By John Lindstrom
Publisher
Posted: November 29, 2018 2:50 PM

When General Motors announced earlier this week it would shutter five plants and lay off close to 15,000 workers it seemed like familiar ground.

Yet with a new governor coming into an office and a president who so far is treating the announcement as a personal insult that needs a retaliatory strike more than a significant sign to the national economy, the announcement breaks very new ground.

Yes, the announcement alone won't collapse the economy into a recession so Governor Rick Snyder will in fact be the first governor to serve more than two years to get out without having to deal with an economic slowdown in at least 70 years.

And Governor-elect Gretchen Whitmer now knows as she takes the oath of office on January 1 her agenda has been expanded immensely from roads and schools and auto-insurance rates to jobs and economic change. How it will change her administration's plans is yet to be established, but it is not something she and the state can ignore.

An earlier crisis with a GM plant made a profound change in the early administration of former Governor John Engler. GM in the early 1990s opened up a kind of bidding war on whether it would keep the Willow Run plant or a plant in Texas open. Mr. Engler said in opening one of his first State or the State addresses that Michigan would not lose Willow Run.

But we did. And that loss had a profound change on Mr. Engler's administration. He had hoped to get away from using incentives to lure or keep companies. He even tried to get other governors to agree not to (they weren't interested in his pitch). Mr. Engler had hoped that cutting taxes and regulations would be enough to both build the economy and make Michigan not recession-proof, but recession-resistant.

After Willow Run, Mr. Engler took to incentives very dramatically. They were part of the state's package along with cutting taxes and regulations.

Of course, cutting taxes and regulations didn't stop Michigan from going into a decade-long recession. They don't, nor can they. An economy comprises too many elements to be controlled by those government actions.

As she takes office January 1, Ms. Whitmer should take heart in projections made earlier this month by the Research Seminar for Quantitative Economics at the University of Michigan, that Michigan has restructured itself enough that it should withstand the next recession much better. The state is far less dependent on manufacturing, especially auto manufacturing.

Look at the Lansing area. Once the place where more cars were made than any other place in the country, and there are still lots of cars being made here, Lansing is now a major center for the insurance industry.

Even GM's announcement is in one way in line with the state's long-term goals. GM wants to focus on electric and autonomous vehicles. Michigan has spent much of the past decade making itself a center of autonomous vehicle research and development. Okay then. What's the problem?

The problem, of course, is thousands of people facing the prospect of losing their jobs and how the state responds to this. Here again is a challenge confronting a second challenge, and are we prepared for both? Because what has business complained of these last several years? A lack of workers available to hire. Here now will be workers. But will they be trained for the jobs available? Will they be willing to relocate to the places the jobs are centered? Will they accept the pay and benefits after working in the auto-related industry?

There is yet a third challenge: how will the general public respond to the GM news? Public confidence in the economy has been high, which helps keep people spending, i.e. investing, in the economy and keeping the state flush with tax revenue. To keep the economy going and the state funded, it is critical the GM situation be managed so the workers are helped, the company can refocus and rebuild, the state can maintain itself (and not go into economic crisis mode) and use this as evidence of whatever PR slogan the Whitmer administration will employ, the Renewed Michigan or some such.

And there is that fourth challenge, President Donald Trump. His reaction so far has been to seek revenge, not adapting and responding to a situation in a way that inspires confidence. Yes, he made a foolish pledge that no plant would close under his watch. As a business executive, which made him so attractive to so many people, he knew that businesses sometimes have to take losses and make sacrifices. He did, after all. Issuing threats, as he has done, does nothing to resolve the situation.