History of Automobile Industry in Michigan - Essay Example

The beginning of the industrial revolution gave the momentum to automobile industry in America especially around regions of South East Michigan and surrounding areas of Detroit. Means of transport, easy availability of raw materials and the access to the neighboring as well different areas and regions in the industrial world made Michigan as the center of automobile hub. Along with it, Fordism with its new technological development further made the Michigan as the leader in the automotive production in 20th century. Michigan lies in the Great Lake Regions, which constitutes twelve states and in the years to come had become an important economic, social, and cultural area. South-east Michigan comprises population of 4.9 million people with the economic footprint extending well beyond geographical parameter of south-east Michigan and the city of Detroit. Automobile production including the production of its components has spread beyond the geographical boundaries of Michigan encompassing southern state and southern Ontario. Automobile industry has the rich history embedded in the growth of the industrial organization and syndicalism, having a closed link with the history of the United Auto Workers. The versatility and socio-politic dynamism and the organized labor movements had been responsible for laying the grounds for the development of the strong automobile industry. (Pezzini & Byrne, 150) Transport itself had its most crucial role in the growth of the automobile industry. Michigan’s location towards the Western frontier without the flow of the natural rivers and the need to reach the potential markets of fur, iron and copper ore, lumber, and agricultural products without natural rivers gave the impetus to develop the cheap and best transportation alternatives. Earlier the only means of transportation were ships across “Lakes Huran and Erie to eastern markets and from the Upper Peninsula via Lakes Michigan and Superior.” (Fosler, 93) The shipping was greatly developed over the Great Lakes, which was connected to the Michigan’s hardwood forests, which in turn led to the building of the shipbuilding firms. The increase in the growth of the lumbering also led to the expansion of the railroad network throughout Michigan. Helped by the federal and land grants, this network was completed by the late nineteenth century (Fosler, 94) and by the year 1900, approximately more than 6,900 miles of track crossed Michigan. (Notes) These railroads stimulated the growth of the heavy manufacturing industries, the most important of them being the railroad cars. Michigan also became the center of the carriage builders, just at the close proximity to the lumbering industry. The growth of this transportation manufacturing industry had its own importance as well as played direct and indirect part in the building of the automobile industry. (Fosler, 94) The emerging entrepreneurs in the marine engine business, established industries, skilled workers, and available local venture capital comprised the most important factors for the growth and development of the industry. As said by R Scott Fosler, “These factors together produced the critical mass for the agglomeration and continued innovation that was difficult for any other geographic area to match or surpass.” (94) It was more of the shipping industry that became the most crucial factor for the growth of the automobile industry. Also the establishment of other industries like wheelwrights, carriage makers, and machine shops induced the growth of the other industries and gave a great impetus to the automobile industry. As Eckstein claimed, ‘What Detroit, Lansing, Flint, Jackson, and Pontiac represented to Olds and later pioneers was not so much a set of relevant industries as a set of relevant skills that could be adaptive to automotive use.” (Fosler, 95) Before 1870, many industries developed in the Michigan especially furniture and food industry and it was only when automobile industry made its presence acknowledged that Michigan began to be emerged as the urban industrial state. Just at the beginning of the twentieth century, Ransom Olds, Henry Ford, Henry Leland, David Buick, and Roy Chapin were few among many who were working on the concept of attaching a motor to the wheels to form a personal transport vehicle. The automobile industry had its beginning in the year 1890, when inventors thought of the idea to create vehicles for their own purpose use. The bicycles, which were very popular in the 1880s had encouraged auto inventors to find out the ways to develop their own vehicles. In 1881, a man named William Morrison invented an electric carriage and two years afterwards, in 1893, in Springfield Massachusetts, Frank Duryea produced a truck that could run on motors making a use of the internal combustion engine. Duryea later involved in the manufacture of the internal combustion vehicles. The 1893 was also the period when the study of the condition of roads was undertaken and recommendations were made for its improvement. It was during this period Americans made traveling as a part of their lives, and their fascination for exploration took them towards the new states and destinations with the climate most suitable for them. (Dreyer, Online) The initial manufacturing industry for the production of the automobiles was started in 1896 powered more by gas rather than electricity. In 1912, Cadillac was the first ever-vehicle to have a self-starting engine. As the popularity of these vehicles grew, markets also began to grow and make their impact felt. In 1898, William Metzger too had become the country’s first automobile dealer to have a Detroit dealership. In 1900, the first exhibition of the automobiles was held in New York City at Madison Square Garden which was attended by 48,000 people which included not only automobile manufacturers but also companies supplying parts to the manufacturers. In the exhibition there were at least 300 different models to see. (Dreyer, Online) Although Detroit became a renowned name in the automotive industry, still it had not established itself as compared to the New England. But by 1905, Detroit made its position strong as the centrally located place in the industry. Economic growth and the extracting of the natural resources like copper, iron and timber had already been taken place and