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| The American
Intransigent unions, declining auto makers, and poor public policy have wrecked both Michigan and its largest city. But the worst may be over, writes TOM BETHELL.
Intransigent unions, declining auto makers, and poor public policy have wrecked both Michigan and its largest city. But the worst may be over, writes TOM BETHELL.
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
I wondered what Bill Ford’s great-grandfather Henry would have thought of that: the Rouge complex as a place where they help the birds through the winter?
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?
The Mustang is a good place to meet auto workers. I arrived after the 8:00 p.m. shift ended. There was a single neon sign of a naked lady outside, and an actual naked lady inside.
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. As industrial production gets cleaner and cleaner, the zeal to abolish the remaining impurities grows stronger and stronger. It’s a viewpoint that has its costs, if you want to sell cars at a profit. The company’s stock price fell by half during Bill Ford’s five-year tenure. Even Ron Gettelfinger, the head of the United Auto Workers (UAW), much in the news because of the Big Three’s renegotiated labor contracts, has expressed some doubts about the helpfulness of CAFE, or Corporate Average Fuel Economy standards. They especially hurt American auto makers, whose highest profits come from their largest cars.
We drove under the famed footbridge, site of the “Battle of the Overpass” in May 1937, preserved, as we were told, as a “symbol of the labor struggle.” By the mid-1930s the UAW had already organized strikes at GM and Chrysler, but Ford was holding out. Union organizers outside Rouge Gate 4, including Walter Reuther, were entreating workers at the end of their shifts to join the union. They were set upon by hired thugs, and a photographer snapped some influential shots.
By now we had arrived at the entrance to the truck assembly plant. Before going on the tour we were shown a movie. The Rouge plant became “the arsenal of democracy” in World War II, said the commentary, whereupon “a new generation came through the factory gates, following in the footsteps of their fathers and grandfathers.” The movie showed ranks of cloth-capped workers. Was there a faint irony here, a sly dig at the hereditary character of much union hiring? You couldn’t tell, but I made a note of it.
A Naked Lady
A few days later I went to a bar called the Mustang Inn on Wyoming Street. It was close to the Rouge, but in a bleak neighborhood. Trucks roared over a nearby overpass. I was told that the Mustang was a good place to meet auto workers. Not long before I arrived, the 8:00 p.m. shift had ended.
There was a single neon sign of a naked lady outside, and an actual naked lady inside, working behind the bar. It was a big place with a silvered pressed-tin ceiling, slowly rotating fans, dim lights, and only seven people present, including the bartender, who was wearing a fishnet garment that concealed nothing.
Two young men who had recently gotten off work sat at the bar, one with three bottles of beer in front of him. He told me his name was Ned, and he looked to be about 30 years old. He wore earrings and was much tattooed, with wisps of beard. He looked weary, somehow defeated, and he told me twice that he had “messed up” in life. Now that he had a five-year-old daughter at home, however, he had more of a purpose, he said. He had been with the union for ten years.
Workers have one minute to do whatever task is assigned to them, and are expected to ‘get to the 70 percent mark,’ although it was not clear what happens if they don’t.
UAW jobs are highly desirable since they pay well above the prevailing wage. That is the whole purpose of unions. Auto workers at Ford make about $28 an hour, while in nonunion auto plants run by foreign-based firms in “right-to-work” states such as Indiana and Tennessee, new hires are paid about $15 an hour. The $28 figure is less than half the story. The “all-in” cost of labor, including healthcare and other benefits, is between $60 and $80 per hour—well over $100,000 a year.
As tactfully as possible, I asked Ned how he had managed to get this job. He said that his grandfather had put in 44 years with Ford, his father 36 years. That was sufficient explanation, apparently. Still, I couldn’t help wondering what he was doing at 9:00 p.m. in a bar with a naked bartender, with a five-year-old daughter at home. Is this what Walter Reuther’s dream had come to?
I heard a similar story from another auto worker I met in mid-afternoon at Miller’s Bar, a plain but much admired hamburger joint on Michigan Avenue, a few miles away. (It has been recommended by Ray Sokolov of The Wall Street Journal, by GQ, and by other arbiters of masculine taste.) This young man had elaborately tattooed hands, a backward peaked cap, and baggy, below-the-knee “shorts” of a satiny fabric. He told me he had been a member of the UAW for 14 years, and actually worked on the F-150 assembly line.
Without prompting, he began to criticize union featherbedding practices such as reserving simple tasks for specialists. “They don’t want us plugging in our fans,” he said. “Instead of doing it yourself, you have to call an electrician.” He followed up this comment with this familiar phrase: “Don’t get me wrong, I’m not anti-union.” Again, the subject of “who you know” came up. “If you don’t know anybody you ain’t gonna be in a union,” he told me, in a tone that brooked no argument.
I brought up the current uncertainty of UAW jobs, and this young man (who didn’t give his name) said it was of concern to everyone. This was in October, while votes were still being counted in the UAW ratification of the new Chrysler contract. (It was narrowly accepted.) Chrysler is now under new management, and the contract makes few commitments as to job security and the continuation of product lines. Ford’s contract still hadn’t been finished.
Mark Miller, who, along with his brother Dennis, is owner of the establishment (whose hamburgers, in fact, were quite good), was working behind the bar and listening to our conversation. “At 14 he’s probably safe,” Miller said, referring to the number of years the man had worked. It may be enough to give him job security. “I wouldn’t want to have ten years,” added Miller, who himself worked on the Ford assembly line long ago before taking over the bar from his father in the mid-1970s.
The carpenter’s union has a ‘rule of 80,’ he said. If your age plus years of service add up to 80 you can retire, with a pension. He was 46 and looking forward to retiring at 51.
