Philosophical Musings

May 23, 2008

Detroit’s beyond Rethinking

Filed under: economy — Elad Kehat @ 1:01 pm

Umair Haque is asking how we’d rethink Detroit for the 21st century.
I think it’ll take more than rethinking. Destroy, then start anew is more like it.

Along with big telcos and big media, the US automotive industry is one of those 20th century powerhouses that just can’t seem to get it right anymore. However, there are two major differences:
(a) Detroit’s been losing market share for decades now. It’s been through generations of leaders, middle managers and employees, and nothing’s changed. They can’t get their act back together. Maybe the conclusion is that they can’t be saved and that’s it?
(b) Telecom and Media are being constantly assaulted by new startups that threaten their business models. They manage to adapt by acquiring or cooperating with these startups, thus injecting new blood and new ideas, rejuvenating their aging carcasses. That just doesn’t happen in the auto industry. I guess it’s too capital and labor intensive to allow for new entrants to make any inroads.

Let’s face it now: America isn’t a world leader anymore in anything that the automobile industry is composed of. It isn’t an industrial giant anymore – China has taken that crown away. It isn’t a heavy engineering powerhouse – Japan and Germany are the leaders there (and that’s why their cars are so much more reliable than anything Detroit has to offer). It isn’t a design powerhouse – leadership there goes to Italy.
None of this spells doom and gloom – the US is world leader in technology (of the lighter kind – computer hardware and software) and entertainment.Β  But all of that happens mainly in California. It’s also the financial center of the world (for now), but that happens in New York and environs.
What it does mean, IMO, is that Detroit is beyond repair. Maybe a US auto industry still has a chance, but that’s up to upstarts like Tesla Motors, not Detroit.

Finally, note that I didn’t say anything about labor unions and other current problems that plague Detroit. I’m trying to take the macro perspective, and there’s nothing there to promise a better future.

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