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RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne at NPR West.

STEVE INSKEEP, host:

And I'm Steve Inskeep in Detroit. I've got a book in my hands called "The Michigan Economy: Its Potentials and Its Problems." The book says the post-war boom is over. The auto industry will never be what it once was, and it's time to diversify into areas like finance, insurance, tourism and mail-order firms.

The book was written in 1959. Michigan has known for half a century that a day like this might come. And now that the auto industry is sagging and state unemployment is 12.6 percent, Michigan residents are struggling to diversify from the handful of industries that made this state rich.

We're hearing some of their stories this week. Dustin Dwyer of Michigan Radio visited one Michigan city that hopes to be a model for the rest.

And, Dustin, where is it?

DUSTIN DWYER: In Kalamazoo, on the west side of the state. The unemployment rate there is about 9.9 percent. Sounds pretty bad, but it's much better than that 12.6 percent number you just mentioned.

And people in Kalamazoo say their city's a little better off because they've depended on a diverse group of smaller firms. What I think makes Kalamazoo really different is just how many industries it's gone through in its history and how often it's had to find something new.

I went on a driving tour of the city with Ron Kitchens. He's the head of an organization called Southwest Michigan First. It's in charge of economic development for the city. And Kitchens told me Kalamazoo has seen a lot of its leading industries come and go.

Mr. RON KITCHENS (Southwest Michigan First): We've been a leader in the production of celery, children's sleds, the gas stove, rods, reels, guitars, pill manufacturing, orthopedic beds, taxicabs and yes, women's corsets.

(Soundbite of laughter)

INSKEEP: Well, the corset industry is not what it once was.

DWYER: No, it's certainly not. And that's just one of the reasons why Kalamazoo has had to reinvent itself over and over, probably more than most cities. Kalamazoo did have a big auto plant in town that closed in the late 1990s. Around the same time, Pfizer bought out the Upjohn company. Upjohn had basically made Kalamazoo what it is. When Pfizer took over, it slashed thousands of jobs.

INSKEEP: That's a pharmaceutical firm?

DWYER: Yeah, a pharmaceutical firm.

And Kitchens says it was devastating, But today that empty GM plant has been turned into a distribution center, home to more than a dozen companies. And all of the lost Pfizer jobs have been replaced with hundreds of smaller companies instead of one big one.

And the odd thing here for me is that Kitchens says he knows even these companies will leave. He says cities that expect big companies to come into town and stay forever, they've got it wrong.

Mr. KITCHENS: It's not the way the economy works any longer, and so we simply have to understand that companies changing and loss is as inevitable a process as them successfully growing and creating.

INSKEEP: I guess the challenge there is to make sure if you're Kalamazoo, that you keep new companies coming.

DWYER: Yeah, it's a tough challenge. I mean, you never really know. But people in Kalamazoo just believe that there are enough good reasons to attract these new companies. And one big weapon for them is the Kalamazoo Promise. It's a program that guarantees every child who spends at least four years in the Kalamazoo public schools will get money to go to college at any school in Michigan. And this is funded entirely by anonymous private donors.

INSKEEP: And it's interesting, because as part of our coverage, we interviewed Richard Florida, who's written books about metropolitan areas and the way they grown. And he argues the key is not to go crazy trying to attract companies and giving them tax breaks, but to find ways to attract educated, interesting, creative people, and they will bring jobs or create jobs.

DWYER: Yeah, and that's certainly the plan in Kalamazoo. It's really the plan in a lot of places. But as you see in Kalamazoo, even here, almost one in 10 people are unemployed. So it's still not a pretty picture, even if you think you're doing well on that front.

I went on a second tour of the city, this time with City Commissioner Stephanie Moore. She's from the north side of town, which is generally poor, and she introduced me to a lot of people. I wish I could share with you all of the things that I heard. But one person I really want to tell you about is Stephanie Moore's nephew, Terance Moore.

He graduated from Kalamazoo public schools a few years ago. He could've gotten money to go to school in Michigan from the Kalamazoo Promise. But instead, he decided to go to Morehouse College in Atlanta.

Mr. TERANCE MOORE (Student, Morehouse College): Even with me coming back to visit, it makes me want to hurry up and go back, you know, back to Georgia.

DWYER: And he literally did right after we got done talking. I met him in his driveway. And he threw his suitcase in his trunk and he drove away.

(Soundbite of car engine started)

INSKEEP: So there's a talented person gone.

DWYER: Yeah. And actually what Terance Moore, one of the things that makes him want to get out of town so quickly is he was involved in a major lawsuit with the city over racial profiling. The thing is he is exactly the kind of educated young person that cities want to attract. And his situation really underscores the challenge of building a healthy and diverse city.

INSKEEP: Dustin Dwyer of Michigan Radio, part of our coverage, Retooling Detroit.

Dustin, thanks very much.

DWYER: Thank you.

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