Michigan sometimes can seem like a place stuck in time, caught between a past that relied on cutting giant white pines and digging copper out of the Upper Peninsula mines, and a future that seems tied to an endlessly shrinking or “restructuring” automobile industry.
Why, many ask, is our state so unwilling to try new things? Possibly, it’s the result of an economy that for decades relied on massive industrial enterprises (the Big Three and their giant suppliers) that gave workers little incentive for innovation or risk-taking. Without any doubt, we’ve been infected by widespread feelings of dependency and belief in a sort of corporate welfare state.
Certainly, generations grew up believing that all they had to do in life was catch on with “Generous Motors” and they’d be set for life.
As a result, many now sadly believe that the spirit of innovative brilliance and entrepreneurial risk never settled in Michigan.
Ah, but how wrong they are!
This may come as a shock to many, but there was a time when Michigan was widely regarded as the Silicon Valley of America, a place where entrepreneurs seemed to spring up out of the ground and took on the risks of failure with a jaunty optimism.
It happened right around the beginning of the 20th century. Back then, a whole raft of entrepreneurs created entirely new companies that were on the cutting edge of what was then regarded as high technology. Many of them went on to establish firms that became giant players in today’s global economy.
The most famous example: Henry Ford, who in 1903 founded today’s Ford Motor Company. Ford became successful thanks to his adaptation of the fundamental new technology of the assembly line. His innovation was to use interchangeable, identical parts to manufacture the automobile quickly and at an affordable price. When Mr. Ford dumped a bunch of identical parts on the floor of an exposition in Paris, the assembled crowd gasped in admiration.
And he had plenty of company:
Herbert Henry Dow, a Canadian chemist, heard about the salt seeps around Midland. He invented a new way of extracting Bromine from the quantities of brine in the area. And the company he started in 1897 to exploit this new technology – The Dow Chemical Co. – is today arguably the world’s leading firm of its kind.
Dr. John Harvey Kellogg was a physician who started a sanatorium in Battle Creek to experiment with his new fangled ideas about a good diet for sick patients. His brother, Keith Kellogg, had the idea that he could sell this stuff and make a profit. So he founded the Battle Creek Toasted Corn Flake Company in 1906. The resulting Kellogg Company made Battle Creek the cereal city.
Another physician, Dr. William Upjohn, of Kalamazoo, was aggravated by the problem of finding ways to give his patients just the right amount of medicine. The elixirs of the day varied in potency and the pills were so hard you had to bust them up with a hammer! So, in 1886 he and his brother, Henry Upjohn, founded the Upjohn Pill and Granule Co., later renamed the Upjohn Pharmaceutical Company. It went on to become a world leader for a century, until gradually disappearing into the Pfizer empire after 1995.
J. L. Hudson founded in 1881 the J. L. Hudson Company; by the 1930’s it was the third largest retailer in the world. A serial entrepreneur, Mrs. Hudson also founded the Hudson Motor Company (1909-1954) which had a relatively short but glorious life.
Each of these entrepreneurs took advantage of the distinctive resources of Michigan at the time. As a result of the profitable logging operations that cut the great pines of northern Michigan and dug the ore from the mines, Michigan had a lot of start-up capital available to finance new ventures. Mr. Dow had only to look around at all the brine around Midland and figure out how best to take advantage of it.
The Kelloggs were lucky enough to be on the rail line that brought corn to the ovens of their toasted corn flake company and shipped boxes of cereal around the country.
But the point is, however, that both sets of men figured their natural advantage out, at a time when other men couldn’t see it.
Each of these took what they had to work with in what was, back then the Silicon Valley of America and added imagination, drive and quite a lot of luck and guts. They made great companies – and great fortunes – that still stand as monuments to the Michigan economy.
What we sometimes forget is that they weren’t always successful, either — certainly not the first time. Henry Ford’s first two automotive companies failed. Many of the other pioneers of the industrial age had their financial ups and downs as well.
