Once Detroit was a symbol of the dynamic USA economy. It didn’t look pretty as a town, but it did plenty. After the second world war it put the USA on the new level thanks to the auto boom that gave great prosperity. However, Detroit’s decline followed. The first worrisome signs appeared in 1955. In the face of growing foreign and domestic competition, auto companies merged, or quit, or moved out of town to get closer to markets. Workers in the plants were replaced with automation. Chrysler, the city's biggest employer, has dropped from 130,000 to 50,000 workers. By 1958 20% of the city's workforce was unemployed. During the crisis the city’s middle class moved to suburbs. It was hard to find work at any wage. The next wave of decline took place in 1979 when the Shah of Iran was overthrown, and the Ayatollah Khomeini came to power. He cut Iran’s oil production, which reduced shipments of crude oil to the United States. Gasoline prices soared, and the American economy plunged into a recession. The more fuel efficient Japanese cars started to conquer the auto market. Sales for Toyota, Datsun (now Nissan), and Honda—the three top-selling Japanese brands—rose from 1.1 million in 1978 to 1.4 million in 1982, a 29 percent increase. Indeed, in 1982, Japan surpassed the United States, even if only briefly, as the world’s largest producer of cars and trucks. As the main plants used to be concentrated in Detroit, the city started ruining together with them. Japanese automaker Honda started hiring American workers for its first plant in America in Ohio. For people it was an opportunity of a lifetime as Honda was a household name. Everybody recognized it for its quality and reasonable price.
As for Detroit, it lost its value as a manufacturing city and now it seems to be deserted in comparansment with the first half of the 20th century. As for the Japanese car makers, today they are widely spread across the territory of the USA, they give jobs to the Americans and continue their development and growth.
https://www.nytimes.com/1989/12/07/business/grim-outlook-of-early-1980-s-is-back-for-us-auto-makers.html
https://theweek.com/articles/461968/rise-fall-detroit-timeline
http://content.time.com/time/subscriber/article/0,33009,873465,00.html
https://www.epi.org/publication/the-decline-and-resurgence-of-the-u-s-auto-industry/
I found this to be a very interesting and well detailed blog because it demonstrates to us how quickly a powerful city can fall. Detroit was once a major economic powerhouse but today the city is just a shell of its former self. Additionally, it shows us that competition between companies is better for consumers. But the dark side of this is that companies die out and are forced to lay off hundreds of thousands of workers.
ReplyDeleteI like how you explain the chronology of Detroit's economy in detail in relation to world politics and international factors. I also think that your analysis on how it wasn't one deep plunge, rather two consecutive ones indicates that this was very significant. On a more positive note, in 2014 Detroit emerged from its bankruptcy and its manufacturing industry has been increasing. New companies like ABB Robotics (Zurich based) have begun production in Detroit to serve its $7.5 billion US market. Additionally Ford is investing $1.45 billion to its 2 manufacturing plants in Detroit and adding 3000 jobs within the next 3 years.
ReplyDeleteSources
https://www.cnbc.com/2015/06/29/and-innovation-power-detroits-manufacturing-revival.html
https://www.thestreet.com/investing/ford-to-invest-in-detroit-manufacturing-plants-add-3000-jobs