DETROIT — There is glitz, gleam and endless oohs and ahhs expected from the miles of metal on display at the North American International Auto Show.
Yet it comes to a state whose economy has been generating more groans than glee, with the nation’s highest unemployment rate and among the highest rates of home foreclosures — largely due to its dependence on a domestic auto industry that’s been cutting jobs and closing plants.
The national economic picture also is showing signs of stalling. The government reported last week that the unemployment rate surged to 5 percent in December — the biggest one-month gain since October 2001. And many of the big chain retail stores reported Thursday that the holiday shopping season turned out to be even weaker than expected, raising more worries about consumer spending in the months ahead.
The disconnect isn’t lost on business and economic leaders and experts. But they say the auto show, which opens to the media Sunday and then to the public Jan. 19, affords a chance to celebrate without cheerleading and offers examples of innovation on a global scale in a time Michigan and perhaps the country could use more of it.
“The choice is not to hide, take a bunker mentality,” said David Sowerby, portfolio manager and chief market analyst for Loomis Sayles &Co. “Recognize that industry needs to get better … (while) celebrating what’s good in the industry.”
Sowerby was hired by the Detroit Area Dealers’ Association, the auto show’s organizer, to conduct an economic impact study. He found that it could generate up to $500 million in the local economy, including money made by local restaurants, hotels and workers.
More than 1,000 workers have been at downtown Detroit’s Cobo Center since October, transforming the convention space into a buzzing business district — if that district consisted solely of shiny, sleek car dealer showrooms with dazzling interactive displays and even a two-story waterfall. Organizers declined to say how much the exhibits cost, but it appears to be at least on par with the reported $200 million spent last year.
Sowerby said the show also delivers substance by unveiling more than 50 new models among the roughly 700 vehicles on display. “To me, it doesn’t make the show ‘too much sizzle.’”
Detroit’s automakers — General Motors Corp., Ford Motor Co. — have spent the past two years shedding tens of thousands of jobs and restructuring. Chrysler LLC — which Daimler AG sold last year to the private equity firm Cerberus Capital Management LP — announced up to 25,000 layoffs in 2007.
Now automakers are concerned about the slowing U.S. market just as they are about to reap savings from those job cuts, globalization and a new cost-saving labor contract.
Already GM, Ford and Chrysler have announced production cuts in the first quarter in anticipation of slowing demand.
Charles Ballard, an economics professor at Michigan State, said it’s difficult for politicians and residents to comprehend the economic transformation that’s taken place, particularly when heavy manufacturing in the 1950s and ’60s powered the state’s economy to success. Those attitudes linger, he said.
“It helped to create a set of attitudes that were, if not exactly hostile to innovation and entrepreneurship, it didn’t foster (them), said Ballard. “I think we’re racing to catch up with the rest of the country.”
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