For Ford CEO Alan Mulally, the 2009 North American International Auto Show called for a stiff upper lip.
Just three years after arriving at Ford, Mulally was dealing with the worst downturn in the car industry’s modern history – demand had fallen by more than 30 per cent, and Ford had taken out almost $24-billion in loans to finance a make-or-break corporate overhaul.
The company was fighting for its life. And so were its competitors. GM and Chrysler had taken massive bailouts from the U.S. government and declared bankruptcy to get out from under a crippling load of costs that included everything from wages to health care for retired workers (this item alone added an estimated $2,000 to every car built in Detroit).
The 2009 car show reflected the industry’s grim state. Workers had erected hoardings to hide empty sections of the Cobo Centre’s vast halls – a record number of car companies had dropped out as sales plunged. Among the no-shows: Nissan, Infiniti, Mitsubishi, Suzuki, Rolls-Royce, Land Rover, Ferrari, and Porsche.
One writer compared the 2009 show to the sinking of the Titanic.
Mulally, a former Boeing engineer, was known for his grasp of complex manufacturing, and for his ability to stay cool in a difficult situation. The 2009 show called for both. Mulally stood in front of an acid-green Ford Fiesta compact (one of the global-platform cars he had bet billions on) and delivered an upbeat message:
“There’s no doubt there will also be unprecedented opportunities to introduce more customers to the Ford brand,” he told a band of reporters. “We’re excited about what we have to offer.”
Mulally was playing the ultimate poker game. As the market continued its brutal free fall, he had doubled down, investing a fortune in new-car development. The outcome was anything but assured.
“Everyone was in the septic tank,” says David Cole, chairman emeritus of the Centre for Automotive Research. “The Big Three had to put on a brave face, but they were scared. No one was sure if they were going to be around next year.”
The 2014 North American International Auto Show, which opens next week, reflects a dramatically different picture. Five years after the show that marked Detroit’s nadir, the Big Three are all making money, and foreign manufacturers have returned to the show in force.
But the world of car manufacturing is not the same as it was in 2009. If you head north from the Cobo Centre on the grand boulevards that once helped Detroit earn its reputation as “the Paris of North America,” you encounter the city’s new reality: mile after mile of collapsing homes, deserted office buildings, and ruined industrial spaces. Deer roam through abandoned neighbourhoods. Last summer, the city declared bankruptcy.
Despite all this, Detroit is in the midst of an industrial comeback, transitioning into a new age of manufacturing that has upended the industrial paradigm, along with the city itself. Car companies are hiring, and the city’s outer suburbs are booming. Work that once went overseas is returning to Michigan as rising labour costs and shipping rates erode the advantage of countries such as China.
Building in Detroit makes sense again, but the new world of domestic car making has created a dramatic shift. Inside Ford’s Flat Rock assembly plant, I witnessed the way things work in the new paradigm. The plant was nearly three million square feet, yet it contained only a smattering of humans. Automation was the order of the day. Industrial robots with 10-metre arms picked up the side panels of new Mustangs and spun them in their steel fingers, dropping the sides into massive jigs that lined them up within thousandths of a millimetre.
Then the robots withdrew, making way for smaller arms tipped with welding heads – these new robot arms showered sparks as they fused the body parts together with perfect welds that no human being could hope to match for precision, consistency or speed.
According to industry analysts such as Cole, today’s car plants operate with a third as many human workers as the factories of just 20 years ago. And today’s assembly workers make a fraction of what their forebears did.