Cars Célèbre!

Tell me where it hurts, bunky. Ouch, in that old rust belt, eh? Right there in the automotive industry? Wow, can I sympathize with that. Yeah, I’m feelin’ your pain! Think about it. In the 1950s, 5% of our workforce was in the automobile industry; in 2007, it was down to 3%, but today, according to the June 9^th NY Times, it’s down to 1.5%!

Michigan is suffering with a higher unemployment rate (12.7 percent in direct unemployment) than any other state, even California . The Times tells us: “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.” They’re closing eight prisons, canceling 130 bridge and road repair projects (they can’t even come up with funds to match federal money), all to meet an expected $1.4 billion budgetary deficit.

Although Michigan ’s budget problems pale in comparison California’s $24 billion short-fall, the bigger issue is where the long-term jobs will come from. California seems to have a higher probability that it can reinvent its economy after this economy stops melting; Michigan is looking everywhere, from venture capital start-ups to motion picture production for answers. The state is using tax incentives to lure new business, but the number of jobs lost in this environment is truly difficult to replace even under the best of times.

Despite some fairly wonderful universities and lots of cheap housing and industrial buildings (or you can call them what they are: shuttered factories that are falling apart and lots of bulldozed neighborhoods with an occasional house in places like Detroit ), the magnitude of this transition away from heavy manufacturing is incalculable. Where do you start?

What worse, the literal destruction of the America automobile industry as we know it has cost millions of jobs all across America . It’s not just the folks working for the big carmakers in Michigan or Ohio or the dealers and their mechanics; it hits financing companies, advertising agencies, media companies where they used to advertise, etc. I’m sure losing car ads helped accelerate a sinking newspaper industry to the bottom. Almost 30% reduction in overall advertising in papers has been lost, and it’s falling still (okay, the Internet didn’t help).

The Times reminds us also about the role of cars in past economic difficulties: “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 , Mo. ”

But mismanagement, over-zealous unions and reckless choices during a period of rising fuel costs could not withstand the additional pressure of a collapsing economy where consumer demand would drastically alter. The big car companies just assumed, like so many others, that good times and rising values would absorb any economic mistakes they may have made along the way. When the good times stopped, all the pigeons came home to roost. It is a pretty common story across our nation; it’s just that the automotive industry is so huge. Or at least it was.

I’m Peter Dekom, and I am deeply saddened by it all.