Being from Detroit, I keep getting asked what I think of what's happening with the auto industry. General Motors declares bankruptcy, Fiat buys out Chrysler. It's all a lot to handle and come to terms with. In all honesty, I have know idea what to think of it. There are too many factors to consider by such a poor economist as myself.
The whole situation is a mess. I am grateful that the government did step in, as even more jobs would have been lost otherwise. At the same time, the government is now too involved to truly benefit a capitalistic system. Furthermore, as much as we want to claim them, these are no longer American giants of industry. These are companies being supported by foreign companies and governments. (The provincial government of Ontario and then feds out of Ottawa gave money to GM last week.) I also know that the industry will never be the same. Consumers are more cautious, looking for a long-term investment rather than the schnazziest ride. Finances are tight, for everyone. In some cases, even if one wanted to buy a new car, the financial backing isn't available to give them that option. Cars are no longer a necessity.
What frustrates me when discussing this situation with others is that there is little understanding of how far-reaching the decline of the auto industry really is. It's not just about the board members who made bad decisions. It's about an industry that has been changing over the past decade faster than the producers can handle it. Americans have been fuming over a recession for a year now. People from the Great Lakes region have been struggling for the past four years. No one cared. No one noticed.
As the world was going green, it suddenly became uncool to drive an American-made vehicle, which let off more emissions than anyone wanted to admit to. The car companies tried to make changes, to meet the demands of consumers, but it was too little too late. The companies began hemorrhaging money. Then lay-offs came. People began moving away, trying to find a job anywhere. Houses sat on the market for months, some never sold at all.
When the former automotive employees moved, the consumer dynamic began to shift drastically as well. Local businesses started disappearing from the scene as they had fewer clientele to support them. What kind of businesses are we talking about? All of them. From the accountant, to the grocer, the welder, to the construction engineer. Projects were cut, funding cut, more jobs lost. More jobs that no one even relates to the decline of the auto industry.
The thing is, it's getting worse. Detroit has been a ghost town for decades but was on the verge of a rebirth before everything happened. It used to be that the deserted buildings lay south of Eight Mile, the notorious border between Detroit and its northern suburbs. Now, the vacant lots are growing at an alarming rate across the expansive metro area. Foreclosure and bankruptcy are facts of life for everyone. Not just the auto workers.
Yesterday, however, I was pleased to learn that there is one car manufacturer that is doing well; Little Tikes can't seem to meet the demand for their Cozy Coupe two-door sedan. The only emissions are those of high-pitched delight from the toddlers who drive them. Powered by the driver itself- just like Barney and Fred in the Flinstones- it is very resourceful. Priced at $49 dollars, it makes children and parents alike love their automobile.