As Gov. Mitch Daniels travels to Japan this week in search of job commitments, he can take some comfort that, if the state fails to pull out of its static employment status, there’s always Michigan to point to.
Not much is going well for Indiana’s northern neighbor.
At a time most states are piling in new jobs, Michigan continues to shed them.
The state has been on a losing streak since 2000, when the latest recession hit the Rust Belt. Employment stands at a seasonally adjusted 4.3 million-down from a peak of nearly 4.6 million.
The ongoing losses have wiped out 12 years of growth and the erosion shows little sign of ending.
Adding insult to injury, last week Volkswagen said it would move its North American headquarters to Herndon, Va., from the Detroit suburb of Auburn Hills. Only 600 of the 1,400 jobs will remain in Auburn Hills, Volkswagen said.
The automaker said the move was prompted by a desire to be closer to its customer base, which is strong in mid-Atlantic states, and to be close to Dulles International Airport. Some media reports, however, suggested that Volkswagen was having a hard time attracting workers to the existing headquarters because of its psychological tie to the beleaguered region.
Indiana has little room to brag, having yet to recover all the jobs lost in the recession. Current employment of 2,989,400 is 25,800 short of the peak reached at about the same time Michigan reached its crest.
After a slow, steady recovery early in the decade, Indiana job numbers leveled in 2006 and haven’t budged much since. Like Michigan, Indiana is struggling because manufacturing is eliminating jobs faster than other industries create them.
George Erickcek, senior regional analyst at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., said Michigan is struggling to overcome its high level of specialization in making one product, cars.
General Motors, Ford and Chrysler aren’t faring well, and the ripple effect is felt by myriad suppliers throughout the state, he said. In Michigan, approximately 4.5 jobs are dependent on each assembly job-many of which have been lost in recent years. Retailing, construction and other businesses are feeling the brunt.
“The story is, this is a state that is built to produce one product. And we continue to lose share in that product,” Erickcek said, referring to competition from foreign carmakers.
“The whole state is suffering.”
Michigan is struggling to overcome its reputation as an automotive center, he said. Prospective employees and other people link the struggles of the Detroit Three and the state as a whole and instead look to Chicago, Atlanta and other places, Erickcek said.
Because the state is so heavily concentrated in one industry, it’s also having difficulty diversifying into other industries, he added.
However, not all is lost, if a recent University of Michigan forecast is any indication. The university said job losses will last only another year or so. Employment actually will rise-slightly-in 2009, the forecast said.