U.S. Carmakers Are Riding High, But Detroit May Not Feel It
Thursday, July 25, 2013
The news out of Detroit has been grim of late, but there are some bright spots coming from one corner of the Motor City. On Thursday, General Motors posted its 14th straight profitable quarter since emerging from bankruptcy. Ford announced its 16th consecutive profitable quarter Wednesday, and Chrysler is expected to offer good news soon as well.
And for the first time in more than 20 years, a domestic sedan, the Chevy Impala, won top marks from Consumer Reports.
But while this should be good news in a city that has just filed for bankruptcy, what's good for Detroit's automakers isn't always good for Detroit.
None of the car companies would agree to talk about Detroit's bankruptcy on tape for this story. But when you consider the Big Three -- and the auto industry as a whole -- there's one fact to recognize, says Michael Robinet, an analyst with IHS Automotive. "The epicenter for the U.S. automotive industry, from a vehicle production perspective, is probably northern Kentucky," he says.
Robinet says cars and Detroit are inextricably linked emotionally and culturally, but not so much financially anymore.
"All the major decisions within the global automotive industry somehow weave their way through Detroit," he says. "So this is still the heart of the industry. A lot of the muscle around it has sort of moved to other parts of the country."
The home of General Motors sits in downtown Detroit, but GM is the only auto company actually headquartered inside the city limits. The company has about 30,000 employees in the Detroit area, but just a little more than 4,000 of them work inside the city itself.
Ford, in contrast, has its headquarters in Dearborn, Mich., and its plants in the region are outside the city limits. Chrysler is headquartered in Auburn Hills, north of the city.
Back in Detroit, Michelle Krebs, an auto analyst for Edmunds.com, drives this reporter past a Chrysler plant where the Jeep Grand Cherokee is manufactured. "It's building a lot of vehicles right now," Krebs says. "They're fully employed and then some."
This plant is special, Krebs says, because it's the only significant plant left in the city of Detroit. There are two others, but one of them manufactures the Dodge Viper, which is not a high-volume-selling car. The second makes the Chevy Volt, but only one-half of that facility lies inside the city limits.
Krebs says what helped make the Detroit carmakers healthy is that they got leaner and shed much of their legacy costs for retiree benefits. If the auto industry can't come to the rescue of the city, she says, maybe it can serve as an example.
"First of all, we didn't know if [the carmakers] would exist and we didn't think they'd make it through a bankruptcy process. And now they're flourishing like crazy," Krebs says. "We're seeing that same bleak picture for Detroit. So I think there is some hope that [since] we got through the GM-Chrysler bankruptcy, maybe we can get through the Detroit bankruptcy."
People who are interested in the auto business and Detroit say cars are absolutely vital to the health of the city -- but they just aren't enough anymore.
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