Archive for the 'industry' Category



Too little, too late?

fisher_plant_snow.jpg

U.S. automakers agree to new fuel efficiency standards. U.S. automakers cut costs. U.S. automakers make fuel efficient vehicles. That’s great. The problem isn’t necessarily with what Big Three execs agree to now, or what they say now, it’s what has happened over the last 35, or so, years. GM, and the other American automobile manufacturers have a really bad legacy. Any other companies that were as poorly managed would be out of business. Even with a massive taxpayer bailout, GM is still filing for bankruptcy. That alone speaks volumes.

While Toyota may be hurting, it doesn’t appear they will be filing for bankruptcy. And, Honda, while posting some recent losses appears to be well positioned for the future. It’s as if the American automotive industry is given a pass for failing to plan successfully for the future. And worse yet, for failures which are often admitted, even by Wagoner himself.

It’s sad. I am still paying on a house in metro Detroit, as are others I’m sure, even while having to leave the state to make a living. We are, in effect, paying the price for the short sightedness of our political and corporate leaders. The Big Three execs seem downright excited about new fuel efficiency standards, and electric vehicles. Too bad they didn’t seem remotely interested even ten years ago, and in fact banded together to fight new CAFE standards multiple times.

The argument, by Big Three defenders, is always, “they sold what the public wanted.” Of course the truth is usually not that simple, nor is the past performance proof of future results. Just because people bought Ford Excursions when gas was $1.25/gallon, doesn’t mean they’ll buy them when gas is $3/gallon. But if we are to believe upper management at the Big Three, no one could have seen this coming. Plenty of people did, and smaller companies with less funding, fewer employees, and much less experience in the automotive industry are now leading the way in electric vehicles. While GM has long since canceled the EV1 program, companies such as Tesla, Fisker, and Detroit Electric are now either already selling, or are close to selling everything from high performance sports cars to affordable family sedans.

fisher_plant_door.jpg

You’ll often hear, that it wasn’t short sightedness. That it must be the unions fault, or perhaps it’s just a bad economy. The Big Three have been losing market share and money for much longer than this current economic downturn. Not that I’m not going to defend the UAW. I believe the UAW leadership was self-serving and short sighted, just like management, and our political leaders. I also believe that while much of the union rank and file knew the good times wouldn’t last, most just decided to get it while the getting was good. That’s a pretty short sighted game plan as well. It seems no one could see beyond the end of their nose.

So now, with Chrysler and GM going through bankruptcy, the Big Three are suddenly excited about fuel efficiency standards, controlling costs, and alternative fuel vehicles. Is it too little, too late? And opinions range from Detroit’s too excited about green cars, to the Big Three’s not embracing green cars enough, to Rick Wagoner is a scapegoat, to Rick Wagoner is to blame, to GM has too many brands, to GM should hold to brands, to Obama is doing too much, to Obama is doing too little. Nobody knows exactly what will work, or even if anything will work. Writers from many media outlets including writers from both the Washington Post and Business Week are at odds as to the reasons for the fall of the Big Three, and how to save it.

antique_car_storage.jpg

The only thing that seems certain is that whatever the fix is, it’s at least 20 years too late. Already the stumbles of the Big Three are opening the doors even wider for foreign manufacturers. I suppose it’s human nature to wait until the roof is collapsing to attempt to fix it, but with all of the money paid to almost everyone involved, you’d hope for a better outcome. When CEOs are paid millions, you expect them to fix inefficiencies, broken business models, and foresee possible future challenges. Gas prices may not stay at $1.25/gallon, consumers may not always want really large SUVs, and the economy may not always grow at record rates. It seems that the claims that no one could see these things coming are a bit disingenuous. It seems more likely that our leaders were simply blind or ignorant. Consumers didn’t always like SUVs. In fact Jeeps were at one point just for that off road enthusiast down the street. Pickup trucks were for construction workers and hunters. Gasoline is a limited resource. We have experienced rising fuel prices several times before. Consumers couldn’t really afford $50k automobiles, but an economy that seemed good led consumers to leverage themselves to buy Hummers and Escalades (among other things). Of course the economy would slow down. It had to. Anyone who couldn’t see that, simply didn’t want to.

The truth hurts…

07150801_04.jpg

I wrote this a while ago, so many of the links go to older (well, weeks old anyway) articles, but this one article made me think about actually publishing this post. A quote from the 25 year old report called “Path to Prosperity” that caught my attention: “‘We said we had to either get smart, get out’ of manufacturing ‘or get poor,’ Ross said. ‘We got poor.’” I was considering a new tone at The Motor(less) City, but what the hell; I guess it’ll have to wait.

Sometimes I get angry comments and emails about the content I put on my blog. Often times the comments are very defensive about the Metro Detroit area, and hence angry at me. In the past my rantings were really just the online equivalent of screaming into the wind. Now that some people actually read the blog, I’m confronted with the fact that not only do people not agree with me, but some are really mad at me. Not sure if I’m really comfortable with this, but I guess it’s a little late now. Yeah, the truth hurts.

Speaking of the truth hurting, it seems that people from the area, even the defensive ones are going to have to deal with some uncomfortable facts about the state, and city…and the region. Everyone (I hope) knows that Michigan’s unemployment rate is 12.6%, and Detroit’s is 22.8% (and future estimates even worse), but of course that’s not surprising. I think many in the area want to pretend that Metro Detroit is better than it is, and in fact often point out only moderately unique aspects of the area as proof of greatness. “We’re a great sports town”, people often say, or, “we’ve got great architecture.” There are two really good professional sports teams in Metro Detroit (and two pretty bad ones), and there are some very nice buildings in Detroit (the Penobscot, the Guardian, etc), but so what. What major city doesn’t have a couple of good sports teams, and some good architecture? And, really, neither of those things makes the area a good place to live.

I think this is becoming exceedingly obvious as people flee the state at a record pace. As the article clearly points out, the “young and college-educated” demographic that is leaving, is exactly the demographic that is needed to save Metro Detroit. As the population becomes older, the costs that will burden those that actually work will go up. The fight will continue over taxation, investment, and education, but it’ll all be for naught if we can’t figure out a way to attract people who create jobs instead of just those who need jobs. We aren’t going to be able to convince enough companies to come to the area to make up for all of the manufacturing jobs that have been lost, but we can make the environment more inviting to those who are the job creators.

harmonie_park_alley_wall.jpg

Some other painful truths:

The Big Three are mostly to blame for their problems. It is not just a symptom of the recent economic crisis, that no one could have seen coming. And the people in charge have not been the right ones either.

The problems in Detroit are very complex and deep rooted. Our past still haunts us. Lowering taxes isn’t a magic bullet.

The entire state is hurting, not just Metro Detroit. A quote from the article: “Michigan’s dependence on low-skill, high-paying manufacturing jobs is driving the state to the poorhouse, a new study shows.” I was a “bad” person for saying this recently.

It’s still one of the most dangerous cities in the country.

The citizens of Detroit constantly elect crooks. This one is not often disagreed with.

Good news? Well, there may be. It depends on your political persuasion.

There are some young entrepreneurial types that are doing their part to keep their own demographic from leaving the state.

The large tax incentives given to film productions in the state appear to be attracting larger and larger productions, bringing some jobs with them.

Immigrants could be the area’s future if we are open and inviting.

Stimulus dollars may help with high speed transit between Detroit and Chicago.

Michigan Central Station

When built in 1913, the Michigan Central Station was the world’s largest train station. The station was built fairly far from the downtown, with the hopes that it would anchor further development in the area. The station was used heavily through World War II, though the Great Depression slowed development in the city. Michigan Central Station saw declining usage shortly after. Unfortunately the station was never even filled to capacity with several upper floors never being used.

