Michigan Works to Remake Itself Without King Auto

By BILL VLASIC and NICK BUNKLEY

DETROIT — The former General Motors Centerpoint truck plant in Pontiac, Mich., is another empty building that served for years as a reminder of the declining fortunes of American automakers.

But the day after G.M. filed for bankruptcy, it was bustling with activity.

Ed Montgomery, the Obama administration’s director of recovery for auto communities and workers, was touring the building with camera crews in tow.

Amid all the grim auto news, it was as good a photo op as he could have hoped for — the building was the future home of the Motown Motion Picture Studio.

The state, with the help of incentives, lured 25 film crews to Michigan last year to shoot movies like “The Day the Earth Stood Still” and “Gran Torino,” from Clint Eastwood, and officials are hopeful about a new growth industry.

“I’m very optimistic about the project,” said Mr. Montgomery, adding that the studio could create 3,000 new jobs. “That’s an excellent start.”

But any promising starts in Michigan are overshadowed by the brutal reality of the state’s economic plight. Just across the street from the building Mr. Montgomery was touring, workers at a huge G.M. truck plant learned the day before that their factory would be closing, one of seven more Michigan plants the automaker plans to shut down.

G.M. has promised to use its tour through bankruptcy to become a more nimble and competitive company, but Michigan faces an even tougher task in reinventing itself.

For all the talk of California’s economic woes, the distress in Michigan is greater. About 800,000 jobs have been lost in the state — about one in every six — since 2000, and its unemployment rate has reached 12.7 percent, higher than any other state.

The fallout has been even worse in heavily populated southeastern Michigan. Manufacturing jobs in the seven-county region that includes Detroit have fallen 51 percent since the beginning of the decade, and auto-related positions have fallen 65 percent.

The economic crisis has been so severe that Michigan, with a $1.4 billion budget shortfall, is closing eight prisons to save money. It is also canceling more than 130 road and bridge repair projects because the state cannot come up with enough money to get matching federal funds.

“Movie studio jobs are going to be measured in the hundreds,” said Don Grimes, an economic forecaster at the University of Michigan. “It’s nowhere near the replacement numbers for what’s going on.”

On a broader level, the troubles of the auto industry are having a profound impact on the overall United States economy. The industry — with Michigan as its center — now accounts for only 1.5 percent of the nation’s economic output, down from 3 percent in 2007 and 5 percent at its peak in the 1950s.

The automakers have historically played a big part in ending recessions. Car companies, in the past, would increase production and add workers to satisfy pent-up consumer demand after a downturn. But now, the industry’s troubles may be prolonging the misery.

“If not for the problems in the auto industry, this recession would have been much milder,” said Ben Herzon, an economist at Macroeconomic Advisors, in St. Louis.

In Michigan, the state’s leaders are hoping to build on what’s left of the once-mighty Big Three automakers, and attract new jobs tied to the alternative-fuel vehicles of the future.

The state has authorized tax credits to support a new battery manufacturing plant for G.M., and similar assistance for three other proposed battery projects. The jobs created will number in the hundreds at first, but state officials are hopeful that Michigan will be at the center of battery development nationwide.

Still, battery production has a long way to go to match the jobs being lost. On Monday, G.M. opened a new battery lab at its Warren, Mich., technical center that will be used by an existing team of about 1,000 engineers. On the same day, the company said it would cut an additional 400 union jobs by shutting down medium-duty truck production in Flint.

Michigan is also pursuing wind-power technology, solar-panel manufacturing, even production of railroad cars — any viable industry that might be interested in hiring the thousands of engineers who used to work in the auto industry.

“This community still has a lot of things going for it,” said Senator Carl Levin, Democrat of Michigan. “This is the heart of the automotive research capital of the world, and there’s a strong structure to build on.”

The bankruptcies of G.M. and Chrysler have, if nothing else, kept both of the automakers alive for the foreseeable future. The state has thus avoided its worst nightmare — that G.M.’s headquarters in Detroit and Chrysler’s sprawling technical center in Auburn Hills would be added to the list of vacant buildings along the Interstate 75 automotive corridor.

The research and development campuses at the Detroit automakers, as well as new operations occupied by Toyota and Hyundai, are the foundation for growth in new technologies like lithium-ion batteries.

But those operations cannot replace the tens of thousands of manufacturing jobs that G.M., Ford, Chrysler and their suppliers have shed in recent years.

White-collar positions have also steadily decreased at all the automakers and their suppliers. In response, Gov. Jennifer Granholm started a retraining program in 2007 — “No Worker Left Behind” — to provide up to two years of free tuition to unemployed workers. So far, more than 60,000 people have signed up.

Providing education for laid-off workers is a priority for Governor Granholm, who joined Mr. Montgomery last week on his tour of the Pontiac movie studio.

“We are not interested in looking in the rearview mirror,” she said. “We need to be able to play both offense and defense.”

Retraining is essential to broaden the skills of factory workers and others in the hardest-hit segments of the economy. “The recession is just crushing industries that tend to employ people with less education — construction, manufacturing, retail stores,” said Mr. Grimes.

Classrooms at community colleges across the state are jammed with former auto industry employees trying to prepare themselves for a new career.

Greg Cortis, 36, had been a contract worker at G.M.’s huge technical center in Warren, Mich., for three years before he was laid off in October. He is taking courses in carpentry, electrical work and other construction skills in Oakland Community College’s facilities management program.

Leaving the auto industry behind, after a total of 15 years in the business, was difficult, he said, but a fact of life in today’s Michigan. “You’ve got to work,” said Mr. Cortis. “I don’t want to be on a two- or three-year unemployment extension.”