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Published: Friday, 4/17/2009

Hope glimmers on Michigan's economic horizon

DETROIT - For Michigan, it was another grim week - but one which, for the first time in a long time, provided two much-needed, serious glimmers of hope.

The bad news wasn't hard to find: Statewide unemployment edged up again, to a nation-leading 12.6 percent. Fiat began making noises indicating its proposed alliance with Chrysler was in serious danger, unless the unions agreed to major concessions.

The battle over renovating Cobo Hall, the city's main and increasingly obsolete convention arena, dragged on in the courts, as suburbanites in affluent Oakland County began to mutter that maybe they should build their own facility and forget Detroit.

But the state then got two much-needed boosts:

The city of Allen Park, a downriver suburb south of Detroit, announced agreement to build Unity Studios, a huge, $146 million moviemaking complex expected to be open by this fall.

The film industry has really taken off in Michigan, since the state agreed last year to give filmmakers major tax breaks if they made pictures here. That was expensive, but seems to be paying off, big time. Hollywood spent $65.4 million in Michigan last year, a figure expected to double this year, despite the recession.

The new studios are expected to help lure not only more film business, but television and new media productions to the state. According to Jimmy Lifton, a Hollywood executive, the studios will create as many as 3,000 good-paying, unionized jobs.

But what could be even better news over the long haul arrived when four major battery companies announced plans to invest more than $1.5 billion to launch advanced manufacturing operations in multiple locations across the state. What that means is that Michigan evidently will now become the national center of battery production and technology for the electric and hybrid vehicle markets. If those are indeed the cars of the future, this development could mean that Michigan may once again become the center of a resurgent auto industry.

The decision came after General Motors reaffirmed its intention to bring out the all-electric Chevy Volt as a production model next year, and Chrysler announced that Massachusetts-based A123 Systems Inc. was its choice to supply batteries for its electric cars.

Landing the four battery manufacturers was a coup - one pulled off primarily by the Michigan Economic Growth Authority.

Yet all this is still something of a gamble. A123 Systems, for example, makes rechargeable lithium ion batteries, the same kind General Motors has now agreed to put in the Volt.

And occasionally, lithium ion batteries spontaneously explode or catch on fire. This doesn't happen often - maybe a few times per million - and engineers seem confident they can work out the bugs by the time the cars go on sale. But it might not take more than an exploding battery or two to completely doom a car model.

Even if that can be solved, another big question remains: Will the new electric and hybrid cars be exciting enough, stylish enough, and high-performance enough to appeal to hundreds of thousands of new customers? And as important, will they be priced low enough?

The answer may go far to determine Michigan's economic future. First reports indicated that the battery deal would create something like 6,700 new jobs.

Well, maybe, eventually - if everything works as planned.

For example, A123 Systems, the biggest of these firms, said it would start manufacturing batteries in suburban Livonia, and then could expand to other sites, ultimately creating 5,000 jobs. Initially, however, the company is talking about creating 300 jobs. That's good news to be sure - in today's Michigan, a new lemonade stand is good economic news.

That's hardly world-changing news, not yet, anyway. But over time, it could be - especially if General Motors and Chrysler manage to get their houses in order, and survive.

Bad Times For Newspapers: Less than a month ago, Detroit's two papers cut back home delivery to two or three days a week. This week, Gannett Co. announced it is closing five twice-weekly papers, the Eccentrics, in Oakland County.

Some of these papers dated back to the 19th century. Why Gannett closed these papers, most of which are in high-income areas, wasn't clear, unless it was meant to drive local advertising to their slipping main entity, the now mostly-online Detroit Free Press.

Jack Lessenberry, a member of the journalism faculty at Wayne State University in Detroit and The Blade's ombudsman, writes on issues and people in Michigan.

Contact him at: omblade@aol.com



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