But they endured and pressed on — and did so without Starbucks, modern medicine or air conditioning. So: even in today’s relatively dark days of high unemployment and widespread home foreclosures, there is no reason that men – and women – like them cannot do the same, or better today. In fact, given the lessons we’ve learned from the past, it would be a surprise if they didn’t succeed.
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Editor’s Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics, and a former president of the Michigan chapter of the Nature Conservancy. He is also the founder and president of The Center for Michigan, a centrist think-and-do tank which publishes the Michigan Scorecard. The opinions expressed here are Power’s own and do not represent the official views of The Center. Power welcomes your comments at ppower@thecenterformichigan.net.
9 Comments
Right on. We can do it again (and again). Now let’s get busy.
Great inspiration, Phil.
I can’t help but reflect upon the legislative, regulatory, and labor impacts that Messrs. Ford, Dow, Upjohn, Hudson, and Kellogg did not have to outwit and overcome.
Just saying.
In regard to the ‘labor impacts’ mentioned above, one point to consider is that 100 yrs ago, unions were founded for the purpose of protecting employees(poor people) from getting more than taken advantage of by big business.
Construction/manufacturing/mining/hard labor.. most of these companies had many deaths, dismemberments, ailments, and all with low low wages barely able to subsist. Families, widows, children couldnt get compensation or assistance with the father/husband was killed or maimed for unsafe working conditions while earning a desperately low wage, all while makin many of the Millionaires and Billionaires of the “romantic old times”.
Now Ford was an exception, he actually realized he could get better productivity by reducing working hours and raising pay for his people. And he was right.
However, unions had to be formed in most places because of the rampant and still prevalent greed of those ‘motivated’ CEOs, that today are becoming a relic and dinosaur only because we now have laws and regulations in place protecting workers.
But guess what, now that most of America is no longer desperate for a job paying $1 /hr, those big companies are happily and gleefully jumping ship to desperate 3rd world nations where they can do whatever they please. Like Mexico and Electrolux. 1.53 /hour? ok, keep selling us those appliances for the same price or higher now that your paying 5% of what you used to pay in labor and benefits.
I used to work for a Technology company in Grand haven in the 90s. As we were laying people off and building a plant in China, there were 3000 men waiting in line to get one of the 40 jobs our company was adding at $1/hr, for 12 hours a day 6 days a week.
no OT, no benefits, no security, no anything.
I honestly believe right now that there is CLEAR proof, that any business that employs unskilled labor will try to pay the rock bottom limit for their jobs no matter what that limit is.
If its 5.65/hr at the minimum wage, then thats what they’ll pay. If we removed labor protections, then they’d be offereing $2 or whatever they can get away with.
What do people expect workers to do in this country when business will take every possible advantage in treating employees badly for higher bottom line profits at any time if there are no labor controls?
of course they have to form unions, its the only way to get results when the government and most all rich people that have power are on corporate’s side when it comes to paying as close to nothing for labor as they can get away with.
Or, I guess as the above posts suggest, we can find excuses to justify not doing anything.
Neal,
I don’t agree with your prospective of Steve’s comment at all! I did not get the point, like you did, that Steve meant we should do nothing at all. He was simply stating how much more difficult it is for the workers of today to get good paying jobs with good benefits without having unions in place to protect them. No excuse there, just stating facts. That does not mean, or justify, doing nothing, but it does mean that it is harder for the Michigan entrepreneurs of our era to bring prosperity back to life here in Michigan once again! It can be done if we all work together to that end. That is the key here…working together to bring about changes and addressing real issues like the one that Steve brought up.
Thanks Donna,
Posts like Neal’s arent useful or constructive. If people like that dont agree, they make sarcastic comments implying extremes that were never said.
If we dont critically analyze and present the problems we face, we cant brainstorm for solutions and come up with ideas and concepts to change whats wrong and change whats not working.
Everyone is all for Business, and most small business is great! but there are so many examples of corporations taking clear advantage of employees at every opportunity, the consumer is the least able to defend themselves and succeed.
The only way to succeed for all, is if ALL (employers and workers) work together to succeed. For decades now, almost every union in existence has made concession after concession after concession to employers, often times reducing pay, eliminating benefits, targeted layoffs and early retirements.