Back at the Mustang Inn, however, another worker, with only ten years’ tenure, was not greatly concerned about being laid off because he worked at a steel plant rather than on the automobile assembly line. Four years ago, Rouge Steel filed for bankruptcy and was acquired by Severstal, Russia’s second-largest steel producer.
“They paid $800 million for it,” the man said.
“Which means…?” I interjected.
“They ain’t planning to shut it down anytime soon,” said his drinking buddy, not looking up.
Reports say the Russians may put $1 billion into the operation overall. Henry Ford’s Rouge Steel, founded in 1923, delivered all its metal to Ford cars. Now, the Russians will sell steel to all comers, GM and Chrysler included. Recently, Granholm further eased Severstal’s burden with $50 million in tax breaks. That would “keep 2,000 jobs in Michigan,” one paper reported. Not that the operation could easily have been moved anywhere else.
Another scene in the movie preceding the factory tour showed stills from the Battle of the Overpass. The UAW “lost the battle, but they won the war,” said the movie commentary. The battle inspired the company to go into “partnership” with the UAW, and that “proved to be one of the company’s greatest assets.”
The interests of workers and owners really are aligned. Both parties should hope to see the company prosper, but 20th-century trade unionism evolved in a way that turned a cooperative relationship into an antagonistic one. Perhaps the high point had already been reached when the Rouge began to thrive. The workers, paid $5 a day, could afford to buy the cars they were building, and they poured into Dearborn from rural America and from other parts of the world.
Many states—Michigan very much included—allow unions to monopolize the supply of labor, denying employment to those who don’t want to join. In Silicon Valley, by contrast, a well-educated and nonunionized workforce remains an advantage that outweighs the cost of high rents and land prices. And note: in 2005, San Jose, California, displaced Detroit as the tenth-largest city.
If it’s grass and trees and birds that you want, go to downtown Detroit. You’ll find buildings deserted enough that shrubs are growing on the roof.
One evening, I went to see Tom Bray, formerly editor of the Detroit News editorial page. He is retired now and lives in the relatively prosperous town of Birmingham, about 18 miles north of Detroit. When I mentioned that the perverse incentives of compulsory unionism receive little attention from the press, he said the reason is simple. Many journalists are themselves members of unions. In the interests of a perceived solidarity they prefer to sidestep the issue.
On the Line
Inside the Rouge factory we went on a “self-guided walking tour.” You walk around the catwalks as the work proceeds beneath. Half-built trucks move slowly on “skillets” or moving platforms, from one station to the next. Workers then have one minute to do whatever task is assigned to them, and are expected to “get to the 70 percent mark,” although it was not clear what happens if they don’t.
Some were putting the windshield in place, others the doors, others the sunroof. About 2,000 people work at the plant in 10-hour shifts, four days a week. They have half an hour for lunch, with two 12-minute breaks in the morning and two in the afternoon. From our vantage point, it was difficult to assess the true working conditions. But a couple of points are clear. The articulated arms of the computer-driven machines do the hard work, such as lifting the windshields or the doors and putting them into place. Line workers are increasingly reduced to watching, controlling, guiding, tapping into place. Just as clerks at check-out counters have to scan but no longer have to add, so on the assembly line the intelligence has been transferred from the head to the machine.
I talked to a member of the carpenter’s union who had worked for a while on an auto assembly line. He was quickly promoted to a supervisory position, but even that work was dull, he said, and before long he escaped into carpentry. Today, he assembles and dismantles structures for auto trade shows, which involves a good deal of travel. The carpenter’s union has a “rule of 80,” he said. If your age plus years of service add up to 80 you can retire, with a pension. He was 46 and looking forward to retiring at 51.
We were taken up to the Rouge’s environmentally friendly 10-acre roof, composed of sedum, a plant that can absorb millions of gallons of rainwater and insulate the building in winter and summer. And there was a good view of the surrounding 2,000 acres bought by Henry Ford almost a century ago—for $1,100, our guide said. They are “bringing nature into the industrial area.” And so it went: 20,000 shrubs, millions of honeybees attracting birds and insects, 85,000 perennials. And trees galore. Perhaps all the green talk is little more than camouflage for the obvious but unmentionable point: although the Rouge is still a going concern, its greatness lies far in the past.
Yes, he said, there were no proper grocery chains in the city. No Sears, no Wal-Mart. Why not? ‘They are unwilling to accept the shrinkage,’ he said. ‘That’s a nice way of saying “theft.”’
But the spirit of Henry Ford still hovers over Detroit. When you see what he did, you realize that by the 1920s American industry was at least a generation ahead of the rest of the world—so far ahead that Detroit easily survived the Great Depression.
Then the war-driven boom of the 1940s, combined with the destruction wrought abroad, ensured that Detroit’s lead was preserved through the 1950s. The industry could easily coexist with a generously paid workforce that, meanwhile, had protected itself against free labor and antitrust violations. There was no need for tariffs against foreign competitors.
One evening, I drove to the northern suburbs of Detroit, where a friend had arranged that I meet a Chrysler executive. (Germany’s Daimler-Benz bought Chrysler ten years ago and sold it at a large loss to Cerberus, a U.S. private equity firm, in 2007.) The executive was critical not of the union but of management. He was also adamant that he not be identified. What he said was simply this: Japan has benefited from a level of protection that we deny ourselves. “The development and testing of a new vehicle cost close to a billion dollars,” he said, “and Japan has done this behind a tariff wall.”
