Up at the top, down in the dregs—and back again? Detroit, once the heart of American industrialization, experienced both an unparalleled rise and then decline due to its auto industry. Now the metropolis is prospering once more—and cars, again, are the driving force.
Huei Peng is familiar with the numbers that have electrified the greater Detroit area over the past months. All the billions of dollars that carmakers plan to invest in the coming years: in technology centers, in testing grounds for autonomous driving and in whole wings of gigantic shopping centers, soon to host co-working spaces for creative minds conceiving the mobility of tomorrow. “When it’s about the future of automobility,” says Peng, “hardly anyone will be able to bypass Michigan with its hub, Detroit.”
Peng presides over the Mobility Transformation Center at the University of Michigan, where he’s intensively busy with present and future developments in mobility in the United States. The massive investments being made here do not surprise him. He says there’s no real alternative to Detroit in the US. “The know-how of the automotive industry is collected here.”
Michigan is the undisputed leader in the American market for the production of motor vehicles. Officials report that sixteen original equipment manufacturers have headquarters or technology centers in the state. Along with the Big Three—General Motors, Ford, and Fiat-Chrysler—also Toyota, Volkswagen, Nissan and Hyundai have subsidiaries here. Ninety-two of the global top one hundred suppliers are also located in the state. What’s more, increasing numbers of companies from the technology, infrastructure and insurance sectors are setting up shop here, particularly to advance the field of networked driving.
Some observers are asking themselves now: Is Lake Erie on the cusp of a new success story like the one that started more than a century ago, when Henry Ford produced the first assembly-line car, sparking an era of increasing prosperity? With a better ending this time, if possible?
Following its dramatic ascent, which began with Ford’s innovation in 1913, the heart of the American automotive industry started beating somewhat irregularly from the 1960s on. The dominant sector of the auto industry became increasingly automated, and production moved to countries where costs were lower. Scores of jobs were lost, many factories fell into disrepair. The former strength became a problem: Detroit was too dependent on the single, major industrial sector of car manufacturing. The city began rapidly hemorrhaging jobs, residents and tax-paying businesses, with the recession reaching its nadir at the start of the twenty-first century. When the global financial crisis came in 2007/2008, it hit Detroit harder than almost any other city in the world.
RISE AND FALL
Population statistics shows how dependent Detroit is on car manufacturing. While the number of residents skyrocketed with the assembly line manufacturing, it began declining from 1960 on—as production was gradually shifted to lower-cost areas.
In 2002, General Motors, Ford and Chrysler were still selling 70 percent of all the vehicles sold in the US. At the end of 2016, it was just 44 percent—even though total sales volumes in the US had risen during that time. Competitors from Europe and Asia flooded the American market with more economic car models. GM and Chrysler had to apply for governmental assistance, which was followed by sales slumps and restructurings, with tens of thousands of people losing their jobs.
The problems in the car industry also contributed their share to the financial misery of the city of Detroit. In summer 2013, billions of dollars in debt, Motor City—as Detroit is colloquially known—was forced to declare bankruptcy. The unemployment rate was almost 20 percent at times, with around one third of Detroit’s residents living below the poverty line. Nobody had any time to deal with grand visions of automobility.
FROM MOTOR CITY TO MOBILITY CITY
And today? Detroit can be considered a global example once again, this time demonstrating how a city can revive itself by reorienting towards a sustainable future with the assistance of public emergency funding. “It needed a new impulse,” Peng says. And, over the past years, Detroit has begun transforming itself: from Motor City to Mobility City.
What this means can be seen in Peng’s Mobility Transformation Center. Cars are autonomously driving through artificially created urban canyons on the University of Michigan’s testing grounds and glide past robots that are supposed to imitate human behavior. On the grounds of an old General Motors factory almost around the corner, in the city of Ypsilanti, another test center for autonomous driving is being constructed, meant to become America’s largest. “To exaggerate a bit, the whole region is reinventing itself,” Peng explains.
What’s making this reinvention possible is, of all things, an old adversary from the western part of the country: Silicon Valley. Even as recently as about five years ago, experts say, Detroit and the tech-nerds from the West Coast looked askance at each other. Traditional carmakers were fearful for their market shares, while tech companies were searching for new sources of income. Then, little by little, the conviction began to grow in Detroit that innovative minds from the tech industry were vital for the smart mobility of the future.
Challengers such as Google, Uber, Tesla and even Apple, in turn, had conceived a vision of modern, technology-based mobility—yet they, too, soon noticed that they were reaching the limits of what’s possible for producing cars. Ultimately, that’s the great trump card Detroit has within the framework of modern mobility: a high concentration of know-how about how to build cars that are functional, attractive and safe. “Together with the technology from Silicon Valley, it brings a whole new dynamic to the market,” Peng says.
Smart mobility on the North American continent could also prove to be a future-oriented field for TÜV SÜD as well. The testing services provider has offices in Auburn Hills, just a few kilometers away from Detroit. “The next generation of drivers values a vehicle’s intelligent features,” says Darryl Fleger, country manager of TÜV SÜD’s North American market. “The big carmakers are following along with this transition to remain competitive. And this development opens up new possibilities for us as independent testers.”
Right now, TÜV SÜD tests all vehicle components, from the tiniest electronic units to entire vehicles, particularly in the electric car sector. “In a radius of fifteen kilometers alone, we have five hundred potential customers in the field of top suppliers,” Fleger explains. And he also points out the location’s future viability: Already today, Michigan is the American frontrunner on numerous rankings, with its 49 projects on the topic of smart mobility, or with its 2,583 patents in the past 5 years.
Detroit as a strengthened center for automobiles isn’t just good for the region and state, it’s also a boon for American politics: the metropolis should ensure that the US doesn’t have to cede leadership on the topic of mobility to Europe or Asia. “The competition has really caught up,” Peng says. Who will win the race for the mobility of the future, however, remains unclear at the moment.
Which is why politicians are forging ahead with the region’s transformation. In July of last year, Michigan’s Governor Rick Snyder presented “Planet M,” a plan to help make Michigan more prominent on the radar of young talent from California. Such initiatives are one of many reasons that increasing numbers of engineers are packing up from warmer California climes to cooler Lake Erie and Detroit. It’s a development from which a responsibility also arises. Huei Peng hopes that Detroit, home to the automotive industry, has learned from its past. “We’ve gotten a new chance,” he says. “Now we just have to use it."