Howes: Mich.'s change just beginning
Whatever the dubious marine metaphor in his "river of opportunity" riff, Gov. Rick Snyder is right to use Tuesday's State of the State to say Michigan still has a long way to go.
Because it does, proof of just how far the state slid in its "lost decade." The easy stuff now is done: Budgets are balanced because they must be, and business taxes are reformed because state policy otherwise was dreadful. Harder is getting Detroit out of bankruptcy, far sooner than the experts predicted.
The state's dropping unemployment rate settled at 6.3 percent in December, the lowest since 2002. The good news underscores a rebound in manufacturing jobs powered chiefly by Detroit's automakers and the suppliers who serve them, not necessarily a wholesale rehabilitation of a state badly tarnished by its dysfunctional past.
Credit an auto sales expansion now moving into its seventh year and, second, an auto industry more concentrated in Michigan than anytime in memory. That's an industrial double-edged sword that cuts in the state's favor so long as economic conditions and domestic demand move in the right direction.
"Relatively speaking, we're better," says Doug Rothwell, CEO of Business Leaders for Michigan. "But we're not where we need to be. We're really not average yet. And we're still a ways from top ten" states.
The governor proves the point. He says the state's business tax climate improved to 13th from 27th four years ago, a stat he borrowed from the Tax Foundation's State Business Climate Rankings. Michigan home values appreciated 25 percent compared to 16 percent nationwide, according to the Federal Housing Finance Agency Home Price Index.
Progress? It should be considering the disproportional pounding Michigan home values took in the Great Recession. Sure, considering that the Granholm-era Single-Business Tax was considered an abomination by people who actually run businesses and need to pay the bills.
If the State of the State carried an unofficial message, it's this: now is no time to coast, a time-honored tradition around here. The lowest unemployment rate in more than a decade, an auto industry firing on all cylinders here at home, a Detroit moving into its post-bankruptcy phases are all causes for (momentary) celebration.
But they also can incubate the disease of complacency that has plagued this state and its bellwether industry since, what, the end of World War II. What's changed, fundamentally, are the cornerstones that defined Michigan's image as a retrograde, under-educated industrial hulk living in the past.
The automakers Snyder touts, chiefly General Motors Co. and Ford Motor Co., are performing at home in ways this town hasn't seen since the 1960s. Profits are solid; market share is holding steady; debt loads are dramatically lower; labor costs as a percentage of finished vehicles are at historic lows.
The post-Chapter 9 Detroit hailed by the governor looks and feels far different than the Detroit of five years ago. Downtown is being transformed by largely private-sector investment; City Hall is run by a business-minded mayor; the bankruptcy eliminated or restructured $10 billion of the city's $18 billion in total liabilities.
Forget nostalgia-fueled comebacks, people. This is about moving forward, using the core strengths of the past and the entrepreneurial present to chart a new future — this for a state whose defining industry and the culture built around it locked too many into a destructive cycle of confrontation and mediocrity and self-satisfaction.
The shackles of imposed discipline are off. The feds no longer own a single share of the auto industry. The city is out of bankruptcy and back under the control of its elected leaders, whose chief job is to deliver the restructuring approved by the court.
And the state has a lot more to do to improve an economic environment that is more competitive and more entrepreneur-friendly, but hardly the dynamo it could be. Its largest city is no Chicago, in the best sense of what that means. Its workforce is not as flexible as the Carolinas, nor nearly as well-educated as that in Massachusetts.
Its transportation infrastructure is a joke, badly trailing Midwest rivals like Ohio. Despite changing administrations and changing parties, the Buckeye state hews to a long-term investment strategy for its roads and bridges. Here, not so much, as the feckless lame-duck Legislature demonstrated with its roads package last month.
"We're better," Snyder said. "But to be open with you, better is not good enough. We need to do more."
Success and results drive perception. The auto industry's new competitiveness will mean next to nothing if the current generation of leadership wastes the historic opportunity of its reckoning; same for Detroit's fresh start in bankruptcy.
Snyder's case for continuing the reinvention exemplified by the auto and Detroit turnarounds may weary the usual political suspects and partisan interest groups, including even some on the guv's side who benefit from perpetuating old political antagonisms.
But that doesn't invalidate a fundamental truth today: drive change, or it will drive you.
Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found here.