Michigan's low-paid, high-skill workforce may entice Toyota
Michigan Future President Lou Glazer
File photo
Michigan's high-paid manufacturing workforce is contracting, but the relatively low salaries of its high-skill workforce could ultimately prove to be an asset, an Ann Arbor think tank reports.
Lou Glazer, president of Ann Arbor-based nonpartisan think tank Michigan Future Inc., said in a blog post that Michigan's low-paid, high-skill worforce could attract the "knowledge" jobs of the auto industry. His post analyzes recent reports that Toyota is considering relocating its Los Angeles-based auto operations to Ann Arbor or Kentucky.
"Conventional wisdom is that Michigan is not competitive for the global auto industry to locate here," Glazer wrote. "Think again! It's probably true when it comes to locating factories, but clearly it's not true in the knowledge part of the industry. It's a competitive advantage - both talent and cost - we have and should exploit."
A Michigan Future report last year asserted that Michigan's manufacturing economy would continue to contract. But, since high-skill Michigan workers have lower salaries than similar workers in high-tech regions such as Boston and Silicon Valley, the state's low salaries may ultimately become a magnet for investment.
This concept recently manifested itself when California startup Systems In Motion announced that it would hire 1,085 workers for a new information technology services operation in the Ann Arbor area. Among the reasons the firm located here was the low cost of high-tech workers.
According to Michigan Future, Michigan's average salary in "high-education attainment industries" in 2007 was about $53,000. The national average? About $59,000.
"If high labor costs here are a major reason to move manufacturing elsewhere, it may turn out that low labor costs are a big reason to move knowledge work here," Glazer wrote. "It, of course, is only an advantage if we have the talent a knowledge-based employer needs. Supply of talent clearly trumps cost."
Toyota, for its part, says it's not considering a major
restructuring of its operation. After reports that it was considering
moving jobs to Michigan or Kentucky, the Japanese automaker released this statement:
Toyota's North American affiliate companies have no plans to change their multi-company structure, nor plans for any significant geographic relocation of personnel outside of normal operations. Emphasis has been placed on finding new efficiencies, shared services and enhanced collaboration to address the changing economic conditions and prepare Toyota for the future automotive market environment.
Comments
Sayraf
Tue, Dec 15, 2009 : 5:32 a.m.
Shouldn't the headline read "Low paid, high skilled...." or "Low paid, highly skilled..." or even "Low pay, high skill..."? Just askin'.
bhall
Mon, Dec 14, 2009 : 5:43 p.m.
Dude, I go to this site to find out what's happening in this city. It seems like you folks are stretched thin. Why waste time on speculation? By the time this speculation appears on this site, it's third hand, from Bloomberg, through Michigan Future, and then through A2 dot com. If Toyota ends up moving operations here, then great. But until then, it does not affect my life at all. (And by the way, how many other companies are considering moving here, or moving out of here. Happens all the time.) However, what happens down the street does affect people living here! I suggest this site prioritize its resources.
Nathan Bomey
Mon, Dec 14, 2009 : 5:24 p.m.
Bhall, thanks for the comment. Toyota's statement that it has "no plans" for a major restructuring initiative isn't necessarily the final word on the matter. Many companies have a policy of not revealing their deliberations until a decision is final, so as not to ignite public speculation about the matter. If there's anything we've learned from the global auto crisis, it's that restructuring and downsizing are a fact of life. Toyota may decide not to make any changes. However, I wouldn't be surprised if the automaker opts otherwise.
bhall
Mon, Dec 14, 2009 : 5:11 p.m.
So is this the most misleading headline ever? You have to read to the bottom of the story to find out there's no chance in H-E-double hockey sticks that Toyota is moving more operations here. Oh why did I waste several minutes reading this?
CynicA2
Mon, Dec 14, 2009 : 4:21 p.m.
So the company denies that it plans "any significant geographic relocation of personnel". If so, what "reports" are the basis for this story? This sounds like more wishful thinking to me, as the very people who Toyota might seek to retain are leaving the state in droves, and would probably do so even faster, if they could sell their homes more quickly. Having attended a Systems In Motion info session, I can tell you that their salaries will not attract many top-tier, or even middle-tier, candidates - they can make a lot more elsewhere. Ann Arbor will ultimately remain what it has always been - a medium-sized college town, with a smattering of research/technology companies seeking proximity to the UM, for one reason or another. It will never be the next silicon valley, or Austin, Tx. Too cold!