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STEVE INSKEEP, host:

Michigan's governor spoke this week near a General Motors plant. Jennifer Granholm went to the public library in the town of Hamtramck, and she told a crowd they have a place in the economy of the future.

Governor JENNIFER GRANHOLM (Democrat, Michigan): Because if you can make a part for a car, if you can bend steel for a car, you better believe you can bend steel for a wind turbine, or you can make a solar panel. So, the future for us, I'm telling you…

(Soundbite of applause)

Gov. GRANHOLM: …we're going to be all right.

INSKEEP: The news had a way of overshadowing Granholm's message. As soon as the governor finished, reporters crowded around. They asked about Chrysler's possible bankruptcy. The governor denounced Chrysler's creditors and then slipped into a back room to make a phone call about the crisis.

I'm just curious about the phone call. How'd it go?

Gov. GRANHOLM: Did you hear me yelling?

INSKEEP: Amid these events, we asked the governor what's next for the state with the nation's highest unemployment rate.

The economic firm Global Insight has come out with a report where it forecasts different areas of the country and how their job markets might improve over the next few years. And there are some that might return to peak employment, according to their forecast, within a year or two. There are others that will take longer. And then there's this category of blotches that are red on the map, including much of Michigan. Michigan is not expected to return to peak employment until sometime after 2014, five years or more in the future. Do you think that's likely to be the case?

Gov. GRANHOLM: No. It is going to take some time, because we have such a concentration of manufacturing jobs. We have a longer way to go to be able to replace those jobs. But when you look at what Michigan's assets are, you know, if we want to move toward wind and solar energy, for example, the fact that the Department of Energy has rated Michigan as No. 4 in the country for the production of wind and the manufacture of wind turbines because we're off of the Great Lakes.

We've got 330 research and development tech centers related to the next automobile, and that electric vehicle and the battery associated with it. That's going to happen right here because of the legacy of that automotive history that we have. So, insofar as this country is going to be manufacturing things to be able to produce renewable energy, we are a place where people should locate to be able to do that.

INSKEEP: This must be a hard question for a booster of Michigan to face, but is there a reality that a place like this has to face that over time, there's just going to have to be fewer people doing fewer jobs here?

Gov. GRANHOLM: Well, it may be a smaller state. I don't think that people disagree with that. However, I do think that because of the resources and the talent we have, the university system that we have, it will come back. But we've also got to change the culture, a culture that has for 100 years worked for someone else. So creating that entrepreneurial culture is really what we have been focused on, the spin-offs, commercializing, more venture capital, robotics, nanotechnology, all of that. You know, those are things that we are focused on, too.

INSKEEP: One other thing: You've got what is, for Michigan, a huge budget gap. Many people will know that you can't borrow money the way the federal government does. You've got decisions coming up, I believe, in the next few days about who's going to lose, who's going to suffer. Give me an idea. Who's going to suffer?

Gov. GRANHOLM: Well, when I first became governor, I've had to cut every single year since I've been governor. Every single year, we've had to cut hundreds of millions, if not billions, of dollars. And so this year will be no different than before.

When I first because governor, I did - I went around the state and I asked citizens what should we save and what should go in a tough time? And what citizens said is, among all things, if you have to cut other things, fine, but keep health care for vulnerable citizens, and keep K-12 education intact. The rest of it, it's all up for grabs.

INSKEEP: Well, when you look at the choices now, I believe they look kind of dismaying. Do you eliminate arts and culture, or do you wipe out job training? I mean, they don't seem like very easy choices.

Gov. GRANHOLM: They're not. Well, I mean, arts and culture, I have recommended eliminating that because we just can't afford it anymore. You know, there was a time when Michigan government was very large, had a lot of wonderful programs. But we are lean and mean. I should say we're lean, but not mean.

INSKEEP: Michigan Governor Jennifer Granholm says she wants to minimize the economic pain if she can. Half an hour after the governor spoke, General Motors announced it will close many of its plants for much of the summer.

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