last chance to save Detroit
- Thread starter mr1940s
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Look up TheMann's Transport America TL and Emperor Norton's AHC:Keep Detroit From Dying TL.
I'll paraphrase a few if the highlights:
I'll paraphrase a few if the highlights:
- Detroit needed to economically diversify away from the auto industry. Pittsburgh didn't have a choice to diversify from steel but they did it.
- Preventing or ameliorating the white flight from 1965 on that eroded the tax base and political clout of the folks in the city.
- The Big Four- including AMC, needed to be more nimble competitors.
Perhaps having John Nichols winning the 1973 mayoral election would be a good place to start.
Indianapolis eased that problem for nearly 40 years via "Unigov". The short version is the State legislature enabled the annexation of most of the suburban cities, or most of Marion County into the city of Indianapolis. This did not solve all of Indys problems but was a good start. Among other things it provided enough tax revenue for the Republican admonistration of the 1970s to pull some massive public works projects in the central districts.
There is also the question of relative corruption between Detroits government and more sucessful cities. Or maybe it is a question of Detroits crooks being less competent than those running Chicago, or Atlanta.
Thx Carl!
Sadly I haven't learned much of Indianapolis' Unigov inititative. D'oh! I knew I forgot something, like absorbing enough of the 'burbs and putting together s semi-functional metro gov't so tax base doesn't evaporate!
Corruption happens in a single-party town, regardless of party.
The big issue with the metro government is finding some kind of middle ground that enhances overall prosperity/social mobility w/o mortgaging the future too much on wild bets.
Working for Dallas, Texas, I saw what Republican govt w/o a serious electoral challenge does- doles out the pork to major campaign contributors and screws the folks inconveniently poor and unconnected downtown. Also, they went for the low-tax, work the bonds strategy to take care of maintenance costs cut from annual budgets.
Detroiters found themselves marooned probably by 1980 watching the good plant jobs disperse to other cities or across the borders as subcontractors went elsewhere. That's really outside the power even of a "Unigov" metro government.
The best thing they could do is attract other businesses to the Detroit area
and develop smaller businesses. UMAA and other area universities could be incubators of new ventures but that's not an immediate panacea.
My two bits...
Sadly I haven't learned much of Indianapolis' Unigov inititative. D'oh! I knew I forgot something, like absorbing enough of the 'burbs and putting together s semi-functional metro gov't so tax base doesn't evaporate!
Corruption happens in a single-party town, regardless of party.
The big issue with the metro government is finding some kind of middle ground that enhances overall prosperity/social mobility w/o mortgaging the future too much on wild bets.
Working for Dallas, Texas, I saw what Republican govt w/o a serious electoral challenge does- doles out the pork to major campaign contributors and screws the folks inconveniently poor and unconnected downtown. Also, they went for the low-tax, work the bonds strategy to take care of maintenance costs cut from annual budgets.
Detroiters found themselves marooned probably by 1980 watching the good plant jobs disperse to other cities or across the borders as subcontractors went elsewhere. That's really outside the power even of a "Unigov" metro government.
The best thing they could do is attract other businesses to the Detroit area
and develop smaller businesses. UMAA and other area universities could be incubators of new ventures but that's not an immediate panacea.
My two bits...
All that Detroit needed to survive was for its auto industry to take the competition posed by the Japanese auto industry far more seriously, stop assuming that only Americans were capable of innovation, and to actually listen to the consumers and act accordingly. Had the aAmerican uto industry been more responsive to change Detroit's auto industry would've survived. Techincal advances would've cost thousands of workers their jobs anyway but a lot of those workers would've found work in supportuing industries like GPS systems etc.
Detroit's government didn't help matters. They allowed themselves to be too heavily dominated by the auto industry and they failed to diversify the Detroit economy when the first factory closures began to take place in the early 1980s.
As for saving the city? My idea would be too insane.
Detroit's government didn't help matters. They allowed themselves to be too heavily dominated by the auto industry and they failed to diversify the Detroit economy when the first factory closures began to take place in the early 1980s.
