Posted by: mulrickillion | February 18, 2012

Bail-Out Politics: Even Michigan’s Economy Is Improving

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Bail-Out Politics: Even Michigan’s Economy Is Improving (ABC News).

By Chris Bury, ABC News, Feb 15, 2012 —

At Nicky D’s Coney Island in Warren, Mich., across the street from a Chrysler truck plant, co-owner Diana Dedvuka has seen her bustling diner come back from a near-death experience.

"People are working.  They’re spending more money. Customers seem to be happier," she said.

In 2009, the family-owned restaurant struggled to stay open as Chrysler and General Motors teetered on the brink of collapse.

"Our business went down 40percent," Dedvuka, the daughter of a retired auto worker, told ABC News. "Driving to work, you would see these big (auto) plants completely empty. It would give you chills."

Now, Dedvuka says, customers who once feared losing their jobs are complaining about working too much overtime.

As Republicans Rick Santorum and Newt Gingrich scramble to overtake native son Mitt Romney in the Michigan primary, scheduled for Feb. 28, the state’s economy appears to be climbing out of a deep, dark hole.

"Since the depths of the recession, we’ve seen manufacturing stabilize and start to come back," said Robert Dye, chief economist for Comerica Bank. "What we’ve seen in the auto industry lately has been good news for the state."

In fact, it’s been very good news:  Tax revenues have jumped so dramatically that Michigan now enjoys a $457 million budget surplus.

The auto industry is driving the nascent recovery in Michigan, where manufacturing accounts for more than 20 percent of the state’s economy.  Indeed, U.S. car sales are revving up at the fastest rate in nearly four years, rising 11 percent in January over a year ago.  The state’s unemployment rate, while still higher than the national average,has dropped from 12.6 percent, in March 2009, to 9.3 percent in December.

The improving economy, while far from robust, has breathed real life into many small and medium sized companies that supply the auto industry.   At Eifel, Inc., a family business that provides tooling and molds for automakers,  new orders are pouring in.

"I haven’t seen it this busy in almost 10 years," said owner Richard Hecker.

Hecker said he is considering adding a second shift to his 16-employee work force, but he cannot find enough qualified workers to fill the openings.

"It’s just tough to find skilled help right now," he said.

President Obama, in a Jan. 27 visit to Ann Arbor, took credit for the auto resurgence while needling his Republican rivals:  "The American auto industry was on the verge of collapse. And some politicians were willing to let it just die. We said no. We believe in the workers of this state."

But the political skirmish over Chrysler’s Super Bowl ad – the Clint Eastwood "Halftime in America" production – reflects the deep divisions remaining over the decision by the Bush and Obama administrations to invest billions in a U.S. auto industry that had repeatedly failed to right itself.  White House aides tweeted their enthusiasm for the commercial; former Bush aide Karl Rove said he was "offended" by the ad.

The Republican candidates all opposed the bailout, including Romney.  The son of former American Motors president and Michigan governor George Romney wrote an article in the New York Times, entitled "Let Detroit Go Bankrupt." His words may come back to haunt him.

"If (automakers) get the bailout … you can kiss the American automotive industry goodbye," he wrote, arguing in favor of a "managed bankruptcy" in which the government would guarantee loans, but not provide financing. He reiterated his position in an Op-Ed published in the Detroit News Tuesday. And he paired it with a new TV ad that shows him driving around Detroit neighborhoods. . . .

Bail-Out Politics: Even Michigan’s Economy Is Improving – Yahoo! News

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