CADILLAC — Settle soon, and the United Auto Workers strike against General Motors will be just a blip for the rest of us. But the longer it goes, the more likely the effects of the picket line will be felt even in communities where GM has no factories.
Part suppliers statewide could see layoffs.
“If the strike is settled soon, I don’t think we will see major effects on communities that are relatively far away from the GM production facilities,‘ said Charles Ballard, a Michigan State University economist. “But if the strike goes on for a long time, the ripple effects will get large and larger.‘
Companies prepare for things like this — GM reportedly has 70+ days worth of inventory, according to multiple outlets that cited Cox Automotive. Similarly, Ventra Evart’s parent company says they have some room before the ripple effects of the strike reach the Osceola County plant.
“Work stoppages occasionally happen and when they do, Flex-N-Gate prepares accordingly,‘ said Jim Woodcock, a spokesperson for Flex-N-Gate. “At this time, it is too early to determine what impact, if any, this will have on our business.‘
The UAW is arguing that GM, after a recession and bankruptcy, can finally afford improved pay and benefits, among other demands.
But though the Great Recession is long over — the economy’s been growing for a decade — another one is sure to come.
“Many economists think there is a good chance we may have a recession next year or the year after that,‘ Ballard said.
And Michigan still doesn’t have as many jobs as it once did.
While we’ve caught up according to some measures — local real estate has somewhat recovered — when you look at economic recovery from another angle, Michigan is still down.
The state lost 400,000 jobs during the most recent recession, and never even recovered from the recession before that. In all, Michigan has 250,000 fewer jobs now than the state had in 2000.
What’s more, Michigan’s job growth has fallen off. We’re not getting new jobs.
“There has been zero job growth this year so far,‘ Ballard said via email. “That doesn’t necessarily mean that Michigan is in a recession, but it makes me concerned.‘
The auto industry, on which Michigan is reliant, is vulnerable in a recession and tends to have bigger swings than other industries.
“After all, you can’t put off buying groceries, but you can put off buying a car,‘ Ballard explained.
Some manufacturing businesses with facilities in Cadillac weathered the last recession better than most.
Borg Warner is one of the few part suppliers that never filed for bankruptcy, according to spokesperson Kathy Graham (and the local Borg Warner facility won’t be affected by the UAW strike because the local facility doesn’t supply GM).
If there is a recession, it doesn’t mean all of us or even most of us will lose our jobs.
“Some people will lose their jobs, but most will keep theirs,‘ Ballard said. Last time, Michigan’s unemployment rate was worse than the national average, 14.6% to 10% nationally.
“That’s bad, but it still means that most people kept their jobs,‘ Ballard said.
They didn’t necessarily get raises, though, when the recession ended.
“Most of the income growth has been for those at or near the top of the income distribution,‘ Ballard said. “There are plenty of people who haven’t shared in the financial benefits of economic growth, even if they have a job.‘
That trend, of top earners continuing to earn more, while lower-paid people have stagnant wages, has been going on since the 1970s, Ballard said.
Besides jobs, recessions can muck up the local community’s economy by tanking real estate values and sales.
That’s what happened in 2009 and 2010, when the recession reached Missaukee County, according to Equalization Director James VanHaitsma.
“Sales were selling for much lower than assessed values,‘ VanHaitsma said.
And while property values have recovered, the taxes local government can receive for that property has not recovered — the government is limited in how much it can increase your taxes, and that has permanently suppressed tax revenues.
“I don’t expect the same problems in real estate that we had in the first decade of this century,‘ Ballard said. “That’s because we had a huge price bubble in the housing market back then.‘
Commercial and industrial buildings’ property values were among the hardest hit during the last recession, equalization directors in Missaukee and Lake counties said. Waterfront homes held their value well but rural residential homes also suffered.