Deja Vu

Motown Malaise

Tags:

automotive,

bankruptcy,

captains of industry,

Detroit,

General Motors

“Why Auto Executives Are Ruling Out Going Bankrupt,” Detroit Free Press, Nov. 10, 2008.

Over more than a century, Detroit's autoworkers have survived two world wars, recessions and oil spikes, but a bankruptcy by a U.S. automaker would finally knock their destiny out of their hands.

Despite vows by top officials to avoid bankruptcy, fear is high that dwindling cash reserves could push one or more of Detroit's three automakers into court protection within the next several months. Even a hypothetical glimpse of the consequences shows why executives insist bankruptcy is not an option.

The fallout would likely range from thousands of jobs cut at factories and offices to the slashing of jobs at suppliers and dealers, the shredding of benefits for workers and losses for investors and pension plans.

While a bankruptcy by General Motors, Ford or Chrysler wouldn't approach the size of the $613-billion reorganization that Lehman Bros. filed earlier this year, it would easily become one of the most complex legal fights ever, with thousands of parties scratching for a piece of whatever's left. And with one in 10 U.S. jobs supported by the industry, millions of workers could be affected.

"The impact would be devastating," said Kevin Tynan of Argus Research. "The impact of the collapse of GM would be bigger than Lehman Bros."

The City of Detroit, Michigan, 1701-1922, vol. I, by Clarence M. Burton et al., 1922.

A motion picture of any business street in the world would reveal a Detroit-made car. Although not the birthplace of the first automobile, Detroit was the foster-mother of the infant industry and nurtured it through the first months of tribulation. However, this same infant was a husky one, a prodigy, and quickly grew to maturity. The rise of the automobile industry is one of the romances of modern business and in Detroit it found its best expression.

The first gasoline auto driven on the streets of Detroit was by Charles B. King in 1894. The car had four cylinders and a speed of about twenty miles per hour. Henry Ford came out with his car about a year later. He was at this time an engineer in the Edison Company and lived in an humble cottage on Bagley Avenue. In a shed at the rear of his home his first car was put together, some of the parts for which were donated by King. The last-named did not follow up on his invention for some years; eventually he organized the King Motor Company, which put out the pioneer eight-cylinder car.

A number of cities have laid claim to the honor of having been the home of the first horseless carriage and many of them have advanced facts which have seemed convincing, but upon analysis of the early days of the industry, if it might have been so called, it appears that the first commercially practical car had its origin at Lansing, Mich., and was built by Ransom E. Olds, whose popular, curved-dash $650 Oldsmobile is well remembered. However, this odd little car was not Mr. Olds’ first.

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