www.jobberz.com
Robert Snell / The Detroit News
DETROIT -- General Motors Corp. is telling workers this morning it will make further production cuts at several factories, according to people briefed on the discussions.
GM announced it will shut down plants in Orion Township, Oshawa, Ont., and Lordstown, Ohio, for an additional week in January and reinstate a week-long shutdown in Wentzville, Mo., in December.
The Detroit automaker also moved up a temporary week-long shutdown in January at its plant in Kansas City that makes the Chevrolet Malibu and Saturn Aura and said it will stop operations at its Oshawa truck plant in May 2009, about two months earlier than previously announced.
GM has announced thousands of factory layoffs so far this year and is cutting its salaried staff in order to pare expenses and conserve cash.
"The impetus really is the extreme unpredictability in the market right now," GM spokesman Chris Lee said. "In some cases, we are adjusting our plant production schedules more frequently to respond to the market than we ever have in the past."
Dave Green, president of UAW Local 1714 in Lordstown, Ohio, said workers were told at 8 a.m. that the plant would be shut down for an extra week Jan. 5. Along with previously announced shutdowns, the plant, which employs about 5,000 workers who make the Chevrolet Cobalt and Pontiac G5, will be shut down from Dec. 23 until Jan. 20.
Cobalt sales were down 62 percent last month compared to a year ago and G5 sales were off 69 percent.
When the plant reopens, about 130 workers will be laid off, and the rate of production will be slowed, said Green, adding that workers were bracing for deeper cuts.
"It's almost a bit of a relief," he said. "It could have been worse. Don't be sorry for us, go buy a Cobalt."
In other moves, GM will reinstate scheduled overtime at its plants in Delta Township, Spring Hill, Tenn., Arlington, Texas., and Ft. Wayne, Ind. The automaker also will slow the speed of its production line at the Kansas City plant earlier than previously announced. The change in production speed will happen Jan. 20 instead of the first week of February.
The new cuts come as GM tries to boost its cash reserves and pursues a piece of $25 billion in federal aid after warning it might not have enough money to meet minimum funding requirements early in 2009.
On Thursday, congressional leaders asked Detroit's Big Three automakers to present a plan by Dec. 2 for restructuring their businesses and how they would spend $25 billion in government loans.
GM has lost about $73 million since 2004, including more than $20 billion this year, and suffered a 45.1 percent sales decline last month, its worst since the end of World War II, when adjusted for population growth.
The automaker outlined a plan in July to increase liquidity by $15 billion, and earlier this month announced an additional $5 billion in cost savings, including more job cuts.
The automaker ran through $6.9 billion in the third quarter, leaving it with $16.2 billion in cash, securities and readily available assets, down from $21 billion at the end of June.
The cash problem forced GM this month to halt talks to acquire rival Chrysler LLC from private equity firm Cerberus Capital Management LP.
The Associated Press contributed to this report.
Friday, November 21, 2008
Gettelfinger: Jobs bank 'almost gone'
http://www.jobberz.com/
Bryce G. Hoffman / The Detroit News
Reports that the United Auto Workers union is in talks to dismantle the controversial jobs bank program are premature, according to people familiar with the situation.
The possibility of more concessions from the union has emerged as Detroit's Big Three automakers are seeking $25 billion in emergency loans from the federal government as they burn through cash amid plunging car and truck sales.
Congress this week rebuffed proposals to give the automakers aid through the $700 billion Wall Street rescue package or by easing restrictions on $25 billion in loans through the Energy Department, a program that was funded in September, to allow the companies to use the money for immediate needs rather than solely to retool plants to make more fuel-efficient vehicles.
The companies could still get the aid, but they have to present Congress with a plan by Dec. 2 showing how they can become financially viable and how they would spend the loan money.
That could include negotiating additional concessions from the UAW, and sources at both Ford Motor Co. and General Motors Corp. say they have been talking to the union throughout the hearing process as part of their ongoing negotiations.
The automakers and the union have not specifically discussed eliminating the jobs bank, a source familiar with the situation said.
GM anticipates that the future of the jobs bank will be part of its ongoing talks with the union as the company seeks additional ways to cut costs.
As The Detroit News reported Thursday, UAW President Ron Gettelfinger said that the jobs bank wasn't a major factor anymore because the number of workers in it had whittled down significantly under provisions of the labor agreement reached with the auto companies last year.
Gettelfinger said the jobs bank has been reorganized (which pays workers 95 percent of their wage while on layoff), adding that Ford has taken 40,000 workers out since 2005 and GM has removed about 47,000. Currently, Chrysler has 711 workers in the jobs bank, GM has 1,404 and Ford has 1,476.
"It's not gone yet but it's almost gone," Gettelfinger said. "We're on the verge of eliminating that provision." And new language in the 2007 contract stripped it to a "mere shadow of what it used to be."
While the specific provisions vary from company to company, idled union members now have a limited number of times they can reject offers of work at other facilities before losing their jobs. Company sources said these provisions would have allowed them to eliminate all or most of the workers still in their jobs banks by now, were it not for a dramatic drop in car and truck sales that has forced each of the automakers to cut production and idle more workers.
Gettelfinger testified on Capitol Hill this week alongside the chief executive officers of Detroit's Big Three. He said that the union continues to talk to the automakers and has worked with them in recent years to reduce costs by agreeing to a range of concessions on health care, wages, factory work rules and other issues in recent years, including as part of last year's labor talks on new national contracts.
Eliminating the program entirely would be a tough sell for Gettelfinger, who is unlikely to support any change that would put these workers out on the street. Additional buyouts remain an option, but the idea of nearly bankrupt automakers paying idled workers to leave is also likely to draw sharp criticism from some in Congress.
Bryce G. Hoffman / The Detroit News
Reports that the United Auto Workers union is in talks to dismantle the controversial jobs bank program are premature, according to people familiar with the situation.
The possibility of more concessions from the union has emerged as Detroit's Big Three automakers are seeking $25 billion in emergency loans from the federal government as they burn through cash amid plunging car and truck sales.
Congress this week rebuffed proposals to give the automakers aid through the $700 billion Wall Street rescue package or by easing restrictions on $25 billion in loans through the Energy Department, a program that was funded in September, to allow the companies to use the money for immediate needs rather than solely to retool plants to make more fuel-efficient vehicles.
The companies could still get the aid, but they have to present Congress with a plan by Dec. 2 showing how they can become financially viable and how they would spend the loan money.
That could include negotiating additional concessions from the UAW, and sources at both Ford Motor Co. and General Motors Corp. say they have been talking to the union throughout the hearing process as part of their ongoing negotiations.
The automakers and the union have not specifically discussed eliminating the jobs bank, a source familiar with the situation said.
GM anticipates that the future of the jobs bank will be part of its ongoing talks with the union as the company seeks additional ways to cut costs.
As The Detroit News reported Thursday, UAW President Ron Gettelfinger said that the jobs bank wasn't a major factor anymore because the number of workers in it had whittled down significantly under provisions of the labor agreement reached with the auto companies last year.
Gettelfinger said the jobs bank has been reorganized (which pays workers 95 percent of their wage while on layoff), adding that Ford has taken 40,000 workers out since 2005 and GM has removed about 47,000. Currently, Chrysler has 711 workers in the jobs bank, GM has 1,404 and Ford has 1,476.
"It's not gone yet but it's almost gone," Gettelfinger said. "We're on the verge of eliminating that provision." And new language in the 2007 contract stripped it to a "mere shadow of what it used to be."
While the specific provisions vary from company to company, idled union members now have a limited number of times they can reject offers of work at other facilities before losing their jobs. Company sources said these provisions would have allowed them to eliminate all or most of the workers still in their jobs banks by now, were it not for a dramatic drop in car and truck sales that has forced each of the automakers to cut production and idle more workers.
Gettelfinger testified on Capitol Hill this week alongside the chief executive officers of Detroit's Big Three. He said that the union continues to talk to the automakers and has worked with them in recent years to reduce costs by agreeing to a range of concessions on health care, wages, factory work rules and other issues in recent years, including as part of last year's labor talks on new national contracts.
Eliminating the program entirely would be a tough sell for Gettelfinger, who is unlikely to support any change that would put these workers out on the street. Additional buyouts remain an option, but the idea of nearly bankrupt automakers paying idled workers to leave is also likely to draw sharp criticism from some in Congress.
