By KATHY BARKS HOFFMAN, Associated Press Writer

LANSING, May 25, 2008 (AP): Michigan still is seeing auto industry jobs disappear faster than gasoline in an oversized sport utility vehicle, and the slide is expected to continue into 2009.

But Comerica Bank economist Dana Johnson sees stronger days ahead for the domestic automakers starting in 2010, even with overall motor vehicle sales declining this year as the national economy sags and gas prices soar.

``I don't think we're through with the restructuring of the domestic auto industry, but I think a year from now we will be,'' Johnson recently told state government economists. ``I look forward to the very strong possibility that Michigan's economy will start moving forward again.''

Despite that forecast, signs of trouble keep popping up. On Thursday, Ford Motor Co. said it no longer expects to return to profitability by 2009 and will cut production of trucks and sport utility vehicles through the rest of this year because high gasoline prices are hurting sales.

Johnson says the downsizing means the state is becoming less dependent on the auto industry, a move Gov. Jennifer Granholm and economic development experts support as they try to attract more businesses tied to alternative energy, homeland security and biotechnology.

Auto assembly and parts manufacturing accounted for nearly 7 percent of total Michigan payroll jobs in 2000, but is closer to 4 percent now. About a third of the state's employment was concentrated in the motor vehicle sector eight years ago, but that dropped to 26.5 percent last year, according to the Bureau of Labor Statistics.

And while motor vehicle and parts manufacturing in 2000 accounted for $35.8 billion of the state's gross domestic product in current dollars—about 10.6 percent—it had dropped to around 6.8 percent or $25.4 billion in 2005, the most recent year available from the Bureau of Economic Analysis.

But Michigan still remains more dependent on the auto industry than any other state. About 4.5 percent of Michigan's employment was related to motor vehicle production last year, nearly 2 percentage points ahead of second-place Indiana, which had 2.7 percent of its work force in that sector.

``We've lost a ton of jobs. ... But the auto industry is still a big part of our economy,'' said senior economist Jay Wortley of the nonpartisan Senate Fiscal Agency.

At this point, Michigan may simply have to wait for auto employment to bottom out before the downward pull of lost auto jobs can be overcome by growth in other sectors. The last time Michigan added more auto and auto parts manufacturing jobs than it lost was in 2000, when it saw a gain of 4,000. It has lost 159,000 automotive jobs in the seven and a half years since then, Johnson said.

Those losses are the major reason Michigan has yet to climb out of the economic doldrums. Of the 72,000 payroll jobs lost since last April, more than half were related to the motor vehicle industry, according to the state Department of Labor & Economic Growth. If the employment drop continues through 2009, as expected, it will mean nine consecutive years of decline, the longest downward stretch on record.

University of Michigan economists Joan Crary and George Fulton say the lost jobs mean the state unemployment rate, which was 6.9 percent in April, will average 7.4 percent this year and 7.9 percent in 2009, likely keeping it the nation's highest. The Senate Fiscal Agency is even more pessimistic, predicting unemployment will hit 8.4 percent next year.

But Crary and Fulton also expect Michigan will begin seeing a net increase in jobs in 2010.

``It's not as bad as it was,'' Crary said. ``The decline is shrinking.''

One bright spot is that the state has added about 1.8 million jobs since 2000 that require an above-average education, while losing about 2.4 million that require a below-average education, according to the University of Michigan.

But it also has lost about half its lucrative auto sector jobs that paid an average $72,505 in 2006. Some of the loss has been made up with education and health services jobs, but those paid an average of only $38,543.

Crary said the state faces a tough challenge as it tries to find ways to make up for the lost factory positions that provided a middle-class life for hundreds of thousands of Michigan residents.

``Those jobs are gone, gone'' Crary said. ``It's hard to imagine what you're going to bring in to replace that.''

On the Net: Senate Fiscal Agency: http://www.senate.michigan.gov/sfa

 

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