The station finally closed for good in 1988. It has stood empty ever since, and after years of neglect and deterioration, the Detroit City Council has voted to demolish the historic building, and bill the owner, Matty Moroun, for the costs.

The Abandoned House of the week, and the remaking of Detroit

02150501_05.jpg

I saw the following in a Richard Florida article in the Atlantic Monthly, titled How The Crash Will Reshape America: “The great urbanist Jane Jacobs was among the first to identify cities’ diverse economic and social structures as the true engines of growth. Although the specialization identified by Adam Smith creates powerful efficiency gains, Jacobs argued that the jostling of many different professions and different types of people, all in a dense environment, is an essential spur to innovation—to the creation of things that are truly new. And innovation, in the long run, is what keeps cities vital and relevant.”

My experience has certainly led me to believe that this is true. I recently read this article about “job sprawl”, which is the condition that exists in Metro Detroit, where most of the jobs are far away from the city core. I once read an article in the Oakland Business Review, about a company located in Oxford, who was unable to find a qualified software engineer. My first thought was, “no shit?” If you are located over 40 miles from the nearest large city, you should probably expect it to be hard to fill technical positions that require a lot of training, and/or education. It looked like a good fit for me, but living in Berkley at the time it was still 30 miles away, and probably an hour or more drive in rush hour traffic. When living in Washington, D.C., I was bombarded with calls and emails from recruiters and head hunters, trying to fill web developer positions in the D.C. area. If the job was not located on the Metro line, or at least within walking distance of the line, I simply said I wasn’t interested.

11240603_06.jpg

If you employ low skilled workers you can locate almost anywhere, but if you need highly skilled, and/or educated, you’re best bet is to be near an area with a relatively high population density. It’s fairly easy to find low skilled workers. Not so when it comes to skilled labor. I’ve had recruiters from around the country contact me because of my specific skill set. They are often having trouble filling these positions. I’ve now worked for multiple companies in densely populated areas that had trouble filling positions. In fact I am currently working for a company that has been trying to fill positions since before I began work there almost a year ago. They are located in an urban center where there is an active high tech community. If they were located 40+ miles from the city, their chances of filling the positions would be slim to none. It’s not that tech workers don’t like the country side; it’s just that in an urban setting you have a much higher concentration of such workers. Your chances of finding the person to fill your high tech role far from the city are not as likely. Someone is going to have a long drive…if they’re willing to do it at all.

Will this change in Detroit? I don’t know. I’m not all that optimistic about Metro Detroit’s outlook. Areas like Royal Oak, and Ann Arbor at least have, arguably, resources, infrastructure and population density to decent tech centers. Currently, Ann Arbor is the area most resembling a creative center, and has the advantage of one of the best public universities in the country. Detroit has the New Center Area, and the Central Business District, but both areas are fairly far from the areas with the highest concentrations of creative workers such as Ferndale, Royal Oak, and Ann Arbor. Detroit has a long way to go to even approach the level of safety, livability, and urban conveniences that the previously mentioned suburban areas already have. Detroit’s advantage at this point are the incredibly low costs of land and buildings. The fact that a start up could acquire large amounts of space and land for very little money should a selling point. The fact that the area is losing the very residents a start up often needs, along with a reputation of as one of the most dangerous cities in the country makes the few pluses at lot less valuable. Detroit will need both the grass roots enthusiasm it’s been seeing, along with large amounts of public, and private funding to even have a chance of becoming a reasonably desirable place to live or do business.

Job opening in Detroit

02070802_12.jpg

Looks like there’s a job opening at G.M. With Rick Wagoner gone General Motors is now leaderless. What will they do? They won’t know how to make cars or,  more importantly, how to make money…oh wait they already don’t know how to make money. In fact since they had industry insiders leading the charge towards irrelevance for decades maybe the could hire someone with no industry experience…like me, for instance. I have no idea how to manage an auto manufacturing company, neither did Rick Wagoner apparently. Rick Wagoner was paid lots of money. Oh sure, by Wall Street standards he was paid practically nothing, but compared to me, he was paid a lot. They could have paid me a lot less, and ended up in the same spot.

