The Effect Of Globalization On Detroit City

In 2013 Detroit was the largest city in the United States to have filed for bankruptcy, a year later it was reported by Davey (2014) that 30% of the buildings in the downtown area of the city are derelict or in danger of becoming seriously damaged. In this essay the writer will explore, what caused the automobile manufacturing powerhouse of the early 20th century to experience such economic downfall and how the rise of capitalism affected the events that transpired in the region. The essay will attempt to firstly describe the recent history of Detroit, its growth and decline, trying to describe the factors looking at the effect of globalization, then it will be considered if there are factors beyond globalization that could have had an effect. It will close with a conclusion considering the validity of the assertion in the title that we need to study its place within the global economy.

Since the turn of the century Detroit had played an important role in the heavy industry, particularly in manufacturing of cars. Detroit was a city with one of the largest populations in the United States, this was in the main due to the automotive industry, with Ford, General Motors and Chrysler at the forefront. However, over the years from 1950 the population of Detroit has fallen immensely by about two thirds from over 1.8 million people to just over 670 000. This massive decline in population was a major factor in bankrupting the city. The development of the city was almost entirely caused by the capitalist developments of the three big automobile companies, mentioned prior, who based their operations in the region as the production was becoming increasingly linked to urban development. According to Sugrue (2004) “By the mid-twentieth century, Detroit was a city of blue-collar home owners. Already by the 1910s and 1920s, many factory workers used their earnings to build their own homes or to buy one of the small wood or brick bungalows that sprung up virtually overnight on the city's open land”. This illustrates how the quality of life improved massively for employees of the motor factories who were now able to afford a middle-class lifestyle, with a home in the suburbs and a car.

Despite all this development in the 1959s and 60s, Detroit was still a vulnerable city, due to the fact it only had one main industry coupled with the increasing competition from German and Japanese companies, which had not experienced before as these countries were recovering from the effects of the Second World War. It could be argued that the downfall of the city of Detroit was not due to globalization rather as Friedricks (2018) explains, Ford unintentionally caused the ensuing downfall of the Detroit area and its economy. This was achieved through the high wages Ford’s workers were paid, which was significantly higher than national average for blue collar workers, Doucet (2014) describes that this wage increase in turn would entice more people to the area as they had such high wages, which allowed for a more comfortable lifestyle. This allowed workers to afford the products they were building, meaning traveling was easier and it was now possible to live in the suburbs and commute into work every day. However, this is only part of the picture as companies such as Ford looked at ways of reducing manufacturing costs. By the 1960’s, as Sugrue (2004) explains Ford factories underwent decentralization and the manufacture of their cars was split into constituent parts which were far flung across the continuous United States. This reduced the need for staff in the factories of Detroit and along with the suburbanization of the city, as noted above, contributed to the decay of the downtown area, with many buildings being left delict such as the Michigan Central Station, as highlighted by Doucet (2014), a once grand show of wealth and prosperity, has now become a symbol for the deterioration of the city. Globalization is not just an industrial phenomenon it can be loosely described as the ways in which people interact and integrate on a global scale. There can be seen to be however several key factors in the case of Detroit; an increased ease in transportation, transport becoming less expensive, also becoming more efficient and faster, that there was free movement of capital so manufacturers could invest in new locations in countries and that barriers to integration across states are removed or reduces. In such situations manufacturers sought advantages by globalizing their operations.

Globalization had a large effect on Detroit mainly due the reduced costs of transporting materials and products, this has the effect explained by Massey (1991) as ‘time-space compression’, this phenomenon is a feeling that people across the globe feel closer as they can be more easily reached. It is also quicker travel across the globe due to increased and improved transport links. This had an effect upon the process of manufacturing, as companies could now access less expensive labor markets, also the transportation, of parts and finished products, became quicker, cheaper and more efficient. All these factors would contribute as Sugrue (2004) notes to the decentralization of the manufacturing processes for the Ford company, as previously all the whole production line was located in Detroit. A knock off effect of this movement of operations was that suburbanization began to accelerate, this could be due to there no longer being jobs located near the factories. Therefore, people would begin to move out of locations within the city as more desirable and more affordable housing was located in neighboring counties, and along with the factories being no longer in service due to the relocation of production, workers would have little to no incentive to stay in the area.