He went to Japan recently and found that a new-model Jeep that you can buy here for about $25,000 costs at least $50,000 there. By the time a Toyota Camry is sold in the U.S., its development costs have already been defrayed in a market of protected, loyal, and patriotic consumers. “Then it is sold here at a two- or three-thousand-dollar cost advantage,” he argued. The costs imposed by Big Labor were minimal compared with this disadvantage, he said.
I wondered how widespread these sentiments were in the executive ranks. My own opinion, not expressed at the time, was that if such protectionist policies had been adopted and the spur of competition from abroad greatly reduced, the reforms that are now really beginning to bite here at home, with beneficial effect, would never have been implemented.
Toyoda-san in Dearborn
“Detroit grew successfully on a big-business, big-labor, big-government model,” said Michael Barone, coauthor of The Almanac of American Politics, who was raised in the city (see his article on page 56). “And it worked fine for a long time. From 1900 to 1930 Detroit was the fastest-growing city in the world.”
How could African-American music, which has contributed so much to American culture, have declined so swiftly, so completely, from Motown to Rap, in the space of 20 years?
But, it is almost universally conceded, Detroit also grew fat and happy. Eventually, Japan was back on its feet. By the 1970s Detroit was producing clunkers that soon turned to rust. The Toyoda clan paid Detroit, and America, a visit.
As it happened, one evening when I was there, the Hyatt Hotel in Dearborn played host when the Automotive Hall of Fame inducted four new members. As long as you are prepared to wait until everyone is settled and then sit at the back of the room, you can walk into such events, and I did. The most important honoree was Shoichiro Toyoda, the president of the Toyota Motor Corporation from 1982 to 1992 and honorary chairman today. Also among the black-tied guests were the General Motors chairman, Rick Wagoner, and the new Chrysler vice president in charge of sales and marketing, Jim Press, who recently left Toyota after 37 years’ service. Press bowed to Mr. Toyoda in the traditional Japanese manner.
Toyoda-san is 82, but he appeared to be almost ten years younger. He elicited a polite executive chuckle when he recalled his earlier visits to Dearborn. “We Japanese weren’t invited inside in those days,” he said.
Actually, they were. David Halberstam reported in his 1986 book on the automobile industry, The Reckoning: “Toasting Philip Caldwell, the head of Ford who in 1982 was visiting Japan, Eiji Toyoda of the Toyota Co. (president, 1967–1981) said: ‘There is no secret as to how we learned to do what we do, Mr. Caldwell. We learned it at the Rouge.”
Toyoda-san spoke in Japanese, and as we had to wait for the translation, there was plenty of time for thought. Only a few months earlier, it was reported that Toyota was now the leading automobile producer in the world, edging out General Motors in the first quarter of 2007. In 2006, Toyota’s 9,018,000 vehicles (up 10 percent from the previous year) fell slightly short of GM’s 9,180,000 (down 1 percent). “Surely some in the room were thinking, ‘Why did we ever teach Toyota our tricks?’” Michelle Krebs wrote in Edmunds Auto Observer.
Daniel Howes, a business columnist with the Detroit News, driving a blue Saab, kindly took me on a guided tour of Detroit. Although its engine is built in Sweden and its transmission in Japan, the Saab is a GM car. I was surprised by the scale of the city. At 138 square miles, it is twice the size of Washington, D.C. Detroit’s population is now about 919,000. The fourth-largest city in the country in 1940, Detroit now ranks 11th.
‘As you can see it’s a nice building,’ he said of his corporate headquarters. ‘I bought it, and half the furniture in it, and ten acres of land for $400,000. Cash.’
With its outer suburbs to the north in Oakland and Macomb counties, Detroit’s metropolitan area has about 4.5 million people, or close to half the population of Michigan. As recently as the mid-1990s, GM, Ford, and Chrysler sold three-quarters of the vehicles bought in the United States. Now the figure is 47 percent. UAW membership, once 1.5 million nationwide, is down to 500,000. So, like the city of Detroit itself, its rolls have fallen by one million.
Drive along Michigan Avenue in Dearborn and you notice signs in Arabic and women with headscarves. Dearborn has the largest Arab-American population in the country and the largest mosque—the Islamic Center of America, established in 1963. Many Arabs arrived before World War II, mainly from Lebanon and Syria, to work for Ford.
Today, Dearborn is about one-third Arab-American. There is some grumbling, but on my visit to Miller’s Bar, Mark Miller told me that the Arab newcomers had “saved the east side of Dearborn,” the side closest to Detroit. But he also told me that business in his own bar, which is on the more prosperous west side of Dearborn, was off by 20 percent in the past two years, reflecting the general economic decline of the region.
I was told that it was the long-time Dearborn Mayor Orville Hubbard (1942–1977) who had encouraged the Arabs to come, and that he had done so “to keep the blacks out.” Seeming to agree, Detroit’s long-serving mayor, Coleman A. Young (1974–1994), called Dearborn a “citadel of racism.” Some have called for Dearborn’s statue of Mayor Hubbard to be torn down, just as others have deplored the racial overtones of the sculpture called the Black Fist, in downtown Detroit, honoring he city’s native son Joe Louis, the heavyweight boxing champion from 1937 to 1948.
In Hard Stuff, his 1994 autobiography, Mayor Young attributes Detroit’s dramatic decline in prosperity to “white abandonment.” Today, Detroit is 82 percent African-American, and the non-Hispanic, white population may not be much more than 100,000.
As we drove through east Dearborn, Daniel Howes noted that houses and sidewalks were being rebuilt; the signs of new businesses opening up were encouraging. Here was a town that had experienced a prolonged decline but now looked to be on the way to recovery. Its transformation became much more conspicuous when we drove a mile or two farther east, and could be compared with the quiet, almost empty streets we entered.
