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tamias6

GR's ties to the Motor City

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As any one that has lived in Michigan for awhile may know, Detroit is a supercharged Chevy Big Block when it comes to political and economic influence upon the rest of Michigan. When the motor city fires on all 8 cylinders, Michigan is blessed with good fortunes. But when Detroit has mechanical problems so does the rest of the state. The cycle of waxing and waning of Detroit can esp. be felt in cities like Flint, Saginaw, and Ann Arbor. But what about Grand Rapids? From my personal observations, GR is a completely different animal economically and culturally. However some here say that GR is just as tied to Detroit as many of the South Eastern Michigan cities. So what do all of you think about the relationship between Grand Rapids and Detroit. Does GR stand on its own two feet or is this city tied to Detroit just as much as cities and towns closer to the Motor City?

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I think to answer the question, you have to ask "If GM, Ford, and Chrysler all shut their doors, where would we be?" We have a ton of auto part suppliers, and even a plant right here in GR. It would hurt...a lot. However, this city also relies heavily on our own local brands: Meijer, Amway, Steelcase, Herman Miller, etc. The bottom line: I think we do rely quite a bit on the SE side (though I wouldn't like to think so). Though, as we have seen, we have the ability to recover rather quickly when the Motor City falters. As we move along as a city, we are becoming increasingly independent from the rest of the state. Ask me again in 10 years, and I may have a different opinion that we'll be fine--despite what's happening over there.

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I agree with Rhino. There are definitely some ties, but I see GR moving in a different direction and diversifying much faster. The "ripple effect" of good or bad things happening in Detroit will be felt less by GR as time goes on.

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Anyone else hear the BBC report on Detroit this morning?

"Michigan's problems stem in large part from the troubles of the big car manufacturers.

But there is much more. A perfect economic storm is hitting this state - falling property prices, a credit crunch, a shrinking tax base and rising oil prices..."

linky

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Anyone else hear the BBC report on Detroit this morning?

"Michigan's problems stem in large part from the troubles of the big car manufacturers.

But there is much more. A perfect economic storm is hitting this state - falling property prices, a credit crunch, a shrinking tax base and rising oil prices..."

linky

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Around here...yes, all the time. But this is the first time I've heard anything about it on the BBC's morning program. The article/broadcast quotes a number of individuals who've been directly or indirectly affected by the slumping auto industry and gets down to the problem rather than blaming a politician for the mess.

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Here's another way to look at automotive manufacturing. A typical General Motors plant employs about 2000 people working 2 - 3 shifts/day. Let's say that plant puts out 300,000 cars a year, or about 1200 - 1500 cars/day, and those cars sell for $20,000. That means that that one automotive plant generates close to $30 MILLION A DAY, or about $750 MILLION per year gross product. It has a payroll of probably $100 - $150 Million/year (flowing back into the community in the form of taxes, disposable income, housing, tourism, etc.), and probably purchases $200 - $300 Million in parts and supplies annually, all flowing back into the "mostly" local economy (a lot of parts are made overseas and in Canada and Mexico, but not most). Michigan is chocked-full of parts supplier facilities.

It really makes me wonder why the LocalFirst crew hasn't started advocating for people to buy American cars. Talk about buying local on steroids. And keeping your neighbor and yourself employed.

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Basically Michigan as a state needs to ask itself this. "Is it worth putting up with the cyclical nature inherent with the big 3 for the easy money that flows in when they do well? Or do I look into the long term and go through the pains and troubles to create a diversified economy that is more robust and not so cyclical?"

Here's another way to look at automotive manufacturing. A typical General Motors plant employs about 2000 people working 2 - 3 shifts/day. Let's say that plant puts out 300,000 cars a year, or about 1200 - 1500 cars/day, and those cars sell for $20,000. That means that that one automotive plant generates close to $30 MILLION A DAY, or about $750 MILLION per year gross product. It has a payroll of probably $100 - $150 Million/year (flowing back into the community in the form of taxes, disposable income, housing, tourism, etc.), and probably purchases $200 - $300 Million in parts and supplies annually, all flowing back into the "mostly" local economy (a lot of parts are made overseas and in Canada and Mexico, but not most). Michigan is chocked-full of parts supplier facilities.

It really makes me wonder why the LocalFirst crew hasn't started advocating for people to buy American cars. Talk about buying local on steroids. And keeping your neighbor and yourself employed.

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Basically Michigan as a state needs to ask itself this. "Is it worth putting up with the cyclical nature inherent with the big 3 for the easy money that flows in when they do well? Or do I look into the long term and go through the pains and troubles to create a diversified economy that is more robust and not so cyclical?"

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My thoughts:

1. Grand Rapids is dependent on Detroit/Detroit suburbs. However, every time that the big three go into a tailspin, the net result for us is that we become less dependent on Detroit as we find other industries to take the place of lost business.

2. Grand Rapids is also dependent on Chicago. In fact, I would venture as far as to say that we are more similar to Chicago than Detroit. And I see just as much investment by Chicago firms as I do with Detroit firms.

3. Grand Rapids is most dependent on West Michigan. We are more hurt when the furniture companies are down than anything else. Those companies have very similar patterns to the auto industry.

4. Detroit is dependent on Grand Rapids more than ever. I do not foresee us having the population of or the number of businesses that Detroit has any time soon, but I do think that we will soon be viewed separately from Detroit. Grand Rapids will be to Detroit as Austin is to Dallas (or something like that- not sure if that is the best analogy).

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If only it were that simple. Which is more "buying local," a Toyota assembled in Ohio with parts made in Michigan and Ohio and Canada or a GM assembled in Mexico with Mexican and US parts or a Ford assembled in Canada with Canadian and US parts?

I'm no expert, and I think you can find out some of this origination information without too much effort. But what if I want a small compact car and none of those are made in Michigan, but I can get a Civic assembled in Ohio?

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