Bloomberg News

Recovery Begins in Michigan Town Burned by Manufacturing Losses

April 18, 2012

Employees Jason Adams, left and Matt Davisson work on a part at Diversified Tooling Group's American Tooling Center Inc. facility in Grass Lake, Michigan. Photographer: Jeff Kowalsky/Bloomberg

Employees Jason Adams, left and Matt Davisson work on a part at Diversified Tooling Group's American Tooling Center Inc. facility in Grass Lake, Michigan. Photographer: Jeff Kowalsky/Bloomberg

After losing his truck-driving job in 2009, Anthony Gonzalez wondered whether he’d ever find work near Jackson, Michigan, where he’s lived all his 38 years.

In January, after a welding class, he landed a $12-an-hour position at Midbrook Inc. making industrial cleaning machines. He’s been working 10-hour days, six days a week.

“I was relieved, happy,” Gonzalez said in a telephone interview. “Finally, someone wanted to bring you in the door.”

The newly minted welder is benefiting from a Michigan economy at its strongest since 2006. It’s fueled by automobile sales and outpacing California, Texas, Florida and Arizona, according to a March report by Dallas-based Comerica Bank. Jackson, a city of 33,500 that’s hub of a region with 300 manufacturers and neighbor to the 125,000-seat Michigan International Speedway, embodies the state’s experience.

Jackson, which is 70 miles (112 kilometers) west of Detroit, led the U.S. with a 2.2 percent point decrease in unemployment for the year ending in February, according to the U.S. Bureau of Labor Statistics. The region has produced about 1,000 manufacturing jobs since February 2010, according to the agency.

Still, the city’s finances have been hit hard by falling property values and a decade of unemployment that exceeded the U.S. average.

Welders Wanted

The 2009 federal bailout of Michigan-based General Motors Co. (GM:US) and Chrysler Group LLC generated jobs throughout the state; in 2011, U.S. auto sales were the best in three years.

By February, Michigan’s unemployment rate dropped to 8.8 percent, the first time it’s fallen below 9 percent since September 2008. The U.S. unemployment rate that month was 8.3 percent.

From 2000 to 2009, Michigan lost 860,000 positions. It gained 121,600 since 2010, including jobs in manufacturing, business and professional services and health, according to an April 6 report by the Research Seminar in Quantitative Economics at the University of Michigan in Ann Arbor.

The Jackson region’s manufacturers range from auto suppliers to makers of aerospace and medical equipment. The median household income of $46,117 is below the statewide average of $48,432.

The region had 8,200 manufacturing jobs in February, up from 7,200 a year before, according to the state Technology, Management and Budget Department. In 1995, it had 13,000.

“I know companies that need 25 welders now,” said Bill Rayl, executive director of the Jackson Area Manufacturers Association. Also in demand are programmers for computerized tooling machines, he said.

Valueless Property

The jobs for workers such as Gonzalez helped Jackson see its income-tax revenue increase to $7 million in fiscal 2011 from $6.5 million in the previous year, Shaffer said. It was the first increase since fiscal 2008.

Still, property values have fallen 30.2 percent and the city lost 7.7 percent of its population since 2000, leaving at least 1,000 vacant houses, Mayor Marty Griffin said.

Toy-store owner Phil Wrzesinski said his house is worth less now than when he bought it nine years ago, despite renovations.

“One house on my street was bought for $197,000 a few years ago,” he said. “It was foreclosed and sold for $87,000.”

There are bright spots: Griffin, 49, said he was elated when the the assessment on his 1,100-square-foot home was raised $800 this year, after five years of declines. It’s now worth what he paid for it 23 years ago, Griffin said.

Budget cuts have trimmed the municipal work force to 214 from 330 in the past three years, City Manager Larry Shaffer said. Since 2007, Jackson’s police force was reduced to 47 officers from 67, said Chief Matthew Heins.

One-Trick Pony

Michigan cities are hobbled by dependency on manufacturing, said Lou Glazer, president of Michigan Future, an Ann Arbor- based think tank that promotes a more educated work force.

“Michigan is too concentrated on a declining factory-based economy, and that is a path to lower incomes and slower employment growth,” he said. “We’re going to a very bifurcated economy in Michigan, with a shortage of people with high knowledge skills and an oversupply of people with low skills.”

Glazer defines knowledge-based companies as having 30 percent or more of their employees with four-year college degrees. In Jackson County, 17.5 percent of adults ages 25 and up had at least a four-year degree, compared with a national average of 30 percent, according to the 2010 U.S. Census.

They’ll Take ’Em

The Jackson economy lost many low-skill manufacturing positions over the years, yet gained more skilled ones in engineering, prototype design and computerized machine operators, Rayl said.

“If anyone doesn’t want those manufacturing jobs, we’ll take them,” Rayl said.

Tool-and-die companies have as much work as they can handle, said John J. Basso, 58, president of Diversified Tooling Group.

Basso said he’s “buried in work” after the longest recession since the Depression. “If you have anything to do with the auto industry today, you are very, very busy,” he said in an interview at American Tooling Center.

Basso said his four companies had 132 employees in 2009, when he said orders from automakers virtually stopped. He said he’s hired about 60 people in the past six months, and now Diversified Tooling employs 320.

“These are good-paying jobs, and a lot of overtime,” ranging from $20 to $25 an hour, he said.

Basso said he abides by words of his late father, John Basso, an Italian immigrant who started the company in 1972.

“He said you take a raw material, you process it, build a product and you’re building value for the country,” Basso said. “You can’t build value in the service industry, you do it in manufacturing plants like this.”

To contact the reporter on this story: Chris Christoff in Lansing, MI cchristoff@bloomberg.net.

To contact the editor responsible for this story: Steve Merelman at


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