New York and Sinatra. Chicago and deep dish. Toledo and glass. Most American cities have distinct personalities that revolve around the markets, meals or memories that, for whatever reason, became synonymous with the place. Perhaps no duo is more notorious than Detroit and cars.
2023 marks the 120th anniversary of Ford Motor Company, and both the auto industry and its urban epicenter stare down an uncertain future. In many ways, Detroit’s complicated history goes hand-in-hand with its “Big Three” of Ford, General Motors and DaimlerChrysler AG (the three largest car manufacturers in North America). First came unprecedented success, then crippling failure, and now the specter of change and possible renewal amid historic strikes and the electric vehicle revolution.
Before Detroit became the Motor City, it was known for the stove. In the 19th century, Detroit produced more than 10% of all stoves sold globally. Cast iron stoves, burning wood or coal, began to be widely manufactured after the Civil War, and Detroit soon stepped into its newfound identity as the “Stove Capital of the World.”
According to John Lauter, a Detroit resident and technician, auto-manufacturing companies were forming across the country in hubs like Indianapolis, Syracuse and Massachusetts.
“[But] the companies that happen to be located in Detroit have a leg up on all of them because they already have the cast iron casting and machinery production items,” Lauter said.
Ford Motor Company was founded on June 16, 1903, with an initial investment of $28,000 by Henry Ford and 12 others. A small parts manufacturer by trade, Ford’s business career originated from humble beginnings. His Detroit Automobile Company project went bankrupt in 1901, and in the following year, investors forced him out of the Henry Ford Company (which was later renamed the Cadillac Automobile Company).
These early setbacks did not deter Ford. After the failure of his second venture, he began developing a new vehicle design that would eventually become the Model A, and later the highly successful Model T. Around this innovative product sprung an equally innovative business model that would revolutionize the American supply chain.
According to Lauter, the car started out as a novelty, as a play toy for the wealthy.
“[Ford] doesn’t really like that segment of the market, and he thinks that the car ought to be a little more egalitarian or attainable,” Lauter said. “He lands on the first Model T, and everything about it is right for the time … It fits everybody’s needs.”
Ford went to market with the Model T in 1908. No more than a decade later, half of all the cars in the U.S. were Model Ts. In his autobiography, Ford recalled a rallying cry he often deployed: “Any customer can have a car painted any color that he wants so long as it is black.” Thanks to its unrivaled affordability, availability and durability, the rugged Model T was an instant success. The final ingredient for success was Ford’s reconfiguration of the assembly line.
Ford didn’t invent the assembly line, but he did adapt it and simplify it, Lauter said; Colt’s firearms had run an assembly line for years, as had Singer sewing machines and Chicago meatpacking plants.
“But what Ford did that no-one else had done before was completely vertically integrate the thing,” Lauter said.
Ford brought all aspects of the manufacturing process in-house. All the parts and all the laborers were contained in the same building, committed to serving a specific need to perfection. Then in 1914, Ford introduced $5 conditional pay, which attracted skilled workers from around the country and the world. From 1910 to 1920, the city’s population grew by nearly 8% per year. Business was booming.
World War II brought a fundamental transformation to the auto industry. Within 90 days following the bombing of Pearl Harbor, most automobile companies stopped making cars and started exclusively producing wartime goods such as aircraft engines, rifles and tank shells.
From 1941 to 1945, the auto consumer was nearly nonexistent. Rationing meant that working families could buy very little food, let alone expensive consumer goods. But once the war ended, with inventory through the roof, demand for cars skyrocketed.
“From 1946 to 1950, [plant workers] are running three shifts and they’re making every car they could physically make,” Lauter said. “So cars are arriving at dealerships and guys are paying the salesman, or accepting cash under the table, to get people moved up in the line to get a new car. And there’s work forever.”
Around 1950, automobile demand hit its peak. As did the Detroit population.
Enter the second half of the 20th century, and the plants that had been built to accommodate the postwar growth were now overly spacious. The workers that got hired were now underutilized. To counteract stagnation, Ford once again turned to innovation. The company introduced power steering, power brakes, power windows, air conditioning and newer, better engines.
Thus began an age of innovation.
"The human element was difficult to manage," Lauter said. "[Workers] did such hard and hot and nasty work that a lot of them turned to drugs and alcohol. When automation took hold in the early '80s, the managers of the auto companies were happy … The machines could work 24 hours a day and they never complained, never refused to show up. They always did the job the same way every time."
From 1950 to 1980, Ford executed regular and significant layoffs. During that same period, Detroit's population fell by over 600,000.
Ford's performance in the late twentieth century reflected the boom-or-bust nature of the business. The early '80s saw a recession and a downturn in sales, while the late '80s and '90s brought huge profits.
Refilling the Tank
Detroit's current population sits at 632,000, a tally that has fallen each decade since 1950. Over this period, the city has plummeted from the fifth most populous city in the United States to the 27th.
Nonetheless, the modern-day picture isn't all doom and gloom. Detroit's unemployment rate fell to 4.2% in April 2023, its lowest mark in 23 years. Many high-ranking city officials, like Mayor Mike Duggan, attribute the low unemployment rate to the arrival of new major employers. This includes an additional Stellantis Jeep plant, GM's retooled Factory Zero and Ford's new mobility tech hub.
The rise of the electric vehicle (EV) presents an age-old industry with the opportunity to redefine itself. And for a city desperately in need of jobs, young people and innovation, Detroit might just get a chance to refill the tank as well.
Ford's approach to innovation is one that still manages to pay homage to the past. The company started by electrifying its most iconic products — the Mustang, F-150 and Transit — which quickly helped elevate Ford to the No. 2 EV brand in the U.S. in 2022.
Ford is currently investing more than $50 billion in electric vehicles globally through 2026. The company plans to manufacture them at a run rate of 600,000 electric vehicles globally by late 2023 and two million by 2026.
The EV phenomenon presents a bevy of new opportunities for the greater auto industry, as well as for the workers that comprise the industry and the communities that depend on it.
According to the World Resources Institute, 56,000 additional auto manufacturing jobs could be created in Michigan if the state fully embraces EVs. In addition, Michigan EV owners could save $40 billion cumulatively by 2040 from lower vehicle purchasing, fuel and maintenance costs. The state could also see significant health benefits from reduced air pollution and could slash its greenhouse gas emissions.
These gains, however, are not a foregone conclusion without supporting legislation. Lawmakers, both in Michigan and federally, have begun trialing incentives in manufacturing and infrastructure, such as grant funding for installing charging stations and tax exemptions for EV industrial properties.
"Ford is investing heavily in electric vehicles," Lauter said. "GM has said that by 2035 they aim to be entirely electric. This is a huge change — it remains to be seen how they’ll navigate this."