First of all, let's talk about more ominous news coming out of the auto industry, and what that will mean for our state in the short-term future. We will get to George in a minute.
Last Friday, the U of M released its economic forecast, and the words "critical" and "diversify" figure prominently after you look at the numbers and let the reality of all that sink in.
For a state limping along from seven years of continuous job losses, the economic forecasts released Friday showed how critical it is for Michigan to diversify its economy.
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Crary and her colleagues estimate Michigan will lose 76,000 jobs this year, more than triple the 24,000 lost jobs they had predicted a year ago. It will be the state's biggest employment decline since 2001.
Next year promises more of the same: another 51,000 fewer jobs. As a result, the state's unemployment rate is forecast to rise to 8.2%, the highest since the end of 1992, when the nation was in the midst of a recession.
And some more really scary numbers come from the Center for Automotive Research. Although the new UAW contracts will help retain some jobs by keeping costs competitive, when you add in the ripple effect from suppliers...
Sean McAlinden, vice president of research at the Center for Automotive Research in Ann Arbor, is forecasting employment in Michigan's auto industry will decline by 242,629 jobs between now and 2009, an amount equal to 5.7% of the state's labor force. The figure includes jobs at auto suppliers and other companies dependent on the automakers.
5.7%. Huge. And Sunday, some prominent investors warned of a nasty drop in auto sales for 2008.
Three top investors in the automotive industry painted a grim picture on Sunday for the sector in 2008, with one executive predicting a possible slump in U.S. sales to levels not seen in 15 years.
"Tapped out" consumers and the mortgage crisis will put the freeze on sales, with the investors predicting that the auto makers will cut factory production rather than offer incentives for purchase this time around.
"I hope I'm wrong on 14.5 (million) to 15 (million)," Stallkamp said. "But I think the mortgage issue is going to freak people out and that will hit pretty hard in '08."
Ross called it "a sort of poverty effect from house prices going down."
The mortgage crisis is now causing worries in the auto loan business, and all of this sent GM's stock tumbling on Monday, and we have this domino effect starting to kick in, and when our state's economy is still so closely tied to the fortunes of the auto industry, well, the screaming is going to get very loud next year.
Had enough yet? Want to get away? For one obvious answer to our problems, we turn to George W. Bush, over the jump...
No, not President George W. Bush. Never him. Governor George W. Bush.
Back in 1999, it was Gov. Bush who started the ball rolling on bringing wind energy to Texas.
It was then-Governor Bush who, in 1999, signed off on a landmark provision requiring utilities to get 2,000 megawatts of their electricity from renewables by 2009, setting off the largest annual increase in wind-farm construction in U.S. history. As president, Bush has resisted calls to include a similar provision in his national energy plan. But as the economics of wind improve, even Bush's industry allies point to Texas as proof that, with just a little push from the government, renewables can compete.
And look what happened in Texas over the next few years. They now lead the nation in wind production. Big job growth, big investments. By 2006, Gov. Rick Perry was lauding a public-private investment of $10 billion dollars, talking about how they are saving the environment, and pointing to all the jobs they have created.
"I am proud of our state's commitment to renewable energy production," Perry said. "We are on the leading edge of developing renewable sources of energy and a more diversified energy economy which is key to keeping costs down."
Perry, who was joined at the announcement by executives of several companies that have committed to building wind energy infrastructure, emphasized the benefits wind energy has on the environment.
For every 1000 megawatts generated by new wind sources, Texas will reduce carbon dioxide emissions by six million tons over the next 20 years.
Perry also noted that the announcement bodes well for further growth of the Texas economy.
"Over the past three years we have added 650,000 jobs, transformed a record budget deficit into a record budget surplus, and attracted more business expansions and relocations than any state in the nation," Perry said.
Texas. Certainly we can compete with the likes of Texas, especially when it comes to manufacturing the components for this explosive growth industry. Manufacturing is what we do best, right?
