Not too long ago, I wrote about what I saw as the unlikely chances of us selling our house in metro Detroit. Well, we did. And even though we had to pay the “buyer” to take it, I am happy to have it off my hands. I’ve recently read a few articles that made feel even more fortunate to have sold the house. Talk about depressing the articles paint a picture of doom and gloom (summed up at Time’s Detroit Blog). In The Detroit News, Bob Daddow of Oakland County says Michigan “is screwed.” Let’s hope he’s not holding back. Apparently short sightedness is to blame…ya think? Sadly, it sounds like corporate Michigan is going to have to take charge. At least according to another article in The Detroit News. That’s scary. Not only did politicians use Michigan and Detroit as personal piggy bank, but the were often working with our corporate leaders (see Black Bottom and Paradise Valley, and especially, Poletown).So, yeah. We’re pretty happy we sold the house. What was the secret? Luck. Our house was recently remodeled (by us), in a very modern style. And in the area we lived, modern was not generally desired. Even though it was urban, I get the impression most of the residents wanted to live in the country. Think ducks, yellow, shaker style furniture, flowery wallpaper trim, and wrought iron. Our house had none of that. Inside it was white on white. Unstained hardwood throughout, with white walls, white cabinets, white toilet, sink, and tub, along with modern fixtures. I thought it had a snowball’s chance in hell of selling. But sell it did. And to the first couple to look at it. I don’t know what else to call it but luck. Sure, we lost money, but in Michigan especially, who isn’t? I guess our house stood out from the rest, and the buyers said they’d looked at dozens of houses before ours. Ours was perfect, they said. Damn, do I feel lucky. To anyone else trying to sell in Michigan, well, I wish you luck too. You’re going to need it.
Archive for the 'dysfunctional' Category
Over the years I’ve received plenty of email from former Detroiters. Recently one asked if I would visited his old street. On this very long block, only about a half dozen houses still stood, and only one appeared to be occupied, although it was in only marginally better condition than the unoccupied ones. This was one of the abandoned houses on the block. Painted an optimistic blue and yellow color combination, it, along with several others appeared to have been recently abandoned.
Not too long ago, I heard The End Of The Line For GM-Toyota Joint Venture on NPR. I had already heard about the closure of the plant, but knew very little (actually, nothing) about the history of the plant and what it represented for the American automotive industry. This paragraph pretty much sums up the whole piece:
“In the mid-1980s, Toyota took over the Fremont plant, one of GM’s worst, a factory known for sex, drugs and defective vehicles. And as part of an historic joint venture, Toyota turned the plant into one of GM’s best, practically overnight.”
NPR reported on the history of the plant. At one point the assembly line output cars with engines in backwards, missing steering wheels or brakes, and cars with with front ends from other cars. Booze was common on the line, and nobody dared stop the line for anything. Eventually Toyota and GM partnered up to run the plant. But first they sent employees to Japan to learn Toyota’s way of doing things. Of course Toyota’s way was very different. It was pretty much the complete opposite of how GM had been run the plant. Upon reopening, the plant began producing some of the highest quality cars in America. So what did GM do next? Did they take what they had learned and apply it elsewhere? Ahh…no. In fact one of the NUMMI “Commandos” quit in frustration.
A year later GM did try to apply what they had learned at NUMMI to other plants. At a plant in Van Nuys nobody wanted to change. I wasn’t shocked by the resistance to change from rank and file workers. After all, the initial reaction by most people to criticism is defensiveness. Most do not want to be told they are doing something wrong, or even that they could be doing something better. I wasn’t even shocked to hear how one plant manager asked a NUMMI Cammando to leave the plant after a presentation on doing things the NUMMI way. Even after plants across the country began closing and GM began losing market share quickly, the resistance remained. What did shock me was the fact that upper management at GM allowed management at the plants to not change. “Who was in charge?”, one might be inclined to ask. According to the NPR story, the “plant managers were king.” I guess I shouldn’t have been surprised, as this is the kind of dysfunctional leadership I’d experienced for decades in the metro Detroit area, and to be truthful, in my corporate experience elsewhere. The Big Three were just bigger and perhaps more dysfunctional than most. And unfortunately they were this dysfunctional during a profound shift in the world economy. It’s bad enough when the average person refuses to pay attention to the writing on the wall, but downright idiotic and shortsighted when leadership ignores it.
