Not official yet, but …

… day job just joined Automation Alley. Will put an official announcement up soon.

Once this goes live, the day job will be offering discounted JackRabbit and HPC systems/consulting to other members. Part of this comes from a desire to grow our business in Michigan, part comes from an understanding of the Michigan economic realities.

If you haven’t heard about the state of the economy in Michigan, there is simply no way to sugar coat it.

Frightening may not be a strong enough adjective.

For far too long this state has been a one-horse town with respect to economic diversity. This has been a manufacturing state, specifically automobiles. Some other things as well, we do have a large chemical manufacturer mid state. But this has been, for the most part, one industry that the state has depended upon for employment, tax revenue, …

This is now coming back to haunt the state, with a vengeance.

Other states should look at what has happened here as an object lesson of what not to allow to happen.

The large auto makers have been slammed by their focus upon gas guzzling SUVs. We own two ourselves. Our next car, likely purchased in a month, will not be an SUV. It will be a high mile-per-gallon vehicle. All the high quality versions of these that exist in the local market appears to come from the Japanese car makers (I find it odd that they are called foreign cars though more of their parts are made in the US than the domestic cars where most of the parts are made outside the US). We won’t give serious consideration to a vehicle that gets less than 30 MPG. Hybrids may be nice, but the CBA may work against them, if you have to pay a premium for the hybrid engine, and it won’t pay for itself over the lifetime of the vehicle.

This said, the local auto manufacturers didn’t quite grasp these things until … oh … the past few weeks.

Two days ago, Ford announced $8B in loss. Chrysler has left the leasing business (requires high residuals to make sense for them, and the residuals are dropping). And somewhat more ominous, GM has to defend its liquidity.

Wall street appears to be genuinely concerned that GM may run out of cash to fund operations, and GM’s actions suggest that Wall streets’ analysis may in fact not be wrong.

Other articles I have read by various analysts suggest that the weakest of the big 3, Ford, may go under. Again, these are not wild-eyed nutjobs wishing for them to go under, these are cold analytical reports that suggest that things may be more amiss than we are aware of at this moment.

My view is, generally, ignore what most companies say, and focus upon what they do. We have many friends at Ford. Every one of them may lose their jobs. Yeah, in this day and age, there is no such thing as a guaranteed job, and your expectations shouldn’t be that you will get one and be able to keep it until you retire. The magnitude, severity, and breadth of the workers at risk of being terminated at Ford suggest that the analysts may have hit their analysis close to reality. It has all the appearance of an emergency scuttle of groups and departments.

I am not sure if this is going on at GM, though we have been aware of a recent layoff (in the last few weeks) that seems to be trying to do a similar cash conservation.

As these people get laid off, they lose their ability to pay for things. Like their houses.

Ignoring the speculation markets (Miami/Las Vegas), this area has the highest (or has been and is very nearly now) foreclosure rates in the US.

The state’s unemployment is hovering in the mid 8%+ region. One of the big three goes under, and it will jump a bit.

Of course, there are even greater problems. Since the area is so over-hyper specialized on a collapsing segment of the market, all the secondary and tertiary support industries are … well … quite concerned to say the least.

Sadly, our state seems hell bent on throwing money at manufacturers, and not focused upon job creation. It’s 21st century fund is a really good idea, with a really bad implementation and focus. It started out as the Life Science Corridor, which as a job creation engine, was an abject failure. It morphed into a badly underfunded tri-corridor thing for a while, and became the 21st century fund. The powers that be have decided that they wish to throw money at manufacturing as a way out of the collapse of the … manufacturing … sector, upon which the state depends so heavily.

There is no venture capital of significance in the state, minimal angel work. Small companies, and, curiously, startups, are job creation engines. Give them money and get out of their way, let them build things. Create value. Create wealth. This has an economic flow to it, with secondary flows being established by successful companies/people. This requires that there be meaningful VC activity and startup generation. Which, sadly, there isn’t here.

The state needs to take a step back, a deep breath, and make some very, very hard choices. These will be politically unpopular (this is an understatement), but if they aren’t made, we wind up as West Virginia 2.0 (a beautiful state with one industry and a bleak economic outlook).

Happily, the Automation Alley folks are not taking this stuff lying down. They are trying to build a brand, build a group of high technology companies that are focused on building a future. I liked what I heard, and we signed up.

Michigan is a beautiful state. Wonderful resources. Low costs. Startups, if there were real VC/angel money here, should be thriving.

Technological associations like Automation Alley aren’t trying to put lipstick on a pig, they are trying to create a brand, create a momentum, build up the region. We support that mission.

We aren’t giving up here. Maybe its a character flaw on my part. I am a fighter. Especially for things I believe in.

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