"The Detroit Three"

In Saturday's Wall Street Journal, Terry Kosdrosky coined a new term that sums it up: "The Detroit Three". In the article "Glum Backdrop for UAW", The Wall Street Journal, March 24, 2007, Terry for the first time (that I've seen) redefines Chrysler, GM and Ford in a special automotive industry group. No longer are they the Big Three. Now these declining symbols of what's wrong with Michigan business are now known as "The Detroit Three".

Once again we stare at the problem: the UAW, but don't acknowledge the solution: right-to-work labor laws. For Michigan and its citizens, our problems continue to mount and we wallow in our own self-indignation. The members of the UAW somehow think they are responsible for the American middle class. That's just wrong. The American middle class is alive and well in high-growth states with low union involvement and right-to-work laws. Who's going to provide jobs in the future in Michigan? Not the UAW.

"The Detoit Three" is a terrible label and all three auto makers should make shedding this label their first priority. It's time for a dramatic break. It's time for a radical change. It's time for right-to-work laws to be legislated in Michigan.

Unions, Unions, Unions

In my last post, I criticized the Governor for not understanding how morbid Michigan's business economy has become. Oh sure, she's talking about our malaise, but she fails to understand that Michigan has NOT caught a cold that will eventually heal itself. Michigan has a cancer that can only be cured by radical surgery.

The most significant point I wanted to make was Governor Granholm's misplaced focus. I continue to argue that economic growth and prosperity must come first. An educated work force and all the other good things the Governor envisions for Michigan will follow growth. The Governor has nothing on her agenda for combating Michigan's anti-business environment. Central to Michigan's anti-business attitude is its labor laws and the UAW. For Michigan to return to prosperity, Michigan must do something radical. For Jennifer Granholm, this means she must take on a core constituent: labor.

Impeding Michigan's return to economic growth is its labor laws. During the late 1970's and early 1980's, many have said the Big Three lost their one true opportunity to combat the UAW and Michigan's labor laws. Many believe to this day, the Big Three should have bit the bullet and forced a cataclysmic crisis with labor in the early 1980's. Only then could the US auto industry hope to create the necessary economic profits to sustain itself and compete with more efficient foreign manufacturers. Well, the opportunity has returned again, and this is GM's and Ford's last chance. Unfortunately for Chrysler, it's too late.

It's time to take on labor. It's time to become a right to work state. It's time for GM and Ford to realize that the UAW must be severally weakened for all time. It's time and it's the last chance.

It's time to do more than fight over balancing the state budget. It's time for Republicans to force significant change, or force a crisis. It's time to connect Michigan's labor laws to the budget process. It time to stand up and fix our anti-business environment, or shut the government down.

Make Michigan competitive, it's time to force significant change to Michigan's labor laws.

Michigan Governor Granholm's 2007 State of the State - One Michigan into Economic Oblivion

Governor Granholm gave her fifth State of the State of Michigan address. There were many ideas that I thought were good ideas; however, I am disappointed. The Governor's priorities will be to continue to treat the economic symptoms instead of tackling the disease. Michigan is not going to attract new business to our state in any meaningful way!

Economic development in Michigan is going to be dismal. Jennifer Granholm made one interesting observation: business taxes are not completely responsible for Michigan's poor job growth. I agree. However, she failed to tell Michiganders why Michigan keeps loosing jobs to other states. Well, there are many reasons. All having to do with Michigan's anti-business climate including: unions, unions and unions.

Face it, Michigan, unions fail us. They don't protect jobs. They don't bring new jobs. They just continue to perpetuate our economic slide that began in 1975. Aren't you tired of this yet? Or, are you just going to move out of the state like so many others.

The Governor also addressed education. Again, I agreed with her. An educated workforce is critical to a successful economy. Problem is, the Governor had her cause and effect backward. Growth attracts the educated, not the other way around. That's why less than 30% of Michigan's college graduates remain in Michigan. As long as Arkansas continues to out grow Michigan, then it will not be long before Arkansas exceeds Michigan in its educated workforce.

Jennifer Granholm gave a strong energetic speech with many interesting ideas, but because she lacked the correct focus and strategy, it just came across as cheesy. "We are one Michigan", heading to the poor house.

Michigan Needs a Crisis!

