Boom, Bust and the Revival of Detroit

I've spent the last five days staying in the world's first airport hotel. It was completed in 1931. The interesting thing is, it wasn't built by someone called Marriott or Hyatt. it was built by someone called Ford.

During the 1920s Henry Ford, overseeing one of the world's dominant industrial companies, got increasingly into promoting air travel, as he sought the next big transportation revolution to sit alongside the automobile. He built a hotel in Dearborn, Michigan, close to his factories and alongside a company airfield. It was intended as a flagship location to stay when journeying via plane between one of the world's most important industrial cities and the rest of the world.

Today the modernity of 1920s Detroit floats like a ghost over the vast, sprawling metropolis that has suffered so much depopulation and changing fortunes as boom and bust cycles have hit its leadership role as an industrial powerhouse of America and, by implication, the rest of the western world.

The Great Depression meant even Ford's deep pockets could no longer support this expansion into aviation. The company, which had been manufacturing the Ford Trimotor, pulled out of air travel. Otherwise, tonight I might have been stepping onto a Ford jet airliner on my journey back from Detroit to London.

Busted flush

Today, as Washington's political leaders debate whether the automobile industry deserves upwards of $30 billion of taxpayer support, it's easy to feel that somehow we are seeing the humbling of a once all-powerful manufacturing industry.

The crisis, however, isn't what it seems on the face. This isn't about a failure of the auto industry to cut costs, or even to reform the relationship between 'management' and 'employees'. Instead, it's about our inability to absorb the products of mass production on the scale that the technology makes possible.

This winter a lack of financial capital has made it harder for the auto sales networks to provide finance at the volumes and cost needed to incentivise people to replace cars that they don't necessarily need to replace. That same lack of capital makes it harder to maintain investments in the product line refreshes, and the advertising, that are so important to motivating sales in a mature market.

I've written before about the extraordinary sums the US auto industry spends on advertising its products - $19.8 billion was the figure in 2005. With our focus on design, I tend to think that the perfect design process creates a product that is absolutely of its time – it gels with the era, uses the latest materials profitably, and attracts buyers itself. Of course, ask an ad person what they perfect product is, and you'll get a different answer.

We put these issues yesterday to someone who has amassed surely the world's largest automotive history collection. Joe and I spent time yesterday with Bob Casey, curator of transportation at the Henry Ford Museum in Detroit.

A highlight of the discussion is the clip below.

Casey's comments include these:

"Cars have gotten so good. When people ask me, what's the golden age of the automobile, it's today. The cars today are the best they've ever been. They're the most reliable, the most comfortable, the safest and easiest to drive. They actually get the best mileage. They're terrific devices. But you can drive them for 100,000 miles and they won't rust up on you, and the engine won't seize up. There's not a good reason to replace every two or three years."

"We've been relying on expanding populations to take up some of the slack, but when the credit crunch hits... we think maybe I can let this car go for another year, 'cos it's actually pretty good."

I'm not sure whether mass producing cars is the panacea. But mass producing things we want has plenty of life left in it.

Maybe Detroit's been short of innovation recently. The city has depopulated, it's been harder to attract talent with big ideas. But don't, ever, write this city off. Industrial mass production remains one of society's greatest achievements. It's not our ability to produce that is the problem, it's our ability to produce the right things. Producing things that people want, or never dreamed they may be offered, remains the challenge.

In a new, connected, flexible society, coming to terms with a new mass production age is surely our greatest, most exciting opportunity. Those with the power should be careful not to repeat history, and let a financial collapse lead to an industrial collapse. And perverse as it may sound, they should consider Casey's assertion that "the golden age of the automobile is today".

The question is what to sell next.

Mark Charmer is CEO of The Movement Design Bureau.

Comments

[Charmermrk]

This is a great analysis by Mark.My fave management guru, Peter Drucker said that the purpose of a business is to 'survive'. That is what needs to be addressed by every company in the world in the face of the financial crisis. If nothing else it will test the ingenuity and ability of professionals. Mass production may no longer be 'mass' or 'as mass', but the quality of products and choice must not suffer. Losing what Mark has described in this blog note would detract from everyone's life quality. Confidence will return as we all realise that we can survive and will need to seek the world's best cars.

Ken Charmer

[Charmermrk]

Thanks dad :-)