Energizing Tuscola’s Economy Through Entrepreneurship

Needs Statement

Ravaging Impacts of Manufacturing Job Declines

Michigan’s once powerful manufacturing base, which for years was driven by the automobile industry, has been declining and is anticipated to continue to decline over the next several years. Hundreds of thousands of quality jobs have been eliminated in the automobile industry. While the national economy continues to grow, the economies of Michigan and Tuscola County continue to dramatically decline. The state has experienced eight consecutive years of employment losses. This level of economic deterioration has not occurred since the Great Depression 75 years ago.

From 2003 to 2005, the state lost more than 100,000 manufacturing jobs primarily in the automobile industry. University of Michigan economists project that the worst is not over with unemployment rates anticipated to go even higher in 2007 and 2008. Dr. George Fulton, a University of Michigan economist, recently explained that the Big Three market share will continue to decline in 2007 and 2008. The economist said the state will end up having lost more than 40,000 manufacturing jobs in 2006, with losses of 30,000 in 2007 and 24,000 in 2008. This projection means that in six years Michigan will have lost nearly 200,000 manufacturing jobs centered on the automobile industry.

Local Economic Problems Escalate

Downsizing and restructuring in the automobile industry have had a devastating impact on the lives of Tuscola County residents. The economies of Tuscola County and the surrounding region have experienced many economic set-backs and challenges because it is so closely interconnected with the automobile industry. Both General Motors and Ford Motor Companies have restructured with unprecedented employment reductions. Major automobile plants and suppliers are located in nearby Flint, Saginaw and Bay City. Delphi has a major local presence and has filed Chapter 12 and is implementing significant restructuring of its operations including wage/benefit concessions and job reductions.

Vacant stores in downtown areas are increasing. Young people are leaving because there are no employment opportunities. Area realtors explain that many homes in the area that formerly sold for $130,000 to $140,000 are now selling for $90,000 to $95,000. The following table shows major businesses/industries in Tuscola County and some of the surrounding counties that have recently closed.

Population – Aging and Not Increasing

One of the indicators of economic difficulties is an aging population and nearly zero population growth. According to the 1980 census, the median age in Tuscola County was 28.1 which was younger than the median age of both the state and nation. However, a significant reversal of this important population indicator has occurred. Tuscola County median age is now older than both the state and nation. The year 2000 median age for these three entities is as follows: county 37.0, state 35.5 and nation 35.3. USDA Economic Research Service (ERS) population estimates for the period of 2000 to 2003 also explain that Tuscola County population of 58,382 is stagnant. For this three year period, the nation’s population grew by an estimated 3.34% and the state’s population grew by 1.42%, while Tuscola County’s population change was a scant 0.20%.

Unemployment – Higher in Tuscola County than State and Nation

Closure of these businesses/industries has had a crippling impact. USDA ERS unemployment information explains that Tuscola County has consistently had a higher unemployment rate than the state and nation. In 2005, the county unemployment rate was 7.9%, which is 18% higher than the 6.7% for the state, while the national unemployment rate was at 5.1%. More recent Michigan Department of Labor and Economic Growth data shows that in March of 2006 unemployment in Tuscola County spiked at 9.9% (32% higher than Michigan), while the state was at 7.5% and the nation was at only 4.8%. At this point in time, the unemployment rate in Tuscola County was more than twice that of the nation.

Median Household Income – Low in Tuscola County

Compounding the high unemployment rate is the fact that Tuscola County families have less purchasing power than the state and national averages. According to the USDA ERS, in 2003 the Tuscola County median household income (MHI) was $39,798 compared to $46,291 for the state and $43,318 for the nation. Tuscola County’s median household income was just 86% of the state MHI and 8% less than the nation's. Even more concerning, Tuscola County’s growth in median family income for the five year period from 1998 to 2003 was only 5.7% compared to 10.3% for the state and 11.4% for the nation.

Mortgage Foreclosures are Increasing at an Alarming Rate

Property mortgage foreclosures are a simple and direct indicator of economic conditions. Foreclosure is the process lenders use to reclaim property when mortgage payment agreements are not fulfilled. Foreclosures have been increasing at an alarming rate in the county. Records from the Tuscola County Register of Deed office identify the number of foreclosures over the past three years as follows: 2004 – 108, 2005 – 147 and for only 11 months of 2006 – 177. From a dollar perspective, the 11 months of 2006 foreclosures result in nearly $16 million still owed on these properties. Even more sobering, based a longer term trend, there were only 16 foreclosures in 1996 compared to 177 for only 11 months of 2006. When December information becomes available it is likely to show over 200 property foreclosures in just one year. A month by month review of 2006 foreclosures shows that the situation continues to deteriorate. The most foreclosures of any single month occurred in the most recent month of November 2006 with 30.

Building Permit Activity

Another important economic indicator is the number of building permits issued. The number of building permits issued in Tuscola County has been declining. According to the South Central Michigan Construction Code Commission (the county contracts with this entity to do building code enforcement), 980 total building permits were issued from January to April of 2006 compared to 1,153 permits for the same period of 2005. This is a decline of 173 permits or 18%. According to the U.S. Census, the number of new private housing units authorized by permit in Tuscola County declined from 202 in the 2002 to 116 in 2004. Even without adjusting for inflation, the valuation of new housing construction declined from $15,600,000 in 2002 to $15,271,000 in 2004.

Educational Attainment

The ability to compete in a global economy is directly tied to this important measure. Tuscola County has consistently lagged below the state and nation in educational attainment. According to the USDA ERS, only 17.44% of Tuscola County residents that were 25 or older in the year 2000 had completed college, which is strikingly below the 28.75% for the state and 30.72% for the nation. This statistic is exacerbated by the lack of a community or public college available to Tuscola County residents.