Michigan has a Huge number of good workers without college degrees or specialized “In-demand” training. This presents a unified problem.
We cannot magically train a half a million workers all of a sudden to fill medical/engineering/federal jobs etc. overnight to have a workforce waiting around and able to do anything someone asks.
Its a long process to try to retrain so many people in one state and provide post secondary education and certifications. Especially considering many are older, middle aged families, with normal obligations (car payment, mortgage, food, utilities etc)
So we have to have business and Government come together to try to solve this problem in the best way we can and implement it asap.
One of my points above, was that there is so much Corporate culture that is not just accountable-to, but Beholden-to shareholders/ownership for profits – Thats ok, but the problem is its MASSIVE profits, immediately. There is no patience left on wallstreet.
If companies dont make Immediate unGodly profits in short term investors dont want to participate. So that pressures CEOs, boards, Execs to do ANything they can think of the boost profits, whether its firing 10,000 employees that were making money for the company so short term gains look great, or falsifying accounting data to look profitable while hiding losses somewhere else, or manipulating legislators to pass law specifically targeting certain industry for huge profits, lax oversight, lax environmental regulation or removing costly safety measures.
All those things almost always hurt the consumer, the lowest income persons, the most vulnerable to economic pain.
This is not conducive to working together.
This is part of a Pattern of a Corporate vs Consumer battle.
You do realize certain industries actually hire, and utilize top analysts in marketing, psychology, and research to devise ingenious ways to convince you that bad things they do are good, and products that are bad for you, you should buy anyway, etc. This is a multi billion dollar part of industry that generally stays hidden to consumers but has an enormous impact on them, and is the epitome exemplifying exactly my point.
Making unreasonable profits at the expense of those that buy your products is bad policy. Doing bad things to get that profit is bad policy.
This is where we need to change culture and respond with a sense of community and partnership to move forward in a positive way.
This period is a Tipping point for Michigan. Lets tip it in the right direction.
I think we’re gettin’ way off course here. And you bet, I find more than a little irony in the follow-on regulation and “us v. them” comments.
Phil’s column was to me about moving entrepreneurship and–especially–innovation ahead in Michigan to create a brighter future. It’s moving back to the pioneering, can-do attititude we’ve had in the past.
There’s no spin on unions. None on workers. No comments about the necessity of a quarter-by-quarter, bottom-line focus for public companies and problems that begets. (Where’s your retirement money invested?) And regulations? Yep. Lots of times they’ve been necessary and probably just as many, they’ve over-reached.
The issues are important but only peripherally related to what I see as the take-home points in the column. Three simple things:
Got an idea? Make it happen. Change the world.
How do you contribute?
I have to agree with Steve’s defense of the unions with, however, some qualification. The unions were and are necessary. Just as Steve said,they were formed to protect the workers from the greed and abuse of management. But just as the pendulum swings, the unions became more powerful and just as greedy and demanding. Strictly defined job definition rules are one example. On one occasion, I was physically restrained by a woodworker from carrying a small wood template from a table to the shop office 20 ft away because “that was his job.” On another occasion, I was required to fill out a work order when I tried to get a light bulb from the tool crib for my desk lamp. Why? Because “that was the electrician’s job”. These may seem small and trivial, but similar incidents occur thousands of times in the work place.
I could tell several more examples that I am personally aware of but the point is that both Management and Labor are to blame for the mess Michigan is in. When Management and Labor stop this bickering and realize that they have a common goal, we may get our middle class back and Michigan will prosper once more. I hope it’s not too late.
Perhaps it is worth noting that Henry Ford
paid the highest wages to hire the best skilled workers. He paid bonuses for just-in-time deliveries from his iron ore mines in the UP to the The Rouge Foundry.He also created the Henry Ford Health System to provide the best health care for his workers.
His Human Resources Department visited workersat home to advise them on healthy living.
He raised wages to $5/day,the highest in the industry while reducing the price of the
Model T to $500.