In Michigan, a future where cars count less

High-wage jobs will come from focusing on human capital, not the Big Three.

It's Wednesday evening, and the west campus of Lansing Community College is humming with activity.

In one lab, students test their electrical skills. In another, they learn computer-aided design. On the main level, instructors and regional industry officials are discussing how to nurture the next generation of manufacturing workers.

It's a key question for America and, especially, for Michigan, as US carmakers pare domestic production. The state has faced job slumps before, most notably in the 1980s. But this downturn is different. The auto industry can no longer carry the state's economy.

Recovery will depend on "human capital," experts say, developing talent that ranges from PhD research to the professional skills taught in evening classes here at this new facility.

Signs of trouble abound. The North American International Auto Show, which runs through this weekend in Detroit, featured its first Chinese car, from a company called Geely. Few expect it to rival Chevy at US car lots in the next few years, but neither does the industry doubt China's will to compete.

Geely's ambition to sell a car in the US in 2008 comes amid a sober backdrop of global competition, marked by US plant closings, job cuts, and sinking wages.

"In recent years, Michigan has led the nation in unemployment," former University of Michigan president James Duderstadt said in a recent speech in Chicago. "Our largest city, Detroit, now ranks as the nation's poorest. We've already seen one of our major corporations, Delphi, file for bankruptcy, with great concern about whether its parent, General Motors, and then possibly Ford, may soon follow."

All this doesn't mean that Michigan can't remain the capital of the global car industry - at least in terms of research and design, if not production, experts say. But retaining that title will take effort.

"There's still this cultural hangover from a different era, when you could get a good job without a postsecondary education," says John Austin, a Brookings Institution scholar who focuses on the future of the Great Lakes region. "That era is over."

Few high-wage jobs will be in manufacturing, suggests Donald Grimes, a University of Michigan economist. The surest way to create those jobs, he and others say, is to recruit and retain the best people and to leverage their strengths into new lines of business.

Top-flight universities can help. They not merely build talent, they also generate the ideas that can spawn new industries.

"We have some of the greatest research universities in the world," says Mr. Austin. But despite being one of the top states in patents, "we're in the bottom tier of states in commercializing products."

Other regions are blazing a trail. San Diego has leveraged its research assets to nurture biotech. North Carolina spawned high-tech jobs by creating Research Triangle Park near three leading universities.

The Wolverine State, for its part, has Michigan State University in East Lansing, the University of Michigan in Ann Arbor, and Wayne State University in Detroit. Those institutions, coupled with the efforts of companies, could help Michigan build a leading position in fields such as energy, medicine, and environmental protection.

The state should use whatever resources it can, experts say, to attract and retain highly educated people. One lure: a new state-sponsored venture capital fund.

The focus on human capital, they add, must extend as broadly as possible through the population. Gov. Jennifer Granholm (D) has set a goal of doubling the percentage of residents with postsecondary degrees or other credentials for career advancement.

Places like Lansing Community College, which serves 40,000 students a year, are helping to make that goal achievable. Whether in traditional four-month classes or in more-flexible formats, the college focuses on training in professions with strong local demand.

Many 16-week courses have been broken into much smaller modules, so learners can grab bite-size training upgrades as needs arise. "I call it 'just in time' education, or 'just in need' education," says Ruth Borger, a vice president at the college.

The job-creation challenge is formidable, however. The state's employment base shrank last year and it is shedding manufacturing jobs faster than the rest of the United States.