Dying Detroit

Detroit was the Silicon Valley equivalent of the economic boom of the first half of the last century. Cars were the symbol of 20th century lifestyle as well as the economy — the great American dream which Henry Ford brought to the common man with his Model T. Among the giants of Detroit were General Motors, Chrysler and Ford — what is good for GM was good for America, it was said.

Those icons are now on the brink of bankruptcy. Even as rumours of their imminent demise swirl about, US President Barack Obama has sacked the GM top boss as a precondition to bailing them out. In effect, Detroit is dying and GM’s dwindling fortunes are approximating America’s own decline.

But the delay began ever since the nimble Japanese automakers broke into the American market in the 1970s. Chrysler was bailed out in the 1980s but the Americans did not move with the times — for them big was beautiful, while the others brought in newer, more fuel efficient models.  The American car reflected their obsession with size.

As an interesting coda to the implosion of the Detroit dream is the emergence of the Nano.  What the Japanese began, India’s Ratan Tata of the cheap and compact yet efficient Nano is taking forward. The Europeans are interested, but the Americans are not too impressed by it; they may be missing another big opportunity to move forward.
There is grudging acknowledgement from around the world that Nano and its variants could be the way of the future. Others can improvise on it, but they ignore the core idea that small and compact will be the reigning idea. For the first time ever in a major industrial segment, India has come up with an idea that is right there on the horizon.

It is America in general, and Detroit in particular, which should find a cue in the Nano about what needs to be done to survive into the future. The question of course is whether the auto majors have the stomach to get down to the real hard work of slimming down. Already there are reports that with the dip in petrol prices American consumers are once again going in for the big gas guzzlers. But here’s a tantalising thought for the future, that Indians could do to Detroit what Indians and other Asians are doing in the Silicon Valley — make it into an attractive industrial hub once again.