“Now we’re in Detroit,” Howes said. “It’s like someone flipped a switch.”
We turned north toward Warren Street, and from there we drove east toward central Detroit. For block after block, there was hardly a sign of life.
If it’s grass and trees and birds that you want, go to downtown Detroit, which has taken a terrible tumble. Visible from the building shared by the Detroit Free Press and the Detroit News—an antitrust exemption allows them to operate jointly—are buildings still new enough to be in fairly good shape, but deserted enough for seeds blown onto the roof to have taken root and grown into shrubs and trees.
There are no major grocery chains left in Detroit; instead, there are “party stores”—convenience stores where you can buy snacks, soft drinks, and liquor, and cash checks. The day after my tour with Daniel Howes, I stopped at a party store with a sign on the outside reading, “Liquor Lotto Deli.” The counter and cash register were separated from the store by plexiglass. Behind the glass stood a couple of polite but tough-looking gentlemen of uncertain ethnicity. Chaldeans, I was told, or Iraqi Christians. Many keep pistols and shotguns within easy reach behind the counter. Coleman Young once said he was opposed to gun control in Detroit and refused to round up the city’s weapons “while we’re surrounded by hostile suburbs.” He died in 1997, so it’s hard to know whether he would be pleased or dissatisfied with this new distribution of firepower.
A few days later, I spoke to a prominent Detroit businessman, Jim Nicholson, the chairman of a company called PVS Chemicals, who ran as a Republican candidate for the U.S. Senate in 1996. Yes, he said, there were no proper grocery chains in the city. No Sears; no Wal-Mart either. Why not?
“They are unwilling to accept the shrinkage,” he said. “That’s a nice way of saying ‘theft.’” He agreed that Chaldeans run the party stores, but there is nothing unusual about such specialization, he said. “Koreans run the cleaning establishments, and the Ma and Pa motels along the highways are owned by Indians.”
Howes and I drove on through Detroit’s west side, past trashed homes that are used for drug-dealing; pockmarked, see-through houses from which windows frames and anything of value have been looted; empty lots, where the city had undertaken the $5,000 cost of demolition; and crumbling structures where the city had not. Rotting houses are often left to the elements. We entered West Grand Boulevard, where houses that could be classified as mansions in a bygone era (the 1970s) were also decaying. A couple of black churches were well maintained. They were conspicuously isolated by chain-link fences with a single locked gate.
‘Through the Grapevine’
We turned a corner, and within a mile or two drove past the Motown Museum. The newspapers said there would be a 50th anniversary ceremony a few days later, when a section of West Grand would be renamed Berry Gordy Jr. Boulevard. Gordy himself, the founder of Motown Records, would be on hand; also Smokey Robinson (“The Tracks of My Tears”) and a former Motown star called Martha Reeves, who led Martha and the Vandellas (“Dancing in the Street”) in the 1960s.
I returned for the event. When Martha Reeves emerged from the bus, the crowd that had gathered on the grass outside the museum burst into applause. Detroit was beginning to look a bit more cheerful. All of the best Motown recordings were made at “Hitsville” studio, which has been faithfully preserved by Gordy’s sister, Esther.
Reeves is 66 now, but the years have surely treated her kindly, despite what she called her earlier “rock-and-roll lifestyle” of prescription pills and alcohol. She became a born-again Baptist, and in 2005 was elected a Detroit city councilwoman.
Soon, Gordy, wearing a beige Nike ball cap, and his long-time friend, supporter, and star, Smokey Robinson, also exited the bus. The crowd of about 200 cheered. There were only two or three white people, and one, Chris Heine, a 26-year-old architect who lives in Grand Circle Park, downtown, acted as my guide. Loudspeakers were playing old Motown hits, and he could name the group, title, and year the song was recorded every time.
Heine said that downtown Detroit was reviving as a place to live, especially for young people. You can get a one-bedroom apartment in a good building close to the cultural attractions for $600 or $700 a month, he said. He thought the trajectory for the city overall was still downward, but Detroit’s central core had turned a corner.
I threw neutrality to the winds and asserted that the only way to spur growth is to cut taxes. The mayor looked at me as though he had found an unexpected soulmate.
Berry Gordy is one of America’s most successful black entrepreneurs, having started Motown Records with an $800 loan from his family in 1959. He not only discovered an extraordinary range of talent but also helped create the Motown sound himself, and managed to retain personal and financial control.
According to Gerald Posner, who wrote Motown: Music, Money, Sex, and Power, Gordy vetoed one of Motown’s greatest hits, Marvin Gaye’s “I Heard It Through the Grapevine”. The composer, Norman Whitfield, kept pressing Gordy, who eventually approved the release of a different version by Gladys Knight and the Pips. Whitfield still wanted Gaye to do it, but again Gordy said no—not now that Knight’s release had become an instant number-one hit. Eventually Gordy relented, however, and “Grapevine” was released as the last track on a new Marvin Gaye album. It became a huge success, with four times the sales of the Knight version.
After the ceremony unveiling the new street name, I managed to get close to Gordy inside the museum, and I asked if this story were true.
“No,” he said, “Me and Marvin, we never talked about Grapevine.” Then he reconsidered and said, “Wait a minute, there was an album he did, ‘What’s Going On?’ and I cautioned him about it because he was talking about police brutality and all that. But once he convinced me that he really wanted to do it, I said fine, you know. These stories all get mixed up.” (I still accept the Posner version.)
