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Detroit’s Financial Slide Linked to Exodus of Auto Industry

Economists say Detroit’s population most likely will never reach its former peak. And if the city is to come back, it will need to redefine itself post-bankruptcy as something different than “Motor City.”

Kane Farabaugh


DETROIT — Its nickname is the Motor City, but many of the automobile factories that gave Detroit that moniker are now hard to find inside the city limits. Detroit’s financial crisis is linked to the exodus of its auto industry, as it failed to achieve the economic diversity that helped other cities avoid bankruptcy.

At the height of Detroit’s boom in the mid 20th century, this plant manufactured Packard automobiles, employing about 40,000 people.

The promise of good pay and plenty of work at similar plants around the city attracted people like Tennessee native George McGregor in the 1960s. Today, he's president of the United Auto Workers Local 22 in Detroit.

“When I first came here, in the automobile factory, they were begging people to come. The hour rate was something like $3.25 an hour,” he recalled.

But the auto industry stopped begging when demand for American cars slowed and interest in foreign automobiles increased.

The Packard brand became extinct, and the hum of its once mighty factory is silent.

Crumbling buildings are part of one of the largest vacant industrial complexes in the world. They symbolize Detroit’s boom-to-bust story.

“There were about a dozen auto factories, and you know very large employers, and over time those have been shut down to now there’s only one left,” Scorsone said.

Economist Eric Scorsone, at Michigan State University, said although General Motors boasts the most prominent set of buildings in downtown Detroit, the auto industry plays a much smaller role in the city's economy.

“In fact, health care is the biggest employer now in the city,” he said.

There were about 300,000 auto factory jobs in Detroit in the 1950s, when the population was around 1.8 million.

Today, there are fewer than 27,000 jobs in plants operated by Chrysler and GM, and the overall population is just above 700,000.

“We got three casinos and two auto factories," McGregor explained. "We went from manufacturing to gaming for jobs.”

McGregor's UAW Local 22 Detroit represents workers at the GM Hamtramck plant still in operation here. He said many of those who work there don’t live in the city. “In my facility I’m going to say its about fifty. Fifty stay in the city of Detroit and the other 50 percent stay in the surrounding neighborhoods,” he stated.

McGregor said he had the opportunity to leave when others fled Detroit, but decided to stay. He doesn't regret it even in the wake of news that the city is bankrupt.

"I made a living in this city, and I plan on staying in this city, and hopefully it will come back,” he added.

Economists say Detroit’s population most likely will never reach its former peak. And if the city is to come back, it will need to redefine itself post-bankruptcy as something different than “Motor City.”

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