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February 6, 2008

Detroit is a Contrarian's "Buy"

I love posting items in Tidbits which run counter to the conventional wisdom. Here's one that is truly a contrarian opinion: Detroit is poised for a comback. That's what The American's Tom Bethell writes after an extended tour of the city. His analysis is quite lengthy; a taste of it follows:

. . . The metaphor that comes to mind in Detroit is the stock that has fallen so far that it’s a “buy.” Something that Daniel Howes said as he drove me across the city made me think that Detroit as a city may indeed be a buy now. He said the big change, taking place even as we spoke, with the new labor contracts at the auto makers, is that all the major players are now on the same page. . . .

By the major players he meant City Hall, the Big Three auto companies, and Big Labor. They all realize that finding scapegoats and strategies of evasion cannot continue. City Hall has been chastened by white flight, by the realization that the responsibility that comes with power cannot be postponed forever. The Big Three have been chastened by the Toyoda clan—by the global economy. And Big Labor, in the form of the UAW, has been chastened by its loss of a million members.

This sentiment was echoed later by David Cole, the oft-quoted chairman of the Center for Automotive Research in Ann Arbor. As a result of the new labor agreements, he said, “What we are witnessing is the transformation from a confrontational way of working to one of collaboration, which is absolutely necessary.”

Badly run companies do go out of business, but Detroit is a historic, physical reality that will be with us for some time. “Up” is about the only direction it has left to go, and that may happen sooner than most people think.

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