Black activists sometimes criticize Gordy because he never became a civil rights activist, and, as his comment to me suggests, never was much interested in the turmoil of the 1960s even when he was encircled by it. The Motown sound, as Chris Heine said, had strong crossover appeal. The artists were black, but the audiences and record buyers were both black and white. In 1972, Gordy and his company moved to Hollywood.
Motown left Motown, with much grief and soul-searching in its wake. Gordy sold Motown records to MCA in 1988, and today, at age 77, he lives in Bel Air, next to Beverly Hills.
Skirting all controversy, the plaque outside the museum primly notes that Motown “provided an opportunity for Detroit’s inner-city youth to reach their full potential and become superstars.” But the larger question is something that bothers me every time I think about it. How could African-American music, which has contributed so much to American culture, have declined so swiftly, so completely, from Motown to Rap, in the space of a mere 20 years?
The Fisher building (1928) and the old GM building (1922), both designed by Alfred Kahn, soon loom ahead as you go farther east on Grand Boulevard. The seven Fisher brothers developed the closed carriage, permitting something we take for granted today—year-round automobile travel. The old GM building, since renamed Cadillac Place, is now home to 2,700 state employees. By the end of the 1990s GM had moved three miles downtown to the Renaissance Center, on the Detroit River.
RenCen, as it’s often called, is a set of tubular skyscrapers, the tallest in Michigan, financed by Henry Ford II and opened in 1977. In one account, RenCen was intended to “quell white flight.” By the mid-1960s Detroit had already lost 150,000 jobs, as major companies like Hudson, Packard, and Studebaker closed down and the remaining Big Three built new plants in the suburbs. Then came the 1967 riots, which lasted for five days and took 43 lives. Some 2,000 buildings were burned down, and the stream of departures turned to a torrent.
The RenCen was not a success. A hulking concrete berm had blocked the entrance, seemingly intended to keep the city at bay. By 1983 the center was in default on its mortgage, and the population of the central business district had fallen by more than one-third from its 1970 level. In 1996, RenCen was bought by GM “for ten cents on the dollar,” I was told. The auto company spent $500 million refurbishing it, removed the berm, and greatly improved its looks and overall quality. Great vistas overlook the Detroit River and Windsor, Canada, on the far shore.
If you head south, you come to such key amenities as Ford Field, home of the Detroit Lions, where the 2006 Super Bowl was held, and Comerica Park (Comerica Bank paid $66 million for naming rights to the Tigers’ new baseball stadium). There is also the Detroit Institute of Arts (founded in 1885), the Music Hall Center for the Performing Arts, the refurbished Fox Theater, and three casinos of recent vintage, among them the MGM Grand.
Dotted around and among these cultural landmarks are numerous tall buildings, some empty, some with plywood windows, and still others in hopeful reconstruction. In this last group is the Book Cadillac. Howes pointed to the vacant, boarded-up Lafayette Building nearby and said: “You get a sense of how fragile Detroit is.”
For six decades, the Book Cadillac was the city’s preeminent hotel. “Presidents, movie stars, and gangsters stayed there,” said the Detroit News. It closed in 1984, swept away as the city’s tide went out. But the building is now under a $180 million renovation and is scheduled to reopen as a Westin hotel in the fall, with 67 condominiums on upper floors. The news when I was in the city was that two unidentified buyers had just bought condos there, at prices in excess of a million dollars each.
It was also reported that, although the city of Detroit is still losing 10,000 people a year, the urban core over the past few years has experienced a small but significant turnaround, and a small population increase is underway. “Detroit now leads the state in new building permits,” said Howes, as we drove past the Detroit Athletic Club, where there is a waiting list to get in.
He took me through Brush Park, past regions where the streets have been repaved and need only cars to test-drive them; past promising parcels that need only people to occupy them. Crumbling Victorian mansions stand next to nearly identical twins being expensively restored.
We made a brief excursion into Indian Village, a small historic district with some excellent residential property, but with slums a block or two away. With good and bad cheek by jowl, it’s a recipe for burglary. As a result, in 2005, 3,000-square-foot houses were typically offered for sale for about $200,000. Patrick Buchanan’s wife, Shelley, who grew up in Indian Village and still has friends there, says that comparable properties in McLean, Virginia, near Washington, sell for four or five times as much.
Pennies a Foot
The alcohol is inexpensive, the soft drinks free. You have to be 21, but I saw an Asian girl who looked no more than 16 nonchalantly slap down $1,000 in $20 bills on the table.
“You can get incredible value in this city,” Jim Nicholson of PVS Chemicals told me. He illustrated this with the place we were in—his own corporate headquarters. “As you can see it’s a nice building,” he said. “I bought it, and half the furniture in it, and ten acres of land for $400,000. Cash…. We paid pennies a square foot here.”
He said that that purchase may have been at Detroit’s “lowest point,” in the early 1990s. He has no intention of selling, but its value today might be $2 million, he said. The building is close to the site of the old Hudson Motor Car Company, which stopped making cars 50 years ago. (Its principal investor was the founder of the Hudson Department Store. Hudson’s main store on Woodward Avenue was another famous Detroit landmark. It closed its doors in 1982.)
In 1989, shortly after Michael Barone joined U.S. News & World Report, the magazine sent reporters back to their hometowns for a feature. He went to his old house near Seven Mile Road (which his parents bought in 1948 for $11,500), but no one came to the door. Neighbors told him that houses there sold for about $15,000—if they were occupied. If abandoned they were worth $3,000. After Dennis Archer became mayor, in 1994, Barone returned and found that houses a couple of miles from where he grew up were selling for about $35,000—about a third of the 1948 purchase price adjusted for inflation and “nothing like what the same structure would command in even the lowliest, mostly-white working-class suburb of Detroit. I’ve driven past my old house half a dozen times in the last dozen years or so, and the neighborhood doesn’t seem to have been visibly changed.”