depleted but not before it spurted the growth of the timber and mining industry and created fortunes. These industries happened to be the most profitable venture for the capitalists but what they were looking for was investment opportunity. During that period Ransom E. Olds was aspiring for the sufficient capital for his automobile company, at that instance, two of wealthy Michiganders, Samuel L. Smith and Edward W. Sparrow formulated a partnership with Ransom Olds, leading to the setting up of the Olds Motor Works. Yet another citizen was also playing his own part in making the city of Michigan, Detroit as the “Motor City.” He was Henry Ford, whose innovative spree and tenacious approach enabled the success of the automobile industry. It was due to the efforts of Ransom Olds and Henry Ford that Michigan could acquire a central place in the market with their philosophical approach in business of “low cost, high volume.” (Dreyer, Online) For retaining the low production costs, both Ford and Olds introduced the production line with Henry Ford taking it further and improving upon the process of assembling vehicles. This moving assembly line is one such example of his creations. Improvements were done with a motive to increase the cost effectiveness of the assembling of vehicle to enable the company to reduce the actual cost of the car. By 1896, there were around 1,500 automobile makers in the United States, with the large number of competitors struggling for power. Subsequently large and more powerful companies bought smaller companies with very less market share but the World War I brought the slump in the auto industry as many of the industries had to slow down the production as the factories then had to devote themselves in the production of war goods. As the World War I ended, again the markets were filled with new cars. For two years, demand for the cars increased but the economic slump of 1920 again reduced the industry because of the increase in supply and less demand. (Dreyer, Online) In 1923, Alfred P Sloan became the president of General Motors, after becoming the company’s vice president. His marketing strategies made the company a leading giant and also induced others to follow the same. He could analyze the situation and increase in demand of the Americans. As all Americans were becoming car owners, the market for the first time buyers was reducing and it no longer remained novelty items. Dealers needed to pursue buyers for another car. He changed the appearance of the car and added up new features. By adding the same, he induced the customers by the phrase “a car for every purse and purpose.” (Dreyer, Online) By the year 1920, automobile industry in Michigan had employed on the role 127,000 with an output value of $1,330,000,000. This transformation from the agricultural and extensive economy to one the most industrialized economies of the world had not been very easy. There was huge influx of laborers to meet the demand of the production which was not without stress and cultural tension. These workers were emerging from all corners of the world especially from Poland, Germany, and Canada. In reply to it, and to meet changing needs of the time, many states adopted new ideas and progressive reforms. The mayor of Detroit, Hazen Pingree in 1889 was responsible for bringing in the regulations in public transport. Chase Osborn during 1911 and 1912 prepared plan for the workers compensation and many other reforms for the welfare of the laborers. Many of the organizations like the Grand Rapids Furniture Manufacturers Association, the Detroit Citizens League, as well as many other groups formulated to protect the interests of the labor class. These organizations gave shape to the urban and town life by helping the people coming from various nations with their own cultural and ethnic identities. Michigan became a great center of labor movement by the setting of the United Automobile Workers (UAW) in 1935. It became such a great industrial center that effects of depression also did not deter it. (Madison, 47-49) The growth of the suburbs was yet another great factor to give the automobile industry a great push, as more and more people began to commute by car making the interurban trains completely outdated by 1935. (Notes) This also made respective local governments to look into the road repairs and improvements and government had to levy the taxes to avail the necessary funds for the maintenance of the roads. Automobile industry also gave impetus to tourism as many restaurants, camp sites, and tourist attractions were opened. But the World War II changed all. After the United States got directly involved in the World War II and Japanese attack on Pear Harbor, automobile industry banned the production of the automobiles for civilians and instead involved itself in the war production. The automobile companies ensured supply of the adequate materials for war. It was estimated that since the beginning of war in 1939 to the end till 1945, this industry had supplied war material to the tune of 50 billion dollars. As Michigan was the hub of auto industry, Ford, Chrysler and General Motors contributed the maximum share to the war effort. Their contribution prefixed Michigan with the title “Arsenal of Democracy.” (Dunbar & May, 532) But after war, the industry enjoyed a great period from 1945 to 1950 with many models moving out of the showrooms. The economy of the post-World War II increased at the rapid rate, bringing with it higher wages, construction of new roads and the automobiles, changes in the urban and social landscape with many people making their way in the newly developed suburbs. “Big Four” auto manufacturing companies like Ford, General Motors, Chrysler and American Motors were the main companies behind this success. They profited at the cost of the destruction of the European and Japanese industry as well from domestic oligopoly. The study revealed that United States “auto industry produced eight million or three quarters of the 10.6 million cars and trucks produced worldwide in 1950” while just “Wayne county at Michigan produced 50 per cent of all the cars manufactured in the United States” as per studies of Aronowitz (Figart & Kahn, 35-36). Increase of the vehicles on the roads and the pollution resulting from it increased the concern of the environmentalists who with the most forceful tone forced