Who, or What, Killed Detroit? Union Greed

Investors Business Daily ^ | 03/24/2011

[SeekAndFind]

Cities: Poor Detroit. It hasn't had any good news for decades, and now, despite a $77 billion bailout of the auto industry, its population continues to implode. The No. 1 reason: the United Auto Workers union.

Census data released Tuesday show Detroit's population has plunged 25% since 2000 to just 713,777 souls - the same as 100 years ago, before the auto industry's heyday. As recently as the 1970s, Detroit had 1.8 million people.

What's happening is no secret: Detroiters are fleeing an economic disaster, the irreversible decline of the Big Three automakers.

In his now-famous Super Bowl commercial for Chrysler, rapper Eminem drives up to a theater in a sleek new 200 model and says, "This is the Motor City. And this is what we do." But, sadly, that's no longer the case. Detroit's decline has been shocking.

Sure, a lot of the blame goes to a generation of bad management. But the main reason for Detroit's decline is the greed of the industry's main union, the UAW, which priced the Big Three out of the market.

As recently as 2008, GM, Ford and Chrysler paid their employees on average more than $73 an hour in total compensation. The 12 foreign transplants, operating in nonunion states mostly in the South and Midwest, averaged about $42 an hour.

Guess which manufacturers are healthiest and expanding their market today? In 2008, the Big Three still made 59% of all cars in the U.S. But, according to recent estimates, their market share is now 46% - with foreign companies selling the bulk of all U.S. cars. So Detroit's loss has been the South's and Midwest's gain.

Behind this is the gold-plated benefits package once guaranteed to UAW workers.

[Oldexpat]

Not to worry. GM will now be rescued by the Dolt. Whoever dreamed up that one wasted billions.

[Anti-Bubba182]

What is reason No. 2?

[ALPAPilot]

For both management and labor, it was the love of money.

I would say it was liberal's addiction to other people's money that caused this.

[Oldpuppymax]

Don’t forget the stupidity and arrogance of GM! It was an important contributing factor.

[DeadFurrow]

I worked, in Detroit under Sheriff Bill Lucas, while Detroit began its decline. Coleman Alexander Young, I believe, had more to do in destroying Detroit. Young HATED his Police Dept, including everything it represented. Before the “Destroyer Young” the City was a great place to live, work, play, and shop. The UAW hurt the entire nation. Currently, the UAW is going after the Ford Motor Co.

[goat granny]

I was brought up in Detroit, 2 words killed Detroit the most.....FORCED BUSING.

No one ever wants to mention that 800 pound gorilla sitting in the middle of the living room...

Middle class blacks and whites moved out as fast as they could....no one wanted their 1st grade child put on a bus at 7 in the morning to drive across town to go to a school with no she knows probably going to the same school..

Blacks were as pi$$ed as whites with forced busing...

[Chuzzlewit]

I recently visited Saint Louis, Missouri.. there is zero urban blight, at least from what I could see. There is a gorgeous section of old homes and converted shoe factories to apartment buildings, that I visited.. just a stunning area.

I wonder if Budweiser is a Union plant? That is their main industry, from what I understand.

[PrincessB]

Go North of where you were and it is there. It isn’t as bad a some other cities and in places it’s block to block, but there is a lot of it.

[Alberta's Child]

Very interesting article, but I think a lot of these analyses that focus on labor and management issues at major U.S. corporations as the major influence in the downfall of a city like Detroit are overlooking a couple of important things.

I would make the case that Detroit would still be a city in decline -- especially as far as the automotive industry is concerned -- even if the UAW never existed and the city was a well-managed jurisdiction. I've come to believe that the single biggest factor in Detroit's industrial decline is that being situated on the Great Lakes system no longer provides industries with the advantages they once had.

