Monday, January 4, 2010

Cautiously Optimistic About Detroit

The Washington Post surveyed residents of Detroit about how they feel about the future of Motown. There's general agreement that the place is in ruins now, but most have not given up completely. Which is good, because I'm from there, and I still have family there (Hi Mom!).

I'm of the opinion that there is a silver lining to the bankruptcy of GM and Chrysler: it clarifies the status of manufacturing in Detroit and places like it. I've been hearing about the decline of American car manufacturing for years. GM has been losing market share for years. Chrysler already flirted with bankruptcy once.

I've also been seeing the Big Three perpetuate delusions about their status, and make strategic decisions that, in retrospect, were just not right. GM and Ford both bought European car companies, and are both now getting rid of them.

Beyond the specifics of what failed - like Saturn - what failed generally was strategic, theoretical thinking that had no connection to the basic raison d'etre of the car business. There is one way to make money in the car business: make good cars that people want to buy. It's like the movie business. There is one way to make money in the movie business: make good movies that people want to watch. What GM, Ford, and Chrysler failed to do was consistently execute on the details.

But now we know that those experiments failed. We have clarity courtesy of President Obama.

Conservatives complain that politicians should not interfere with business decisions. Except that a key part of the problem at GM and Chrysler was politics, specifically, the internal kind. Imagine office politics wherever you work. Now multiply that by 1,000. Or 10,000. That's what office politics are like at the Big Three. Many people have known for years that GM was making too many different models of cars. But each division had its advocates, and even the chairman of GM did not have the power to lay down the law and cut divisions.

The office politics at GM and Chrysler were literally so bad that it took the intervention of the most powerful man in the world, the president of the United States, to cut the Gordian knot.

So now we have clarity about the future of American car manufacturing. It's not dead. I have faith that the Big Three can build good cars. I have faith that they now understand that their experiments have failed. There are lots of people in Detroit who know a lot about designing and selling good cars. Those people will still have good jobs. And there will still be people wielding rivet guns and paint sprayers. Just not as many of them.

What's ironic for me is that there are some people who saw this coming years ago, and one of them is a guy named Bill Clinton. An essential part of Clinton's message was this: The jobs that created a blue collar middle class in the 1950's are going, many of them are gone, and they will not be coming back. So we have to deal with it. This is why he focused on health care reform early in his first term - because he knew that the model of employer-based health care was changing, and not for the better. It's also why he focused on job training and empowering people to go to community colleges for retraining.

It's not clear what is going to replace manufacturing as a source of jobs. But transitions like this one have always been problematic. There have always been winners and losers as industries and companies change.

We don't know where we will go from here. But we know we can't stay where we are.

No comments: