Monday, November 17, 2008

Region braces for car crash

Ann Arbor real estate effected by losses of the big three - Crain's Detroit Business has a very informative piece on the impact of the automotive job losses on Southeast Michigan. While Ann Arbor is less affected by losses at the big three, there are definite impacts on Washtenaw county - especially Ypsilanti which is more automotive based than Ann Arbor and has been especially hard hit with foreclosures.

Hopefully the Obama administration will get focused on supporting manufacturing here in the US and develop policy to help us compete more effectively.

While the Auto companies are partially to blame for their problems, I haven't heard many people talking about how the federal government set up fuel economy laws to not include SUV's and that during the 2001 recession government policy was created to create a large tax loop hole for buyers of LARGE SUV's and trucks. So saying the the automotive companies didn't see the trends is partially true, but the government definitely made it worth their while to produce gas guzzlers. All I hear on the news is how we have to bail out the financial industry but the auto business created their own problems and should not be bailed out.

Consider these facts as taken from the article:
“Over the first nine months of this year in Michigan, there's been a 33,000 decline in auto and auto parts manufacturing jobs, and the biggest decline we've ever seen was in 2001 - it was 37,000,” said Dana Johnson, chief economist at Comerica Bank. He added that the state is on pace to lose 40,000 by year's end - a more than 20 percent decline....Johnson said the current pressure on the Detroit 3 to continue restructuring in the hopes of returning to profitability likely will result in a 30,000-job loss, and a bankruptcy at GM or Chrysler could shed an additional 20,000-30,000 jobs at the automakers."

The impact of these job losses is huge. Consider these facts (From Crain's).

"The Detroit 3 employ an estimated 109,180 people in Wayne, Oakland, Macomb, Livingston and Washtenaw counties, or about 5.5 percent of the metro area's total employment across all industries. The average automaker employee earns an estimated $90,868 per year, according to calculations made by Crain's based on data from the Michigan Department of Labor and Economic Growth. If 30,000 jobs are lost at that wage, more than $2.7 billion in personal income will be taken out of the regional economy."
Photo courtesy of Flickr - Wyliepoon

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