Meeting the Mayor
City Hall is on Jefferson Avenue, downtown. The incumbent is Kwame Kilpatrick. An imposing figure at 6 feet, 4 inches, he was first elected mayor in 2001 at the age of 31. At one time sporting a diamond stud earring, he was dubbed the hip-hop mayor and judged by Time to be one of the three worst big-city mayors (along with San Diego’s Dick Murphy and Philadelphia’s John F. Street). He was reelected in 2005.
Kilpatrick has also been much criticized by a press corps whose main criterion of merit among public officials seems to be personal virtue. Pro-growth policies attract less attention. Criticism for letting his wife use a sports utility vehicle leased by the city has predictably drowned out any applause for grappling with the city’s budget, cutting the payroll, or lightening the tax burden.
Several days into my visit, quite by accident, I bumped into the mayor at the Dearborn Hyatt. It was the 64th biennial public meeting of the National Pan-Hellenic Council. Greek fraternity banners hung from the walls, and the black establishment was on parade, with local civic leaders waiting to proceed into the crowded ballroom. I spotted Kilpatrick, standing more or less alone in an adjacent room. He was dressed in a very smart blue suit with a maroon tie, and he looked utterly at ease. No earring or stud in sight.
The breakthrough came when the CEO held a press conference and said the company could no longer go on paying laid-off auto workers ‘$65 an hour to mow the company’s lawns.’
I walked right up and for some reason asked him about the “fate” of Detroit. I had meant to ask about the prospects, but somehow it came out as fate. I immediately changed the wording, and the mayor laughed, nudging a retainer at his elbow and telling how fatefully I had misworded my question. Kilpatrick is one of those pols who effortlessly convey a sense of good humor in public. And to survive as mayor of Detroit these days, no doubt that’s an essential quality.
“Going all right,” he said. “But the real question is how quickly we can diversify.” By which he meant become less dependent on a single industry. The casinos came up, and the mayor said they were proving to be one of the city’s largest sources of revenue—“four hundred thousand dollars a day.” Then he annualized that figure but I missed it. I was thinking about his “diversify” comment, and suddenly I threw neutrality to the winds and asserted that you can’t plan these things and the only way to spur growth is to cut taxes.
Hizzoner looked at me as though he had found an unexpected soulmate, perhaps a fraternity brother. “I am the first mayor of Detroit to have cut taxes,” he said with great confidence. Conspicuously, I wrote that down. (I checked and found that he had indeed cut property taxes.)
Aides were beginning to pluck at his sleeve and pull him away from this unscheduled intruder. Striding ahead, the mayor nonetheless said something over his shoulder to me: “Of course, the people in Lansing have different….” His voice faded out. I admired his political skill here, unmistakably conveying his disapproval of the people in the state capital, but not audibly enough to be quoted.
A mayoral press secretary approached and asked who I was, who had I been speaking to, could he help, what had the mayor said, what would my article be about, for what publication, what was my angle?
“Detroit’s fate,” I said.
I listened from the back of the ballroom. First to the podium was the mayor of Dearborn, John B. O’Reilly Jr., who is white. Then came Kilpatrick: Detroit was “going through a rebirth,” the mayor said. “The industry we have relied on is changing forever.” Seven new hotels were opening soon. Or was it six?
The two mayors left together. I watched them walking down the side aisle. O’Reilly, in a rumpled suit, trotting along beside the big man, might have been his accountant. O’Reilly disappeared into the night, while Kilpatrick, with two bodyguards almost as large as he, boarded his limousine.
One evening I went to the MGM Grand Casino to see how the city makes its money. The casino occupies a whole floor in a big hotel downtown. So many cars were lined up that there was a 15-minute wait for free valet parking. Inside, lights were flickering to an endlessly thrumming beat. The place was crowded and the slots were whirring. I was struck that it was the most racially integrated environment I had seen in Detroit. Whites drive in from the suburbs—and go straight back home again. Lots of people were smoking. Indoors!
Smoking. Drinking. Gambling. The alcohol is inexpensive, the soft drinks free. You have to be 21, but I saw an Asian girl who looked no more than 16 nonchalantly slap down $1,000 in $20 bills on the blackjack table. She hardly bothered to watch as the cards were turned over. I wondered if this was some kind of an in-house lure, intended to prime the gambling-fever pump.
“It’s all straight,” said a worldly-wise gent in his 60s as we waited outside for our cars to be pulled up. “Legit. Just like Vegas.” He was a grocery wholesaler, now retired, who came to the States from Iraq in the 1960s. Meanwhile, the UAW, shedding its auto-industry members, is successfully organizing casino employees.
Detroit was an anthropological wonderland. I met an old couple selling junk from a roadside yard near Hamtramck, an incorporated city wholly surrounded by Detroit. In the early part of the last century, after the Dodge brothers built the Dodge Main plant, Hamtramck (pronounced as a three-syllable word) became the fastest growing section of fast-growing Detroit, and mainly Polish.
The man, gray hair scraped back into a ponytail, pointed to some decaying battlements in the distance—the remains of the Packard factory, closed 50 years ago. Nearby in a dimly lit cabin sat a strange-looking fellow with protruding eyelids. Local lore was at his fingertips. “In 1980 GM said they needed 400 acres, and the city came up with that particular parcel,” he said, pointing toward what was Poletown. “Roughly 2,000 houses, 150 businesses, and 18 churches were demolished; they used eminent domain. It was supposed to bring a great deal of economic benefit to the area.” But, of course, it didn’t.