Michigan to lose more than 100,000 jobs next year, say U-M forecasters
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Jaclyn Trop / The Detroit News
ANN ARBOR -- Michigan will lose even more jobs in 2009 than the 81,000-plus that have vanished already this year, and won't see an gains in hiring until sometime in 2011, according to a new economic forecast released today.
A total of 108,000 jobs will be lost next year in the state, according to a survey released today by economists at the University of Michigan's Research Seminar in Quantitative Economics. They predict state unemployment will exceed 10 percent in each of the next two years -- the highest rate since 1984. And while the economists expect some form of a government-approved rescue package for Detroit's Big Three automakers, they forecast that by 2010 the auto industry will employ less than a third of the workers it had a decade earlier.
The nationwide economic recession coupled with the precarious position of the Big Three automakers is a "troublesome gateway to the year ahead," according to U-M economist George Fulton.
"The potential consequences of myriad alternatives are impossible to predict at this point, but none of them is any good fro Michigan," Fulton said. "The hard times are here to stay."
The first half of 2009 will be especially rough for the already suffering auto, construction and retail sectors. Fulton and colleague Joan Crary forecast that the state will lose 53,000 manufacturing jobs next year and another 24,000 in 2010, with about two-thirds coming from the auto industry. Michigan already has lost 74,000 manufacturing jobs during the past two years.
After enduring an eight-year stretch of job losses tracing back to mid-2000, the state economy now faces the confluence of a U.S. economy in recession and the very real fear of bankruptcy among major players in its core industry: domestic automobile manufactures, Fulton added.
Fulton and Crary made the presentation during a two-day economic outlook session attended by more than 200 academics and analysts.
They said, though, that a surprising number of small, non-auto-related businesses continued to grow. They include agriculture and chemical and medical businesses. In fact, education and health services -- the only industry sector expected to see employment gains -- will gain 22,000 jobs during the next years, they said.
Although the economists said they expect 2010 will be "much better" than 2009, modest job gains aren't expected across the board in the state until sometime in 2011.
Jaclyn Trop / The Detroit News
ANN ARBOR -- Michigan will lose even more jobs in 2009 than the 81,000-plus that have vanished already this year, and won't see an gains in hiring until sometime in 2011, according to a new economic forecast released today.
A total of 108,000 jobs will be lost next year in the state, according to a survey released today by economists at the University of Michigan's Research Seminar in Quantitative Economics. They predict state unemployment will exceed 10 percent in each of the next two years -- the highest rate since 1984. And while the economists expect some form of a government-approved rescue package for Detroit's Big Three automakers, they forecast that by 2010 the auto industry will employ less than a third of the workers it had a decade earlier.
The nationwide economic recession coupled with the precarious position of the Big Three automakers is a "troublesome gateway to the year ahead," according to U-M economist George Fulton.
"The potential consequences of myriad alternatives are impossible to predict at this point, but none of them is any good fro Michigan," Fulton said. "The hard times are here to stay."
The first half of 2009 will be especially rough for the already suffering auto, construction and retail sectors. Fulton and colleague Joan Crary forecast that the state will lose 53,000 manufacturing jobs next year and another 24,000 in 2010, with about two-thirds coming from the auto industry. Michigan already has lost 74,000 manufacturing jobs during the past two years.
After enduring an eight-year stretch of job losses tracing back to mid-2000, the state economy now faces the confluence of a U.S. economy in recession and the very real fear of bankruptcy among major players in its core industry: domestic automobile manufactures, Fulton added.
Fulton and Crary made the presentation during a two-day economic outlook session attended by more than 200 academics and analysts.
They said, though, that a surprising number of small, non-auto-related businesses continued to grow. They include agriculture and chemical and medical businesses. In fact, education and health services -- the only industry sector expected to see employment gains -- will gain 22,000 jobs during the next years, they said.
Although the economists said they expect 2010 will be "much better" than 2009, modest job gains aren't expected across the board in the state until sometime in 2011.
Thursday, November 13, 2008
GM-Chrysler deal to mean big job cuts
www.jobberz.com
GM-Chrysler deal to mean big job cuts
Closing of facilities also is expected
BY TIM HIGGINS • FREE PRESS BUSINESS WRITER • October 29, 2008
Progress is being made in merger talks between GM and Chrysler owner Cerberus Capital Management, the Free Press was told Wednesday, but some issues remain. As reported earlier, financing of the deal is keeping it from occurring.