As for saving the city? My idea would be too insane.
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BlairWitch749
Banned
i think the last reasonable chance was in the early 1980's (although it might be too late by that point without a unigov strategy as mentioned above)
the big 3 were so financially mismanaged that their market caps had been ground down badly
an idea I floated previously was to have Warren Buffet by GM in 1981 or Bain capital to buy Ford in 1987 and with the extra leverage provided by taking the companies private; break the UAW with the help of the Reagan administration who would be more than willing to oblige
now buying GM in 1981 is outside of Warren Buffet's normal style. His preferred method of operation is to buy successful companies and largely let them continue to run themselves; and GM was not a successful company in 1981
however, a study of their books ( his interest piqued by visiting a GM dealership in his hometown of Omaha forex) would show that they had a MAJOR financial mismanagement problem that he could resolve without even getting anywhere near the cars themselves.... this would literally remove 2/3 of gm's problems and free up capital to design their cars better or make their pricing more competitive with Toyota and Honda; Buffet in such a situation would have an excellent chance of turning the company around and securing a huge return on his investment
Bain capital buying Ford in 1987 is a coin flip. Bain did employ (although not in this time period as much as they did later) slash and burn tactics on their tactical takeovers that could destroy Ford. However, running Ford may strike a romantic tone with Mitt Romney, who is certainly shrewd enough to see that reorganizing their financial and inventory management would largely cure the company's woes; and if he perceives that on the way in to the investment, turning around Ford might represent a way for him to secure a massive return on his capital
the big 3 were so financially mismanaged that their market caps had been ground down badly
an idea I floated previously was to have Warren Buffet by GM in 1981 or Bain capital to buy Ford in 1987 and with the extra leverage provided by taking the companies private; break the UAW with the help of the Reagan administration who would be more than willing to oblige
now buying GM in 1981 is outside of Warren Buffet's normal style. His preferred method of operation is to buy successful companies and largely let them continue to run themselves; and GM was not a successful company in 1981
however, a study of their books ( his interest piqued by visiting a GM dealership in his hometown of Omaha forex) would show that they had a MAJOR financial mismanagement problem that he could resolve without even getting anywhere near the cars themselves.... this would literally remove 2/3 of gm's problems and free up capital to design their cars better or make their pricing more competitive with Toyota and Honda; Buffet in such a situation would have an excellent chance of turning the company around and securing a huge return on his investment
Bain capital buying Ford in 1987 is a coin flip. Bain did employ (although not in this time period as much as they did later) slash and burn tactics on their tactical takeovers that could destroy Ford. However, running Ford may strike a romantic tone with Mitt Romney, who is certainly shrewd enough to see that reorganizing their financial and inventory management would largely cure the company's woes; and if he perceives that on the way in to the investment, turning around Ford might represent a way for him to secure a massive return on his capital
do away with the oil embargo in the 70's? This caught Detroit rather off guard, as they didn't have much of a line of gas efficient cars, while Japanese companies did. It wasn't the only thing that sunk Detroit, but it was the first step...
That just delays the inevitable, allowing the Big Three to grow even more ossified than they were when their wake-up call came in 1973. American oil production had peaked in 1970, and from there on out it was going to be increasingly dependent on foreign oil. If an oil crisis didn't come from the Arab oil embargo in 1973-74, it would've come from something else, like the Islamic Revolution in Iran in '79, or a major war in the Middle East knocking oil production offline.
American car makers produce smaller greener better cars.
