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As Jobs Leave, Detroit Struggles To Find Its Way

Ford
Ford

President Bush will tour two factories today where GM and Ford make hybrid vehicles. His visit to the Kansas City auto plants is the first of his presidency to domestic auto factories and is also an effort to improve relationships with Detroit’s Big Three after a tumultuous year. Their troubles are having a significant economic ripple effect on the city the automakers call home. CNBC’s Mike Huckman went to Detroit to check on the struggling city.

Over the past year nearly 40,000 manufacturing jobs have left Detroit and they are not exclusive to the auto industry. Comerica Bank's chief economist said last week that Michigan was “stuck in a one-state recession.”

“It’s amazing, when I go out and show houses, how many of them are vacant. So many people have already left,” said Gary Banister, a Detroit real estate agent.

When former Detroit Mayor Dennis Archer was asked about Detroit’s current state, he replied, the city of Detroit and the state of Michigan are "having its share of challenges.” But Archer also is an optimist.

"We’ll come back," Archer said. "The city will come back. Companies will come back and we’ll be even stronger.”

However, others don't think it will be that simple. David Littman, who at one time served as Comerica’s chief economist, said the only way for Detroit to turn around is for corporate taxes and labor costs to go lower.

“We’re noncompetitive," Littman said. "Our capital markets aren’t competitive. Our labor markets aren’t competitive, and we’ve chased the entrepreneurship away because profits is a dirty word."

“There’s no early revival until we have a business climate change of formidable proportions,” he said. Littman suggested this could begin to happen later this year when the Big Three and the UAW begin contract talks.

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