The writer, a Los Angeles freelancer and former Detroit News business reporter, writes a blog, Starkman Approved.
By Eric Starkman
Gov. Gretchen Whitmer and GM CEO Mary Barra are blessed that the mainstream media prefers to only write flattering stories about them, thereby escaping scrutiny for their mighty contributions to Michigan’s decline.
Gov. Whitmer and CEO Mary Barra
The Alliance for Automotive Innovation (AAI), an industry group representing a cross section of companies in the automotive sector, has released its 2024 industry report and the findings are particularly ugly for Michigan. While Whitmer waxes on about Michigan being the center of the automotive industry, California has more than double the number of automotive jobs than Michigan, 841,986 jobs vs. 409,220 jobs.
Michigan doesn’t rank second or even third, bested by Texas with 726,196 automotive industry jobs and Florida with 513,287 jobs.
AAI defines automotive industry jobs as those not only in auto manufacturing, but also through an extensive network of parts, components and material suppliers, and a vast retail and maintenance network of dealers and aftermarket products and services.
Whitmer no doubt would prefer to emphasize that Michigan ranks No. 1 for auto manufacturing employment, 206,178 jobs, compared to California’s 121,981. But Michigan’s auto manufacturing is heavily dependent on federal and Michigan taxpayer philanthropy, without which Barra would have moved even more jobs to Mexico, where GM is that country’s biggest vehicle manufacturer.
As an example, former Energy Secretary and two-term governor Jennifer Granholm last fall donated $500 million in taxpayer funds so that Barra could retool GM’s plant in Lansing for electric vehicle production. The donation will supposedly retain 650 jobs and create 50 new ones.
Barra prefers to build GM’s electric vehicles in Mexico, where she can get away paying poverty wages and can avoid dealing with militant union workers on critical matters like wages and safety. Just months after her friend Joe Biden was elected president, Barra announced a $1 billion investment to electrify one of GM’s plants in Mexico, a move the UAW called “a slap in the face.”
“At a time when General Motors is asking for a significant investment by the U.S. government in subsidizing electric vehicles, this is a slap in the face for not only UAW members and their families but also for U.S. taxpayers and the American workforce," said Terry Dittes, UAW’s former vice president and director of the General Motors Department.
Barra gave the UAW another slap in the face last June with GM’s disclosure that it would build the Cadillac Optiq EV crossover in Mexico, with nary a peep from UAW president Shawn Fain, who endorsed Kamala Harris and squandered millions of his union’s funds to support her election. The Biden/Harris Inflation Reduction Act made it advantageous for Barra to build EVs in Mexico because they are eligible for the same lucrative tax credits as EVs manufactured in the U.S.
Barra's Compensation
Barra, who received $28 million in 2023 compensation, builds her EV Chevy Blazer and Equinox vehicles in Mexico. While Barra builds her EV Hummers and Silverado pickups at Factory Zero in Detroit/Hamtramck, that’s only because Whitmer relieved Barra of an obligation to keep 4,000 headquarters jobs in Detroit that was previously required under a $3.5 billion package of tax breaks Michigan gave GM. The automaker had hoped to keep the lucrative tax breaks secret, but Michigan’s Supreme Court ruled that Michigan taxpayers had a right to know details of the deals Michigan Economic Development Corp. (MEDC) was cutting with the Detroit 3 automakers.
Barra builds her electric Cadillac Lyriq in Tennessee, where she also mooched tax breaks from that state, although not nearly as generous as Michigan’s embarrassment of riches.
Whitmer likes to wax on about creating “good paying” automotive manufacturing jobs, but California’s automotive jobs pay much better, many of them in the six figures. Tesla’s global engineering headquarters is in Silicon Valley, where Ford has an office and GM opened one last May to serve as the focal point for the company’s software and battery development. Three of GM’s top executives work out of the Silicon Valley office.
In a major diss to Michigan, Barra said GM opened the office because the automaker had to go “where the talent is.” Lin-Hua Wu, GM’s head of communications, is also based in the Bay area, which perhaps explains Barra’s clueless statement.
Toyota Embraces Michigan
Toyota seems to have an appreciation for Michigan’s engineering and design talent. The company has more the 2,000 employees in southeastern Michigan, where some of the Japanese-owned automaker’s most popular vehicles are designed and engineered, including the Camry and the Tacoma and Tundra pickups. Toyota this year is expected to open an advanced battery research and development plant in York Township in Washtenaw County.
