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Updated 12:30 PM February 14, 2007
 

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Pfizer's ripple effect: More than 6,000 Michigan jobs

Pfizer's recent announcement that it will close three Michigan facilities could cost the state 6,000 jobs over the next three years, U-M economists say.

While 2,410 Pfizer jobs in Ann Arbor, Kalamazoo and Plymouth will be eliminated this year and next, another 3,723 spin-off jobs at other businesses (including government) will be lost through 2009, they say.

In a new analysis of the impact of the pharmaceutical giant's facility closures on the Michigan economy, Donald Grimes and George Fulton of the Institute of Labor and Industrial Relations examine the ripple effects of Pfizer's decision—across geographic regions within the state and across industries.

Washtenaw County will take the brunt of the job losses (3,952 or 1.6 percent of all jobs in the county by 2009), but many other counties in the state also will be affected—virtually all of southern lower Michigan. Over the next three years, Oakland will lose 670 jobs, Wayne 447, Kalamazoo 425, and Macomb 187.

"The Pfizer closures will have a widespread adverse impact on the entire Michigan economy, although the most severe losses will occur in Washtenaw County," Grimes says. "However, state and local efforts to retain workers and create jobs would help to improve the outcome."

Grimes and Fulton say that the geographic ripple effect is a result of extensive trading relationships among Michigan's counties. For example, people and businesses located in Washtenaw purchase many goods and services in neighboring counties. Many people who work in Washtenaw live, and support businesses, in other counties.

The industrial ripple effect will be felt mostly in professional and technical services (2,654 job losses statewide), but also in retail trade (688 job losses), accommodations and food service (429 job losses), administrative support (350 job losses) and state and local government, including education (346 job losses). Construction, manufacturing and many other industries also will be affected, though less so, the economists say.

In addition, Grimes and Fulton predict that 3,650 people will leave the state over the next three years as a result of the Pfizer closures. Most of the outmigration will occur in 2008, but population losses in Michigan will continue for several more years, with more than 5,300 residents gone by 2012.

By that year, Michigan also will have nearly 1,000 fewer school-age children as a result of Pfizer leaving, with nearly 500 fewer of them in Washtenaw County.

Grimes and Fulton say that the overall population estimates in their analysis probably are conservative.

"It is possible, maybe even likely, that the near-term population loss will be substantially greater than indicated," Fulton says.

Despite the projected population and job losses, especially in professional and technical services—precisely the kinds of jobs the state wants to attract and retain—Michigan should continue to invest in the development of knowledge-based jobs.

"Pfizer did not leave Michigan because of the economic environment, nor do the closures contradict the rationale behind the strategy of diversification," Fulton says. "The correct response is not to get off the track, but rather to stay the course."

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