Toyota is creating manufacturing jobs all over America, except for Michigan. Why?

I could endlessly list the reasons why, but that's a waste of time. Let's just start with the most important reason; Michigan has given up! We've decided that business growth is not necessary to our future. We've also decided that the auto industry is too tough an industry for Michigan, and that the conditions to attract Toyota is too drastic for Michigan's morality and lifestyle. In other words, Michigan is too union sympathetic and too entitlement centric.

Now, I know the MEDC and the Governor would vigorously argue this point, but really, what are they doing new today to change Toyota's mind? I keep reading articles about Toyota's need to build five new plants around America to keep up with growth. What's more unbelievable is Toyota's wages are comparable to other auto industry wages. The fact is, Michigan has given up. The Governor, the Legislature, the MEDC, the Democrats and the Republicans have all conceded Toyota to other U.S. regions. The reason doesn't matter. But if Michigan isn't going to truly compete in Michigan (which is Michigan's only industrial cluster besides government), then the state is truly dead for business.

About two years ago, I represented a Michigan manufacturer before the MEDC. Without going into the specifics, the MEDC was "unable" to help. The "rules" for helping the company prevented the MEDC from really tackling the issues that plagued that employer. Well, that employer continues to make investments and add jobs, but not in Michigan.

The unfortunate reality is, Michigan is so poorly viewed by almost every business executive in the nation, that Michigan can only now turn opinion with radical changes. Can we do it? Yes! Is it possible to forge the will? Only if the "smart" people in Michigan give up on the old notions and embrace the new notions that allow other states to grow. However, I'm not optimistic, and I think we need a real crisis to change minds. Let's start a real crisis with Jennifer Granholm's speech tomorrow.

Jennifer Granholm's State of the State address Tuesday night should be watched by every Michigan citizen. I am more interested in the radical ideas that will make people very unhappy, then I am in the populist issues that everyone seems to agree on. That may seem strange, but I support creating a crisis environment in the state.

As I talk to my neighbors, I am disheartened by their lack of interest in the State's economy. Fewer and fewer Michiganders make a private sector living. More and more work for a government, a university, or the medical industry. The private sector economic woes continue to be a distant conversation, and not a direct threat to their livelihood.

But, that's how Michigan has always behaved. I vividly remember how seriously ill the state's economy became in the late 1970's before any substantive changes were made to revive it. Problem was, those changes were no where near decisive enough to tackle this slow drag to oblivion that Michigan is on today.

Until a crisis is created artificially or naturally, Michigan will continue its economic slide and the remedy will become increasingly bitter to swallow.

Michigan: Stop Digging that Hole

What should Michigan be working on right now:

Michigan has a 21st Century Jobs Fund. Spend $500,000,000 on fuel cell research over the next seven years. Give domestic and private companies access to this technology who participate in the effort. Get each company to invest in the consortium and provide research scientists.

Compliment the research that's occurring elsewhere like the California Fuel Cell Partnership. Start to create an automotive fuel cell research industry cluster right here in Michigan. Why is this research occurring in California anyway?

Ask Michigan's congressional delegation to get the DOE and DOD involved. Get some legislation like this for Michigan: Semicondutor Research - Cooperative Research Program . Get the DOE or DOD to match the Michigan funding in the consortium. After all, isn't oil dependency a national security concern?

Learn from others (like Austin, TX.). Austin succeeded in attracting high paying research jobs when their economy was weak in the mid 1980's (See: Sematech). Michigan needs to look at what's worked elsewhere.

Use these legislative acts to overcome antitrust concerns and get companies working together:

National Cooperative Research and Production Act of 1993

Defense Production Act of 1950, 50 U.S.C. app. § 2158
. . . This Act provides that the President or his delegate, in conjunction with the Attorney General, may approve voluntary agreements among various industry groups for the development of preparedness programs to meet potential national emergencies. Persons participating in such an agreement are immunized from the operation of the antitrust laws with respect to good faith activities undertaken to fulfill their responsibilities under the agreement. . . .

Pfizer sends Michigan and other states a message . . .

Take away our cash flow and you'll lose jobs.

See Debbie Stabinow's recent legislation: Pharmaceutical Market Access and Drug Safety Act

Read about the loss of over 2,100 jobs in the Ann Arbor News

Ann Arbor News Coverage Online

I'm not seeing very much frank discussion. It's difficult to forsee how Michigan is going to attract new private sector investment. Until we engage in more critical assessment.