GM is pushing the federal government for some sort of assistance, including $10 billion in aid, while Cerberus is said to be continuing talks with another suitor, Renault-Nissan, about a potential deal, hoping to have some resolution within two to three weeks -- if not sooner.
It's believed Cerberus prefers a deal with GM, which could give the private equity firm a larger stake in GM's financing arm, GMAC. GM's stock surged Wednesday 8.2% on reports that GM and Cerberus had resolved some issues keeping them from a deal.
The U.S. Energy Department is working on temporary rules for the $25-billion loan program that could be completed as soon as next week. The Bush administration is considering setting up a $5-billion loan from that fund for GM.
In Michigan, up to 25,000 jobs could be cut because of a merger, including up to 10,000 hourly jobs and up to 15,000 white-collar jobs, said Patrick Anderson, chief executive officer of Anderson Economic Group. Outside Michigan, he estimated, up to 15,000 more factory jobs could be cut. He predicted 10 production facilities, including three in Michigan, would be closed.
"Michigan would be the most affected state in the country by far," he said. "We have by far the largest concentration of managerial and technical employment. An unavoidable effect of the merger is the combination of many managerial, technical functions between Chrysler and General Motors and that will mean the reduction in a good number of well-paid, professional jobs."
Analysts have predicted a merger would mean thousands of job cuts as GM rushes to eliminate duplicated functions. Other analysts have said the merger could mean 30,000 job cuts.
Gov. Jennifer Granholm and her office are preparing for a merger in case it occurs, aiming to have a rapid response ready to go if something occurs similar to what the state had for when Pfizer announced big job cuts in Ann Arbor. "We're looking at this from a SWAT team approach," Granholm spokeswoman Liz Boyd said. "We're looking at what can and what will we be able to do immediately to help people and communities, what will we be able to do in the short term and what will we be able to do in the long term."
GM sees the potential for cost savings in a merger with Chrysler and is eyeing the smaller automaker's supposed cash. While Chrysler has indicated losses of more than $1 billion during the first half of this year, the automaker has said it ended June with $11.7 billion in cash.
GM is burning through more than $1 billion in cash a month and analysts have predicted the company could run out sometime next year.
The two companies, independently, have been taking steps to save money and reduce spending. Chrysler, for example, announced last week it would eliminate about 5,000 white-collar jobs on top of the 29,000 it already has marked for elimination.
Contact TIM HIGGINS at 313-222-8784 or thiggins@freepress.com. Business writer Justin Hyde contributed to this report.
GM-Chrysler deal to mean big job cuts
Closing of facilities also is expected
BY TIM HIGGINS • FREE PRESS BUSINESS WRITER • October 29, 2008
Progress is being made in merger talks between GM and Chrysler owner Cerberus Capital Management, the Free Press was told Wednesday, but some issues remain. As reported earlier, financing of the deal is keeping it from occurring.
GM is pushing the federal government for some sort of assistance, including $10 billion in aid, while Cerberus is said to be continuing talks with another suitor, Renault-Nissan, about a potential deal, hoping to have some resolution within two to three weeks -- if not sooner.
It's believed Cerberus prefers a deal with GM, which could give the private equity firm a larger stake in GM's financing arm, GMAC. GM's stock surged Wednesday 8.2% on reports that GM and Cerberus had resolved some issues keeping them from a deal.
The U.S. Energy Department is working on temporary rules for the $25-billion loan program that could be completed as soon as next week. The Bush administration is considering setting up a $5-billion loan from that fund for GM.
In Michigan, up to 25,000 jobs could be cut because of a merger, including up to 10,000 hourly jobs and up to 15,000 white-collar jobs, said Patrick Anderson, chief executive officer of Anderson Economic Group. Outside Michigan, he estimated, up to 15,000 more factory jobs could be cut. He predicted 10 production facilities, including three in Michigan, would be closed.
"Michigan would be the most affected state in the country by far," he said. "We have by far the largest concentration of managerial and technical employment. An unavoidable effect of the merger is the combination of many managerial, technical functions between Chrysler and General Motors and that will mean the reduction in a good number of well-paid, professional jobs."
