(This is the third in a three-part series, “Covid & the Economy,” that looks at the impact of the pandemic on the three legs of Greater Lansing’s economic “stool.” This week: General Motors.)
With the impact of COVID-19 on automakers, their supply chains and the local businesses that support factory workers, the Lansing region’s future is still tied closely to how well General Motors bounces back — and in turn how well its employees fare economically.
Automobile manufacturing has been a part of life in the Lansing region almost since the car was invented. In particular, Lansing has been a General Motors town for generations. Ransom E. Olds started his company here in 1897 and, after GM purchased Oldsmobile, the size of its operations began stretching out across the region.
Two of the oldest automobile plants that ended up becoming GM factories — one built in 1901 and a second constructed in 1920 — were closed and demolished in the early 2000s. But Lansing Grand River Assembly and Lansing Delta Township Assembly soon took their place, continuing GM’s foothold on the region’s economy. Combined, the two plants employ about 3,900 people.
Tim Daman, president and CEO of the Lansing Regional Chamber of Commerce, has been with the chamber for 14 years. He said his entire career there has involved, in some way, working to help diversify the region’s economy. But GM is still one leg of the three-legged stool that impacts the local economy. The other two legs are Michigan State University and state government.
“We’ve been successful” in achieving some diversification, Daman said. And it might show, given the results of a survey the chamber conducted of its members.
“I was surprised when our survey came in,” Daman said. “A majority of our folks were still working or working remotely. And 58% said they had not laid off employees.”
When asked if a business had closed due to COVID-19, 32 percent of respondents said they had. But another 46 percent had not fully closed.
Still, Daman noted that he and others are really watching the big three legs of the economic stool to see how the region is going to start recovering from the COVID-19 pandemic. And even with federal aid assisting small businesses, there is some trepidation over how much it will help.
“It’s certainly a bridge, but how quickly do we get things ramped up?” Daman asked. “And how quickly can we get customers to come back?”
That includes automotive customers. Many people are taking a closer look at their savings accounts and how well prepared they might be for another economic downturn. That is especially true for those worried about a predicted second wave of COVID-19 in the fall. So, buying a new car may not rise to the top of many shopping lists.
“We were already on the backside of the (global sales) peak, but (the coronavirus) accelerated this in a very unprecedented way,” Mark Wakefield, global co-leader of AlixPartners’ automotive and industrial practice, recently told The Detroit News.
Wakefield also told the News that the demand and supply side “will be hit for some time.”
The May automotive sales figures support this hypothesis.
Reports indicate automotive sales dropped around 30 percent in May for most major automakers, including the Big Three of GM, Ford, and Fiat-Chrysler. The industry as a whole was expected to be down more than 32 percent in May. While that may sound devastating, it’s an improvement over April, when that figure was over 50 percent.
Still, General Motors is ramping up during this in-between period as Gov. Gretchen Whitmer’s COVID-19 restrictions are being relaxed.
The company announced at the end of May that the restart of vehicle production across North America had “gone smoothly.”
“Our comprehensive safety procedures are working well, and our suppliers have done a great job implementing their return-to-work strategies and safety playbooks. We are now in a position to increase production to meet strengthening customer demand and strong dealer demand,” the company statement read.
GM’s operations in Lansing are approaching pre-pandemic levels, according to company spokesman James Cain. He said the Lansing Delta Township plant, which builds crossovers, is working two shifts. Meanwhile, the Lansing Grand River plant, which produces cars, is working one shift.
“Our parts and distribution operations (with about 220 employees) continued to operate throughout the industry shutdown to keep parts flowing to customers and dealers,” Cain said.
As businesses large and small attempt to reopen in whatever the “new normal” is for the Lansing region, it will ultimately be up to consumers on how well and how quickly things progress. And that includes consumers who may have thought about postponing returning to full-time jobs while enhanced state and federal unemployment benefits are still available.
But Daman said he is hopeful and believes the region will emerge well in the end.
“Folks have a decision to make as we open the traditional summer season and with the majority of our economy beginning to reopen,” he said. “We hope folks go to the side of ‘let’s go back to work and get our economy going again.'"
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