To the People

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or TO THE PEOPLE.

Wednesday, August 01, 2007

Gingrich is Right: Detroit Is a Disaster

Newt Gingrich has come under fire for calling Detroit a "disaster" on Fox News this past Sunday. But he is right, and the reasons that he points to-- horrible public schools and entrenched unionism-- are also right. Does anyone know of any companies relocating, or forming, in Detroit or all of Michigan for that matter?

Here is more very bad news from Detroit.
Detroit lost its leadership of the American automobile market for the first time ever in July, when import nameplates outsold the three American companies in a dismal month for auto sales.
In big picture terms, I think that perhaps the root problem of the Big Three auto companies is not only that Michigan is an unfriendly state in which to do business. Rather, it is also because they are located in a place that does not attract a great, or even decent, talent pool. Despite the well-known fact that every Detroit-made car has built into its price a huge cost for labor and health insurance, their cars are still inexpensive or competitive with Japanese imports in terms of price.

But Detroit cars are badly designed and not enough people want to buy them. I rent cars a lot for work and my only request is: no American cars. They are noisy and feel cheap, wildly understeer, have poor brakes and just try to find the gas cap opener when you are at a filling station.

The failure of Detroit is more than a union problem; it is a failure of design and it will never be solved unless the Detroit companies move to either Coast, where they can tap the best design talent and get out of their Detroit bubble. Would any talented designer that you know move to Detroit? Absolutely not. They are in NY or LA and would rather be a Starbucks barrista than move to Detroit. So long as Detroit wants to be in Detroit, their cars will always suck and no one will want to buy them.

Labels: