Who really bankrupted Detroit and surrounding

[mmonk]

feeder towns for parts factories?

[TheFarseer]

1. I've been trying to read up on this and get the facts

It seems like it started going south before problems with the auto industry. It seems that Detroit had a problem annexing new housing developments and was confined to just having city limits in the older parts of town, which are never going to be the wealthiest and best tax paying. Then the race riots scared alot of the remaining upper class people out and suddenly there was much less tax revenue coming in. From there it kind of spiraled downward, although auto plants closing certainly didn't help. Some sites I was looking at also fault a high level of city government corruption. I hope someone with first hand knowledge will help, because I would like to know also what is to blame for the downfall of Detroit.

[beachbum bob]

2. I spent 5 years working at the Big 3

and seeing car manufacturing from the inside and the hate relationship between labor and management....believe me...both labor AND management are the chief responsible parties of the destruction of the car industry in this country....they really only have themselves to blame

[mmonk]

3. How so labor?

[beachbum bob]

6. inflexible union rules that promoted inefficiencies, reduced production and protect awful employees

ALL the time.....and management was just as bad. Do not think labor wasn't a part of the destruction of the industry....their sense of entitlement to a job was overpowering and the general attitude that management would never lay them off and close factories permeated their thinking right up to the time the doors were locked

Not saying that trade deals didn't contribute but labor did not step up to the plate and management became indifferent. I saw this at"

chrysler
ford
pontiac
buick
international harvester
westinghouse
general electric

to name some of the facilities I spent considerable time in and saw it first hand

[mmonk]

7. Still it's hard to pinpoint how it led to bankruptcy.

I understand how it could lead to efficiencies however.

[beachbum bob]

9. the overhead cost in the price of a car became unsupportable without drastic

changes in the process.....for instance back in the late 80's over 40% of the profit margin in an average vehicle was dedicated to pension costs....and that was the 1980's....that is unsupportable longterm....unions fought innovations for decades....trying to protect worker count at the expense of productivity and efficiency. This happened across all american industry, especially the automotive.....sooner or later something had to give....and corporations found closing plants became their only option....so US manufacturing jobs collapsed.

Federal tax codes didn't help either as plant closure was a tax-positive move....and trade agreements gave cover for corporations.....combined this with H1-B employee program abuses and the american worker became an unprotected endangered species...

the sad thing, that so many of these union employees who lost jobs kept moving toward GOP candidates who's policies were the basis of their job losses....I never understood how these people could continually elect politicians that were cutting their throats. Little has changed as we seen GOP/conservatives morphed into their beast...and the same people so badly damaged by conservative policies are their chief supporters

[Chitown Kev]

4. It started with OPEC and imported cars in the mid-late 1970's

it accelerated under NAFTA.

The 1980 Republican Convention was held in Detroit for a reason.

[mmonk]

5. Yes, all those were contributing factors.

[Octafish]

8. Detroit - Why the domestic Auto Industry 'collapsed'

I want to make plain why Detroit's number one business, cars, went into the toilet, taking jobs and the good times with it.

The American Car Industry

by EAMONN FINGLETON
CounterPunch, Dec. 4, 2008 (Tokyo)

Never has the American car industry had a poorer press. No epithet these days seems too contemptuous in referring to the industry’s managerial competence and no policy proposal too heartless in addressing the industry’s high labor costs.

The American commentariat’s “let-them-eat-cake” attitude was summed up by Mitt Romney in a New York Times editorial page article last week in which he unapologetically advocated that the entire industry be allowed to go bankrupt. Yet the main “benefit” of a bankruptcy is merely that the industry’s surviving businesses would be allowed to walk away from billions of dollars in obligations to retirees. One wonders how Romney would react if some ideologue casually suggested his pension benefits be incinerated on a bonfire of free market theory.

Yes, some of Detroit’s injuries are self-inflicted. But no industry is perfect. Not in the United States and not anywhere else. Even the American financial services industry — so recently held up as a poster boy of supposedly world-class management — is now seen to be less than infallible.

There was once a time — some of us remember it well — when Detroit led the world in both labor productivity and R & D. What has changed? The most important reason for Detroit’s downfall has not been incompetent management — the executives been running the industry lately have been hewn from much the same timber as their predecessors in the 1960s. As for “greedy unions,” labor seems far less grasping these days than in the 1960s, when Detroit’s wage rates ran nearly four times those in Japan.

The elephant in the room is unfair foreign trade practices. Though you would never know it from the way the news has been reported, for forty years the Detroit companies’ foreign competitors have systematically pursued predatory pricing in the American market. They have thereby starved Detroit of the adequate returns necessary to invest in new, more efficient production technologies.

CONTINUED...

http://www.counterpunch.org/2008/12/04/the-american-car-industry/

BWTM...

How the Press Helped Destroy the Auto Industry

Detroit's Collapse: the Untold Story

By EAMONN FINGLETON
CounterPunch, July 3-5, 2009

For decades East Asian competition has played a controversial role in the decline of the American car industry. Both Japan and Korea have long been accused of unfair trade and closed markets. For their part Japanese and Korean officials have argued that their markets are open and that an incompetent and heedless Detroit doesn't make the sort of cars their consumers want.

In all the charges and countercharges, little of the remarkable truth of Detroit's trade problems has come out. To see how well -- or rather how badly -- you understand the background, try this quiz:

1. What was the Detroit companies' share of the Japanese market in 1930? (a) About 90 per cent. (b) About 20 per cent. (c) Less than 4 per cent.

2. How many models do the Detroit corporations currently make with the steering wheel on the right (the standard configuration for Japan)? (a) More than 40. (b) 12. (c) 3.

3. What was the combined share of all foreign makers – American, European, and Japanese – in the Korean car market in the last decade? (a) Less than 2 per cent. (b) Around 15 per cent. (c) More than 70 per cent.
The correct answer in each case is (a).

If you flunked, don't feel bad. Just cancel your newspaper subscription.

For decades American press coverage of global car industry competition has been abysmal. Reporters and commentators have almost never dug below the surface and their idea of fact checking has too often consisted merely of "accurately" recycling previous observers' errors. Worse many commentators have displayed an almost venomously elitist bias against Detroit. In short, readers of the American press have been fed a diet of falsehoods, while key facts that give the lie to the foreign trade lobby’s special pleading have been swept under the carpet.

Much of the most egregious press coverage moreover has emanated from writers and editors at some of the most “respected” media organizations, not least the Wall Street Journal, the Economist, the Washington Post, and the New York Times. Reuters and Associated Press have not been far behind and even the automobile trade press has often unforgiveably spun the story to Detroit's great disadvantage.

CONTINUED...

http://www.counterpunch.org/2009/07/03/detroit-s-collapse-the-untold-story/

What was missing from the news coverage? That Uncle Sam doesn't protect its own automotive industries, while Japan does.

All this info on national trade policy and its impact on Detroit -- from where unions and the great American middle class emerged (let alone the Arsenal of Democracy) sprang -- is missing from the news. A very similar situation is arising today with the lack of coverage of TPP.