Dodge Main, which became a Chrysler assembly plant, was closed by Lee Iacocca, and this new GM plant was supposed to bring in 6,000 replacement jobs. They built Cadillacs there, but sales dropped, and after the recent contract with the UAW was signed, GM announced that the second shift would end. That will reduce the labor force at Hamtramck to about 1,000 workers, with the city down to about one-third of its peak population in the 1930s.
I drove past the Sacred Heart Cemetery, where many of the Poles are buried, past the Mound Correctional Facility, where razor wire keeps people in, and past the Slammer Lounge (closed), where razor wire keeps them out. Grass was growing everywhere. A Catholic church announced that it had, in 1981, become a Baptist church: founder and pastor, Dr. Cullian Hill. The parochial school once attached to the church was now a charter, the Commonwealth Community Development Academy. A sign outside said it was “Now accepting applications: Free, Free, Free.”
Badly run companies do go out of business, but Detroit is a physical reality that will be with us for some time. ‘Up’ is about the only direction it has left to go.
I walked in without an appointment and was shown into an office where Dr. Hill himself sat behind a desk. He greeted me as though he were fully expecting me. A genial 69-year-old black preacher, he immediately took me on a classroom tour.
“We have 270 students,” he said. “They come from all facets of Detroit.” He didn’t have to deal with unions, he said, and obviously he was in complete charge.
As we entered the first classroom he announced his presence with a rhythmic clapping of his hands. The students responded with the same rhythmic clap, and then they were all silent, turning to stare at us. Then the same routine in another classroom. The children, all African American, were well trained and well behaved.
On Hamtramck’s main street, where it seemed to me there were not enough people, I met a white woman with an eight-year-old son coming out of another school. She was part-Italian, part-Syrian, she said, and a “natural-born medium.” She gave me her card to prove it. “I speak to the dead.”
“Is there a Polish district?” I asked.
“Let me explain it to you, sweetie. We have Polish people, Bosnian people, Indian people, Turkish people. We have Ukrainian, Yemeni, Chaldean people. We have Urdu, Arabic….” It was quite a litany. She pointed me to the Hamtramck Public Library, run now by a woman who came from Poland as a political refugee in 1986. Just that day she was opening an exhibit on the local Polish community.
It’s a ‘Buy’
On the subject of Detroit’s prospects, you will encounter pessimists and optimists, although the former also see signs of hope and the latter concede the difficulties. Here is just one bleak item. On the Milken Institute’s list of the 200 largest cities, ranked by performance, eight Michigan communities finished in the bottom 20. Grand Rapids was at 192, Flint 194, Detroit 197, and Lansing-East Lansing dead last. No city in Michigan ranked higher than Ann Arbor at number 184. The Detroit News editorial page editor, Nolan Finley, wrote that “no other state is so well represented at the bottom of the heap.”
What separates the best from the worst in the Milken ranking is a climate that fosters entrepreneurship and is receptive to business. Finley wrote, “Governor Jennifer Granholm and lawmakers have adopted a tax policy that discourages entrepreneurs from locating here, and will drive up the overall cost of doing business in the state. Already, many consulting and other service industry firms are saying they will leave the state if the new service tax on selected businesses isn’t revoked.”
David Littmann, who retired as a vice president and chief economist after 35 years with Comerica Bank, is equally critical. Today he is affiliated with the Mackinac Center in Midland. His 2005 speech, “Is Michigan Stuck on Stupid?” included a downbeat forecast that has proved to be correct. By April 2007, with the bad news at hand, Littmann wrote in The Wall Street Journal: “The economic fog will lift when policies are enacted that make Michigan a good place to do business for newcomers as well as existing firms. That won’t happen if the legislators in Lansing, the state capital—who advocate heavier tax burdens on the remaining taxpayers to subsidize or attract firms handpicked by government officials—get their way. These targeted subsidies simply redistribute scarce income.”
Unfortunately, one more tax increase was enacted a few days before I went to Detroit.
Recently, there has been talk of repealing the new extension of a service tax.
Littmann wrote that organized labor “now controls most tax-and-spend policy levers.” Unions keep pressuring the governor for more taxes to be funneled into schools and universities, which supposedly will generate a more educated workforce—hence salvation. But that has already been disproved by what Littmann calls “meteoric increases” in Michigan’s education budgets, lack of improvement in performance, and the continued outflow “of Michigan’s most capable graduates.”
The breakthrough came when the CEO held a press conference and said the company could no longer go on paying laid-off auto workers ‘$65 an hour to mow the company’s lawns.’
When I spoke to Littmann in October he said that Michigan elected a Jennifer Granholm, but needs a Margaret Thatcher. He says that house prices in Michigan are about one-third those in comparable locations in Illinois.
Quoted in the Free Press, here was Granholm’s response to the recent uproar against her tax increases: “It’s not just about me, me, me. It’s about investing in Michigan. Where’s the notion of the common good?” Taxpayers should not keep thinking, “It’s your money, it’s your money. What happened to, ‘It’s your schools and it’s your roads and it’s your parks?’”
What about John Engler, the governor of Michigan from 1991 to 2003? Littmann said he was “very good at the beginning of his time in office” but gradually lost control of the budget. Today, Engler heads the National Association of Manufacturers in Washington. When I called his office for a comment on Michigan affairs, his media man said that Engler “doesn’t want to get into a pissing contest with Jennifer Granholm.”
Littmann says that about one-third of union members realize that what their leaders really deliver is “short-term gain and long-term unemployment.” He also thinks that when the state does find its Mrs. Thatcher, “Michigan will be a great investment.”