Are new taxes steam-rolling at us in Michigan?

Friday, February 02, 2007
Report may pave way for tax hike
Mark Hornbeck / Detroit News Lansing Bureau

LANSING -- A blue-ribbon panel will lay the groundwork for a tax hike, without specifying which tax to raise, when it releases its report on the state budget to Gov. Jennifer Granholm today.

Tom Clay, a consultant to the group and director of state affairs for the nonpartisan Citizens Research Council of Michigan, said Thursday the report stops short of calling for a tax on services to shore up the budget. But Clay said the report notes that "services is the one area of the economy where the state tax system is completely disconnected from the economy."

Michigan taxes goods -- other than food and prescription drugs. But it doesn't tax services such as lawn care, movie tickets and haircuts.

Clay provided budget and revenue data to Granholm's group and read all of its report drafts. His assessment of its findings was confirmed by another person familiar with the 19-page report, who asked not to be named.

Report discourages tax cut

The 12-member committee was headed by ex-Govs. James Blanchard and William Milliken and included ex-lawmakers and former budget and treasury officials. The current shortfall is expected to exceed $800 million.

Granholm is under pressure to develop a strategy quickly: Her State of the State address is Tuesday, and her 2007-08 budget plan is due on lawmakers' desks Thursday.

A business tax cut, proposed by business groups and some Republican lawmakers, is not the way to go, the report says. The $1.9 billion Single Business Tax will be eliminated at the end of this year. Granholm has said the replacement tax must generate the same amount of revenue. But Senate Republicans last week proposed a $290 million business tax cut.

"The group is in agreement that cutting taxes at this stage is not a good idea," Clay said. "The evidence doesn't support it."

The advisory panel, appointed last month, was widely seen as a way to provide cover for Granholm to raise taxes. This report, which is certain to draw criticism from some Republican leaders and anti-tax groups, is not likely to dispel that notion.

Statistics cited in the report show businesses pay a smaller share of state and local taxes than they did 10 to 15 years ago and that Michigan's business tax burden is nationally competitive, Clay said.

He said the report doesn't specifically call for the Single Business Tax replacement to be "revenue-neutral, but it gives the sense that full replacement (of the $1.9 billion in annual revenue) is the right thing to do."

"Did you expect anything less from that group? That has been their solution all along," Rose Bogaert, chair of the anti-tax Wayne County Taxpayers Association, said of the panel's apparent support for tax hikes and the replacement of the SBT. "There is no excuse, given the state of the economy, for these people to do such an unconscionable thing."

Bogaert called a possible tax on services "regressive" and said it would further push young professionals out of the state.

"The solution for bringing people into Michigan is not to tax them more," she said.

Trimmer government urged

The panel's document also calls for streamlining government but does not propose detailed budget cuts, except in the area of corrections.

"It says we should reduce our prison population and treat nonviolent criminals more like neighboring states," Clay said. Michigan's prison incarceration rate per capita is 40 percent higher than other Great Lakes states, according to a report by the Center for Michigan, an Ann Arbor-based think tank.

"It lays the groundwork for a careful examination of state priorities, potential cuts in some areas, doing better in some areas," according to Clay.

The report, co-authored by Craig Ruff and Bill Rustem of Lansing-based Public Sector Consultants Inc., provides a history of how Michigan got into this budget predicament and concludes there are no more short-term fixes.

Discussions in the state capital in recent weeks also have focused on replacing the flat-rate income tax with a graduated tax; raising the flat income tax rate; increasing the gas tax; substantial across-the-board spending cuts; and selling state assets, such as the lottery or state parks.

"These bipartisan, cooperative participants are very concerned about the state," Clay said of the advisory panel. "Without question, they believe we have a real mess on our hands."

Joe Menard contributed to this report. You can reach Mark Hornbeck at (313) 222-2470 or mailto://mhornbeck@detnews.com.

Do you think Pfizer considered this when they decided to close their Michigan operations?

