Michigan, Tri-County Area on the Cutting Edge as International Issues Loom
Congressional Action on Currency Sought by Bipartisan Senate Group
March 4, 2007
By: Dave Rogers
U.S. made cars and trucks are at a disadvantage of $2,000 to $9,000 per vehicle made in Japan because of currency manipulation, say Industry leaders.
Local economic developers are citing a positive tri-county economic picture with several large projects on the drawing board.
And, there is good news in local real estate, with sales bouncing back in January, according to Bob Adamowski, president of the Realtor Association of Bay County.
Gov. Jennifer Granholm also reports the State New Economy Index ranked Michigan in the top 20 in the nation for preparedness for the new global economy. In the past eight years, Michigan has improved 15 spots in this survey ranking, more than any other state in the nation, she said in her weekly radio address.
As reports of gains by Asian firms in the automotive area continue, U.S. automakers continue to grapple with a structural problem: currency manipulation by foreign nations.
This complex topic affects jobs in Michigan and the tri-county area of Bay City, Saginaw and Midland especially.
Industry leaders note that U.S. made cars and trucks are at a disadvantage of $2,000 to $9,000 per vehicle made in Japan because of currency manipulation.
One leader says: "The U.S. is the most open market in the world, while other countries impose protectionist trade restrictions."
A bipartisan group of senators said that China's manipulation of the yuan has become a destabilizing force in the world economy and has led to major international exchange rate and trade imbalances throughout the world.
Senators Charles Schumer, Jim Bunning, Dick Durbin, Lindsey Graham, Evan Bayh and Christopher Dodd last month launched an effort to build international pressure on the Chinese Government to float its currency.
Sen. Bunning, Kentucky Republican, who has introduced a bill to curb currency manipulation, says: "Currently, there is no objective method for protecting American companies from countries such as China who cheat by devaluing their currency in an effort to artificially lower the cost of their exports. This practice creates an unfair trade advantage that makes it nearly impossible for American manufacturers to compete in the free market."
The Bunning bill would provide injured U.S. companies that suffer due to the impact of undervalued currency with the ability to seek countervailing duties, a key enforcement tool to fight back against companies whose governments seek to create an artificial advantage.
"We believe China's currency policies and the deep undervaluation of its currency, the yuan or renminbi, have not only contributed to job loss and business failure in the United States, but they are also leading to major international exchange rate and trade imbalances and have become a destabilizing force in the global economy. the Senators wrote in a letter to Vice President Richard Cheney.
The yuan has been pegged to the U.S. dollar since 1994. Given China's enormous growth over that time, many economists believe the yuan may be undervalued by 15 to 40 percent. The practical impact of China intentionally lowering its currency's value is to make its goods and services cheap internationally. This means that when Chinese manufacturers export a product, they effectively receive a 15 to 40 percent subsidy on their exports, providing them with a nearly insurmountable advantage over U.S. producers.
Thousands of local workers are employed at Delphi Corp. that has extended the terms of its buyout offer from a group of private-equity firms at least to March 15.
Delphi reportedly sought time to reach labor agreements with unions and settle pension and health care issues with General Motors, its biggest customer.
Delphi has been in Chapter 11 bankruptcy since October 2005 and received court a buyout offer of up to $3.4 billion from Cerberus Capital Management L.P., Appaloosa Management L.P., and Harbinger Capital Partners Master Fund I Ltd., as well as with Merrill Lynch & Co. and UBS Securities L.L.C.
Granholm says Michigan's struggling manufacturing sector has affected the state's economy and contributed to declining state tax revenues. Michigan faces an unprecedented $3 billion budget shortfall in the current and coming fiscal years.
Granholm stressed that to continue this positive progress, Michigan must make key investments in diversifying the state's economy, educating the next generation of Michigan citizens, and ensuring the health of all Michigan people.
The town hall meetings will take place starting on Monday in Flint and then in Detroit, Grand Rapids and Lansing. A final meeting will be held in Traverse City on March 26. The complete listing is available at www.michigan.gov/gov.###