Also Tamla Motown stays there and becomes part of the basis of more cultural power
Also Tamla Motown stays there and becomes part of the basis of more cultural power
Most of the severely declined American cities have two critical points where the damage began - the entry into the city of large numbers of minorities and this causing white flight, and the dismantlement of one of the city's large industries. Often this is combined with an inability to deal with social problems of the time. Indianapolis had Unigov and the Lily Foundation, Pittsburgh had good city management. Detroit, thanks to likes of Coleman Young and his people, had none of those. If you really want to save Detroit, you need white flight to be narrowed off. I can see a WWII POD pulling this off, with the aftermath of WWII leading to many more black police officers (bad community relations between the police and the community was a key cause of the Detroit riots in 1967) and a key difference in community relations. When I wrote Transport America, I had a social movement in the 1960s which directly challenged white flight, the idea that many of WWII's warriors were gonna hold on to the places where they lived and make it better rather than run to the suburbs. This after the turbulent 60s and 70s leads to massive gentrification in the 1980s and 1990s, and Detroit starts to be seen as a culturally happening place by the late 80s (True to some extent IOTL) and so the population soars in the 1990s and 2000s as people leave behind the sterile suburbs for the bouncing inner city.
The last chance to stage a recovery is 2013. Sometimes you need to hit rock bottom before you are willing to get better.
There were too many people with too much to lose, limiting the prospects to have a turnaround earlier. The unions, the management teams at big auto, the politicians - too many conflicting interests and too short sighted. Detroit's decline wasnt inevitable but just the same, nearly impossible to avoid.
If you dont like that answer, then I would suggest 1998-2000. In 1998, Daimler Benz bought Chryser in an acquisition which didnt work and left Chrysler further weakened. In 2000, Ford, paid out a dividend to its shareholders that totaled about $15 billion, if I recall. It was their rainy day fund but investors were growing complacent. Almost immediately thereafter the recession hit and they were cash strapped. Then, just as the economy started to improve, oil and gas prices rocketed higher and they couldnt sell their SUVs anymore. It would have been nice to have the cash to invest in new models and technology. Doesnt address GM but two of the three really did themselves in during those two years.
There were too many people with too much to lose, limiting the prospects to have a turnaround earlier. The unions, the management teams at big auto, the politicians - too many conflicting interests and too short sighted. Detroit's decline wasnt inevitable but just the same, nearly impossible to avoid.
If you dont like that answer, then I would suggest 1998-2000. In 1998, Daimler Benz bought Chryser in an acquisition which didnt work and left Chrysler further weakened. In 2000, Ford, paid out a dividend to its shareholders that totaled about $15 billion, if I recall. It was their rainy day fund but investors were growing complacent. Almost immediately thereafter the recession hit and they were cash strapped. Then, just as the economy started to improve, oil and gas prices rocketed higher and they couldnt sell their SUVs anymore. It would have been nice to have the cash to invest in new models and technology. Doesnt address GM but two of the three really did themselves in during those two years.
The likelihood of Warren Buffet ever buying GM is somewhat less than the likelihood of you buying GM.
Part of the problem with implementing the strategies you discuss is union blockage. If you cut inventory it means a union job is lost. Difficult to get them to agree to these things.
BlairWitch749
Banned
Yea buying a struggling company isn't buffets style
That's why I said they would have to bring the company private so they could break the unions because they wouldn't go along with a sales only oriented production schedule
Re: Big 3 restructuring strategies
@TO91320 IDK how much the unions contributed to malaise of the 1970's.
Sure labor unrest was a factor, but the underlying economics of how cack-handed Ford, GM and Chrysler were run made labor problems a lot further down the list. They were too bloated and diffusely run.
In 2013 hindsight, the problem Big Three management had was that they had their factories, dealer networks and price points already doped out for a steady-state supply-demand model that ignored any other competitors
or technical or regulatory challenges.
The 1973 OPEC embargo changed the game. Also the Boomer kids were perfectly happy to drive foreign (VW's, Hondas, etc.)
Don't underestimate the effects of Nader's Unsafe At Any Speed and the effects it had on folks considering American cars unsafe gas hogs and how that altered American car buying patterns for two generations.
We've already mentioned how top-heavy GM and Ford were and how it led to paralysis (too many layers of mgmt means ideas good ideas get stuck in a swamp waiting for consensus) and too many brands to manage.
Plus, since there were so many autonomous units that a good idea say in Buick had little chance of spreading throughout GM.
IMO Bain Captial would've sliced and diced GM or Ford into several entities and marooned every retiree on the rolls with a joke kiss-off payment.