Unfortunately this seems to be a common theme in American corporate culture. I suppose I shouldn’t be shocked about any of this. The shareholders at public companies frequently reward pathetic leadership. There is rarely any incentive lead a company toward a long term course of profitability. Instead they give big bonuses for short term profitability. Any sports fan knows that teams go through periods of mediocracy as they build toward long term competitiveness, yet in the world of high paid corporate cronyism, no one seems to give any thought to a few years down the road. In corporate culture almost any cut seems to be rewarded. Even cuts that will harm company for years to come seem to be rewarded. Seemingly, as long as a company beats the next quarterly projection the stock goes up. And if stock goes up, shareholders are happy. And if shareholders are happy, execs get big bonuses.
Is it any wonder my confidence in our corporate leadership ranks right down near that of our political leadership? Now that the Big Three have possibly hit rock bottom, do they have the leadership in place, and the will to make the necessary changes? It seems that perhaps the threat of extinction has shaken enough people, in at least two of the three, that perhaps things are headed in the right direction. Too little, too late for so many. Sad that the ship has to begin sinking before the will is there to fix the problems.
The winter months in Michigan can be, and usually are, rather dreary. During our annual holiday visit to metro Detroit, along with the usual lack of sunshine, we had experienced the joy of pouring rain on Christmas day. Fun. Of course many can get used to such weather, and some will even claim to like it. For some reason many Michiganders complain all winter about snow. Some even claim to prefer cold, damp weather to dry, cold weather. Many say, “well, at least it’s not snow!”, whenever it rains. Because soaking wet and cold is apparently so much better. Besides, snow is the only thing that covers up the brown grass, bushes, trees, and all of the mud that we get to experience a good four, or more, months of the year. But, if someone claims to like it, who am I to judge. Whatever makes you happy…
On the plus side, we enjoyed the usual things during our visit to metro Detroit. We spent time with family for holiday brunches, lunches, and dinners, as well as at a memorial for my grandmother who had recently passed away at the age of 98. We ate and drank at some of our favorite metro area restaurants and bars, and caught up with Friends. We also got to enjoy a Red Wing’s game, as we watched Detroit beat the Colorado Avalanche.
In the weeks leading up to our trip back to Detroit, we scheduled some drywall work to be done prior to our arrival. Over the eight years we’ve owned the home we’ve gutted the bathroom and kitchen. And by gutting, I mean we ripped out absolutely everything. In the bathroom we had to stand on floor joists as we laid new sub-flooring. In the kitchen we spent days ripping out old underlayment covered with nasty, worn out linoleum made to look like bricks. In both rooms everything went. The bathroom got a new cast iron tub, all new plumbing, ceramic floors and tub surround, as well as new insulation and drywall. The kitchen received all new cabinets, appliances (other than the fridge), and new oak, hardwood flooring. We also replaced insulation and drywall in two bedrooms, refinished all of the old, existing hardwood floors, as well as the new kitchen flooring, after ripping out disgusting, rental house carpeting. We patched holes in the foundation leftover from the cement forms. All of this was done by us, with the rare helping hand of a professional plumber or electrician. The only thing we didn’t play a major role in installing was the new furnace and air conditioners.
We did as much as possible ourselves because we didn’t want to take out a loan on our house. We didn’t believe that borrowing to fix up our rather modest ranch house was a smart move. Instead invested a lot of sweet equity, saved money in envelopes, and always paid all bills in full. The only exception was the twelve months, same as cash, credit card Ikea gave us. We did take advantage of a free year long loan. Of course we paid this off in full before the deadline. We had also purchased a house we could afford, even on one income should one of us lose our jobs. And this happened shortly after buying the house. My wife’s company was purchased by good ole’ Barry Diller, and was promptly laid off. I quit my job a few years later to try my hand at self-employment. We never had to stretch to afford the house. We were never house poor. We even paid extra on the measly $666 dollar mortgage each month in a effort to pay down the principal.
