In a move that seems inspired by a Steve Miller Band hit of the 1970s, Big Three automakers are taking Michigan taxpayer money and running somewhere else.
Not that taxpayers had any say in handing over their hard-earned pay. That largesse was determined by government officials in Lansing, who have handed out billions of dollars in public grants, low-interest loans, land, and tax incentives over the past several decades with the often false promises of job creation and other such economic multipliers that are seldom realized. Despite decades of reputable economists and public policy experts pointing out that government-provided subsidies on the taxpayer dime never provide a comparable return on investment, government officials and programs such as the Michigan Economic Development Corporation and the Michigan Innovation Fund continue to shell out money to private industries and business startups.
The most recent example, as of Tuesday, is General Motors’ announcement it has laid off 634 Michigan salaried employees at the Global Technical Center in Warren. All told, this round of layoffs will reduce GM’s workforce by 1,000 employees globally. The workers will be paid through Oct. 18.
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“This is another example of the futility of government subsidies,” John Mozena, president of the Center for Economic Accountability, told The Midwesterner in a phone interview. “There are too many factors that impact businesses, and MEDC subsidies are going to change the reality of that.”
He continued: “For decades, Michigan automakers have wielded tremendous power in Lansing and have given out billions of dollars from both political parties. It’s time to tell them to sink or swim on their own merits.”
According to the Detroit News, the layoffs are GM’s “effort to streamline the divisions operations under new leadership.”
The division taking the hit this time around is software engineers. The News identified several recent software issues plaguing the automaker this year, all related to GM’s bumpy attempts to transition to electric vehicles from internal combustion drivetrains.
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Last week, GM recalled 20,000 Cadillac Lyriq EVs due to an issue that caused the model’s’ anti-lock braking system to activate for no reason.
“Earlier this year, GM placed a stop-sale order on the electric Chevrolet Blazer because of a software problem,” the News reported. “The Lyriq and GMC Hummer EV have had other software issues that required recalls, marring highly anticipated launches.”
On Monday, Kevin Kelly, a GM spokesperson, said the layoffs are part of the company’s efforts to “simplify for speed and excellence, make bold choices and prioritize the investments that will have the greatest impact. As a result, we’re reducing certain teams within the Software and Services organization. We are grateful to those who helped establish a strong foundation that positions GM to lead moving forward.”
Despite the bad news, Michigan Economic Development Corp. spokesperson Otie McKinley indicates the organization is undeterred, telling the News that the agency “will continue to work closely with General Motors to ensure the company’s future in Michigan is strong and to collaborate around connecting those impacted by today’s announcement.”
GM’s layoffs come on the heels of Stellantis offering buyouts to salaried employees and last week’s announcement the company was laying off 2,450 union employees in Michigan.
Mackinac Center for Public Policy Fiscal Policy Director James Hohman told The Midwesterner that Stellantis has also been a major beneficiary of government subsidies. Hohman said Stellantis was offered $2,059,000,000 from Michigan taxpayers. This includes a $2 billion financial package that was approved during the Great Recession and expires in 2029, he said.
Despite the negative returns, Gov. Gretchen Whitmer has continued to celebrate handouts to private industries.
In June, for example, she announced a $22.8 million MEDC “investment” to build an automotive Test Center of Excellence in Plymouth with German company DEKRA.
“We are thrilled to welcome DEKRA and their Automotive Test Center of Excellence to Michigan, building on our mobility leadership and creating 18 good-paying, high-skill jobs in Plymouth,” Whitmer said. “Since I took office, we have announced 38,000 auto jobs up and down the supply chain, shoring up our strong position as the top state for automotive manufacturing. Let’s continue our comprehensive economic development strategy to win projects, invest in places, and support people to ensure everyone can ‘make it’ in Michigan.”