All kidding aside (ok, most),  Chrysler and G.M. appear to be in deep doo-doo. I wondered what Cerberus was thinking when they purchased Chrysler from Daimler-Benz. I know what Cerberus’ M.O. is, but I think they were overly optomistic, and I don’t think their plan worked out too well. Now Chrysler has to Merge with Fiat. Wonderful. So, now, two crappy car companies can make crappy cars together. Maybe, at least, the crappy cars will cost less. I know I’m bound to anger some with statements such as the one I just made, but let me make it clear, that I believe management is to blame. The Union played a role in Chrysler’s demise as well, but any time a company is poorly run, and Chrysler has been poorly run, management is to blame. Management’s job is to maker sure all parts of a company function in unison to achieve a goal. If the goal is wrong, or portions of the company are not performing, it’s always managements job to redress such issues. And, most likely what G.M. really needs is a leader who the skeptical public will believe feels as disgusted with the old ways as they do. Someone who isn’t part of the dysfunctional machine, and shows a desire for a complete overhaul.

03180804_09.jpg

With two (here, and here) recent announcements by smaller companies, you have to wonder where the Big Three have had their collective heads lodged lately. Of course those cars aren’t out yet, and Tesla, and Detroit Electric have nothing to lose by making claims they may not be able to follow through on. Meanwhile the Big Three can’t afford to fall short of big claims. But that’s mainly because they’ve become the definition of over promising and under delivering. They’ve already used up their “get out of jail free” cards. Still, why did G.M. wait until the verge of bankruptcy to come up with a plan for a usable electric vehicle?

So the price to pay for such short-sightedness by the Big Three is partial socialization of a huge portion of our manufacturing industry. Anyone who’s angry about the state we are in should have spoken up long ago. It’s now a choice of pay to save the very ones at center of problem, or pay the price of doing nothing, and watching as an entire industry collapses around us. And actually there’s a third scenario as well. We may pay to save the industry, only to have it fail anyway.

Peeling paint

12260702_17.jpg

Updated Map of Abandonment


View Larger Map

Dead body frozen in ice…

A disturbing article in the Detroit News:
Frozen in indifference: Life goes on around body found in vacant warehouse
While this could happen in many American cities, it does say a lot about Detroit. The level of indifference in the area is incredible, and won’t change any time soon. Detroit won’t improve until enough people care.  Until enough people care, Detroit will not attract the kind of people needed to bring the right kind of change to area. And the attitude won’t change until a majority of those living in Detroit have some hope. And as long as poverty rates hover around 40%, unemployment rates continue to climb, and the education rates remain low, hope will remain illusive for many Detroiters.

Below are two iconic structures owned by Matty Maroun (mentioned in the preceding article). It’s amazing that an individual such as Matty is allowed to leave many of his structures unmaintained. In most cities, the buildings would have been condemned long ago by city or county agencies. Somehow Matty is able to get away with actions that no one else would be able to pull off.

ambassador_bridge_3.jpg

mcs_night_fog.jpg

Preaching to the choir…

12150406_09_xl.jpg

A discussion with my sister-in-law, regarding the inevitability of change, facing change, and dealing with change, somehow made me think of Detroit. Detroit’s like some people I know who refuse to face up to the fact that change is inevitable. And not only that it’s inevitable, but that you’d better prepare for it, and make the most of it. Once change is accepted, it can become an opportunity. Anyone who knows me, is well aware of how irritated Michigan’s, and Metro Detroit’s, resistance to change makes me.

As an individual, I, like so many others, had to face up the reality that the opportunities that my previous career choice, and my location in Metro Detroit, offered were limited. I mourned the loss of what I once had, and moved on. I learned new skills, used my spare time to build up some experience in my new industry, and, along with a move to a new, more economically viable location, am making a good living in an industry with a lot more current and future potential.

