Shuttered factories, shattered lives in US rust belt

By Mira Oberman (AFP) – Aug 2, 2009

DETROIT, Michigan(AFP) — Weeds have not had time to overtake factories shuttered in the wake of recent bankruptcies at General Motors, Chrysler and a host of suppliers, but the signs of shattered lives are spreading as the economically devastated region, dubbed "the rust belt" after its steel industry, fails to absorb the collapse of the auto industry.

Long lines at the unemployment offices. Empty shelves at the food banks. Boarded up businesses. Homes lost to foreclosure, their contents strewn on the street.

Michigan, the birthplace and home of the US auto industry, is the hardest hit.

"There's just no doubt that region has faced an incredible tsunami of events," said Mark Partridge, an economist at Ohio State University.

"It's really tough on the psyche... they've had one failure after another."

In the past ten years, Michigan has lost half its manufacturing jobs as the Detroit Three saw their share of US auto sales slide from 70 to 45 percent.

That's more than 543,000 people forced out of plants where the wages were usually good enough to pay for a nice house, a college fund for the kids and maybe even a cottage.

Most blame management for pumping out ugly, unreliable cars people simply didn't want to buy.

Some blame the union and its gold-plated benefits, while others say it's the government's fault for shifting the burden of healthcare costs to employers.

But simply put, GM, Ford and Chrysler had been losing market share to Asian automakers for decades.

They managed to post record profits in the 1990s by developing gas-guzzling sport utility vehicles, but were slow to match the smaller crossovers introduced by Toyota and Honda.

When fuel prices soared, the Big Three tanked.

The plant closures started in 2005 and the restructuring plans deepened as the economy slowed in 2007. The union made historic concessions. Management got focused on fuel efficiency and quality.

And then -- just when it looked like they might pull through -- the credit crunch and financial crisis hit in the fall of 2008. US auto sales fell to lows not seen in decades.

Ford survived with the help of massive loans it secured before credit dried up, but GM and Chrysler were forced into bankruptcy protection and a 50-billion-dollar government bailout.

Michigan went from having one of the lowest unemployment rates in the country -- 3.3 percent in June of 2000 -- to topping the list every single month for over three years.

More than 740,000 people here were actively looking for work in June as the unemployment rate hit 15.2 percent. An untold number have moved away or simply given up.

"I think there's a lot of hope," said Andy Levin, deputy director for Michigan's department of energy, labor and economic growth.

Governor Jennifer Granholm -- a charismatic and energetic speaker with close ties to President Barack Obama -- has been traveling the globe to pitch the state's resources to prospective employers.

She's making a major push to draw alternative energy jobs, touting the state's experience with advanced manufacturing and engineering its easy access to the shipping lanes and wind power of the Great Lakes.

State officials have also devoted millions of dollars to an innovative retraining program for unemployed and low-income residents and have launched a major tourism campaign promoting Michigan's miles of pristine shorelines.

"It's an incredibly beautiful place and we have all these incredible water resources and our manufacturing process and know-how," Levin said in a telephone interview.

"We can make things cheaper, faster, better than other places because we have the highest concentration of engineering talent."

The success stories fill 12 pages of a website set up by the state's economic development corporation to tout the "Michigan Advantage."

A 2.9-million-dollar investment by a medical device firm (108 jobs). An 84-million-dollar expansion by an insurance company (1,600 jobs). A new, 220-million-dollar plant to build batteries for hybrid cars (498 jobs).

They pale in comparison to the 337,600 jobs Michigan has lost in the past year alone.

"The fallout from the shrinkage of the auto industry -- even in the best scenario -- we will be feeling that for years," said Charles Ballard, an economics professor at Michigan State University.

"The downward trend has been going on for 60 years, so it's not going to be fixed by Thursday. Even if they do the right things it'll take years before they bear fruit."

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