Local business developers, business leaders and some state lawmakers are panicking over local team player Ford Motor Co.’s plans to make the biggest manufacturing investments in its history in Kentucky and Tennessee.
Unless you’ve been locked in a Tesla with a dead battery over the past month, you are no doubt aware that Ford has announced that it will spend $ 11.4 billion to build two battery factories in the Kentucky, as well as a battery factory and an electric van. assembly plant in Tennessee.
Ford expects to create 11,000 new jobs at these factories. The Tennessee complex will be known as BlueOval City, located on a six-square-mile site that the state has spent $ 175 million to assemble over the past decade in hopes of completing such a project.
“As the iconic Rouge complex in Michigan did a century earlier, BlueOval City will usher in a new era for American manufacturing,” Ford said in a press release announcing the project.
Some Michigan executives felt like they had been run over by a Ford F-150 pickup when hearing the news.
Senator Ken Horn (R-Frankenmuth) described it to me as a “punch” that threatens the century-old dominance of Michigan’s auto industry.
He and many local business developers are calling on Michigan to dramatically increase tax and other business incentives to become more competitive in the fight for investment in electric vehicles.
But the debate over increasing incentives to drive out new auto factories ignores Michigan’s biggest challenge to remaining king of the auto hill: keeping and growing the intellectual heartbeat of the industry.
Michigan companies provide 68% of the $ 15 billion in annual automotive research and development spending funded by U.S. companies, according to MICHauto.
Michigan’s ability to hold its preeminent share in research, design, engineering, finance, management and marketing will determine Michigan’s automotive trajectory. Or if there will be one.
“This is where the future growth is,” said Glenn Stevens, executive director of MICHauto, which researches and promotes Michigan’s flagship industry.
Stevens is quick to point out that Michigan also needs well-paying jobs represented by the UAW that its 13 auto assembly and component plants provide.
These jobs contribute to a vibrant mobility ecosystem that employs 20% of Michigan’s workforce, according to a MICHauto study.
But production jobs at Michigan auto plants have been on the decline for decades, despite billions of dollars in taxes and other government incentives spent to attract jobs to the factories. Michigan has about 38,000 auto jobs, down 60% since 1990, as this astonishing graph from the St. Louis Federal Reserve illustrates.
And wages in auto production jobs are falling. Adjusted for inflation, revenues at motor vehicle and parts factories fell 17.1% between 1990 and 2018, according to a Bureau of Labor Statistics study.
This compares to a 17.9% increase in inflation-adjusted earnings for total private sector jobs over the same period.
Tens of thousands of other auto factory jobs are at risk as automakers quickly switch to electric vehicles that do not require piston engines, transmissions and other components.
Meanwhile, automakers are hiring thousands of highly skilled software engineers and other knowledge workers they need in a historic transformation of the auto industry.
“I don’t think there’s been an upheaval like this in my career,” said Kristin Dziczek, senior vice president of research at the Center for Automotive Research in Ann Arbor.
Last year, General Motors announced it would hire 3,000 engineers, designers and IT specialists with the goal of becoming a software company that also makes cars.
GM already has more salaried workers than hourly workers in the United States; 48,000 employees and 46,000 hourly workers, according to the automaker’s latest annual report.
Maintaining auto jobs in Michigan is critical to ensuring that state auto plants that build gasoline cars and trucks are converted to produce electric vehicles.
Dziczek cited the old cavernous assembly plant of GM Detroit-Hamtramck as an example. GM said it would close the plant in 2019, but then decided to invest $ 2 billion to refurbish it as the automaker’s first dedicated electric vehicle plant.
Pressure from the UAW to turn the plant into electric vehicle production was crucial for its revival. Known as Factory ZERO, the factory will soon begin producing Hummer SUVs.
“Factory ZERO’s proximity to GM’s knowledge workforce is really important,” said Dziczek. “They go hand in hand. ”
But Michigan has serious shortcomings in retaining and attracting knowledge workers who want to live in states with vibrant communities and a good quality of life.
Stevens points out that Michigan has a few, including Grand Rapids, Ann Arbor, and parts of the Detroit Metro.
But the state is too often known nationally for places like Flint and Benton Harbor where drinking water is contaminated with lead, and for losers accused of plotting to kidnap and possibly kill Governor Gretchen Whitmer. for his efforts to protect public health in the deadly COVID epidemic. .
The State’s economic development policy is focused on the challenges of the business climate and the training of workers in skilled trades. These things are not without importance.
But little attention is paid to increasing the average proportion of working-age adults in Michigan with a degree of at least four years, and to retaining and attracting those who do. have these sheepskins.
We will need many more of these highly skilled workers to avoid losing our knowledge advantage of the auto industry to other states that are not content with just our auto factories.
“You can’t build this overnight,” Dziczek said of places that would like to steal Michigan automotive gray matter. “But that doesn’t mean it’s a birthright either.
Originally posted Nov 1, 2021 on Michigan Advance. It is shared here with permission.
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