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Howes: Quiet crisis bedevils Michigan in good times

Daniel Howes
The Detroit News

Michigan and its largest city do their best work amid a crisis.

And that’s the problem as 1,700 or so of the state’s business movers and political shakers descend this week on Mackinac Island for the Detroit Regional Chamber’s annual policy conference: There is no real crisis to rally the collective mind.

Automakers are booking record North American profits in the longest-running car and truck sales boom since the 1960s. The city of Detroit is out of bankruptcy, hitting its financial targets and showing signs of sustained economic reinvestment, chiefly downtown and along the lower Woodward corridor.

Financial crises in Lansing are a fading memory, enabling the Republican-controlled Legislature to conjure new and meddlesome ways to needle the teachers unions or gut curriculum standards precisely when educational attainment is collapsing.

All of which means that now is the time to worry. Because if history is any guide — and it is — now is when the political and business leadership around here tends to grow complacent, content with knowing another economic cycle still is spinning upward.

Complacency kills, metaphorically speaking, as this town and its people can attest. With regional and industrial competition intensifying, with people and capital more mobile than any time in human history, Michigan’s traditional rebound is proving less powerful than earlier cycles.

The state’s comeback bounce ain’t what it used to be, despite some $30 billion in auto investments here since 2009, according to state figures. Michigan is home to 27 assembly plants, 63 of the top 100 suppliers, and more than 75 percent of industry research and development is conducted in 375 separate R&D centers across the state.

Michigan produces more vehicles than any other state — 19 percent of production. And of the 195 autonomous vehicle test sites in the United States, 49 are in Michigan. That’s more than No. 2 California, more than Germany and roughly equal to all of Japan.

Still, those encouraging macro-trends in the auto space do not negate economic reality weighing on Michigan and the city that helped put the world on wheels. The state long ago lost its perch as a national leader in per capita income. Population growth statewide is mostly non-existent, and Detroit continues to lose residents, albeit at a slower rate.

Growth in taxpayer obligations to current and former public employees is outpacing growth in personal income and property values, two metrics that most closely affect tax revenues. And personal income growth between 2000 and 2013 is less than half the national average, reports Public Sector Consultants.

Educational attainment is worsening across the state and across both rich and poor districts, Education Trust Midwest found. That’s a fitting commentary on efforts in the Legislature to lower curriculum standards and ease requirements for math and foreign languages.

Those facts are the stuff that makes real people vote as much with their feet as their ballot. That dreary, even depressing, data should motivate the leadership class to more honestly examine the cultural and political obstacles to growth and competitiveness.

They won’t get better with time or denial. This year’s policy conference is built around increasing economic opportunity (Detroit), winning the race in connected technology (Michigan) and restoring civility in politics (the nation).

Michigan has a better chance of becoming the new headquarters of Silicon Valley’s Big Three of Apple Inc., Google parent Alphabet Inc. and Intel Corp. than it does of “restoring civility” in today’s politics. Once you’ve exceeded the measure, as this past election cycle so clearly did, there are no limits.

It is true that Michigan and Detroit are making discernible progress in their recovery from the global financial meltdown and the Great Recession that followed. But primed for greatness they aren’t — at least not yet.

More than $7 billion in investment along the Woodward corridor from Jefferson to West Grand Boulevard since 2013 is an enormous infusion of capital in a city America gave up for dead. It also highlights, by contrast, the needs of Detroit’s neighborhoods and efforts to include more Detroiters in the revitalization.

The race for leadership in connectivity, centered on the vehicles that Detroit still designs, engineers and builds, is real. There also is inescapable evidence that investors and financial markets are not at all persuaded that Detroit can do for autonomy, mobility and connectivity what it did for the good ol’ car.

Elon Musk’s Tesla Inc. is worth more than Ford Motor Co., and the automaker knows a reason or two why. The 114-year-old American icon last week dumped its CEO because he was judged to be going too slowly on the singular challenge of maximizing profit today and moving quickly in autonomy and mobility for tomorrow.

General Motors Co.’s Chevrolet Bolt electric car is the first of its kind to go more than 230 miles on a charge and cost less than $30,000 (after government subsidies). But it’s Musk’s still-to-be-delivered Model 3 that is captivating investors and would-be customers more than happy to shoot the Silicon Valley mogul a $1,000 deposit.

Perception still drives reality, and right now the perception that Michigan is not the economic powerhouse is reality — because it’s true. And that is the central challenge facing Michigan’s leadership class gathering this week on Mackinac Island.

Daniel.Howes@detroitnews.com

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.