Analysts have predicted a merger would mean thousands of job cuts as GM rushes to eliminate duplicated functions. Other analysts have said the merger could mean 30,000 job cuts.
Gov. Jennifer Granholm and her office are preparing for a merger in case it occurs, aiming to have a rapid response ready to go if something occurs similar to what the state had for when Pfizer announced big job cuts in Ann Arbor. "We're looking at this from a SWAT team approach," Granholm spokeswoman Liz Boyd said. "We're looking at what can and what will we be able to do immediately to help people and communities, what will we be able to do in the short term and what will we be able to do in the long term."
GM sees the potential for cost savings in a merger with Chrysler and is eyeing the smaller automaker's supposed cash. While Chrysler has indicated losses of more than $1 billion during the first half of this year, the automaker has said it ended June with $11.7 billion in cash.
GM is burning through more than $1 billion in cash a month and analysts have predicted the company could run out sometime next year.
The two companies, independently, have been taking steps to save money and reduce spending. Chrysler, for example, announced last week it would eliminate about 5,000 white-collar jobs on top of the 29,000 it already has marked for elimination.
Contact TIM HIGGINS at 313-222-8784 or thiggins@freepress.com. Business writer Justin Hyde contributed to this report.
Former Mexican president: Get over Michigan job losses
www.jobberz.com
Former Mexican president: Get over Michigan job losses
Ron French / The Detroit News
Vicente Fox, former president of Mexico, isn't a shy man. He calls President Bush the "cockiest" politician he's ever met; he talks glowingly of John McCain and less so of Barack Obama. And, he has a message for Michigan factory workers who have lost their jobs.
Get over it.
Those jobs aren't coming back, and Michigan should focus instead on the high-tech and service industries.
"In the end, Michigan factories have to compete with factories in Mexico and China," Fox said in a telephone interview Thursday. "Companies like General Motors and Ford and Maytag don't have an option. They either close the doors and fire their workers, or they move where they can gain economic competitiveness."
Fox, an outspoken critic of U.S. immigration policies and the person most identified with American jobs moving across the border, will speak at 6:30 p.m. Friday in the Community Arts Auditorium at Wayne State University.
Fox's speech and a question-and-answer session afterward are free and open to the public, but seating is limited. Tickets can be reserved by calling (313) 577-5550 or on-line at www.focis.wayne.edu.
The president of Mexico from 2000-2006, Fox has promoted a North American Union similar to that of the European Union, with a single currency.
Fox argues Americans helped create economic policies such as NAFTA that moved jobs to Mexico, and now are complaining about it, even though the United States continues to benefit.
"As long as you have salaries of $15 to $20 an hour, you will keep losing jobs to economies that pay $5 an hour," Fox said. "This great nation of the United States has to understand that the way we opened our markets, was to learn how to compete. Now that we have learned how to compete, the leaders of the United States is building walls. That's a big, big mistake. We should be building bridges, building opportunities.
"The loss of manufacturing jobs is a problem not only of Michigan but of the United States, and is a product of the new economy," Fox said. "(But) you cannot look at it from an individual perspective. That's the way General Motors, Ford and Chrysler were able to compete. That is good for the Michigan economy and also good for Mexico."
Fox's biography, "Revolution of Hope," offers a less-than-glowing impression of President George W. Bush. Fox and Bush, the former Governor of Texas, were close allies when the two men came into office in 2000, but relations turned frosty after Fox rebuffed Bush's request to support the U.S. invasion of Iraq.
Fox calls Bush a "windshield cowboy" and mocks his "grade-school Spanish."
The former president made it clear who he favors in the upcoming U.S. presidential election. Fox said his views are more in line with those of McCain, the Republican nominee. "What I see with McCain is experience," Fox said.
You can reach Ron French at (313) 222-2175 or rfrench@detnews.com.
Former Mexican president: Get over Michigan job losses
Ron French / The Detroit News
Vicente Fox, former president of Mexico, isn't a shy man. He calls President Bush the "cockiest" politician he's ever met; he talks glowingly of John McCain and less so of Barack Obama. And, he has a message for Michigan factory workers who have lost their jobs.
