Detroit's Fate: Intransigent Unions, Declining Auto Makers, and Poor Public Policy Have Wrecked Both Michigan and Its Largest City. but Tom Bethell Finds Signs That the Worst May Be over and Detroit Is a 'Buy.'
Bethell, Tom, The American (Washington, DC)
For the Ford Motor Company's Rouge Factory Tour, we were instructed to assemble at the IMAX theater. That's in Dearborn, on the outskirts of Detroit. The theater turned out to be next to a huge, dispiriting, almost empty parking lot. But if you go to Detroit you get used to parking lots that seem larger than necessary.
Detroit's population peaked with the Census of 1950 at 1,849,000. Today, it's less than half that. An analysis of FBI crime statistics by Congressional Quarterly in November found that Detroit is America's most dangerous city, with Michigan's Flint, 60 miles away, ranked third. And, while Detroit would hardly seem to be an overheated real estate market, it has suffered more than Las Vegas or Miami in the recent property bust, ranking second nationally in its foreclosure rate. The automobile industry hasn't been doing so well, either.
At a time when the national and global economies have been thriving, the unemployment rate of the metro area centered in Detroit, as of October 2007, was 8 percent--the highest among the nation's 34 largest metropolitan divisions and nearly twice the overall U.S. rate. Phoenix, by contrast, was 2.9 percent. While the United States has gained 1.7 million jobs over the past year, Michigan has lost 75,000, and its unemployment rate, 7.7 percent in October, is the highest of any state.
In response to the state's fiscal difficulties, the Canadian-born governor, Jennifer Granholm, recently raised taxes--the biggest increase in Michigan's history. The state with the worst economy now, according to the Tax Foundation, has the 11th highest tax burden.
From the outside, Michigan and Detroit look like disasters. Why? Bad public policy, grasping unions, the shifting fortunes of the domestic auto industry? Do the state and its largest city have a future? In all my 45 years in America, I had never been to Detroit, so I decided to go there and take a look for myself. A tour of the Ford plant was probably a good introduction.
At the Rouge
The principal vehicle built at the Rouge plant is the F-150 truck, the top-selling vehicle of any type in the United States over the past quarter-century. That is what we would be seeing, from walkways elevated about 12 feet above the assembly line. The bus, with about 30 of us on board, set off on a winding route. We crossed the Rouge River, which looks more like a canal, with its concrete banks, and then through the factory complex. Building the Rouge plant, which occupies two square miles, was a huge effort, begun in 1917 by Henry Ford. At its peak the complex employed over 100,000 people and was the largest industrial complex in the world. Everything was made on the spot. Iron ore, brought in by barge, was converted into steel and then into Model T Fords, with a new one coming off the assembly line every 49 seconds.
Today, the Rouge, as it is often called, employs only 6,000 people, but it's still an impressive sight. You realize that there was once a time when large-scale industrial production was highly prized in this country. The smoke that was pouring out of the tall stacks was admired as an indicator of progress. The benefits of industrial civilization were still not taken for granted.
Now there is no smoke to speak of, and the bus commentary kept reminding us how green everything is. That was what we were supposed to admire. As a part of the "greening program," the area we were passing through was designed "to help the birds through the winter." This reflected the environmental enthusiasm of Bill Ford, CEO until 2006. I wondered what his great-grandfather Henry would have thought of that: the Rouge complex as a place where they help the birds through the winter?
Bill Ford's "reputation as an environmentalist sometimes competes with his role as head of the world's No. 2 auto maker," the Detroit News said in 2004. …