Michael Barone’s prognosis is also gloomy: “The whole metro Detroit real estate market is depressed right now because of the woes of the Big Three, and I think will remain so.” His Detroit experience led him to develop “the proposition that high crime is a confiscatory tax on the wealth of black people. Black homeowners in Detroit have accumulated almost no equity over the last 40 years.”
Tom Bray, formerly of the Detroit News, says that the auto companies, with all their mandates and restraints, “now essentially operate as an arm of the government, severely restricting what they can do. That’s the greatest story never told about the American auto industry.”
There are also optimists, and most of those, I found, live or work closer to downtown. One was Doug Rothwell, the president of Detroit Renaissance, whose offices are on the 17th floor of one of those RenCen towers. His organization is funded by the CEOs of Detroit’s 50 largest corporations, so optimism comes with the job description. Perhaps for that reason, I found it tough to follow his talk of business accelerators, creative corridors, integrated strategies, and master development plans.
Still, it was hard not to be impressed as one gazed out over the city. Yes, looking north, one felt like a dentist looking into an open mouth with rotted teeth and gaping holes. But still, there’s life there, and signs of hope. Rothwell talked about the growth of young reverse commuters who have come to the city for “lifestyle reasons”; they like its edginess. “The city government is more pro-development than it has been for years.”
As for the view to the south and east: the riverfront has been bulldozed and cleared of debris. Too much of it is still given over to parking, but GM has put bids out to attract developers. The undeveloped riverfront stretches east and west for several miles. The mayor would like to see high-rise condominiums here.
We admired the river view, and Rothwell, who moved to Detroit in 1993, said that five years ago we would have been looking down on wall-to-wall derelict buildings and cement silos. “You couldn’t even see the river. It has changed dramatically. We’re getting there.”
I believed him, and for some reason I thought of the woman in Hamtramck and her catalog of that city’s many ethnic groups. I also thought of Jim Nicholson of PVS Chemicals. He too is an optimist. He says that “a hundred years of wealth has created a culture of entitlement…and a very strong union movement which by its nature is inflexible. Rich makes for fat and lazy, and in many ways that’s the culture here.”
But economic reality “wrings that out, and that is what is also happening in Detroit.”
Mayor Kilpatrick, said Nicholson, is a bright man and does understand the economic picture. “He has done much in recent years to turn the city around. We are starting to see new investment.”
But Nicholson’s great hope is immigration. “America is a country of immigrants, and they have settled in Detroit because it is inexpensive.” By contrast, if you’ve moved to the suburbs, “have kids and four bedrooms, you’re not moving back, because first of all the schools are bad. But if you’re Mexican, looking for an inexpensive place, southwest Detroit is the place for you.” Immigrants bring entrepreneurship and a willingness to work. “They will see Detroit as fertile ground.”
The metaphor that comes to mind in Detroit is the stock that has fallen so far that it’s a “buy.” Something that Daniel Howes said as he drove me across the city made me think that Detroit as a city may indeed be a buy now. He said the big change, taking place even as we spoke, with the new labor contracts at the auto makers, is that all the major players are now on the same page. That hasn’t happened in many decades, perhaps not since the Battle of the Overpass 70 years earlier.
By the major players he meant City Hall, the Big Three auto companies, and Big Labor. They all realize that finding scapegoats and strategies of evasion cannot continue. City Hall has been chastened by white flight, by the realization that the responsibility that comes with power cannot be postponed forever. The Big Three have been chastened by the Toyoda clan—by the global economy. And Big Labor, in the form of the UAW, has been chastened by its loss of a million members.
This sentiment was echoed later by David Cole, the oft-quoted chairman of the Center for Automotive Research in Ann Arbor. As a result of the new labor agreements, he said, “What we are witnessing is the transformation from a confrontational way of working to one of collaboration, which is absolutely necessary.”
As far as the UAW was concerned, Howes told me, the big wake-up call came with the declaration of bankruptcy by Delphi, the auto parts company. It had been spun off from GM in 1999 but by 2005 was seeking Chapter 11 protection. The breakthrough came when the company’s CEO, Steve Miller, held a press conference and said that Delphi could no longer go on paying laid-off auto workers “$65 an hour to mow the company’s lawns.”
Delphi had been giving “4,000 idled workers in its ‘jobs bank’ full pay and benefits amounting to about $100 million a quarter,” he said. He also practically defied the workers to go on strike. He didn’t blame them for being angry. “But neither do I fear production disruptions. They are adults, and they understand that industrial action can only hasten plant closures, and further jeopardize their pensions.”
Shock and awe! Some in the media thought it a little cheeky for a mere CEO to speak so bluntly to the heirs of Walter Reuther, who had supposedly lost that battle but won the war. But a lot of people in Detroit—including many auto workers themselves—knew that what Miller said was true, and that it was high time someone said it.
The new auto contracts make it clear that reality has sunk in. New hires will essentially be remunerated at the market rate, while the older, privileged workers will gradually be replaced. Within days of the ratification of its new contract, Chrysler said 10,000 hourly workers would be laid off.
Badly run companies do go out of business, but Detroit is a historic, physical reality that will be with us for some time. “Up” is about the only direction it has left to go, and that may happen sooner than most people think. The same cannot be said of Lansing, which may not recover until Granholm is replaced. Term-limited, she has three years to go. It’s quite conceivable, then, that if Detroit does turn around in the next year or so, it will also be the leading indicator of Michigan’s eventual revival.
Tom Bethell, a native of England and a graduate of Oxford, has written four books, on subjects ranging from jazz to property rights.
Image credit: photographs by Joshua Kristal.
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