by Gongwer News Service
July 18, 2008

Slammed with two bits of massive bad news, state leaders took care to temper the announcement this week that Volkswagen will seek southern pastures for its new billion-dollar plant and that General Motors will make yet more cuts with more positive news of thousands of other jobs the state is set to create.

There will be hundreds of new high-paying jobs from a new Dow Chemical joint venture, along with thousands of new opportunities created by tax credits, Governor Jennifer Granholm said. But even if the good news does outweigh the bad, the Volkswagen decision has once again heaped scrutiny upon the governor’s “go anywhere, do anything” jobs plan and the tenuous nature of the state’s economy.

That’s not to say that observers blame Ms. Granholm directly for Volkswagen’s decision, and she and her economic team said they threw everything they could on the table. They dealt with the question of unionized workers. Sources indicated German companies here in Michigan were encouraging VW to look at the workers in the state.

Michigan, whose leaders groomed Volkswagen to come to the state after hearing the surprising news that the company was even considering the Great Lakes state for relocation, just didn’t have the one thing Tennessee did: land.

That’s 500 acres to be exact. Cleared and ready for Volkswagen to do with it what it may.

According to the car company’s press release, it will hire about 2,000 employees at its new Chattanooga site and a “significant” number of other related jobs will also result from the new $1 billion plant.

Compared to the news this week that Dow and a Kuwaiti partner plan to create a headquarters in Michigan for a new $11 billion joint venture and hire 800 new high-wage employees, Volkswagen’s loss doesn’t hurt as bad.

Incidentally, Kuwait’s Petrochemical Industries was one of the companies that the governor would have visited on a Middle East trade mission in June if she hadn’t been grounded to undergo emergency surgery.

While the new join venture softens Volkswagen’s blow a bit, more bad news — and more fundamentally bad news — on the automotive front, this time GM’s announcement that it will cut an as yet unreleased number of white collar jobs in Michigan and another 30,000 around the world, painted a bleaker forecast still. Most of the white collar jobs affected are expected to be in Michigan.

Timing is everything though, and news of the Michigan Economic Growth Authority’s approval of record-setting tax incentives that will create thousands of jobs gave a silver lining to the ever-looming manufacturing cloud.

Word came that five brownfield developments will add 753 jobs and 13 more companies will invest $145 million to create another 3,045 jobs.

But then more bad turns came about a company spurning Michigan, and this time it seemed personal.

Utility Risk Management Corp. of Pennsylvania would have only hired 17 new employees, but it was the founder’s rationale behind choosing to locate in Vermont that stung.

It wasn’t land; the two states were equal among their offerings. It wasn’t money; Michigan offered more than the $140,000 Vermont gave in tax breaks.

The reason the founder gave for choosing Vermont over all other contenders: the work ethic of the state’s employees.

Anyone who has been paying attention to Ms. Granholm’s jobs strategy can pinpoint the irony.

If Michigan had a resume that the governor used to get it “hired” for new jobs, “strong work ethic” would be at the top.

In fact, she said this week that it was the state’s “highly skilled workforce,” as well as quality education and a culturally diverse population that sealed the deal with Dow/Petrochemical.

So, if one company went elsewhere because it wasn’t convinced of the Michigan resources, another company wanted a resource that the state simply couldn’t offer and a homegrown company expanded in spite of Ms. Granholm’s inability to visit on a trade mission, what is the governor to do?

While this week’s developments seem to suggest that companies that are in Michigan will expand in Michigan, Dow did seriously consider locating in Texas or Louisiana and may have headed south if not for Ms. Granholm’s aggressive recruitment.

Indeed, some of the governor’s other trade missions, such as to Sweden and Germany, have also resulted in new jobs and likely will do so in the future.

As for the auto industry that Michigan has relied on for so long, it’s clear there’s little the governor or any state leader can do to stop the hemorrhaging of jobs at GM and other domestic car companies.

The governor said this week that the state’s unemployment won’t turn around until the state stops relying so heavily on manufacturing, which she said, makes her mission to diversify the economy even more imperative.

For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.