G.M. has promised to use its tour through bankruptcy to become a more nimble and competitive company, but Michigan faces an even tougher task in reinventing itself.
For all the talk of California’s economic woes, the distress in Michigan is greater. About 800,000 jobs have been lost in the state — about one in every six — since 2000, and its unemployment rate has reached 12.7 percent, higher than any other state.
The fallout has been even worse in heavily populated southeastern Michigan. Manufacturing jobs in the seven-county region that includes Detroit have fallen 51 percent since the beginning of the decade, and auto-related positions have fallen 65 percent.
The economic crisis has been so severe that Michigan, with a $1.4 billion budget shortfall, is closing eight prisons to save money. It is also canceling more than 130 road and bridge repair projects because the state cannot come up with enough money to get matching federal funds.
“Movie studio jobs are going to be measured in the hundreds,” said Don Grimes, an economic forecaster at the University of Michigan. “It’s nowhere near the replacement numbers for what’s going on.”
On a broader level, the troubles of the auto industry are having a profound impact on the overall United States economy. The industry — with Michigan as its center — now accounts for only 1.5 percent of the nation’s economic output, down from 3 percent in 2007 and 5 percent at its peak in the 1950s.
The automakers have historically played a big part in ending recessions. Car companies, in the past, would increase production and add workers to satisfy pent-up consumer demand after a downturn. But now, the industry’s troubles may be prolonging the misery.
“If not for the problems in the auto industry, this recession would have been much milder,” said Ben Herzon, an economist at Macroeconomic Advisors, in St. Louis.
In Michigan, the state’s leaders are hoping to build on what’s left of the once-mighty Big Three automakers, and attract new jobs tied to the alternative-fuel vehicles of the future.
The state has authorized tax credits to support a new battery manufacturing plant for G.M., and similar assistance for three other proposed battery projects. The jobs created will number in the hundreds at first, but state officials are hopeful that Michigan will be at the center of battery development nationwide.
Still, battery production has a long way to go to match the jobs being lost. On Monday, G.M. opened a new battery lab at its Warren, Mich., technical center that will be used by an existing team of about 1,000 engineers. On the same day, the company said it would cut an additional 400 union jobs by shutting down medium-duty truck production in Flint.
Michigan is also pursuing wind-power technology, solar-panel manufacturing, even production of railroad cars — any viable industry that might be interested in hiring the thousands of engineers who used to work in the auto industry.
“This community still has a lot of things going for it,” said Senator Carl Levin, Democrat of Michigan. “This is the heart of the automotive research capital of the world, and there’s a strong structure to build on.”