Detroit fears of losing carmaking to Silicon Valley
DETROIT -- Under the headline "Motor City West Revs Up Demand for Space," the Wall Street Journal ran an article over the summer that should scare the bejesus out of Detroit and Michigan.
"The future of the car is in Silicon Valley," a vice president of the San Francisco-based Bay Area Council Economic Institute boldly predicted in the story, adding, "We're getting this entirely new ecosystem around automotive parts."
Yikes.
First it was southern U.S. states luring auto assembly plants in the 1980s; then maquiladora auto plants exploding along the Mexico border in the 1990s; then a mad scramble to match the so-called "China price" when America's automakers were desperately trying to buy cheaper components in order to offset their unsustainable legacy costs.
Now we have Silicon Valley challenging Detroit's leadership in the auto industry's most promising growth areas — autonomous cars, connected vehicles, eco-friendly powertrains.
All of which sets the table nicely for the 2014 MICHauto Summit in Detroit, a daylong conference Tuesday exploring the hot automotive trends and, hopefully, bold ideas for growing investment and jobs in Michigan's signature industry. MICHauto, a group absorbed and then beefed up by the Detroit Regional Chamber three years ago, is dedicated to promoting, retaining and growing the auto industry in our state.
Sounds like a no-brainer, right? Something that should have been Job One for Michigan's economic development officials and elected leaders since way-back-when. But it wasn't. We took the golden goose for granted and Michigan domination of the auto eroded steadily after the 1960s until the whole house of cards darn near collapsed a few years ago.
Things are looking up now. Ford, Chrysler and General Motors and the supply base are all profitable — investing, adding jobs — and Michigan is attracting investment from around the world.
"Homer is booming," Gov. Rick Snyder told me recently, referring to the $115-million investment announced in May by Italian parts maker Brembo at a plant in Homer, near Battle Creek. The company makes brakes, discs, calipers and corner modules. Brembo also has a technology center in Plymouth, one of more than 300 automotive research and development operations in the state.
Just last week, a Chinese firm announced plans to add up to 300 jobs to build aluminum alloy wheels on the site of a former solar panel plant in Greenville that closed in 2012, while Israeli-owned Plasan Carbon Composites said up to 620 new jobs will result from expansion of a plant near Grand Rapids that makes lightweight body parts and assemblies for sports cars.
While these are welcome developments, that Wall Street Journal article serves as a warning against complacency, a reminder that every city, state and nation in the world is courting companies that make high-value-added products and create the well-paying jobs that come with them.
"While the growth of auto manufacturing has been mostly confined to Tesla and its supply chain, the growth of auto research and design investment in Silicon Valley has been spread widely throughout the industry," the Journal story stated, noting that BMW, Nissan-Renault, Ford and Toyota have opened large R&D centers since 2012.
"It is scary stuff, if you do nothing about it," said Glenn Stevens, vice president of MICHauto, who led the effort to assemble a group of speakers for Tuesday's summit that includes Ralph Gilles, Chrysler's head of motorsports and product design; GM's global product boss Mark Reuss, Snyder and Detroit Mayor Mike Duggan.
Duggan's remarks should be particularly interesting, as Detroit emerges from municipal bankruptcy at a time of great need and opportunity. The city desperately needs good jobs — and has an abundance of inexpensive, vacant land and industrial space.
Detroit's fledgling economic revival, driven mostly by health care jobs and some in-migration of young workers to downtown and Midtown so far, cannot fully rev up until the city regains more of its lost industrial mojo. Duggan is said to be cooking up some ideas in the automotive space; we'll see Tuesday if he's ready to unveil any.