Just over a month ago, Michigan-based Ford Motor Co. announced it would establish two “massive” campuses focused on electric vehicles in Tennessee and Kentucky and create, with a battery manufacturing partner named SK Innovation, nearly 12,000 jobs in those states. It will be a $11.4 billion investment that Michigan will miss out on.
In response, Whitmer told reporters: “In terms of us having tools that we need to be competitive, I’m always looking to make Michigan more competitive, and (I’m) always eager to put solutions on the table. But we needed a real opportunity to do that. And that really wasn’t the case here.”
But it rarely is “the case” with Whitmer, because she doesn’t look for “real opportunities” or try to make them happen. Everybody in the business and economic development community, particularly in the states that are taking advantage of Michigan’s languor, knows this. Michigan under Whitmer appears to have forgotten what “site selection” is all about.
Meanwhile, the headlines in The Tennessee Journal ran this way: “WEST TENNESSEE MEGASITE LANDS HUGE FORD PLANT” and “GOV. BILL LEE BASKS IN FORD PLAUDITS.” The attendant narrative ran this way: “Fresh off the blockbuster announcement that Ford would place a massive electric vehicle and battery plant in West Tennessee, Lee was the star of the show when the International Economic Development Council held its annual conference in Nashville this week … Former Gov. Bill Haslam praised the Ford deal as the ‘most significant’ economic development announcement since Nissan selected Smyrna for its first U.S. assembly plant in 1980…”
The Tennessee Journal’s Oct. 1 issue said this: “For 15 years, state officials traveled the globe to promote a sprawling site in rural West Tennessee to industrial investors. They found no success as a variety of projects went to other states. All that changed this week when Ford announced plans to build a $5.6 million campus to make electric trucks and batteries at the site, creating 5,800 new jobs and transforming the rural landscape into what the automaker has dubbed BLUE OVAL CITY.” The neighboring Commonwealth of Kentucky will enjoy a similar size economic windfall.
Don’t look for anything like this to happen in Michigan anytime soon.
Ford is headquartered in Dearborn. The Detroit News reported that Quentin Messer, Jr., CEO of the Michigan Economic Development Corp., said the state was “not actively involved” in the siting of Ford’s new plans.
The News’s Craig Mauger quoted Martin Gunsberg, a Ford spokesman, saying that “location decisions for the new plants were based on several factors, including size, shovel-readiness, transportation and proximity to other electric vehicle sites.”
“Michigan did not have the type of sites needed for this project, so they were not part of the formal bid process,” Günsberg added.
Michigan’s electricity prices are another factor that puts the state at a disadvantage for such projects, according to the News. In July, the average industrial price of electricity per kilowatt-hour in Michigan was 8 cents compared with the national average of 7.53 cents, according to the U.S. Energy Information Administration. Tennessee’s price was 5.85 cents, Kentucky’s was 6.06 cents and nearby Ohio’s was 6.63 cents.
What has been the reaction of the Michigan news media to Ford’s stunning announcement? For the most part, crickets.
It wasn’t always this way. Back when there was a Republican governor, John Engler, and a Republican in the White House, George H.W. Bush, what Michigan readers heard, read and saw was much different. Here’s an article by Rick Pluta, then of United Press International, on Feb. 24, 1992 — nearly three decades ago.
Willow Run workers stunned, angered by GM decision
‘I think the governor left a lot to be desired,’ he said.
Harlow said those who will be hurt by GM’s decision will range far beyond the Willow Run plant, ranging from automotive suppliers who service the plant to merchants who sell goods and services to GM workers.
‘This is also going to hurt your ‘Mom and Pop’ supermarket on the corner,’ he said.
‘I feel sold out,’ said Harry Harvey, 35, of Detroit, as he was leaving the plant Monday afternoon. ‘I still hope we’re going to have another car. I think we still have one round to go.’
While refusing to release details of any offers the UAW made to GM, union officials estimated the cost of making a car at Willow Run is still $300 to $400 less than at Arlington.
‘The package we gave them, I don’t think any plant could have matched that offer,’ Harlow said.
Harlow said GM workers at Willow Run, as well as the other plants GM is closing — including Flint, Saginaw and Detroit in Michigan — will have the option of transferring to some plants that will remain open.
He said the average Willow Run worker is 40 years old with 20 years of experience.
In Lansing, Engler called GM’s announcement ‘tragic for the men and women at Willow Run and their families and the community. It’s also a tragedy for Michigan.’
Engler said the company’s decision supports his contention that Michigan needs lower taxes. Otherwise, he said, ‘Our jobs will take a hike — to Texas.’
Ypsilanti City Manager Herbert Gilsdorf said the city woke up Monday morning fully expecting that Willow Run would be the plant kept open.