Nowadays, having good access to major East Coast and West Coast ports (either directly or through Class I railroads) is more important to an industry. Cars don't need as much steel as they once did . . . which means they don't need access to Great Lakes ports where iron is barged in from Minnesota and Wisconsin . . . and they don't need to have miles of railroad tracks to bring coal in from Pennsylvania, West Virginia, Kentucky, etc. I think geography is a bigger factor in Detroit's decline than most people realize. It's no coincidence that Detroit's decline is occurring even as other old industrial cities along the Great Lakes (e.g., Cleveland, Buffalo) are in decline, too.

[MalPearce]

I’ve just had a look at Detroit property.

What a tragedy.

Although...

I live in a very cheap former mining town in northern England, also with low employment and the manufacturing industry decimated.

It seems I can pick up a decent sized five bedroom 3 bathroom detached property over there, if I sell my tiny little ex-miner’s 3 bedroom terraced house (would’ve been four but they had to move the bathroom indoors) here.

The positive news is that I worked with some other entrepeneurs and we’ve finished getting the village hooked up to three different next-gen broadband technologies. As a consequence businesses are getting interested, two senior architects working for high end IT consultancies have moved into our neighborhood, the business park is expanding for the first time since... ever, property prices are on the up and there’s even talk of us getting a major national railway station up the road which’ll rejuvenate the rest of the local area.

So, it is possible to turn an industrial wasteland into a hotbed of entrepeneurship, even in That Yorkshire.

So... Detroit.

Is it worth a punt?

[Bob]

One of the comments has a different take:

Speaking as a refugee from Detroit AND the Big 3 - - -

Much as I loathe the UAW, it did not kill the CITY of Detroit. What did that was, in two words, Coleman Young, the original Robert Mugabe of Michigan. All round the city are prosperous suburbs, generically known as Oakland and Macomb counties. GM, Ford, and Chrysler all built new plants in the 'burbs, which was partly due to simple logistics - transport to and from the downtown plants wasn't as easy as a greenfield plant in, say, Lake Orion. But also partly due to high taxes and graft that Young brought to a fever pitch within the city. Most of those new plants are still operating, and are still getting the best new machinery, (which was my piece of the puzzle). But the exodus of PEOPLE from Detroit was purely political - the corruption and racism that Young brought in was more than they could stand. This has contributed to a further decline of the city infrastructure, to the point where the majority of it now is only good for bulldozer practice.

[isaiah55version11_0]

Welcome to Starnesville

[Vaduz]

Sure looks like the Obama T.A.R.P. sure is working out just fine.

[sportutegrl]

Maybe it’s time to make, “Escape from Detroit”. (Escape From LA stunk on ice)

[Charles Martel]

You forgot to include a picture of the majestic Detroit School Book Depository:

What an amazing depiction of knowledge unlearned and potential untapped. The ruin of the city in smelly, moldy microcosm.

[antiRepublicrat]

It’s never that simple. Agree 100% the unions were a big problem. But how about clueless management? They ran wasteful operations, completely missed markets, allowed crap cars to be produced, and generally didn’t give the consumer what they wanted most of the time.

Meanwhile, the Japanese companies run a tight ship, and have for decades had design bureaus here in the US to meet US consumer desires. And they were never afraid to tackle a technical challenge. The end was in sight with the Big 3 said it was impossible to meet emissions standards, and Mr. Honda brought showed off his CVCC engine that already did.

[snoringbear]

“Yep, I read somewhere recently, that upon graduation over 50% of Michigan and Michigan State grad’s leave the state for greener pastures”

“One of my predictions for the future is that the State University is going to go the way of the Dodo Bird, because it will get harder to justify spending the money on students who most likely won’t stay in the state after graduation.”

An interesting prediction, had not considered that possibility.

[hinckley buzzard]

There is no doubt that management was complicit in the decline and fall of the auto industry, and by extension Detroit. Much like recent generation of politicians, they caved to union demands to avoid costly strikes and keep the cash flow going, knowing full well they were kicking the can down the road--sound familiar? Like Congress? In both cases, the perpetrators said "What the hell, we know it is unsustainable, but when the bill comes due none of us will be around anyway."