Black October

There's an excellent article on today's Detroit News web site regarding the effect of Delphi's Bankruptcy on the automotive industry and unions. One quote:

"The domestic auto industry's structure is not stable... And, simply put, we expect it will get worse before it gets better."

We're seeing the beginning of a dramatic restructuring of the US automotive industry, and by extension, the legacy manufacturing sector. As GM, Ford, and Chrysler are experiencing record amounts of idle time at factories, Toyota is scrambling to open more US plants.

Michigan is going to bear the brunt of the negative effects of this change, and we'd better be willing to face the realities of the situation. Michigan must be made attractive to business investment if we are to get through this.

Grand Rapids Public Schools - Holy Cow

In the spirit of yesterday's post on the Grand Rapids school board's inability to make a decision on selling a building, we give you today's installment, "Bleke admits mix-ups on Huff." There's not much that can be said about this one, so we'll just ask you to read the article from the Grand Rapids Press. It speaks for itself:

Bleke admits mix-ups on Huff

Grand Rapids Public Schools Paralysis

It's funny to watch the Grand Rapids school board completely bungle everything they do. One has a hard time understanding exactly how they can bat 1000 when it comes to messing up the simplest task.

The GRPS board is considering selling the now-unused Huff elementary school on the city's north side. They got two bids - first from a charter school company offering $1.3 million. The second bid is from a non-profit organization run by Dave Allen, one of the board members (and a former president of the board), offering about $800k.

The board had an "emergency" meeting last night to consider the charter school company's bid. The board realized that it doesn't look so good to sell a school to a board member (can anyone say conflict of interest?). Allen's organization proposed selling off a portion of the land as "brownfield" sites so that the school district could capture additional tax dollars. One hitch - no one ran the idea by the city first.

To top it off, Allen's organization wouldn't even be able to raise the money for months. There was such an outcry at the unusual Wednesday evening meeting, that the board decided to table to decision.

They can't even handle the sale of an unused building - how can we expect them to handle the education of 20,000+ kids?

Michigan Ouch

Over the last month we've seen several events which will permanently shift the economic reality of Michigan.

1) Northwest Airline's mechanics strike, which flopped and ended up in a busted union, had no consequence for NWA. This marks a major turning point for unions in Michigan - they have lost the organizational power and they don't have the sympathy of the average Joe.

2) Delphi's Bankruptcy. This will have some very far-reaching effects, and it is already starting to ripple. Not only is it likely that thousands more manufacturing jobs will be lost here in Michigan (including some in the Grand Rapids area), the Unions are suddenly on their heels. Nearly immediately after the Delphi Bankruptcy filing, GM and the United Auto Workers worked out an agreement to shave billions off GM's health care bill.

3) Today, the Detroit News reported that October car sales dropped to a seven year low. Total Big Three US market share dropped from 57% in October of 2004, to 52.4% in October of 2005. In the mean time, Toyota captured 15.1% of the market, the highest ever for that company. This will continue to have far-reaching effects on the Big Three (Ford and GM in particular) and will put further pressure on those companies to achieve higher cost savings, in turn putting pressure on the UAW for more concessions.

Things aren't looking good. What can be done to help? Michigan must aggressively become a business-friendly state to attract non-manufacturing jobs. How do we do that?

1) Eliminate the single business tax - the most onerous business tax in the nation.

2) Lift the cap on charter schools - our traditional public school systems are collapsing under their own bureaucratic weight. A market in education will fix this problem. Competition will improve achievement for all students.

3) Pass a "right to work" law which allows employees to decide whether or not to join a union when they take a job at a union shop.

Those are just first steps. Hopefully we can stand up to special interests in order to improve the economic situation for all Michiganders - but we're not holding our GR Pundit breath.