While we did see hardship coming to the metro Detroit area, we didn’t have the renovations finished soon enough to sell when we new we should. And while we saw the writing on the wall, we certainly didn’t know it would get as bad as it did. Upon arriving home we worked hard on finishing the basement on our house, not really knowing the extent of the value lost in the previous six months. Sure we new it had lost value, but all told, it’s probably down 40% or more from it’s peak value. We were told by our real estate agent that we really needed to finish the basement, and so we were intent on it…until we realized what kind of shape we were in. Instead of throwing good money after bad, we began to think in terms of damage control. We may as well burn a pile of money on the driveway. Or perhaps put a pile of money on the driveway. At least that would generate some interest in the place.
Now I constantly read articles like:
After learning that we were hopelessly under water, we dropped all tools and stopped work on the house. Strategic default, the new term for walking away even though you’re currently good on your payments, became a very appealing thought. We moved for work, and we can’t, and don’t want to, go back. Two years of paying the mortgage on even a cheap house (that we don’t live in) is a huge amount of money that is not saved for retirement (not that I ever expect to actually retire), or for the unthinkable potential need for a future debilitating illness, or for other future needs. The money becomes locked away, in a sense, prevented from being used for more useful in the economy. Even though we bought way less than we could afford, never borrowed against it, and did all renovations ourselves, we are still faced with the possibility of owing $30,000, if we can even sell the house. This is perfectly plausible scenario even though we did everything “right”. And now the mortgage and banking industry wants me to think of my legal obligation as a moral obligation. The legal documents say it all. They state in the terms what we owe, what the collateral is, and what happens if we fail to pay. There’s no mention of heaven or hell, good or bad, right or wrong…only terms of agreement, and potential penalties should one side fail to uphold their end of the bargain.
I don’t like the idea of walking away, and we’re doing what we can to avoid it. But at some point we need to, once again start saving the large sums of money needed for our future. The longer we hold off, the worse it becomes. Even the moral compass in my head is weak compared with pending problems of a future with too little saved. Which potential scenario is worse? The one were we walk away from a legal obligation with a bank? Or the moral obligation were we fail to take care of ourselves and our families, without relying on public handouts?
After living and working for the past two years in D.C., and Denver, Colorado, coming back to the Detroit area is a real eye opener. What was once a maddening and frustrating place to live is now just plain depressing. With the real unemployment rate estimated to be near 20% for the state, and a ridiculously high 50% for the city of Detroit, still falling real estate values (down 40% in my area, and including our house), a crumbling infrastructure, financially strapped municipalities and school districts, and a apparent 50% commercial vacancy rate (just judging by what I can see..), the metro area seems to continually worsen. Each time I come back it seems that things couldn’t get worse (even though I don’t believe the area’s hit bottom yet), yet it always does.
Living in the area, one becomes accustomed to things residents in most other areas would never imagine. Roads that get complaints in other areas, metro Detroiters can only dream about. The public transit that others complain about being crowded or expensive, doesn’t even exist here. Same with the practically non-existent bike lanes. In Denver I ride my bike everywhere, only getting in the car to make longer distance trips. It’s something that I found to be unacceptably difficult here in southeastern Michigan. When I did make a trip by bicycle here, I was that strange person riding their bike on the road carrying grocery bags; presumably some poor sap who’d had his license taken away, or who didn’t have enough money for a car. In Denver, I’m just one of many using a bicycle for, believe it or not, transportation. Imagine that… Our neighbor here in metro Detroit would drive one block to buy cigarettes.
Driving around metro Detroit, it’s rare to see more than one or two people out getting exercise of any kind. In Denver it would be rare to see less than a dozen people exercising on my two mile ride to work. The weekly Wednesday night cruiser ride in Denver attracted up to 850 riders on a single night this past summer. Of course one has considering how many other options there are for socializing, entertainment, and outdoor activities. On any given week there will be rides, runs, creative Meetups, art openings, and just about anything else an active person under the age of 95 might enjoy. I know some of these things exist in metro Detroit, but the often long distance between them isn’t just inconvenient, but a huge waste of time, and dangerous when you consider all of the different highways one would have to travel to get from, say, Royal Oak to Ann Arbor on a weekday evening.
