I cannot disagree with you that the auto idustry has relied more heavily on some of its foreign subs, to both the advantage of the consumer and the company. But, as Aaron suggests, Detroit still holds dominance for the auto industry in the US. I guess my point is that auto really isn’t different than other industries with high concentrations of talent in certain areas. There really is no industry more “high tech” or specialized than the creation of a car, as has become more evident to the lay person with the recent Toyota issues. In my humble opinion, the same factors that play into the concentration of talent for Silicon Valley or Wall Street apply to pre-production and management in auto (though not assembly, as you suggest). My hope, however, is that we can convince other industries to take advantage of this talent, and allow this region to diversify.

I also think you haven’t been involved in the auto industry for some time. Chrysler left Highland Park for the exurbs almost 15 years ago. (Sorry for being snarky.) Clearly I’m not an urban economist either, or in the auto industry for that matter, so I’m sure there are plenty of flaws in my argument too.

Starting in the 1980s, the Big Three pushed their Tier 1 suppliers to design bigger pieces of cars: full instrument panels instead of dashboards, speedometers, and gauges; full sound systems instead of radios and speakers. Some of that was done at tech centers in metro Detroit, but much was done elsewhere too.

Auto design and legal/finance nodes are now spread throughout the world as a result. (Does anyone really believe that Chrysler product design will be exclusively done in Highland Park now that Fiat is in control? Likewise, Daimler/Nissan/Renault are sharing decentralized product development. GM under Whitacre may finally entrust Opel and Daewoo with worldwide small-car development.)

Creative collaboration can now be done over long distances through the same economic and technical miracles that allow us all to essentially write and instantly post “letters to the editor” to an international newsmagazine (blog). Decentralization by applied technology on this scale was not possible or even contemplated by Jane Jacobs; to me it seems no coincidence that the San Jose (Silicon Valley) metro lost bunches of jobs in the recession.

I think the Jacobs orthodoxy has to be recalibrated for a highly-connected and decentralized world: our “neighborhood” is no longer where we can walk in 15 minutes, our retail merchants aren’t storeowners on the corners, and our social interactions and reputations have a far larger footprint than ever before. It is more and more possible to have “face-to-face” meetings with a working group in multiple different sites. All this fundamentally changes the nature of the agglomeration economies present in cities.

Jane Jacobs attributed the web of interconnected goods and services as one of five ingredients a city region must have and keep in balance in order to thrive.

An auto assembly plant is what Jacobs might classify as an “industrial” version of a supply region. It is certainly a transplantable enterprise.

An auto plant is certainly a producer of wealth, but once a vehicle rolls off the line, there’s more value added to those cars. Salesmen in urban areas make commissions, banks finance loans, and auto parts stores and mechanics help keep the cars in working order. These activities are long-lasting, but the auto plant doesn’t get to collect any of the post-manufacture upside.

An auto plant is comparatively richer than the places where it sources parts, and those areas are far better off than the areas supplying the raw materials.

Manufacturing turned out to be highly transplantable as it became more automated and nation-states began to encourage globalization. Detroit’s downfall happened because its automakers became so successful that they could plop a factory anywhere they pleased. Then, other countries began to imitate and refine the manufacturing practices. Detroit’s comparative advantage in automobile production quickly eroded.

Detroit does still maintain a lot of the highest-value goods and services, and despite the diminished presence of the Big Three, it still holds an important place in the geography of the automotive world. (Its auto show is still regarded as one of the world’s most important and influential, as it continues to attract the world’s industrial, financial and media representatives.)

The highest-value goods and services are often the most difficult to disperse, and at the same time, the people holding these careers are the most mobile and the most entrepreneurial by skill set and temperament. This should lead to jobs, knowledge trees and markets spread evenly, yet they are more concentrated than ever.

Your position is correct if you assume auto manufacturing is simply assembly. But the auto industry is actually a highly reticulated, and complex. Moving it is much harder than simply concentrating factories in other states. Suppliers, designers, engineers, R&D, advertising and marketing, legal departments, etc. all support this industry. The list goes on and on. Assembly has been trickling from Michigan for some time, but the auto capital is still Detroit. Even many foreign manufacturers, tier 1 and otherwise, still have a significant presence in Michigan. It’s similar to trying to recreate the financial industry or the entertainment industry in locations other than NY or LA, respectively. While possible to siphon off portions, a wholesale replacement is not really economically feasible. It’s like Apple assembling I-Pods in China. While they are not assembled in the US, the vast support, and subsequent profit, for that product is still located in California. And the same holds true with autos and Detroit.

PS–Aaron, thanks for the reply.

