Wednesday, May 22, 2013

The Detroit of the Future

Production of New Autos as a Percentage of Gross Domestic Produc

In today's news, Bloomberg Views argues against Detroit's recovery. The article makes some valid points, such as the number of people who work for Detroit is nowhere near its peak and manufacturing experiences a V-shaped recovery so this short-term trend will not continue, but I believe they are missing the bigger picture. That is,  the US economy has diversified and globalized in the last several decades. The Big Three have followed this trend. The new auto market in the US is going to become an every smaller share of GDP, but that is not a bad thing - nor does it mean that the automakers are in trouble.  The  "Detroit of the future" is not going to look like the "Detroit of the past".

The  Big Three automakers now have ventures throughout the world, as well as large investments in the Defense industry here at home. After Restructuring (which temporary bankruptcy helped in), these companies have been and will continue to be much stronger companies then they were before.

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