I have a point, beyond yet one more rant about the area. And the point is this: does anyone, who hasn’t left, or doesn’t want to leave, understand what needs to change about the metro area? Everyone knows that Michigan needs jobs. But I get the feeling that many who remain believe that those who left were weak, or quitters, or don’t like hard work. Those “quitters” who left the state, left because they had other opportunities…better opportunities, and most likely a chance at a better lifestyle. They didn’t leave because they weren’t up for a challenge. If an area offers jobs, and “opportunities” rooted in the past, and another area is embracing the future, why would I choose that challenge? If you can be on a better team, who wouldn’t choose it? Sure, some would rather be a big fish in a small pond, but this particular pond keeps getting smaller, and dirtier.
The point is often made that the area needs to bring back manufacturing jobs. I wouldn’t argue that manufacturing jobs…heck any jobs, would be good for the area. But maybe what the area really needs is to face reality. Metro Detroiters need to adapt to changing times. An education may be a good place for many to start. The claim is often made that metro Detroiters are scrappy, gritty, and hard working survivors. What mid-west city doesn’t believe that? The question is, what do survivors do when there old way of doing things doesn’t work anymore? They change their way of doing things. What did metro Detroit do when it was obvious the ways of the past were going to end soon? Nothing. Detroit made pretty much all of the same mistakes Pittsburgh has made, but unfortunately, unlike Pittsburgh, Detroit’s had very little of the fortuitous investments in other industries.
The question that should be asked, that often isn’t, is why have our young and highly educated citizens been leaving for decades? If the question was asked of every one of them, that has left the state, one would get a variety of answers from jobs to lifestyle. If you were to ask what it would take to get them to come back to metro Detroit, the answers would be equally varied, but I doubt many want to come back for traditional manufacturing jobs. Nor did many of them leave because of a lack of traditional manufacturing jobs. As a friend said the other night, “the state is a storefront. Why would anyone want to come in?”
When time Magazine offered advertising space for a campaign designed to draw this very demographic to southeastern Michigan, they asked five large agencies to answer the question, “If I’m young, talented and creative, and open to all kinds of opportunities, why Detroit?” Take a look at the ads… My personal opinion is that these ads do a better job of answering, “if I’m young, talented and creative, and open to all kinds of opportunities, why leave Detroit?” The ads do a great job of pointing out the disconnect that exists between those who have lived here a long time, and made lots of money here, and those of a younger more mobile generation. Outside of the suburbs of Detroit, who cares about Kid Rock? It really makes me wonder, if these people even understand what types of music the target demographic listens to? I can tell you, it’s not Kid Rock. Not a single one touched on any compelling reason for someone from outside of the area, to relocated here. Why are we even asking the old guard how to attract a new generation of creative, enthusiastic, and highly motivated entrepreneurs and creatives? L. Brooks Patterson still wants to stake metro Detroit’s future on the widening of I-75 from 8 Mile to M-59. MDOT and SEMCOG still seem to believe all transportation should be done in an automobile. No bikes, no trains, no walking…again that’s for the Third World poor, such as those in New York, Chicago, Atlanta, San Francisco, Portland, Denver, London, Brussels, and Toronto.
The morning after I arrived back in metro Detroit, we watched part of a round-table discussion on a local news show. The topic was, of course, about the area’s future. It appeared that not one of the participants was under the age of 60. Not that those over 60 have nothing to contribute. But asking only those who lived through a very different time period how we should proceed into the future misses the point entirely. We are in this situation because we (they) thought that what worked in the past would surely work in the future. If it was good enough then, it’s good enough now. Needless to say, watching did not make me feel very encouraged about the future of metro Detroit. Does anybody here, in any leadership position, with any power, or with money, get it yet? Do they understand the real issues? Do they know what it’s going to take to bring people back, or to make them stay?
