Howes: ‘Good news’ for Detroit automakers buoys region

Daniel Howes
The Detroit News

It may be time for the poster child of American industrial decline to consider burying the poster.

Detroit’s automakers are poised to tally another year of record earnings and sales. The 11-county Detroit region’s economic rebound is real and accelerating, according to a new study released Wednesday by the Detroit Regional Chamber. And the hometown auto industry thinks it may have a potential ally in the White House, not necessarily a Twitter-wielding antagonist.

Not since who knows when have General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV had a president of the United States seek their counsel in reshaping corporate tax policy and reforming costly regulations. That’s why a ranking industry executive calls this week’s meeting with President Donald Trump “extremely positive.”

He should. In the space of just a few days, the new president nixed the prospective Trans-Pacific Partnership formally opposed by Ford (and, quietly, by GM, too); signaled a willingness to revise costly federal rules in exchange for redoubled investment in the United States; acknowledged that protracted permitting processes foul the business environment.

The president also vowed to revise the 23-year-old North American Free Trade Agreement, blamed for killing jobs and closing plants. Industry insiders say the move offers a chance to establish a template for addressing currency manipulation — less important with Mexico and Canada, but vital to successive bilateral trade deals with Asian nations.

“This is very good news for the auto business,” says David Cole, chairman emeritus of the Center for Automotive Research. Detroit’s automakers “have had more contact” with Trump and his team already “than over eight years with Obama” — the federal bailouts of 2009 notwithstanding.

“Regular interface between people and teams builds relationships that are the foundation for success for both sides,” Cole continues. It’s common sense, actually, recognition that economic competitiveness can create jobs and attract investment. It also makes for very good politics in the industrial Midwest.

Trump’s presidency and its early focus on manufacturing and economic competitiveness is a stark break from at least the past generation. With the obvious exception of the taxpayer-backed bailouts begun by President George W. Bush and continued by President Barack Obama, manufacturing largely has been what one executive called “yesterday’s news.”

That narrative is changing. High-tech heavies are sniffing around the auto business because they need growth and they see it in what’s called “mobility.” The bankruptcy-led restructurings of both the Detroit auto industry and the city of Detroit have dramatically changed to arc of renewal for both.

Downtown revitalization and profit-rich automakers are making Detroit cool again, with The New York Times ranking the city ninth in its “52 Places to Visit in 2017” feature. And a new president’s “America First” mantra potentially redounds to the benefit of a town long synonymous with the reasoning behind his sentiment, if not the early 1940s-era genesis of the isolationist phrase.

Outside of the industrial Midwest, Democrats largely abandoned the concerns of industrial unions in favor of their public-sector brethren. State-level Republicans in places like Michigan pursued right-to-work legislation, while their national counterparts in Congress tended to cleave to non-union producers like Toyota Motor Corp. or Honda Motor Co.

Two days into a new administration, Detroit manufacturing became the day’s news. So did representatives of industrial unions called to the White House. Their members have a vested interest in plant expansions, pipeline construction and other infrastructure projects.

It’s early days, of course, and things can change. But the signs issuing from Trump’s Washington — and a Wall Street that pushed the Dow Jones Industrial Average above 20,000 for the first time in history Wednesday — amount to golden opportunities.

For a Detroit-based auto industry facing the inflection point separating its traditional present from its mobility future; for a city of Detroit whose continued recovery depends on a working relationship with a Republican administration in Washington; for a regional economy whose improving health remains yoked to the relative health of the auto business.

Unemployment in Michigan is tracking below the national average, the chamber’s “State of the Region 2017” study found. Growth in per-capita income surged 13.6 percent between 2010 and 2015, well above the national average and trailing only Seattle, Pittsburgh and Chicago.

Private-sector job growth exceeds the national average. Industrial and office real estate vacancies are way down. Detroit leads the nation in mobility-related patents, and Ann Arbor registered more such patents than Boston and New York combined. Hardly the poster child of industrial decline, that.

The change in direction — in Washington and Detroit — comes as the industry is using a wave of profitability and record sales to place bets on an emerging mobility space that could radically reshape the auto industry, transform its underlying investment thesis, and shrink the perception gap separating it from the go-go world of Silicon Valley.

“Exciting times, positive times,” says Mustafa Mohatarem, GM’s chief economist. “Not everybody’s going to agree with me, but we will see a lot of change.”


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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.