Get over it.
Those jobs aren't coming back, and Michigan should focus instead on the high-tech and service industries.
"In the end, Michigan factories have to compete with factories in Mexico and China," Fox said in a telephone interview Thursday. "Companies like General Motors and Ford and Maytag don't have an option. They either close the doors and fire their workers, or they move where they can gain economic competitiveness."
Fox, an outspoken critic of U.S. immigration policies and the person most identified with American jobs moving across the border, will speak at 6:30 p.m. Friday in the Community Arts Auditorium at Wayne State University.
Fox's speech and a question-and-answer session afterward are free and open to the public, but seating is limited. Tickets can be reserved by calling (313) 577-5550 or on-line at www.focis.wayne.edu.
The president of Mexico from 2000-2006, Fox has promoted a North American Union similar to that of the European Union, with a single currency.
Fox argues Americans helped create economic policies such as NAFTA that moved jobs to Mexico, and now are complaining about it, even though the United States continues to benefit.
"As long as you have salaries of $15 to $20 an hour, you will keep losing jobs to economies that pay $5 an hour," Fox said. "This great nation of the United States has to understand that the way we opened our markets, was to learn how to compete. Now that we have learned how to compete, the leaders of the United States is building walls. That's a big, big mistake. We should be building bridges, building opportunities.
"The loss of manufacturing jobs is a problem not only of Michigan but of the United States, and is a product of the new economy," Fox said. "(But) you cannot look at it from an individual perspective. That's the way General Motors, Ford and Chrysler were able to compete. That is good for the Michigan economy and also good for Mexico."
Fox's biography, "Revolution of Hope," offers a less-than-glowing impression of President George W. Bush. Fox and Bush, the former Governor of Texas, were close allies when the two men came into office in 2000, but relations turned frosty after Fox rebuffed Bush's request to support the U.S. invasion of Iraq.
Fox calls Bush a "windshield cowboy" and mocks his "grade-school Spanish."
The former president made it clear who he favors in the upcoming U.S. presidential election. Fox said his views are more in line with those of McCain, the Republican nominee. "What I see with McCain is experience," Fox said.
You can reach Ron French at (313) 222-2175 or rfrench@detnews.com.
Michigan's job-loss streak is the longest since Great Depression
Check Out www.jobberz.com
ANN ARBOR, Mich.—Michigan has endured six straight years of job losses and the next two years will see even more—the longest stretch of employment loss in the state since the Great Depression, say University of Michigan economists.
Since mid-2000 to the end of this year, the state will have lost 336,000 jobs and it will lose another 33,000 jobs in the next two years, they say. Most of these losses are in manufacturing.
Moreover, unemployment in Michigan is projected to rise from an average of 6.8 percent this year to 7.5 percent next year and 7.7 percent in 2008—the highest rates since 1992.
"The Michigan economy is fighting its way through a long stretch of stormy weather, trying to ride out the turbulence generated by the ongoing restructuring among the domestic automakers," said U-M economist George Fulton. "With Big Three market share continuing to decline for 2007 and 2008, auto industry downsizing will not have run its course by mid-2007.
"The Michigan labor market will continue to flounder. Dreary as this outlook may be, we do see some improvement developing over its horizon. By the close of 2008, job growth barely nudges into positive territory."
In their annual forecast of the Michigan economy, Fulton and colleagues Joan Crary and Saul Hymans predict the state will lose 24,000 jobs during 2007 and another 9,000 during 2008—due to heavy job losses in manufacturing.
The state will lose more than 40,000 manufacturing jobs over the course of this year, nearly 30,000 next year and another 24,000 during 2008, they say. The auto industry will account for about 70 percent of these manufacturing job losses.
"The state economy reflects not simply the fortunes of the auto industry as a whole, but in particular, the well-being of the traditional domestic producers, or Big Three—General Motors, Ford and the Chrysler Group," Crary said. "From 2001 to 2005, the Big Three's market share plummeted 7 percentage points. The situation went from bad to worse this year as soaring gasoline prices had consumers tightening their belts and focusing on fuel economy. It now appears that Big Three market share will plunge by nearly 3 percentage points this year."