When the wall to your church collapses onto the sidewalk and street, there’s no need to stop holding services. With a pile of bricks and an i-beam laying across the sidewalk and into the street, the name of the church, the pastor, and the service schedule was simply painted on a once interior wall. As singing and sounds of “praise God…” blared from speakers of a church across the street, pedestrians walking along the sidewalk either climbed over the pile or walked into the street without so much as a pause to consider the somewhat strange situation. It is a testament to what can be considered “normal” in the city of Detroit.
The article reinforces the importance of flexibility, and continual education for a successful career. For most, the days of learning something in school, or on the job, and applying it in one career for the rest of your life, are gone.
On the other hand, the recommendation for the church newsletter publisher to put together a portfolio and shop it around at creative Meetups, will likely lead to nothing. A brand new designer at a designer Meetup, will, at worst, meet other new designers with no work, and at best meet successful veterans who don’t have enough work. This is true in most places, and even more so in metro Detroit.
I didn’t find this surprising. It actually reinforced my preconceived notions. Unfortunately Michigan didn’t do too well in either category. And it shows in the results, with Michigan ranking 41st in happiness.
The following quote from the article was particularly interesting: “Of the personality factors, neuroticism took a toll on a state’s cheery count, suggesting people living in the happiest states are more relaxed than their gloomy counterparts.”
From Wikipedia comes the following definition of neurosis: “poor ability to adapt to one’s environment, an inability to change one’s life patterns, and the inability to develop a richer, more complex, more satisfying personality.”
When Rick Wagoner was ousted from GM, many people came to his defense. There was anger. How dare a government appointed “czar” (Steven Rattner), with no automotive industry experience, fire GM’s CEO. “What does the government know about running a car company?”, the defenders would say. I constantly heard how Rick was a “nice guy”. As if that matters. I like nice guys too, but Wagoner had proven his inability to turn GM around.
What does the government know about running a car company? Nothing. What did Rick Wagoner know about running a car company? I don’t know, but it was definitely time for a change. Don’t worry too much though, over his tenure at GM, Rick Wagoner made over $63 million, and left with a $20 million retirement package. Raise your hand if you’d like to lead a failing automotive company…
There were a few points that immediately stood out in their relevance to the metro Detroit area, including the following:
“Economic growth is highly correlated with an abundance of small, entrepreneurial firms.”
“There is a remarkably strong correlation between smaller average firm size and subsequent employment growth due to start-ups.”
“Evidence does not support the view that regional differences in demand for entrepreneurship are responsible for these entrepreneurial clusters. Instead, the evidence suggests that spatial differences in the fixed costs of entrepreneurship and/or in the supply of entrepreneurs best explain cluster formation.”
“If weight, horsepower, and torque were held at their 1980 levels, fuel economy for both passenger cars and light trucks could have increased by nearly 50 percent from 1980 to 2006. Instead, fuel economy actually increased by only 15 percent.”
Technology usually makes things more efficient, and cheaper. In the case of the Big Three, they made them less efficient and more expensive.
There’s not much to say about this, other than those who feel that the suburbs don’t need to worry about the plight of the city are mistaken. The brutal murder occurred at a restaurant at 12 Mile and Telegraph Rd. The witness to that murder was gunned down before the trial.
It’s great to see a Michigan company who played a large role in the collapse of the real estate market get $450 million in tax refunds. Guess who’ll get to pay for that? With “$1.5 billion in cash and cash equivalents on its balance sheet, according to its most recent financial statement”, it’s not like Pulte was in danger of shutting it’s doors any time soon.
A recent post on Time’s Detroit Blog about a letter written in response to a comment by George Jackson, in which he stated, “in a sense we are all Detroiters”, brought out some angry and emotional comments.
“When the city of Detroit begins to embrace the economic models that make great American cities, perhaps then the surrounding counties that are enjoying a modicum of economic success will consider aligning themselves with Detroit.” Unfortunately, modicum is the key word here.
Can energy be Michigan’s salvation? What the author, Bob Herber says is, “What we’ve lacked so far has been the courage, the will, to make it happen. ”
One of the recurring sentiments I get from metro Detroiters is not just a lacking will, but a belief that things don’t need to change. “V-8s are good damnit! We’re America!” V-8s are pretty cool…but, it’s old technology, and we need to start embracing the future in this state.
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