As wretched as the OTL slow fall of the Big Three has been, watching those ripoff artists kill off and dismember the dinosaurs ca 1985 would've been catastrophic. Robocop's Wretched Hive Detroit would've been a vacation spot by comparison.
TheMann's Transport America posits that GM was able to get the Corvair out of development hell, adopting some useful tweaks from Honda that would make American small cars far more competitive.
AMC would be more viable and get the Big three to be more nimble competitors etc.
The tech was there, they had the money and people to retool and make it happen.
TM's a train nut, so the USA also gets serious about updating and improving train networks (which GM and Chrysler massively benefit from in making locomotives and train cars) as well as building and tweaking mass transit networks (ditto) which IMO is both an enivronmental and employment win vs OTL.
We talk about Detroit's city government pulling its act together, which could've cushioned the fall a bit, but w/o the Big Three pulling head-from-anus maneuvers in implementing changes in what to make, how to make it, and properly marketing those products...Detroit's got some major challenges.
@TO91320 IDK how much the unions contributed to malaise of the 1970's.
Sure labor unrest was a factor, but the underlying economics of how cack-handed Ford, GM and Chrysler were run made labor problems a lot further down the list. They were too bloated and diffusely run.
In 2013 hindsight, the problem Big Three management had was that they had their factories, dealer networks and price points already doped out for a steady-state supply-demand model that ignored any other competitors
or technical or regulatory challenges.
The 1973 OPEC embargo changed the game. Also the Boomer kids were perfectly happy to drive foreign (VW's, Hondas, etc.)
Don't underestimate the effects of Nader's Unsafe At Any Speed and the effects it had on folks considering American cars unsafe gas hogs and how that altered American car buying patterns for two generations.
We've already mentioned how top-heavy GM and Ford were and how it led to paralysis (too many layers of mgmt means ideas good ideas get stuck in a swamp waiting for consensus) and too many brands to manage.
Plus, since there were so many autonomous units that a good idea say in Buick had little chance of spreading throughout GM.
IMO Bain Captial would've sliced and diced GM or Ford into several entities and marooned every retiree on the rolls with a joke kiss-off payment.
As wretched as the OTL slow fall of the Big Three has been, watching those ripoff artists kill off and dismember the dinosaurs ca 1985 would've been catastrophic. Robocop's Wretched Hive Detroit would've been a vacation spot by comparison.
TheMann's Transport America posits that GM was able to get the Corvair out of development hell, adopting some useful tweaks from Honda that would make American small cars far more competitive.
AMC would be more viable and get the Big three to be more nimble competitors etc.
The tech was there, they had the money and people to retool and make it happen.
TM's a train nut, so the USA also gets serious about updating and improving train networks (which GM and Chrysler massively benefit from in making locomotives and train cars) as well as building and tweaking mass transit networks (ditto) which IMO is both an enivronmental and employment win vs OTL.
We talk about Detroit's city government pulling its act together, which could've cushioned the fall a bit, but w/o the Big Three pulling head-from-anus maneuvers in implementing changes in what to make, how to make it, and properly marketing those products...Detroit's got some major challenges.
Detroit made several things- M60 and M1 tanks and variants, as well as M-113 APC's, M2-Bradleys and so forth during the 1970's-1980's , as well as the 2.5 ton trucks, Hummers, and other vehicles.
The problem is that while military vehicles have a high mark-up, you're not making them by the millions like you are civilian cars and trucks.
After the Vietnam War, the cost per unit quintupled, so the number requested has to drop to fit the same budget.
Long story shorter, IMO Detroit's not going to prosper or keep everyone working strictly due to military vehicle orders.
The problem is that while military vehicles have a high mark-up, you're not making them by the millions like you are civilian cars and trucks.
After the Vietnam War, the cost per unit quintupled, so the number requested has to drop to fit the same budget.
Long story shorter, IMO Detroit's not going to prosper or keep everyone working strictly due to military vehicle orders.
Military vehicles actually do not have a high mark up. And the auto guys sold their defense businesses to defense contractors partially due to that.