The Implosion of Detroit, five years after.

By Peter M. De Lorenzo

Detroit. Five years ago the domestic automobile industry as we knew it was staring at The Abyss. The economy was in disarray, the financial pressures on the industry were mounting and this country was beginning to understand what being in the throes of The Great Recession really meant.

With the burgeoning financial crisis in the automobile industry becoming an alarming, front-burner issue that was in the crosshairs of the national media’s attention, “Detroit” quickly was becoming a pejorative term for the rest of the country, a galvanizing symbol for everything wrong with America, both real and imagined.

And for many in this town who had grown up in a business that had been one of the pillars of the American industrial fabric, that had performed as the Arsenal of Democracy when the country needed it most and that had been the engine that powered this country’s upward trajectory in its glory years, it was a particularly galling development.

But that was just the beginning, because the ominous and churning clouds of negativity would soon turn into a journey into Hell for this industry, this region and most excruciatingly, for this town, the Motor City.

We watched in horror as company after company went under, with thousands upon thousands of jobs simply disappearing as an entire region of the country simply came unglued.

We watched as the Ford Motor Company was forced to put everything they owned on the line in order to borrow money to fund its future. The risk of mortgaging its corporate soul was incalculable and the consequence of failure was apocalyptic and unfathomable. There was simply no “Plan B.”

We were witnesses as Chrysler, having been seduced and abandoned by Daimler, fell into the hands of Cerberus - those despicable Private Equity carpetbaggers masquerading as corporate saints – who ran what was left of a company already teetering on the edge of oblivion hard into the ground, and into bankruptcy.

And we watched in disbelief as General Motors, once the pinnacle of industrial might in this country and the symbol for American corporate excellence around the world, sank under the weight of a financial shell game that could no longer be sustained and was sent reeling, straight into a humiliating and soul-crushing bankruptcy, something so unfathomable and unbelievable that it was as if the world as we knew it had stopped.

But perhaps most disconcerting was the public whipping of “Detroit” orchestrated by loathsome – and relentlessly clueless - politicians in Washington and Northern California, who seized the moment to blame Detroit for everything under the sun in a series of hearings that were simply unconscionable - and unforgivable - displays of political vacuousness the likes of which haven’t been equaled since.

“Detroit” the industry and “Detroit” the city and region had simply become persona non grata in its own country, a relic that too many in this country believed was getting exactly what it deserved and that we’d all be better off as a country if it all just went away. After all, the country didn’t have to worry about “Detroit” and what it all meant because we had become a Great Society for the New World, a Starbucks Nation of Consumer Zombies who wholeheartedly believed that our ability as a nation to make anything of consequence simply didn’t matter anymore, that we would be able to consume our way to euphoria and leave the unfortunate Rust Belt right where it belonged – a rotting, hulking carcass by the side of the road.

The legions of anti-car, anti-Detroit zealots that came out of the woodwork to heap derision on Detroit were staggering, led by their Supreme Leader, Thomas L. Friedman of The New York Times, who, while commenting so completely and embarrassingly afield of his wheelhouse, had the temerity to seriously suggest that one of America’s founding industries should simply be replaced by Toyota, because the country would be much better off for it in the long run, which was personally my last straw concerning this sordid mess.

(If you want to read about how the whole ugly episode unfolded over the months as it happened, check out Witch Hunt, the book Peter wrote that encapsulates one of the ugliest chapters in American industrial history in a series of commentaries that still resonate just as loudly today. - WG)

And now, here we are today, five years down the road and the fundamental question has to be asked - did anyone learn anything from it all?

In a lot of ways, that answer could be yes.

The domestic automobile industry has fundamentally changed, to the point that these companies are barely recognizable from the ones doing business half a decade ago. And it should be emphasized - especially to the instant experts out there who think that all of the “fixing” that Detroit needed could be accomplished by simply flipping a switch - that this is not an insignificant achievement by any stretch of the imagination, either.