Well, for starters, one would build multiple factories in states without a history of auto assembly dominance but which have lots of parts factories and surplus blue-collar labor. Places like Kentucky (Toyota), Tennessee (Nissan), Illinois (Mitsubishi), Indiana (Subaru, Honda, and Toyota), and Ohio (Honda).

(The political value of spreading investment and capital around is not to be discounted: who wouldn’t want ten senators/five governors on your side to Michigan’s two/one?)

I’d say that’s the recipe to challenge Detroit’s dominance as the “center” of the US auto industry: create a decentralized industry with many nodes.

Lo and behold…

[This comment is really a little snarkier than I intended. It does follow on some of the previous Detroit thread's commentary and the Avent post.]

First, don’t assume he’s talking about Detroit. The backstory the American Prospect and with Florida is more around smaller industrial cities, I believe.

There’s an old saying, “nothing succeeds like success”. I think the points you are making are not that different from Avent. Do people follow jobs or jobs follow people? Both. Growth and success are positive reinforcement cycles.

People want to be near jobs, jobs want to be near a skilled workforce. Think about the companies for a minute. How many companies in NYC wouldn’t rather relocate to a lower cost climate? But many don’t because they need access to the human capital. The key is that high value human capital and high value jobs cluster because there are benefits to doing so. In a sense, if you want to be successful – as a firm or employee – you have to be where the action is.

These clusters tend to be stable. Think about Detroit. How would someone go about undermining its dominance as the capital of the auto industry in the US? It would be extremely difficult.

Avent also notes that many people would prefer to live in a locale like their hometown, and some do even without any economic prospects.

The part that infuriates some is that this seems like a closed system where the winners are chosen and there’s nothing anyone can do about it. I don’t think Avent, Gleaser, or Florida would say that if you look at the totality of their work. There are new cities all the time. Many of them are in the Sunbelt like Charlotte.

In cold weather cities, Glaeser more or less correlated success to talent over a long period of time. Indeed, the top cities a hundred years ago – Boston, NYC, Chicago – are still tops in many regards. But even Glaeser admitted he couldn’t figure out the Sunbelt cities.

So there are new entrants, but the dynamic that creates them in one place vs. another isn’t fully established. Also, you’ve got to look at whether many of these boomtowns of day will prove any more sustainable than Detroit over the long term.

Jim Russell might say struggling towns are brownfields while new boomtowns are greenfields. A place like Detroit that gets into a decline cycle with high legacy costs (in the broadest sense of the term), is in a tough spot.

That doesn’t mean it’s hopeless for Detroit. But like Pittsburgh and other places, it is going to take a long time before it works through the issues and creates an upside opportunity. The roots of Pittsburgh’s turnaround are at times 50 years old. The good news is that Detroit is already a talent hub in some respects and is big enough to have “minimum scale” to operate as a successful city in the right circumstances. Many smaller cities can’t say that.

“But what do you do if you are in a town that is a long way from generating a self-sustaining concentration of human capital, and which is relatively remote from bigger urban economies?”

You throw a lot of money at Next Generation Consulting and hope your constituents think doing so is a good idea. As Avent indicates, that’s better than facing up to the economic reality.

It seems to me that many urban ecomonists suffer from a kind of group think mentality. Their theories depend on a a faulty premise that people want to escape areas like Michigan and move to megopolis/coastal cities. Having lived in both, I say that is not necessarily true. I know of many young, well-educated people who would love to move back to Detroit if there were jobs. But they are “stuck” in cities like NY and San Francisco with overly-expensive housing, toiling away at work, unable to spend quality time with friends and family because all of the “good jobs” are concentrated in these areas. Is it possible that the premise is wrong, that people may want to move to places like Detroit or Nashville, or Indianapolis for a higher quality of life, but are unable to do so? That the people who are really stuck are those in the major cities? Just look at satisfaction rates, which are lowest in NY. Is it ideal to perpetuate the current trends. Isn’t productivity connected to satisfaction? Is it possible that we would be better off spreading talent a bit, rather than overly concentrating it? Maybe I misunderstand the author’s position.

Being from Detroit, I also have a problem with the author singling the city out. I guess I also assume he is talking about Detroit when he says no one likes to think of an American city shrinking until it disappears. Comments like that are usually directed toward us. My question is this. The author seems to assumes that there is no significant concentration of talent in this area. He must, considering he believes high concentration of skilled workers = sucessful city. But what about the fact that this area has the second highest concentration of engineers in the country. I’ve read accounts of out-of-state companies simply blown away by the quality of resumes they see here. The common conception of Detroit is that it is entirely blue-collar. But many of the people whose jobs were auto-dependant are highly skilled, technical professionals. Why is it presumed that Detroit is a lost cause based on an artificial belief that we are all high school drop-outs who have no skills other than the assembly line? Any suggestions on what we can do to change that image, and leverage the talent that we do have?