‘We were quietly getting ready to throw confetti. Today was going to be the party, now it’s a wake,’ he said. ‘We have empty storefronts; now obviously there’s going to be more.'”
Remember, what Michigan lost in the Ypsilanti 1992 closing was a drop in the bucket (4,000 jobs) compared with what Michigan FAILED TO GET OR EVEN COMPETE FOR (12,000 jobs) in the Ford announcement just five weeks ago.
And, by the way, Engler’s beloved father, Matt Engler, had just died during that 1992 winter night when GM dropped its bombshell. The governor could have bowed out of his scheduled appearance before the Ypsilanti Chamber of Commerce (the backyard of Willow Run) where the baying hounds of the Democratic Party, the local labor union, and the MSM were lying in wait to heap abuse on the governor’s “failure” to “save” Michigan’s auto jobs. An Engler aide told him that “people would certainly understand” if he didn’t go. But Engler replied, “No, I gave my commitment to be there — we’re going.”
Engler’s instincts were right. He withstood the barrage of questions that night. In 1994, Engler won a massive re-election victory.
Today, what is even more stunning is the silence on the Ford announcement of the various GOP candidates for governor in 2022. This should be as viable an issue as what is taught in local K-12 schools was for Glenn Youngkin in Virginia last week. But it’s not — a sign that none of the Republicans running for the state’s top office is up to speed, meaning that Whitmer is headed for almost certain re-election.
Maybe Michigan’s citizenry should just brace themselves and wait for 2027, when things MIGHT begin to get better for Michigan.
*********************************************
Bill,
Considering the ripple effect of decisions like this on the macro level, what do you see as the effects on the micro levels? As Rick alluded to in his earlier piece, how many small businesses will either close or die aborning? And while the decennial census is relatively complete for this time around, will we see the same sort of brain and youth drain going forward as occurred in the 70s here? It looks like the social economic double helix could be going downward…reality and perception of reality are always intertwined. What is the likelihood of some about to be revealed direction changer here? Did Tennessee and Kentucky not have COVID outbreaks?
Self-evident Economics 101: the Dearborn-based Ford would ordinarily prefer to do business in the Mitten State (keep money circulating within the local economy) over another state.
That Ford ultimately opted for Tennessee tells you everything about the corporation’s lack of confidence in the current governor’s economic policies. Under a more pro-business, pro-growth administration, I doubt that Ford acts as such.
Please comment on the long term affects on the economy and the Citizens, if Pres. Biden ,Energy Secretary Granholm and Governor Whitmer succeed in shutting down the Embridge Line-5 . Will Mich. survive another “Granholm Decade ” ?
One thing Damocrats do really well is kill the economy.:-(
Not sure Michigan can economically survive Gov. Whitless’s economic incompetence and anti-capitalism philosophies.
The four greatest economic disasters in the US in the last 100 years have been toward the end of Republican administrations, after periods of tax and regulation cutting. I am referring to the Great Depression, the Savings and Loan crisis during the Reagan administration, the Great Recession at the end of the George W. Bush administration, and the economic decline due to the pandemic at the end of the Trump administration.
Making it look like it’s Ford’s fault will help her chances with the electorate, the handlers are hoping. The image doctors are working overtime to polish a turd. Will they succeed?
No, the jobs will never return, which is especially unfortunate. But its not due to the two-headed hydra (Robert & David; R & D for short). Due to the decimation of the auto industry, which offered good paying stable employment for decades, it is actually impossible. Remember, at one time Michigan WAS the auto industry, with a small company in Kenosha later grabbed by Iacocca making up the last corporate headquarters outside the state.
Today, auto plants are spread throughout the country due to a plethora of reasons. Also, Michigan was a heavy industrial state along with others in the Midwest. Not any longer. Tax abatements, lower wages, and less regulation by our southern and western neighbors have solved that “problem”.
So the real challenge is how do we keep what we have? We are losing another congressional seat for the next election, going from 19 to 13 over the course of many decades. Until we can attract more people here, that trend is likely to continue. The only way to reverse that trend is radical tax reform, less regulations, and trimming government.
The solution involves a look at the past to determine how we got to this point. And a main problem is the full-time legislature. When the legislature was part-time, fewer statutes were enacted. This meant lower taxes, less regulation, resulting in streamlined government. When elected officials don’t have as much time for mischief, then government isn’t given the opportunity to vacuum resources from the populace, spreading the ill-gotten gains to their cronies.
Remember the almost passed sales tax on services? The only services that were going to be taxed were those businesses that were not paying a lobbyist. Like fortune telling, for instance.
Well, here’s my prediction. Either cut the size of government, or continue to watch the jobs and population leave.
As reported in Crains, NONE of the futurist EV companies “even considered Michigan for their EV plants” (their quotes). Michigan voters get the awful performance they elect. We need to do better. Period.