Renaissance or Not? Is the Manufacturing Comeback For Real?

The good news is Fitch Ratings has upgraded Michigan’s credit rating to ‘AA” because, among other considerations including conservative spending in state government, manufacturers in the state are doing much better.
The bad news from Fitch is that Michigan’s economy is still “dominated by manufacturing, notably in the cyclical automotive-related sectors.”


The Fitch report that was released April 2, 2013 provides a dramatic snapshot of how rough the first nine years of the twenty-first century were for Michigan.
It shows Michigan lost jobs every year from 2001through 2010. The drop in 2009 was especially bad. Seven percent of Michigan’s jobs were lost that year. Fitch blames the “combined impact” of the U.S. recession, the collapse of the U.S. auto industry and the restructuring of the Detroit Three.


More people in Michigan found work in 2011 and 2012. Employment growth was 2.3 percent and 1.8 percent respectively, above the national rate.
However, the authors of the Fitch report also believe the job losses in the automotive sector — that includes the supply chain as well as Ford, General Motors and Chrysler — will be tough to overcome.


Most of those jobs are not coming back. Just as every job gained in Michigan has a positive ripple effect in the economy. The reverse is true. The ricochet can be deadly.


Personal income growth was miserable in Michigan, compared to the rest of the nation. Yet, it rebounded 5.6 percent in 2011 and 3.5 percent in 2012.


This is especially shocking: two-thirds of auto manufacturing and parts supply jobs disappeared from 2001 through 2010. Some of those jobs have come back. Employment was up 11.2 percent and 3.8 percent, year-over-year, respectively in 2011 and 2012.


However the bad news again is that Michigan’s economy is still tied so tightly to auto manufacturing. That sector accounted for 13.6 percent of Michigan jobs as of February 2013.


Only 8.9 percent of U.S. jobs are in auto manufacturing.


What Fitch described as the “cyclicality” of manufacturing has to be a concern. Goldman  Sachs’ Jan Hatzius said in late March 2013 that the recent resurgence of the U.S. auto industry is more a result of global economic cycles than a true renaissance of made in America Manufacturing.


While he does believe U.S. manufacturing will continue to outperform the rest of the American economy, Hatzius also wrote, “The reason for this will be the broad economic improvement that benefits all sectors...not a structural U.S. manufacturing renaissance.”

~LCP~

Renaissance or not, manufacturing in Michigan is doing better than it has in years and that is rebounding through the economy as the Fitch Report showed.
For more on manufacturing's comeback, check out the Restore The Roar: Manufacturing Renaissance of ebook essays and meet the people leading the recovery.

Restore The Roar: Manufacturing Renaissance, a ebook essay series is available through Amazon and Vook.com

~LCP~

Last Chance Mile: The Reinvention of an American Community tells the story of how the people of Grand Rapids, Michigan shook off their industrial rust and changed the way the world sees their community.

Last Chance Mile: The Reinvention of an American Community is available through Amazon, Abbott Press, or by clicking the Add To Cart button on the Welcome Page of www.rodkackley.com