FOR IMMEDIATE RELEASEJanuary 10, 2007
Contact: Press Office Phone: 202-224-4822
Stabenow Continues Fight to Make Prescription Drugs More Affordable

Legislation would allow pharmacies to import drugs from Canada, save money for Michigan families
WASHINGTON - U.S. Senator Debbie Stabenow (D-MI) today announced the reintroduction of legislation to allow reimportation of safe, lower-priced prescription drugs from Canada into the United States. The Pharmaceutical Market Access and Drug Safety Act would allow U.S. licensed pharmacies and drug wholesalers to import Food and Drug Administration (FDA) approved medications from Canada, Australia, New Zealand, Japan, and European Union nations, passing along much needed cost savings to American consumers. Stabenow was a lead co-sponsor of this bill in the 109th Congress, and continues that role with this reintroduction in the 110th.
"Pharmacists in Michigan and across the country would like to be able to do business with their counterparts in Canada and other industrialized nations to offer customers their medications at affordable prices," said Stabenow. "This legislation would provide a safe and secure framework to help seniors, families, and businesses lower their often crippling health care costs."
According to the Congressional Budget Office, this legislation would save the federal government $6.1 billion over 10 years - money that could be used to protect health care for veterans and retirees.Last year, Stabenow was successful in passing a provision permitting individuals to import FDA-approved prescription drugs from Canada. The measure was signed into law last October.
"Prescription drugs aren't like other products - they are a necessity families cannot do without when finances are tight," said Stabenow. "Our families, our pharmacists, and our businesses deserve better, and this bill is step in the right direction."

Detroit News Editorial the morning before Pfizer's announcement. Pfizer's Ann Arbor closure was predicted.

Detroit News, Monday, January 22, 2007,

"Attack on drug companies will send jobs out of state"

"U.S. Sen. Debbie Stabenow has long had the pharmaceutical industry in her sights and, with the shift in power in Congress, now has the support she needs to attack. That doesn't bode well for the more than 12,000 people who work for the pharmaceutical industry in Michigan. As a member of the Finance Committee, Stabenow can wield influence over Medicare and Medicaid policies and help shape regulations that affect everything from the research and development of new drugs to how companies advertise and sell their products. We're not encouraged by the preliminary reports from Washington. Democrats in Congress, being pressed by Stabenow and other outspoken critics of the pharmaceutical industry, are pushing legislation authorizing Medicare to negotiate prices with drug manufacturers. They also want wholesale investigations into the business practices of the drug companies.

Stabenow has supported tax incentives for Pfizer Inc.'s Michigan operations, which went toward research and development, but she remains at odds with the industry on a number of other issues. Fundamental change in how prescription drugs are distributed to the public is premature. Though the Medicare Part D drug plan has had its issues, reports show that seniors who have enrolled are saving money. And price controls, which is what will happen if government officials start negotiating prices for prescription drugs, have failed every time they've been implemented by populist politicians. They create shortages and take away the incentive for profit that companies use to invest in research and development. Much like her misguided and naïve attack on the oil industry, Stabenow fails to grasp the magnitude of the research and development and the risk pharmaceutical companies take to produce and market drugs to keep people healthier and alive longer. She also ignores the economic impact Pfizer Inc. has on the state.

The company employs more than 7,000 and has research laboratories and programs in Ann Arbor that specialize in drugs that treat cancer, heart and vascular disease, arthritis, skin disease and psychological disorders. Its jobs pay an average of $60,000 each, and the company works closely with the University of Michigan. Those are exactly the kind of jobs Michigan needs to turn itself away from the Rust Belt economy that has led it into this continued single-state recession. Stabenow should be leading the charge to bring more high-paying, high-education jobs from the pharmaceutical industry into Michigan, not working to kick them out. Of course, attacking the drug companies is easy and in vogue.

Much like the auto industry, the pharmaceutical industry is viewed as having deep pockets. That's why trial lawyers also attack it relentlessly. Instead of going after the alleged problem -- rules approved by the Food and Drug Administration that critics say are not stringent enough -- trial lawyers and politicians attack the companies. A better way to reduce drug costs is to stop the lawsuit abuse. Locally, state Democrats are vowing to repeal Michigan's law that grants immunity to drug companies if their products meet FDA standards.