12150405_16_xl.jpg

For Metro Detroit, it’s time to mourn and move on. The past is past. It’s time to look towards the future. Time to figure out how to become relevant in the 21st century. When I talk with friends,with similar sensibilities, I always realize how we are simply preaching to the choir. More and more, people are coming to the realization that we are in the midst of a dramatic shift away from our industrial past. When will a Critical Mass emerge, that will force the change upon the area, that is necessary Detroit’s survival? Talk is cheap, and as these articles suggest, there’s plenty of talk…plenty of preaching to the choir. How can we convince the skeptics that change is not only inevitable, but necessary, potentially the best thing that can happen to the area?

New Detroit: A Radical Vision of America’s Greenest City

Immigrants in the 313: This is where the future begins

Essay: Is mass transit in Metro Detroit for real this time?

Return to Detroit

02070802_01.jpg

I made two separate trips to Metro Detroit recently, and was reminded of both why I miss the area, and why I hate it. First, we made the usual holiday family visit to Detroit, followed shortly after by a business trip to the area. During both trips we experienced the usual irritants such as only seeing the sun twice in a week, and driving on some of the worst roads on the planet.

The first trip back started with an evening of food and drinks with friends at the Royal Oak Brewery. Even though most of the restaurant is non-smoking, the entire place filled with smoke fairly quickly. By the time we left, we reeked of smoke, and my throat was scratchy. The next morning both my wife and I woke up with terrible headaches which developed in to full blown migraines. The next night, while laying incapacitated, and doped up on anti-nausea and migraine medication, I was already cursing my return to Detroit. In most major cities (at least the ones I like), you can enjoy dinner and a drink without smelling like an ashtray, but not in Detroit.

During our trip we constantly heard how Detroit’s automotive legacy was responsible for making this country what it is today, so therefore the (not so) Big 3 deserve loans. Guess what? Nobody cares. The Big 3 have had a broken business model for years, didn’t control their costs, gave away the automobile market to their foreign competitors, and failed to conceive of rising gas prices (how could gas get more expensive). The rest of the country doesn’t care much about the Big 3, because they’ve been aware of the industry’s problems for years. Why is Detroit still trying to avoid the inevitable?

We also heard how auto workers have hard jobs, and are hard workers. Unfortunately how hard your job is does not determine pay. Sorry, but, most of the time, it’s true. The market determines pay, and if you are easy to replace the market pays less. If you are difficult to replace, the market pays more. Simple enough. Workers for the Big 3 (both management and union) were often paid rates much higher than similar jobs in other industries. The wages had to fall to what both the companies can pay, and what the market will bear.

01200601_02.jpg

On the second trip back, while doing a job at the North American International Auto Show, I experienced the, seemingly never ending, incompetence of Detroit. When we went to park at Cobo Hall, the ticket machine wasn’t working, so one worker would remove the ticket from the machine, and give it to the driver. The driver would advance two feet to the toll booth where another worker took that same ticket, and ten dollars. That seemed strange, but it got worse. When attempting to leave, the same worker that took the ticket and your money at the booth, asked for our ticket again. We had to explain to him how he took our ticket, and our money, when we entered. Eventually we convinced him that we’d already paid, and we headed home.

The final kick in the teeth came from a publisher of several prominent magazines in the area. I had provided photography for use in an issue of one of their magazines. After agreeing to an amount, and running the images in the magazine, the editor, after several weeks of back and forth emails and phone calls attempting to get my invoice paid, told me that the person who agreed to an amount for reuse of the images had no authority to negotiate, and therefore they would not be paying me. Thanks for nothing. I’ve been asked many times why I haven’t worked for this particular publisher in the past. Well, this is the reason.

I’m always torn, when thinking about whether or not I want to move back to Metro Detroit at some point. We still have our families, friends, and a house in the area, but going back is like beating your head against a wall. The big question is always, what will happen to the area. The problem is that, collectively, the question wasn’t asked until it was too late. If Detroit hopes to remake itself, it’s got to do better.