Monday, November 14, 2005

"Black October: How one month changed the course of the auto industry"

If you weren't sure things were serious here in Detroit, check yesterday's headline from the Sunday News and Free Press. This is an extremely somber time for us - if we cannot figure out how to sustain a profitable domestic automobile industry, in a few years we might not have one. We might have companies located here, but the number of people they employ and the wages that they are paid will be drastically different from what they are now.

We can already feel it - the metro Detroit housing market is soft lousy, and now the economic pressures affecting Detroit are softening vacation home values in Northern Michigan. People accustomed to second homes, large cars, college for their kids - those given the income and benefits that have allowed the American automotive manufacturing class to live solidly middle-class lives in the 20th Century - will probably have to readjust their lifestyles radically.

In the longer term, my hope is that companies like the one I work for will carve out a new future for our region, one not tied to automotive manufacturing, but on ideas, technology, and innovation. But no one living in the US should think that their lives won't change if the US auto industry proves to be ultimately non-sustainable. This article was written almost exactly two years ago, and it holds true:

A recent CAR study found that 10 percent of U.S. jobs are provided by the U.S. auto industry, which directly employs 13.5 million Americans. Suppliers and other auto-related companies employ another 2.2 million, not counting the local stores and mom-and-pop shops supported by every U.S. facility.

To be fair, as U.S. OEMs shed employees to survive their shrinking shares, foreign-owned transplants are adding jobs. But the ratio is far from one-for-one, and those new jobs are mostly in non-union factories in poorer parts of the country, and in dealerships.

I have worked for General Motors, for a Big 4 consulting firm on automotive accounts, for a car dealer in Toledo, and for a Tier II/III manufacturer. Almost every place I have been employed would be substantially impacted by the loss of the automotive business. If you think you won't be affected because you don't live in Detroit or because you are in a different industry, you're kidding yourself.

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