Detroit's desperate struggle


Memories of a time when the American Dream was real are vivid as local rock'n'roll singer Jody Raffoul takes to the stage at the aptly named Chrysler Theatre in Windsor.

Think Bruce Springsteen meets Bono. Think of the 1980s, of blue jeans, white T-shirts and black leather jackets. And last, but not least, think of big, enviable American cars.

Jody, through his music, offers a flashback to a time before Motown - formerly famously confident and globally admired - crumpled into a pitiful shadow of its former self.

"My father worked for Ford, all my uncles and my sister worked for Chrysler," Jody says.

"I still have friends who work for the car companies, but I also know many who've been laid off."

Out of work

Detroit and its Canadian neighbour Windsor have seen their automotive workforce halved in the last six years, observes Sean McAlinden, chief economist and vice president of research at the Center for Automotive Research in Detroit.

Consequently, the state of Michigan has suffered what Mr McAlinden describes as a "single-state recession", its 7.5% unemployment rate set to rise to 8.5% by spring, well beyond the 5% US average.

Michigan has suffered "the highest unemployment rate in the US for the last four years", observes Mr McAlinden, hence the economy has become the key issue ahead of Tuesday's primary election in the state.

In the Province of Ontario, meanwhile, the jobless rate rose to 6.5% in December, well beyond the 5.9% Canadian average.

Pledge

Canada has been hit hard as the country's dollar has soared to parity with the Greenback, thus making exports to its main trading partner, the US, more expensive.

Hence, while Jody spent Friday night giving the locals' rage and frustration a voice, Canada's Prime Minister Stephen Harper and the country's premiers gathered for a four-hour dinner to hammer out a solution.

None was found.

Instead, the night ended with "little more than a pledge to share ideas about how to shelter an economy that has just experienced its heaviest losses in almost five years", the Canadian newspaper The Globe and Mail wrote the following morning.

Out of line

The crisp night air hits the concert crowd as they pour into Windsor's broad and largely deserted streets.

Across the Detroit river, the US city's brightly lit towers of power rise proudly towards the starry skies, their confident posture belying an enduring crisis that has pretty much ripped the underbelly out of Motown in recent years.

Even American buyers have been deserting Detroit's Big Three - General Motors, Ford and Chrysler - who currently deliver only about half the cars sold in the US, having seen their market share slip 7% in the last year.

Their market share is declining in a market that is set to shrink this year to less than 16 million vehicle sales for the first time in a decade, amidst growing concern that the US is slipping into recession.

The sharp decline offers a stark warning, yet there are few signs that the slide is coming to a halt as Detroit gets ready for this year's auto show.

Out of touch

Chrysler, the US carmaker that was recently sold by German group Daimler to private equity investors, is set to make a big splash when it drives a herd of cattle through Detroit's streets on Sunday to launch its new Dodge Ram pickup truck.

Ford, meanwhile, is going big on its redesigned F-150 pickup, the best-selling vehicle in the US.

Such a focus on gas-guzzling pickup trucks, although there is still a market for them, is going a bit "against the grain", says auto analyst Michael Robinet of CSM, referring to how environmental concerns and regulation are forcing a shift towards smaller cars, many already being marketed by European and Asian rivals.

The future, he predicts, will be one involving not only "a lot of changes to the type of vehicles built here" in the US. In addition, there will be other "players who will be building cars here".

These newcomers over time could include carmakers from India and China as well as existing ones such as Toyota, Hyundai and BMW, which have already invested massively further north in Canada or in southern US states.

But they seem unlikely to build their new plants in Detroit or Windsor.

"There'll be another Detroit," laments Jody. "There'll be another USA."

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BBC News - http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/7185787.stm


The Jornalist

Jorn Madslien is a writer and broadcaster with more than 20 years experience as a journalist for BBC News, CNBC, Dow Jones and Institutional Investor.

 

Jorn created The Jornalist in 2015 to bring you generated news stories, views and glorious storytelling on automotive and energy, sustainability and luxury, global affairs and local angles, from a number of contributors. 

Please note that publication does not equate endorsement, merely an expression of interest.

   

 

 

 

 

 

 

 

 

 

 

 

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