Insider: Mixing Government and Manufacturing

Michigan governor Jennifer Granholm is talking with me about her recent mission to Japan to woo that nation's auto suppliers and OEMs.

Michigan governor Jennifer Granholm is talking with me about her recent mission to Japan to woo that nation's auto suppliers and OEMs. She wants them to consider Michigan as a place to invest their manufacturing yen. One company she visited with high hopes is Toyota, where she gave her spiel for the virtues of locating in the Great Lakes State. But it is going to take more than claims about natural beauty and numerous golf courses to get much more than the commitment for a few hundred jobs that she came back with from various auto suppliers. While I give Granholm credit for her trip and aggressive sale pitch, I doubt that the Japanese automakers will flock to the state as she hopes. That's because Michigan-like many other states-must make some fundamental changes before the Japanese (or the Koreans, or the Germans) will set up shop here.

For one thing, there is the issue of organized labor. For the Japanese, this might be considered the "specter" of organized labor. Granholm must get together with Ron Gettelfinger, president of the United Auto Workers, to work out a way that the union will be more receptive to the possibility of companies establishing manufacturing facilities in the state that won't be automatically represented by the UAW. In addition, they have to be flexible enough so that there are mutually beneficial relationships where there is UAW representation. That is not unprecedented as is the case at the Global Engine Manufacturing Alliance plant established by Chrysler Group, Mitsubishi, and Hyundai in Dundee, MI. What's more, Granholm needs to work with the people who craft the image of the state, to transform it from being a gritty, blue-collar enclave to a place that's characterized by forward-thinking, adaptable people. This will be tough in a state that is indelibly linked to Henry Ford and is the birthplace of the modern labor movement.

Granholm told me that Michigan has an abundance of skilled manufacturing laborers-on the order of 20,000 people. Many of these are people who lost their jobs when the Big Three and its suppliers decided to establish factories in the south. She notes that Toyota is presently experiencing trouble finding skilled workers for its new truck plant in Texas, a problem it wouldn't have if the plant was built in Michigan. But there are questions that need to be answered, like: Would Michigan's skilled workers be willing to work for half the prevailing wage in the state? And would Toyota be willing to pay union scale? Economics-personal and corporate-matter.

One fundamental thing that Granholm and other state governors seem to miss in their pursuit of new manufacturing plants is that in this global environment, manufacturers go where the costs are low and the quality high. She needs to spin that conventional wisdom on its head, proving that tomorrow's manufacturing plants require smarter workers, who know more than the basics of attaching a bolt onto a vehicle. The next-generation of workers must know how to run advanced robots, lasers and machine tools. Michigan's skilled human capital provides the perfect foundation to build these next-generation plants. If Granholm can covey these factors to Toyota or any other manufacturer, then she'll be successful. Short of that, her Japanese adventure will amount to nothing more than a tourist visit.