the Congress to pass the legislation and so the concern for the safety on account of the accidents induced again the government to incorporate safety-belt laws. In 1966, National Traffic and Motor Vehicle Safety Act as well as the Highway Safety Act were passed along with the establishment of the Department of Transportation. During 1960, the industry geared itself for the induction of the electric vehicles with the General Motors developing the models of two electric vehicles, the Electrovan and the Electrovair II, which was an electric version of the Corvair. (Dreyer, Online) The whole movement and shift in the social, economic as well as geographic paradigm brought white suburbs almost in entirety leaving the older residents and the African Americans within the confines of city. This increased racism within the citizens and politics resulting in the riots. By the later years of the twentieth century, the prosperity of the state got a tremendous set back whereby the lumber and mines in the upper areas of Peninsula were deeply exhausted. Although the agricultural production remained the same, the furniture industry shifted towards south whereas the stiff competition from the foreign nations gave a tough challenge to the automotive industry. This caused Michigan to bear the symbol of Rush Belt with old and deteriorating factories. The political upheavals also during the late 1970s and 1980s led the state economy into deeper recession but soon the division in the Republican Party of the state led to the election of the Democratic James Blanchard, who tried to build up its old prestige and charm while making an attempt to diversify. By the year 1990, Republicans had regained its governorship under John Engler, who belonged to the conservative wing of the party. It was his initiative spree and cost cutting measures and welfare reforms including the economic boom in the country as a whole gave Michigan not only its lost glory but also more growth than it could have achieved in the previous years. (Figart & Kahn, 47) In 1975, on account of the fuel crises, rule of the Congress made it mandatory for the automakers to manufacture and bring into the market passenger car fleet, which had more fuel efficiency. Subsequently car manufacturer giants began to create smaller cars for their customers. In 1980’s these companies also had to face competition from the cars being imported from Germany and Japan, as Toyota was getting most popular, getting major share of the US market. As the consumption of the vehicles increased, people buying second car became common. Each individual had a car for their own personal use instead of the common trend of the family car. With the increase in consumption, industry began to create new ideas. (Dreyer, Online) The main factor which is now confronting automobile industry particularly in Michigan in 21st century is the growth of the parallel automotive industry in states like Kentucky, Ohio and other southern states of US. Approaching of retirement age of baby boomers has also given a shock to the auto industry which is quite evident in skilled labor shortages and increased competition in hiring of the talent. The automobile industry has begun to induce the labor by giving more incentives especially to the workers who are closer to the retirement age to work for longer years. The immigrants are proving to be the biggest asset, as they are very well educated and comparatively more trained than the local inhabitants. By the close of the twentieth century, US manufacturers had shifted their attention to the truck manufacturing, leaving their car segment lack behind. This shift was due to the reduction of the petrol prices that would give more profit to the manufacturers. Meanwhile foreign cars, Toyota and Honda continued to exert their presence felt and their presence was enough to get the automobile manufactures back into the business of cars. Apart from these challenges, the automotive industry has also been affected by the market shifts due to global production and new emerging economies. (Pezzini & Byrne, 154) Against all odds, still Michigan is the leading center in the automobile research and development which was highlighted by the Governor Jennifer M Granholm and is a leading contributing in its economic growth. The governor pinpointed the fact that “automotive industry is the leading producer and consumer of 21st century “enabling” technologies that cross a multitude of sectors and that those technologies will not only influence the features of tomorrow’s automobiles, but will have applications that affect other areas of our lives as well”, for e.g. application of the nano-technology that would allow an automaker to fit stain proof fabric seats in the family cars. (Shore, Online) In the century today, the automotive industry at Michigan encompasses the main manufacturing industries like General Motors, Toyota, Honda, Volkswagen, Ford and Daimler Chrysler, all of which have their operations in the global competitive market. In-spite of several hurdles and stiff competition, Michigan’s future in the automobile industry is brighter and current President Barack Obama’s move for fuel consumption induced auto industry to look forward to more technological innovations to give the world the best they are looking for. Works Cited Dreyer, Rachael. “Automotive History.” The Bentley Historical Library. Internet (2009) Available: http://bentley.umich.edu/research/guides/automotive/ 16 December 2009. Dunbar, Willis Frederick & May, George S. Michigan: A History of the Wolverine State. Grand Rapids, Michigan: Wm. B. Eerdmans Publishing, 1995. Figart, Deborah M. & Kahn, Peggy .Contesting the market: pay equity and the politics of economic restructuring. Detroit, Michigan: Wayne State University Press, 1997. Fosler, R. Scott. The New Economic Role of American States: Strategies in a Competitive World Economy. New York, NY: Oxford University Press US, 1990. Madison, James H. Heartland: comparative histories of the midwestern states. Indiana: Indiana University Press, 1988. Pezzini, Mario & Byrne, Erin. Globalisation and regional economies: can OECD regions compete in global industries? OECD Publishing, 2007. Shore, Michael. Granholm Touts Michigan as Capital of 2020 Automobile Industry. Internet (2005) Available: http://www.michigan.gov/gov/0,1607,7-168--107879--,00.html, 16 December 2009. Read More