The message these attacks send is clear: Michigan remains an unfriendly place in which to do business. What's worse, that charge is led by the very people who should be working to change the state's anti-business image. "

Title 15 -- Semiconductor Research

From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 20, 2004]
[Document not affected by Public Laws enacted between
January 20, 2004 and December 23, 2004]
[CITE: 15USC4603]

TITLE 15--COMMERCE AND TRADE

CHAPTER 72--SEMICONDUCTOR RESEARCH

SUBCHAPTER I--COOPERATIVE RESEARCH PROGRAM

Sec. 4603. Semiconductor Technology Council
(a) Establishment
There is established the Semiconductor Technology Council.
(b) Purposes and functions
(1) The purposes of the Council are the following:
(A) To link assessment by the semiconductor industry of future
market and national security needs to opportunities for technology
development through cooperative public and private investment.
(B) To seek ways to respond to the technology challenges for
semiconductors by fostering precompetitive cooperation among
industry, the Federal Government, and institutions of higher
education.
(C) To make available judgments, assessments, insights, and
recommendations that relate to the opportunities for new research
and development efforts and the potential to better rationalize and
align industry and government contributions to semiconductor
research and development.
(2) The Council shall carry out the following functions:
(A) Advise Sematech and the Secretary of Defense on appropriate
technology goals and appropriate level of effort for the research
and development activities of Sematech.
(B) Review the emerging markets, technology developments, and
core technology challenges for semiconductor research and
development and semiconductor manufacturing and explore
opportunities for improved coordination among industry, the Federal
Government, and institutions of higher education regarding such
developments and challenges.
(C) Assess the effect on the appropriate role of Sematech of
public and private sector international agreements in semiconductor
research and development.
(D) Exchange views regarding the competitiveness of United
States semiconductor technology and new or emerging semiconductor
technologies that could affect national economic and security
interests.
(E) Exchange and update information and identify overlaps and
gaps regarding the efforts of industry, the Federal Government, and
institutions of higher education in semiconductor research and
development.
(F) Assess technology progress relative to industry requirements
and Federal Government requirements, responding as appropriate to
the challenges in the national semiconductor technology roadmap
developed by representatives of industry, the Federal Government,
and institutions of higher education.
(G) Make recommendations regarding the semiconductor technology
development efforts that should be supported by Federal agencies and
industry.
(H) Appoint subgroups as appropriate in connection with the
updating of the semiconductor technology roadmap.
(I) Publish and submit to Congress by March 31 of each year an
annual report addressing the semiconductor technology challenges and
developments for industry, government, and institutions of higher
education and the relationship among the challenges and developments
for each, including an evaluation of the role of Sematech.
(c) Membership
The Council shall be composed of 16 members as follows:
(1) The Under Secretary of Defense for Acquisition, Technology,
and Logistics who shall be Cochairman of the Council.
(2) The Under Secretary of Energy responsible for science and
technology matters.
(3) The Under Secretary of Commerce for Technology.
(4) The Director of the Office of Science and Technology Policy.
(5) The Assistant to the President for Economic Policy.
(6) The Director of the National Science Foundation.
(7) Ten members appointed by the President as follows:
(A) Four individuals who are eminent in the semiconductor
device industry, one of whom shall be Cochairman of the Council.
(B) Two individuals who are eminent in the semiconductor
equipment and materials industry.
(C) Three individuals who are eminent in the semiconductor
user industry, including representatives from the
telecommunications and computer industries.
(D) One individual who is eminent in an academic
institution.
(d) Terms of membership
Each member of the Council appointed under subsection (c)(7) of this
section shall be appointed for a term of three years, except that of the
members first appointed, two shall be appointed for a term of one year,
five shall be appointed for a term of two years, and three shall be
