Rustbelt Renaissance?

It was a big week for Michigan as GE picked it as the site for a new technology center and GM announced that the state was the winner in the race to land a new plant to manufacture small cars. Maybe Flint should think twice about bulldozing all those houses.

From the NYT:

General Electric will build a research center that could bring more than 1,100 jobs to Michigan, the company announced Friday.

The center, called the Advanced Manufacturing and Software Technology Center, will be about 25 miles outside Detroit in Van Buren Township. G.E.’s plan is to hire engineers and scientists in the region who have been put out of work by the shrinkage in the auto industry.

G.E. said that it would invest about $100 million to build the site and that it would benefit from more than $60 million in state incentives over 12 years.

This is a coup for Michigan. These are high value jobs and as the article indicates, there is going to be a lot of emphasis on renewable energy technologies. It’s the type of investment that’s going to get a lot of notice from Washington, probably money as well. In all likelihood, manufacturing will tend to gravitate to the area to take advantage of any advancements that come out of the GE effort.

Also from the NYT:

General Motors said on Friday that it would reverse plans to close two plants near Detroit after Michigan won a three-state battle to be the site where G.M. will build a new small car.

GM said that it had chosen to make the car at its Orion Township assembly plant, which was scheduled to close in September, over plants in Janesville, Wis., and Spring Hill, Tenn.

A metal-stamping plant about five miles away from Orion in the city of Pontiac will stay open to supply the Orion plant. About 1,400 of the 5,000 jobs at those plants will be retained.

Not quite as big a deal as the GE victory but it does preserve a lot of jobs and note again we’re talking about a product that’s politically favored. There’s probably better job security building small cars than there is building SUV’s. Regardless of their profitability, the government is likely to make sure they get built and get sold.

So props to Michigan, but I wonder what all of this means for the country from a demographic point of view. There’s clearly a bias in Washington towards rebuilding the manufacturing capacity of the U.S. That would seem to play into the hands of the industrial Midwest pretty nicely. Let’s see, they have lots of idle manufacturing real estate that can be had for a song, skilled workers and an abundance of low cost housing. Sounds like a place I’d look if I was going to start manufacturing some renewable energy components.

In the 1950′s and 1960′s a great migration took place as workers from the midwest went to California and the sunbelt in search of well paying jobs in the defense industry. They found them and as the sunbelt expanded more workers came to build the housing and support industries that were needed. Now that job factory is in serious trouble. The defense industry started shrinking two decades ago and continues on that track. Growth has slowed to a crawl and there are more houses and dry cleaners and insurance agents than the sunbelt needs. The model is seriously bent if not broken.

Government money used to build aircraft carriers, fighter jets and defense systems created the great migration west and south. Will government money now devoted to wind turbines, solar panels and advanced research in alternative energy sources now induce another massive population shift? It doesn’t seem unreasonable to assume that it might. Economics, infrastructure and politics are all on the side of the Midwest right now.

Right now the American middle class is focused on jobs in a way that it hasn’t been for over thirty years. If good, high paying, secure jobs are or appear to be available in other parts of the country, I fully expect that workers would move in an instant. Since it looks like those jobs might be in the Midwest some of the Sunbelt cities might want to see if they can get a deal on bulldozers from Flint.

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