Daniel Howes

Michigan can't wait until 2011 for reform

Attention Mackinac Conferees:

Down here in the real world, far from the world's longest porch and the corporate swag of leaner times, reality keeps encroaching -- a novel concept for the 1,400 or so folks who schlep up Interstate 75 for the Detroit Regional Chamber's annual confab and accomplish very little.

Since your last round of cocktails, or thereabouts, Visteon Corp. and Metaldyne Corp. declared bankruptcy. And General Motors Corp. announced a sweetened deal with bondholders that mostly guarantees it'll be bankrupt by Monday, too.

Yet official Michigan spends lots of time watching from afar (when it isn't passing smoking ordinances, amending marginal legislation or begging Washington for bailouts), even as its CEO angles for a job with Team Obama and others politick for promotions in Lansing.

Reminds me of GM's directors, who are fast on their way to adding "former" to their titles. They were in their seats, too, but chose bystanding over directing.

"Are we going to wait for the state as long as we waited to fix GM and Chrysler and the Detroit Public School system," asks John Rakolta, chairman of Walbridge Aldinger Co., the Detroit construction company, in an interview Thursday. "Are we going to wait 'til 2011," when a new governor and new legislative leaders are seated amid financial cataclysm?

Officially, no. The governor's task force to streamline government is close to issuing its plan. The speaker of the House is said to be working on reforms that may not be popular with his fellow Democrats and their special-interest friends (read "labor"). The Senate majority leader? Running for attorney general.

"Michigan is a failed economic model," Rakolta continues, reprising his remarks to a Mackinac panel Wednesday. "If we wait 'til the gubernatorial election, we'll be on the precipice of disaster -- if we aren't already."

That crash you hear may be the silence breaking, finally, with what Rakolta rightly calls the "courage to speak the truth." There are others -- you know who you are -- who agree with him, starting with (probably) the entire executive committee of Detroit Renaissance.

Now's the time to mount pressure for change because the Great Reckoning is here. Detroit Auto is passing through the tempering fire of bankruptcy, restructuring, even liquidation. The public sector's pain will intensify, as the lagging effects ripple through tax rolls, school budgets and public priorities.

The longer Public Michigan waits to reform the structure of government, to rationalize departments, to commonize retirement systems of public and school employees, to push consolidation of police and fire service among neighboring communities, the tougher the future will be. Ask GM.

Business knows this because successful business lives it, responding to changing conditions with dynamic management. Smart CEOs would look at the tale of GM, its predicament and see missed opportunities that, seized earlier, might have mitigated the today's pain.

The most maddening part for Rakolta and those of us who agree with him: It's all so obvious. The scattered leadership; the denial of the speed and affect of the downward spiral; the panicky search for fresh revenue in Obama's budget and stimulus plan; the crisis management that treats symptoms of Michigan's malaise, not the disease.

Savvy business leaders, to the extent they're still bothering to focus on the mostly lost cause of Michigan's public policy, are long past wanting action to make the state viable for new investment. Business probably would even welcome some federal largesse -- if those who run Michigan or represent it in Congress could get it from their friends in Washington.

But they mostly can't, as Thursday's USA Today details.

Federal officials have awarded nearly $4 billion in contracts since the president signed the stimulus bill in February, the paper reported. Michigan, the state with the nation's highest unemployment rate, has received contracts totaling just $2 million, or 21 cents per capita.

Neighboring Ohio has received contracts totaling $22.3 million, or $1.94 per capita. In California, the total is $151.5 million, or $4.12 per capita. In New York, the contracts total $343.2 million, or $17.62 per capita.

The numbers, like so much in Michigan, speak for themselves -- and the leadership.

dchowes@detnews.com (313) 222-2106 Daniel Howes' column runs Tuesdays, Thursdays and Fridays.