per facility and average incentives per job.
The Upper Midwest has 43 original equipment manufacturing facilities to 16 in the South, said Mr. Hill. The South offers an average of $131 million in incentives per facility and $89,000 in incentives per job, he said. Meanwhile, the Upper Midwest lags with about $68 million incentives per facility and $38,000 in incentives per job, he said.
Company return on investment is 23.5 percent per new facility in the North and 32.8 percent in the South, with the margin for the South narrowing to 25.2 percent to 22.2 percent when roads, sewer and water are figured in, he said.
In answering the rhetorical question, Why the South? Mr. Hill answered:
The South has 33 percent of U.S. vehicle sales, a share that is climbing;
Lower land costs and lower energy costs;
The South's Right-To-Work laws result in a lower percentage of unionized workers, for example 5.2 percent in Alabama and 16.6 percent in Michigan;
The South's lower wage rates are indicated by Alabama's average wage of $13.10 and Michigan's of $20.48, he said.
On the other hand, the South is seen as having a weak, undeveloped industrial infrastructure, few supporting services, thin transportation infrastructure, lack of industrial culture and rapidly developing human resource shortages for manufacturing, even extending to trainable applicants for production jobs.
Auto industry moves South are expected to slow because of skilled labor shortages and international companies may pick up the slack in the North, Mr. Hill predicted.
For more information please see www.cargroup.org.###
Dave Rogers is a former editorial writer for the Bay City Times and a widely read,
respected journalist/writer in and around Bay City.
(Contact Dave Via Email at email@example.com)
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