Monday, June 06, 2005
Death of Manufacturing
Michigan has a rich agrarian history, but someone forgot to tell the few remaining farmers that agriculture is a 19th century industry. Farming is not a growth market. While we will always need food industries always have a way of consolidating an optimizing, so consequently small farmers will continue to suffer until there are none left.
Michigan also has a rich manufacturing economy. In the early 20th century, the town of my birth, Flint, Michigan was a bustling cottage industry of small carriage builders turning out custom automobiles. William Crapaud Durant was one of the earliest consolidators, converting all of these horse-drawn buggy/car makers into what is now known as General Motors. Durant got over-leveraged on margin and the Duponts and Alfred Smith took over. This was the 1920s or 1930s. My grandfather did 40 years at Buick in Flint. My step-dad put in 36 years at Fisher Body and at the time of my birth even my father worked at Fisher Body, or so my birth certificate says. That was 39 years ago.
Unfortunately the 1960s was the last time I know for sure that anyone walked out of a high school and got a high paying factory job. I still live by Lansing and as far as I can tell low-seniority on the line is 27 years. That means the new guys have been there almost thirty years.
High paying factory jobs are gone, General Motors is once again in serious trouble, labor costs are huge, and the new consolidator Kirk Kerkorian is quietly and not so quietly buying up GM stock.
Where is GM going to go? Mexico and China folks. The industrial age has quietly slipped away for the US--I should say passed away--and nobody told Michigan. The presence of Flint's most famous bitter native, Michael Moore, should have been a clear harbinger of industry's death. How do you think guys like Moore are created? They are created in the homes of the embittered, impoverished, and disillusioned, which would probably describe many of the denizens of Flint and Detroit. (Both have high crime rates. According to the FBI Detroit had 195 murders and 4770 aggravated assualts in 2004 and Flint had 14 and 719 respectively. Fewer but nothing to write home about. In my opinion, prosperous, engaged people don't go around killing and hurting each other.)
Yes, we will always have some manufacturing in Michigan and the US just like we will have farms, but the heyday of manufacturing is history. The guys retiring from the shop in the remaining ten or fifteen years will be the last generation of American car makers, at least as we know them.
GM cannot continue to pay $70,000 a year and huge benefits to automakers when they can pay a Mexican $5,000 or less to build the same car. Personally, this evolution is probably necessary. Factories are smelly and we can't be hugely rich while all of our neighbors are poor. The natural evolution is the exportation of some of these jobs and some of our wealth. Car makers may not appreciate these ideas but I am not the impetus behind manufacturing's exodus. Time is.
The new economy is digital. If you don't believe me go to Western Washington and witness exuberance and enthusiasm and the symbols of wealth and prosperity (which is what we had in Michigan from the 1920s to the 1960s). Washington State is wealthy because it is the nexus of the new economy.
So, why am I writing this? Simple. I am bearing witness to Michigan's economic death and decline right under the noses of incompetent governors. Michigan's leaders are begging factories to stay and add jobs but that is a losing battle. Michigan will never be an economic gemstone based on manufacturing again. We presently have a $700, 000,000 deficit and the executive and legislative branch think raising taxes and bribing GM to keep factories open will do the trick. They are sadly mistaken.
Michigan is at present a great place to live and raise a family but manufacturing families are slowly being disenfranchised and slowly being adding to the working class poor. This doesn't have to happen. We have great universities, beautiful natural resources, and many enjoyable pastimes during each of our diverse seasons. But this was true of steel and Indiana and Pennsylvania (and probably other manufacturing-related businesses and several other states).
Michigan doesn't have to diminish, but Michigan's business and elected leaders better start letting factories take care of themselves and start investing in technology. We can build computers, microchips, and software but so far Oregon, Texas, and Washington own those businesses. We'd better start enticing telecom and software companies to Michigan and quick.
I don't have the answers but infrastructure would seem to be important. Every city and town needs to provide universal wireless and high-speed access. Every university and community college needs to beef up their technology curriculum and innovate, including defining new specialties like designer, architect, analyst, project management, and update heir programming courses. Put computers in every classroom and wire them up. Start using digital and wireless devices in every business, websites, blogs, online shopping (even Amazon.com isn't in Michigan but it could have been), and start innovating. Form and attend user groups (hell, secret societies if you think it will be fun; Skull and Bones seems to have done wonders for some prominent people), brainstorm, buy a computer, wire it up, take an extension course, start computer business, whatever it takes.
What's new? What's next? What do people need? What do people care about? How can software help them have a better life? What can Michigan business do service these needs?
We do know one thing Michigan (Henry Ford and his peers) demonstrated that Michigan was capable of leading an age, and I think we can do it again.
