Detroiters can learn to love the all-American Honda and Hyundai

PUBLISHED : Saturday, 16 July, 2005, 12:00am
UPDATED : Saturday, 16 July, 2005, 12:00am


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DETROIT, THE ERSTWHILE Motor City, is running on empty, as the movers and shakers of Motown seem to be losing their groove.

At the Renaissance Centre, the hotel-and-office complex in the heart of the city that has been the focus of a quixotic urban-renewal push, the global headquarters of General Motors glows like a giant piston in dark smoky glass.

But this corporate engine is no longer revving; the only humming you will hear is across the Detroit River, where the neon lights of Windsor, Canada, advertise a booming economy and an agreeable urban lifestyle of lower crime rates, reliable public services and affordable housing.

According to federal data, as many as 150,000 people a year have been leaving Detroit over the past few years in search of the proverbial greener pastures.

As a result, Michigan's industrial heartland has just lost its status as the 10th-largest American city in terms of population to San Diego in California.

Detroit's fate contrasts with that of Ohio's Cleveland, another city highly dependant on the car industry.

Michigan's manufacturing-payroll employment index has plunged to 650 from as high as 900 in the mid-1990s to 2000, pointing to the steady decline in the number of factory jobs.

Ohio has also lost many such jobs, with the state's manufacturing-payroll index falling to about 800 from more than 1,000 in the 1990s.

However, Ohio's jobless rate in May was only about 6 per cent, far from its peaks of 14 per cent in the early 1980s. Michigan's unemployment rate, by contrast, stood at about 7 per cent in May, from almost 3.5 per cent in 2000 and 10 per cent in the early 1990s.

Ohio's lower jobless rate can be partly attributed to efforts to diversify the state's economy.

For instance, more than 400 firms in the Akron area are working with polymers and plastics, while companies in liquid-crystal technology are clustered between Akron and Cleveland.

But even innovative Cleveland is a laggard compared with the dynamic economies in the southern states and on both the east and west coasts, where cities like Seattle, Los Angeles, Boston, New York and the rest of southern California are booming, thanks in large part to links with the Asia-Pacific and South America. Among these states, the jobless rates hover around the national average of 5 per cent.

Some analysts say that Detroit's protracted demise reflects the gradual death of US manufacturing as a result of outsourcing and the exodus of companies to low-cost countries.

This assertion, however, is not supported by data. According to the US Bureau of Labour Statistics, the number of US employees on non-farm payrolls has been posting net-positive gains of about 200,000 a month since mid-2003 after haemorrhaging in 2001, indicating that American industry is far from dead.

What Detroit's experience points to is that the players are changing while production bases are shifting - but still within American borders.

The most radical shift in the US motor industry has been the mass movement to the southern states, where companies like Toyota, Nissan and Hyundai are opening state-of-the-art factories in Tennessee, Georgia, Mississippi, South Carolina and Alabama. These companies account for almost 30 per cent of the car market in the US.

This production shift has meant that the thousands of car parts makers that once dotted the northern landscape of the US are also moving south. According to industry estimates, the northern vehicle industry centred around Detroit has lost 10,500 positions - 25 per cent of the work force - since 2000.

Surprisingly, given the massive job losses, these foreign car manufacturers have hardly attracted local enmity. In fact, Toyota's Prius and Honda's Civic car models are among the most popular brands in the US market.

To explain this phenomenon, one only has to look at the steady stream of advertisements bombarding the US consumer, with Toyota, Nissan, Honda and Hyundai practically wrapping themselves in the Stars and Stripes, billing themselves as job creators and friends of the American people.

In their advertisements, they project themselves as caring corporate citizens who look after the environment, their host communities and the American workers and their families.

Interestingly, while other foreign-owned car makers promote their overseas origins - take for instance BMW's trumpeting of its German-engineering genes - Toyota, Nissan, Honda and Hyundai take pains to point out that their innovations, such as cleaner emissions and cutting-edge hybrid-engines, have been developed with the help of American know-how.

For the Detroiters, a new and painful lesson has been learned: There are no barbarians at the gate. The so-called enemies are already within and - guess what? - they are as all-American as chicken tikka masala, California rolls and Chinese take-away dinners.