Henry Ford didn’t invent the assembly line. He wasn’t even the first to manufacture automobiles using an assembly line. Like many successful entrepreneurs, he adapted and improved upon the initial concept.
Ford produced his company’s Model Ts on a rolling assembly line in 1913 at his Highland Park Ford Plant in Michigan, 10 years after Oldsmobile pioneered the assembly line in auto manufacturing.
Ford’s innovation was using a conveyor belt to move the chassis from station to station. Within a year, Ford reduced assembly time from 12 1/2 hours to 93 minutes. In just over a decade, 10 million Model Ts rolled out the door at the plant.
Although not nearly what it was in its heyday, the automotive industry remains a vital part of the Wolverine State’s economy today. Michigan ranks as the top state in the U.S. for auto manufacturing with 975 manufacturing plants. In 2014, the auto industry supported 532,000 jobs in Michigan. The second closest was Ohio, with 305,000 jobs.
About $10 billion a year is spent on research and development for the auto industry in the state, including funding for the American Center for Mobility — a global center for testing self-driving cars.
As the auto industry’s fortunes improved after the recession, so did Michigan’s fortunes. The state has seen nine years of uninterrupted job growth from 2009 through last year.
Michigan’s economy goes beyond the auto industry, however. The state is home to more than 500 medical-device manufacturers. Health care is an important part of the state’s economy, generating $65 billion in total economic impact per year. About 930,000 jobs in the state are directly or indirectly connected to the health care industry.
More than 600 aerospace companies are based in the state, enjoying Michigan’s long history of manufacturing expertise as well as tapping into highly rated engineering universities. Michigan was ranked eighth in the nation last year for aerospace-manufacturing attractiveness. The state also is a leading force in research for carbon fiber and other lightweight materials.
Michigan faces challenges like any state. Michigan’s per capita personal income was $46,201 in 2017. That ranked 31st in the U.S. and was just 80 percent of the national average of $51,640. That could be exacerbated if the trade war continues with China.
The state’s automakers cut their profit forecasts as a result of the trade tensions. Ford has said that steel and aluminum tariffs enacted by the Trump administration could cost the company $1 billion.
Michigan has an estimated population of nearly 10 million. About 14.2 percent of the population lives in poverty
Home sales and prices
Residential properties sold in Michigan generally have been climbing in the past few years, but there are some signs of softening. The total number of properties sold in 2017 was 133,764, nearly 3,000 sales shy of the 2016 mark, according to Michigan Realtors statistics. The figure declined to 125,534 in 2018, a 6 percent year-over-year drop.
Home prices, however, appear to be on an upward trajectory. The average residential-property sales price reached $185,170 in 2018. That’s far higher than 2012, when the average sales price was $110,998. It’s also higher than pre-recession levels. In 2007, residential properties were being sold in the state for an average price of $142,438, according to Realtor statistics.
Concerns exist over available housing inventory in the state. The Home Builders Association of Michigan estimates that 25,000 homes per year should be built in the state to keep up with population growth and to replace aging housing. The state has seen construction slow in recent years and estimates that only 17,000 homes were built in 2018.
Unemployment
Michigan experienced uninterrupted job growth from 2009 to 2018, according to a report from the University of Michigan. That’s the longest period of sustained job growth in the state since the World War II era. Michigan is expected to add nearly 700,000 jobs from 2009 to 2020.
The Great Recession was particularly hard on the state, however. Michigan saw its unemployment rate reach 14.6 percent in June 2009. The unemployment rate was at double digits for 34 straight months from 2009 until 2011. By comparison, the U.S. as a whole saw unemployment rise above 10 percent for just one month during that span. As a result of the recent job gains, Michigan recorded a 3.9 percent unemployment rate as of this past November. That was just slightly higher than the U.S. unemployment rate of 3.7 percent for that month.
Delinquencies and foreclosures
The delinquency rate for mortgages in Michigan, defined as loans 30 days or more past due, was 3.6 percent as of October 2018, according to CoreLogic’s Loan Performance Insights Report. That’s down from 4 percent for the same month in 2017. The national rate for October 2018 was 4.1 percent. The foreclosure rate in the state stood at 0.2 percent in October 2018, the same as the prior year. Nationwide, 0.5 percent of outstanding mortgages were in foreclosure as of this past October, according to CoreLogic.
The number of foreclosure filings in Michigan as measured by auctions and homes taken back by banks, or real estate owned (REO), totaled 97,407 in 2012, according to Attom Data Solutions. Foreclosure filings have been on a decline over the past four years. In 2018, Michigan recorded 18,461 of these filings.
What the locals say
“There’s an old saying around here, ‘If the U.S. economy sneezes, Michigan gets pneumonia.’ I think that’s less true than it used to be, because any time you’re heavily dependent on durable-goods manufacturing, that’s more cyclical than the rest. People can’t put off buying groceries, but they can put off buying a car. The auto footprint is smaller than it once was. I think we are less cyclical than maybe we were, but I say maybe because the Great Recession was horrendous for Michigan.”
Charley Ballard
Economist, Michigan State University
3 Cities to Watch
Detroit
The city was the first capital of Michigan, but the capital was moved in 1847 to Lansing to be farther away from potentially hostile British troops stationed in Ontario. Today, Detroit remains one of the cultural and economic centers of the Midwest. The city itself was founded in 1701 and features a long and often quirky history. Iraqi strongman Saddam Hussein, for example, was given the key to the city in 1980 after making large donations to a Detroit Christian church. Detroit’s Motor City moniker is well-earned. Henry Ford drove his first car on the streets of the city in 1896. About 1.7 million of the 2 million cars and trucks built in Michigan in 2017 were made in metro Detroit, which has a population of 4.3 million. The city also is home to two heavyweights in the mortgage industry: United Wholesale Mortgage and Quicken Loans — both of which employ thousands in the metropolitan area.
Marquette
The largest city in the Upper Peninsula (also known as the UP) is Marquette, which has a population of about 20,500. The city was founded in 1844 after the discovery of iron ore in the nearby Marquette Range. One historian even said Marquette produced the bulk of the iron ore used by the Union Army during the Civil War. Two mines in the surrounding county still produce 20 percent of North America’s iron ore. The city, which is located along the shores of Lake Superior, also promotes its wintry outdoor getaways with the marketing slogan, “Don’t hibernate. Celebrate.”
Kalamazoo
This city in southwestern Michigan was the home to two slices of Americana history. Gibson Guitar Corp. was founded in Kalamazoo and operated there until 1985, when the company moved to Nashville. The manufacturer of Checker Cabs was based in the city as well, but the last cab rolled off the line in Kalamazoo in 1982. Kalamazoo and nearby Battle Creek also were the first cities in the country to incorporate curb cuts that allow people in wheelchairs to navigate sidewalks smoothly and easily. Today, Kalamazoo, with a population of about 75,000, is the home to medical-equipment maker Stryker Corp. and Western Michigan University, both major employers in the city. Kalamazoo is equidistant between Chicago and Detroit, 150 miles from each.
Sources: American Center for Mobility, Bureau of Labor Statistics, CBS News, Crain’s Detroit Business, Detroit Chamber of Commerce, Discover Kalamazoo, Encore, HistoricDetroit.org, History.com, Michigan Economic Development Corporation, Michigan Radio NPR, Michigan State University, MLive.com, PricewaterhouseCoopers, Reuters, Robohub.com, The Detroit News, U.S. Census Bureau, University of Michigan, Western Michigan University