As you know, this month Governor Granholm has been meeting with businesses across the state that are moving forward in the renewable and alternative energy field. One of the first stops was at K & M Fabricating in Cassopolis, a company that produces those big, heavy pieces for large wind turbines.
For a good example of how former auto workers can find new jobs, crucial in light of the numbers above, a look what they are doing at K & M holds the key.
"Anybody who is being laid off or displaced should come here," Granholm said, referring to alternative energy businesses.
"People that have worked assembly jobs, machining or fabricating in the automotive industry, ours is a lot heavier duty than that, but the basics are the same and can translate," said K&M General Manager Derek McLoughlin.
And more from K & M. They tell us that the supply can't meet demand right now.
Gary J. Galeziewski, K&M's chief financial officer, said, "A significant amount of investors are rapidly putting their money into wind farm developments around this country." Michigan so far has just one.
"Windmill manufacturers are pretty much sold out into the foreseeable future," he continued. "What's fragile is their supply chain of manufacturers. They do not have the capacity in their supply chains of companies like K&M, which can manufacture all of these components for them. That's what needs to be developed. That's what we're bullish on. We have expansion plans under construction right now to move quickly at the velocity this industry is moving at to support wind farm development."
Explosive growth. Can't keep up. And we have the potential to make it happen here; our manufacturing capabilities can and should supply the country and the world with the pieces to make this happen.
And as far as producing our own energy needs for the state, instead of importing out-of-state (and country) energy like we do now, we have those resources right under our nose. Granholm again-
"In fact, I was told this morning that in the United States right now, the U.S. as a whole produces about 14,000 megawatts of wind. Michigan has the capacity to do 14,000 MW of wind by itself. We have the capacity to be the third-most productive state for wind.
Wind energy is just one part of the equation for Michigan. Wave energy is coming into play.
Second, water. "Many businesses - and we were with some of them Friday - are now moving into the area of capturing movement from water currents," the governor said. "Any time there's movement, you can capture that and feed it into the electric grid. There are some who are manufacturing wind turbines and, at the bottom of the turbine, if the turbine is out in the water, they put devices that capture the movement of the waves, so you've got a two-fer.
And wood. Granholm mentions what they are doing in Sweden-
"They're also taking advantage of something Michigan uniquely has, and that's wood. That goes to this issue of the next generation of ethanol. Two-thirds of Michigan's land is covered by forests. We have the largest footprint of publicly-owned forest land of any state in the country. What a huge opportunity for us as we look at cellulosic ethanol, the next generation.
And waste. What could be better than taking advantage of all that Canadian trash that everyone complains about?
"In Sweden, there's a region where they're getting 80 percent of their energy from burning municipal landfills," Granholm said. "But they don't let the CO2 (carbon dioxide) go up in the air, they capture it all and put it back into heating commercial and residential businesses. (Michigan) used to be the landfill capital of North America - and we still are. I hate to say that's something unique to Michigan we could capitalize on, but it actually is.
Michigan, please pay attention. If George Bush and the state of Texas can get something like wind energy started, and Rick Perry can talk about cleaning up the air and giggle with glee at all the money and jobs that they have created, there is no reason why we should listen to the coal-burning, nay-saying, knuckle-draggers like Nolan Finley anymore. There is no reason we should continue to rely on a volatile auto industry. We have the tools, we have the environment, we have the workers, we have the research capabilities, we can create jobs and protect the environment all at the same time. And when the auto industry starts to rebound, predicted for 2009, we will have that, too.
Texas came a long way in less than a decade. No reason why Michigan can't do that as well. Of course it will take some time to get to where we want to be, but we have the answers to our problems staring us right in the face. We can take advantage of this opportunity, start to move faster towards the obvious goals of a clean energy future, or we can sit back and continue to cry about our current economic conditions and let those that would hold us back purely for political reasons dominate the conversation. Your choice.
The cynical side says that George W. Bush just wanted to make a buck for his buddies in Texas, but look at what he started.
We can do the same. And we can do it better.