The Detroit Free Press reported that when Toyota restructured its Michigan operations to prepare for electrification, the company’s buyout packages were double the payments GM and Ford offered its workers. Underscoring GM’s shabby treatment of its Michigan workforce, the company last year notified a highly respected employee with degrees from Harvard and MIT who worked for the company for 38 years that he was being laid off in an early morning email.
Silicon Valley-based Lucid, which manufacturers an EV more technologically advanced than any vehicle GM builds, last year opened an engineering office in Southfield.
Michigan taxpayers should be aware that unlike Whitmer, California doesn’t offer huge tax incentives for its high paying automotive jobs. It doesn’t have to. The automotive industry contributes 9.2% of Michigan’s GDP, and California didn’t rank in the top 10 states where automotive contributed to their GDP.
Long Beach, a port city about 30 miles south of Los Angeles, is where Ford opened an electric vehicle development facility that CEO Jim Farley said is the future of the company and where Mercedes-Benz also has a major R&D facility. Listen to the mayor of Long Beach talk about the sorts of businesses he’s looking to attract.
“We’re proud to be able to project at least 1,000 new advanced manufacturing and engineering jobs in Long Beach over the next year, year and a half,” Mayor Rex Richardson told a local business publication. “We may not be competing for $20 an hour jobs. We’re going to compete for the $45 and up jobs. Austin, Texas; Denver, Colorado; Phoenix, Arizona — those are the communities that Long Beach is competing with.”
Mayor Rex Richardson
Notice that Detroit and southeastern Michigan aren’t on Richardson’s radar screen. That’s because Whitmer and her economic development people have an appalling lack of vision and settle for crumbs that GM and Ford throw the state’s way for projects few, if any, states want.
An example is the electric battery plant Ford is building in rural Marshall, for which Whitmer spearheaded $1.7 billion in grants and subsidies and destroyed fertile farmland and century old trees to build. The Center of Economic Accountability named Whitmer’s giveaway the worst economic deal of 2023.
Adding to Whitmer’s disgrace, Ford subsequently scaled back the project's size by 43% and said it would only create 1,700 factory positions, not the 2,500 it promised.
Ford had hoped to build the battery plant in Virginia, but officials in that state were concerned about Ford’s partnership with a communist China-based company. In any case, Virginia state officials said they’d never approve a sweetheart deal like the one Whitmer gave Ford.
Michiganders would weep if they knew about the amazing turnaround Long Beach’s economic development officials orchestrated.
In 1997, the federal government closed a major naval yard located in Long Beach, which was used to overhaul and maintain conventionally powered US Navy surface ships. The shipyard pumped $757 million a year in business into the region and employed about 3,000 workers. As well, there were some 45,000 Navy personnel housed in the city.
Long Beach’s economic development folks, who a real estate source told me are wicked smart and are sophisticated businesspeople, rallied and attracted a slew of new businesses. In addition to luring Ford, Long Beach Medical Center is where Michigan’s famed thoracic surgeon Marc Sakwa went to work after failing to force the ouster of former Beaumont Health CEO John Fox.
Sakwa, a native Michigander, was beloved at Beaumont by patients and staff, and he was responsible for luring millions of dollars in donations for the hospital system. Sakwa was appalled with Fox’s aggressive cost cutting that caused great harm to Beaumont’s once vaunted reputation and quality of care but was unable to rally sufficient support from other physicians to force Fox’s removal.
Although the damage Fox was inflicting on Beaumont was publicly known, neither Whitmer nor AG Dana Nessel intervened. Fox turned over control of Beaumont and its $4 billion reserve to Grand Rapids-based Spectrum Health and walked away with at least a $10 million golden parachute on top of the $50 million or so he was paid for about seven years’ work.
Ford also has substantial operations in Mexico, where the company proudly builds its electric Mustang, its red-hot Maverick pickups, and its Bronco Sport SUV. Ford also has an expansive engineering center in Mexico.
But at least Ford has demonstrated a commitment and respect for Detroit, having spearheaded and funded much of the cost for the impressive redevelopment of Michigan Central Station. Ford also has also relocated some of its employees to the complex.
By comparison, Barra has moved more than 4,000 employees from Detroit's RenCen to Warren in recent years and cut some likely sweetheart deal with billionaire developer Dan Gilbert to house GM’s remaining Detroit employees in his heavily tax subsidized Hudson’s tower. Despite GM and Gilbert mooching billions off taxpayers, they want an additional $250 million to fund the cost of redeveloping the RenCen.
Any politician who votes to support giving GM and Gilbert the $250 million should be run out of office.
Contact Eric Starkman. Confidentiality assured. Eric@starkmanapproved.com.
