Look no further than Ford Motor Co.’s $1.9 billion investment in three existing Michigan facilities, detailed this week, for evidence there really are two auto industries wrapped in one.
The Blue Oval’s move to add an engine at Romeo Engine, and retool Michigan Assembly Plant in Wayne to build the next-generation Ranger pickup and Bronco SUV, are traditional plays in a profit-rich present. They’re bids to remain competitive in a U.S. market fueled by low gas prices and a steady hunger for truck-based rides.
Transforming Flat Rock Assembly Plant into a data and autonomous-vehicle production center, hard by an assembly line building Mustangs and Lincoln Continentals, is something else entirely. It symbolizes the dual tracks the industry is pursuing because it must.
Ford’s $200 million investment in a second data center in Michigan, coupled with $700 million to create capability to build electrified and autonomous vehicles at Flat Rock, are investments in a future defined by the race to deliver zero-emission, self-driving cars to a skeptical market.
They also represent Ford’s efforts to stake a leadership claim in a fast-developing mobility space crowded with rival automakers, their suppliers and Silicon Valley heavyweights accustomed to winning with consumers and the investment community.
That so much of it is happening in Michigan is huge, a testament to the industry’s human capital here and the current political environment’s bias for investing at home. This in the state synonymous with the “Lost Decade” of job losses, plant closures, economic decline and epic bankruptcy.
This in the home of Detroit automakers many investors still do not believe in. Memories of capital incinerated and promises broken, of deep cutbacks, asset sales, even bankruptcy, are still too fresh for too many on Wall Street.
Ford’s mobility plays are efforts to alter those impressions with action, not words; to produce greater returns on its capital; to open new revenue streams with mobility services and sales of electrified and self-driving cars to ride- and car-sharing companies — if not the Blue Oval’s own version of one.
The stakes are enormous. For the Detroit auto industry, finally profitable at home but still beset by perceptions they’re less competitive, less nimble and less innovative than foreign-owned rivals. For industry employees who see management priorities increasingly skewing to speculative pieces of a mobility business yet to produce meaningful revenue or any profit.
And for Michigan and its residents. Since the end of the global financial meltdown in 2009, and the emergence of General Motors Co. and Fiat Chrysler Automobiles NV from bankruptcy, the ranks of new auto-related jobs in Michigan swelled by 200,000, first in the nation, according to the Ann Arbor-based Center for Automotive Research.
Altogether, the Ann Arbor-based industry think tank says Ford, rival automakers and major suppliers have invested more than $30 billion in the state between 2009 and the middle of last year. More than 75 percent of all North American automotive research is conducted here, and Michigan boasts more autonomous-vehicle test sites than any other states, including California.
The Michigan Economic Development Corp., an arm of the state, says Michigan is home to 27 assembly plants; claims 63 of the top 100 North American suppliers; and is the largest producer of cars and trucks in the United States, boasting 19 percent of total U.S. production.
The bottom line: the smaller footprint of the Detroit-based industry, diminished by the tempering contractions of 2008 and 2009, is more geographically concentrated in Michigan than it was before the meltdown.
Meaning the state and the economic health of its nearly 10 million residents are, like it or not, more closely tied to auto industry fortunes than would have seemed possible in the depths of the slide — even if many of those residents do not work for the industry or depend on its pension checks.
Meaning how and whether these companies negotiate the tech-driven race for mobility leadership is no academic exercise to be tracked from afar, if at all. It’s shaping up to be a defining business issue of our time.
Put it another way: This is a high-profile gut check to determine whether archetypes of 20th-century American industrial might can make an effective (and profitable) transition into a space unfettered by the legacy, broken promises and corporate cultures shaped over the past 100 years.
The evidence is encouraging, but the question is far from answered.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.