Now down to two companies, Ford and General Motors – with the Italian auto company Fiat having taken over Chrysler – the industry has placed an emphasis on cost discipline, efficiency and excellence in execution, from the products they build to they way they operate. And “business as usual” simply stopped being business as usual so long ago that no one even remembers the concept. The cadence today is breathtaking and the drive to achieve and succeed is staggering. The adage that you’re only as good as your last effort is palpable and intense, and it’s only exceeded by the sheer 24/7 effort that it takes to keep up with it all.

And the vehicles now being produced are ultra-competitive and noteworthy to the point that even the most jaded anti-Detroit consumers are being forced to take a hard look at the offerings being brought to market by the Detroit-based auto companies. You can’t suggest that the business has fundamentally changed more than that.

But it needs to be pointed out that there has been a deep and shattering toll on the way to reimagining the domestic automobile industry as well. These companies have gone through gut-wrenching restructurings that cost thousands upon thousands of people their jobs and though these companies are now showcasing gaudy profit numbers, the effect on pensions and livelihoods and families in order to get to this point is still being calculated and will go on well into the next decade. It cannot and should not be swept under the rug that for a lot of people the “miracle” of a rejuvenated Detroit is mind-numbingly grim.

But back to that fundamental question again: Did anyone learn anything from one of the direst periods in American industrial history?

Unfortunately that answer in some ways could be no too.

I’m beginning to see the same mistakes and the same sloppiness creep into the automotive company equation. Realistic auto loans have given way to sure-fire stupidity in the form of lengthy financial commitments that make little sense for anyone concerned, whether it is the consumer or the company itself. How this could possibly be considered an acceptable way of doing business after what this industry has been through is beyond me. 

I'm seeing car companies jump into segments that they have no business being in, thinking that it's a foolproof way to invest in their future and that it will lead to certain success. To that I will add a giant "we'll see" because the danger of brand dilution is high, and the cost of trying to be all things to all people can be crippling. 

And, as if this industry hadn't seen enough of them, there are still industry charlatans and antagonists hanging around, just in case you thought those days were finally purged after The Darkness that shrouded the business beginning five years ago.

I am still disgusted by the fact that an “Accidental Tourists” of a CEO is running General Motors, someone who is singularly so unqualified to be doing so that it is simply shocking to contemplate. A Private Equity refugee who sauntered through what can only be described as a morbidly mediocre career in corporate America, this guy is simply the wrong guy at the wrong time at the wrong company. And the fact that we have to endure GM PR’s manipulation of some lesser lights in the media (you know who you are) for at least another six months while it attempts to paint an extraordinarily fanciful picture of this guy – a churlish, unctuous prick of a man who loathes the industry and everyone in it with every fiber of his being – is sickening and beyond the pale.

As I’ve said repeatedly, the True Believers at GM who actually do the work and keep the company in the game deserve so much better.

And there’s still carpetbagging at work in this business as well. The aforementioned Chrysler is now being run by a smart guy who is trying to use the company’s ability to make serious hay in the U.S. market with trucks and Jeeps to save an embarrassment of an Italian company (okay, except for Ferrari) from inevitable financial ruin. In the course of this fundamental reality, the media has decided to canonize this CEO as some sort of industry Messiah, when in reality it (and he) always was and always will be about the money. Some of that adulation is starting to erode now, as Fiat-Chrysler’s Chieftain is being exposed on an almost daily basis for who he is and what his true agenda is, but still, we’ve all had to wade through a raft of shit to get to this point.

The True Believers at Chrysler, you know, the ones who had the winning product programs in place before they were descended upon by the espresso swilling hordes who were out to show them a thing or two about how it’s done, deserved better as well.

I can safely assure everyone out there that there’s one thing about this maniacally infuriating, at times exhilarating and mostly flat-out crazy business that hasn’t changed one iota in the ensuing ruin and resurrection of Detroit, however, and that is that no matter how much things allegedly change, no matter how many fly-by-night “saviors” come and go and no matter what level of the roller-coaster called the economy is in play, this business will be about the products and the people who design, engineer and build them. It always has been and it always will be, in fact.

And as long as the people fully engaged in that endeavor are True and Believing, this business will not only endure, it will thrive.

And that’s the High-Octane Truth for this week.