appointed for a term of three years, as designated by the President at
the time of appointment. A member of the Council may serve after the
expiration of the member's term until a successor has taken office.
(e) Vacancies
A vacancy in the Council shall not affect its powers but, in the
case of a member appointed under subsection (c)(7) of this section,
shall be filled in the same manner as the original appointment was made.
Any member appointed to fill a vacancy for an unexpired term shall be
appointed for the remainder of such term.
(f) Quorum
Eleven members of the Council shall constitute a quorum.
(g) Meetings
The Council shall meet at the call of a Cochairman.
(h) Compensation
(1) Each member of the Council shall serve without compensation.
(2) While away from their homes or regular places of business in the
performance of duties for the Council, members of the Council shall be
allowed travel expenses, including per diem in lieu of subsistence, at
rates authorized for employees of agencies under sections 5702 and 5703
of title 5.
(i) Federal Advisory Committee Act
Section 14 of the Federal Advisory Committee Act shall not apply to
the Council.
(j) Support for Council
The Council shall use Federal funds made available to Sematech as
needed for general and administrative support in accomplishing the
Council's purposes.
(Pub. L. 100-180, div. A, title II, Sec. 273, Dec. 4, 1987, 101 Stat.
1070; Pub. L. 102-245, title I, Sec. 103(e), Feb. 14, 1992, 106 Stat. 9;
Pub. L. 103-160, div. A, title II, Sec. 263(b), (c)(3)-(e), Nov. 30,
1993, 107 Stat. 1608, 1610; Pub. L. 103-337, div. A, title II, Sec. 251,
Oct. 5, 1994, 108 Stat. 2702; Pub. L. 106-65, div. A, title IX,
Sec. 911(a)(1), Oct. 5, 1999, 113 Stat. 717.)
References in Text
Section 14 of the Federal Advisory Committee Act, referred to in
subsec. (i), is section 14 of Pub. L. 92-463, which is set out in the
Appendix to Title 5, Government Organization and Employees.
Amendments
1999--Subsec. (c)(1). Pub. L. 106-65 substituted ``Under Secretary
of Defense for Acquisition, Technology, and Logistics'' for ``Under
Secretary of Defense for Acquisition and Technology''.
1994--Subsec. (b)(2)(I). Pub. L. 103-337 inserted ``and submit to
Congress by March 31 of each year'' after ``Publish''.
1993--Pub. L. 103-160, Sec. 263(b), substituted ``Semiconductor
Technology Council'' for ``Advisory Council'' in section catchline.
Subsec. (a). Pub. L. 103-160, Sec. 263(b), added subsec. (a) and
struck out former subsec. (a) which read as follows: ``There is
established the Advisory Council on Federal Participation in Sematech.''
Subsec. (b). Pub. L. 103-160, Sec. 263(b), added subsec. (b) and
struck out former subsec. (b) which related to the functions of the
Advisory Council of Federal Participation in Sematech.
Subsec. (c). Pub. L. 103-160, Sec. 263(b), added subsec. (c) and
struck out former subsec. (c) which related to the membership of the
Advisory Council on Federal Participation in Sematech.
Subsec. (d). Pub. L. 103-160, Sec. 263(c)(3)(A), substituted
``subsection (c)(7)'' for ``subsection (c)(6)'' and ``five shall be
appointed for a term of two years'' for ``two shall be appointed for a
term of two years''.
Subsec. (e). Pub. L. 103-160, Sec. 263(c)(3)(B), substituted
``subsection (c)(7)'' for ``subsection (c)(6)''.
Subsec. (f). Pub. L. 103-160, Sec. 263(c)(3)(C), substituted
``Eleven members'' for ``Seven members''.
Subsec. (g). Pub. L. 103-160, Sec. 263(d), substituted ``a
Cochairman'' for ``the Chairman or a majority of its members''.
Subsec. (j). Pub. L. 103-160, Sec. 263(e), added subsec. (j).
1992--Subsec. (c)(4). Pub. L. 102-245 substituted ``Technology'' for
``Economic Affairs''.
Termination of Advisory Council on Federal Participation in Sematech
Section 263(a) of Pub. L. 103-160 provided that: ``The advisory
council known as the Advisory Council on Federal Participation in
Sematech, established by section 273 of the National Defense
Authorization Act for Fiscal Years 1988 and 1989 (15 U.S.C. 4603), is
hereby terminated.''
First Meeting of Semiconductor Technology Council
Section 263(f) of Pub. L. 103-160 provided that: ``The first meeting
of the Semiconductor Technology Council shall be held not later than 45
days after the date of the enactment of this Act [Nov. 30, 1993].''
References to Terminated Council
Section 263(g) of Pub. L. 103-160 provided that: ``A reference in
any provision of law to the Advisory Council on Federal Participation in
Sematech shall be deemed to refer to the Semiconductor Technology
Council established by section 273 of the National Defense Authorization
Act for Fiscal Years 1988 and 1989 [15 U.S.C. 4603], as amended by
subsection (b).''