In agreement with the assertion in the title, one could argue that due to the nature of the economy of Detroit, it was a global center for innovation for the manufacturing of cars during the early 20th century, entailed that the economy of the area was not very diverse. Therefore, the place of Detroit in the economy was that of being focused on the automobile industry and alternative businesses or industries did not have chance to expand their ventures in the area. Leading to a monoculture town forming in city, when Detroit then faced more competition from German and Japanese manufacturers, as mentioned prior, the American car industry was suddenly much more vulnerable than ever before. As the German and Japanese companies would have been using much more modern manufacturing techniques than the current ones used by Ford at the time, as the after effects of the war would have meant innovation would have been needed to create the production line and new products. Also, as they were building from scratch in many cases, the foreign competitors could use modern and more effective processes and techniques reducing the overall unit (car) cost. The effect of globalization would also play a role in this competition arising as foreign companies were increasingly able to export their products across the global as it became less expensive to ship across the globe, consequently brands such as Volkswagen and Hyundai could now reach the American market.

On contrary, one could argue that the decay of Detroit is inevitable due to the theory of ‘spatial fix’, a concept explored by Harvey (2001). He argues that due to the nature of capitalism, to fix issues within an economy, whether that be business or country, capitalists always look elsewhere to solve these problems. An example of a ‘fix’ would be capital and labor, these are also the most mobile examples as they can be found across the globe. Therefore, one could claim that Detroit was always destined to experience an economic crisis as it became increasingly suburbanized, a movement driven by Henry Ford as he paid his workers double the average during the (time period), meaning they were able to afford to buy the very cars they worked to produce. This created an ideal lifestyle which the average working-class person would be now striving to achieve, this links to the ideas presented by Harvey as the greater numbers of people attracted to the area would arguably create a capitalist crisis of overaccumulation. Harvey (2001) also notes that overaccumulation can become a crisis for capitalists as too much labor or capital can no longer be used due to constraints, an example would be that the technology is no longer modern enough to quickly manufacture goods. Therefore, spatial fix is used as an attempt to resolve this issue, this relates to the business in Detroit as the Ford Motor Company was experiencing great success it would quickly begin to experience overaccumulation of profits and would need to seek a resolution. One way of overcoming this would be to look to expand production in other locations and with international transport becoming more and more efficient, naturally the Ford motor company would look to expand to other markets.

Another argument countering the title statement is that a factor in the collapse of the economy of Detroit was the event known as ‘white flight’ this was coupled with a rise in civil unrest in many large American cities. According to Castree et al. (2013) ‘white flight’ is “movement to the suburbs by middle-class households from the majority white population supposedly in reaction to the growing demands and presence of racial and ethnic minorities in city center”. Coupled with more and more policies favoring segregation of people, even within the workforce, this led to increased tensions. Many white families reacted to this by moving out of the downtown areas and into the counties surrounding Detroit, which I believe to be opposing the assertion in the title as the increased unrest led to the downfall of Detroit, but was not linked to the role of Detroit within the global economy. One could then argue the people who could not afford to move out of the city would be more likely to be of lower income which in turn could lead to increased strain on the economy of the city. This similar to the idea that Hausman (2009) presents that people can become trapped by the economy of the countries surrounding them leading to lower quality of life. This could be argued for those left in the downtown area of the city as they did not have the means to move out and become trapped.

Hence there appear to be three main factors that have caused the decline of Detroit including; the lack in diversity of the industry present in the region, growing competition from foreign companies, the growth of manufacturing in lower cost areas across the globe. There is also the social factors of suburbanization and increased tensions. But was the decline of Detroit inevitable even without globalization?

Overall in my opinion spatial fix played little significant role in the deterioration of Detroit as due to the nature of the industries located in the region the economy was inherently vulnerable from the outset. Of these the growth of competition overseas and increased low cost labor across the world can be related directly to globalization. The overarching factor in the deterioration of the economy of Detroit was mainly increasing globalization of the very companies that made the city. However, I believe that these factors would have inevitably caused the collapse of the city, but it was made all the more dramatic due to the increased civil unrest within Detroit and the subsequent movement of people towards the suburbs.