Maybe Washington and Bill Gates own the digital age, but we ought to at least give 'em some competition.
Michigan also has a rich manufacturing economy. In the early 20th century, the town of my birth, Flint, Michigan was a bustling cottage industry of small carriage builders turning out custom automobiles. William Crapaud Durant was one of the earliest consolidators, converting all of these horse-drawn buggy/car makers into what is now known as General Motors. Durant got over-leveraged on margin and the Duponts and Alfred Smith took over. This was the 1920s or 1930s. My grandfather did 40 years at Buick in Flint. My step-dad put in 36 years at Fisher Body and at the time of my birth even my father worked at Fisher Body, or so my birth certificate says. That was 39 years ago.
Unfortunately the 1960s was the last time I know for sure that anyone walked out of a high school and got a high paying factory job. I still live by Lansing and as far as I can tell low-seniority on the line is 27 years. That means the new guys have been there almost thirty years.
High paying factory jobs are gone, General Motors is once again in serious trouble, labor costs are huge, and the new consolidator Kirk Kerkorian is quietly and not so quietly buying up GM stock.
Where is GM going to go? Mexico and China folks. The industrial age has quietly slipped away for the US--I should say passed away--and nobody told Michigan. The presence of Flint's most famous bitter native, Michael Moore, should have been a clear harbinger of industry's death. How do you think guys like Moore are created? They are created in the homes of the embittered, impoverished, and disillusioned, which would probably describe many of the denizens of Flint and Detroit. (Both have high crime rates. According to the FBI Detroit had 195 murders and 4770 aggravated assualts in 2004 and Flint had 14 and 719 respectively. Fewer but nothing to write home about. In my opinion, prosperous, engaged people don't go around killing and hurting each other.)
Yes, we will always have some manufacturing in Michigan and the US just like we will have farms, but the heyday of manufacturing is history. The guys retiring from the shop in the remaining ten or fifteen years will be the last generation of American car makers, at least as we know them.
GM cannot continue to pay $70,000 a year and huge benefits to automakers when they can pay a Mexican $5,000 or less to build the same car. Personally, this evolution is probably necessary. Factories are smelly and we can't be hugely rich while all of our neighbors are poor. The natural evolution is the exportation of some of these jobs and some of our wealth. Car makers may not appreciate these ideas but I am not the impetus behind manufacturing's exodus. Time is.
The new economy is digital. If you don't believe me go to Western Washington and witness exuberance and enthusiasm and the symbols of wealth and prosperity (which is what we had in Michigan from the 1920s to the 1960s). Washington State is wealthy because it is the nexus of the new economy.
So, why am I writing this? Simple. I am bearing witness to Michigan's economic death and decline right under the noses of incompetent governors. Michigan's leaders are begging factories to stay and add jobs but that is a losing battle. Michigan will never be an economic gemstone based on manufacturing again. We presently have a $700, 000,000 deficit and the executive and legislative branch think raising taxes and bribing GM to keep factories open will do the trick. They are sadly mistaken.
Michigan is at present a great place to live and raise a family but manufacturing families are slowly being disenfranchised and slowly being adding to the working class poor. This doesn't have to happen. We have great universities, beautiful natural resources, and many enjoyable pastimes during each of our diverse seasons. But this was true of steel and Indiana and Pennsylvania (and probably other manufacturing-related businesses and several other states).
Michigan doesn't have to diminish, but Michigan's business and elected leaders better start letting factories take care of themselves and start investing in technology. We can build computers, microchips, and software but so far Oregon, Texas, and Washington own those businesses. We'd better start enticing telecom and software companies to Michigan and quick.
I don't have the answers but infrastructure would seem to be important. Every city and town needs to provide universal wireless and high-speed access. Every university and community college needs to beef up their technology curriculum and innovate, including defining new specialties like designer, architect, analyst, project management, and update heir programming courses. Put computers in every classroom and wire them up. Start using digital and wireless devices in every business, websites, blogs, online shopping (even Amazon.com isn't in Michigan but it could have been), and start innovating. Form and attend user groups (hell, secret societies if you think it will be fun; Skull and Bones seems to have done wonders for some prominent people), brainstorm, buy a computer, wire it up, take an extension course, start computer business, whatever it takes.
What's new? What's next? What do people need? What do people care about? How can software help them have a better life? What can Michigan business do service these needs?
We do know one thing Michigan (Henry Ford and his peers) demonstrated that Michigan was capable of leading an age, and I think we can do it again.
Maybe Washington and Bill Gates own the digital age, but we ought to at least give 'em some competition.
# posted by PaulKi : 9:03 AM
Subscribe to Posts [Atom]