Despite the continued bleak outlook for manufacturing employment, Michigan's economy will add jobs in other sectors—namely, in services, the forecast shows. After adding more than 20,000 jobs this year, service industries will gain nearly 13,000 jobs during 2007 and just under 17,000 during 2008.
Almost half of these gains will occur in private education and health services, the only major industry to have grown throughout the extended downturn in the Michigan economy. About 40 percent of the additions will come from professional and business services and from leisure and hospitality services over the next two years.
In all, the U-M economists say that in any analysis of Michigan's economic prospects, the "elephant in the room" clearly is the well-being of the Big Three automakers.
"The risks associated with the auto industry remind us of how vulnerable the Michigan economy is to the uncertainties that lately seem to define the domestic companies," Fulton said. "These troubled times in Michigan stress how critical it is for these companies to get their houses in order.
"More to the point, though, these troubled times scream out for a strategy of investing in other activities, activities that show promise in the new economy. The issue is being discussed frequently these days in Michigan, and a fairly compelling argument has been made for investing in a more highly skilled work force and growing the knowledge-based economy. Such a strategy would be in step with the evolving new economy, recognizing that regardless of the fate of the domestic auto industry, we are not going back to the good old days."
ANN ARBOR, Mich.—Michigan has endured six straight years of job losses and the next two years will see even more—the longest stretch of employment loss in the state since the Great Depression, say University of Michigan economists.
Since mid-2000 to the end of this year, the state will have lost 336,000 jobs and it will lose another 33,000 jobs in the next two years, they say. Most of these losses are in manufacturing.
Moreover, unemployment in Michigan is projected to rise from an average of 6.8 percent this year to 7.5 percent next year and 7.7 percent in 2008—the highest rates since 1992.
"The Michigan economy is fighting its way through a long stretch of stormy weather, trying to ride out the turbulence generated by the ongoing restructuring among the domestic automakers," said U-M economist George Fulton. "With Big Three market share continuing to decline for 2007 and 2008, auto industry downsizing will not have run its course by mid-2007.
"The Michigan labor market will continue to flounder. Dreary as this outlook may be, we do see some improvement developing over its horizon. By the close of 2008, job growth barely nudges into positive territory."
In their annual forecast of the Michigan economy, Fulton and colleagues Joan Crary and Saul Hymans predict the state will lose 24,000 jobs during 2007 and another 9,000 during 2008—due to heavy job losses in manufacturing.
The state will lose more than 40,000 manufacturing jobs over the course of this year, nearly 30,000 next year and another 24,000 during 2008, they say. The auto industry will account for about 70 percent of these manufacturing job losses.
"The state economy reflects not simply the fortunes of the auto industry as a whole, but in particular, the well-being of the traditional domestic producers, or Big Three—General Motors, Ford and the Chrysler Group," Crary said. "From 2001 to 2005, the Big Three's market share plummeted 7 percentage points. The situation went from bad to worse this year as soaring gasoline prices had consumers tightening their belts and focusing on fuel economy. It now appears that Big Three market share will plunge by nearly 3 percentage points this year."
Despite the continued bleak outlook for manufacturing employment, Michigan's economy will add jobs in other sectors—namely, in services, the forecast shows. After adding more than 20,000 jobs this year, service industries will gain nearly 13,000 jobs during 2007 and just under 17,000 during 2008.
Almost half of these gains will occur in private education and health services, the only major industry to have grown throughout the extended downturn in the Michigan economy. About 40 percent of the additions will come from professional and business services and from leisure and hospitality services over the next two years.
In all, the U-M economists say that in any analysis of Michigan's economic prospects, the "elephant in the room" clearly is the well-being of the Big Three automakers.
"The risks associated with the auto industry remind us of how vulnerable the Michigan economy is to the uncertainties that lately seem to define the domestic companies," Fulton said. "These troubled times in Michigan stress how critical it is for these companies to get their houses in order.
"More to the point, though, these troubled times scream out for a strategy of investing in other activities, activities that show promise in the new economy. The issue is being discussed frequently these days in Michigan, and a fairly compelling argument has been made for investing in a more highly skilled work force and growing the knowledge-based economy. Such a strategy would be in step with the evolving new economy, recognizing that regardless of the fate of the domestic auto industry, we are not going back to the good old days."
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