The Rise, Fall, and Resurgence of the Detroit Auto Industry (1898-2014)Last Updated August 8, 2023 | Andrew Boyle
Detroit Michigan is the birthplace of the American automotive industry. Originally home to Ford, GM, Chrysler, and Dodge, Detroit was built on the backs of the men working on the assembly lines. Eventually, the city that seemed to be the home of the American Dream began to decline. This decline was due in large part to the fluctuating automotive industry.
View the infographic below to see the events that contributed to the rise and fall of Motor City.
[click the infographic below]
The Beginning of the Automotive Industry in Detroit
Motor City began with the formation of the Detroit Automotive Company in 1989. Before establishing the automotive powerhouse Ford Motor Company, Henry Ford created Detroit's first automotive manufacturer. This venture created only two cars before the company went under but it was the start of something big. Despite the unsuccessful first start, Detroit would go on to be the home of America's most profitable and innovative automotive manufacturers.
By 1925, the automotive industry was experiencing a boom. At this time the Detroit Three -- Ford, Chrysler, and General Motors -- are established and headquartered in Detroit proper, and the automotive industry is the largest in the country.
By the 1940s, Motor City was a boom town. The Detroit Three controlled 90% of the U.S. market share, and the United Automotive Workers union was formed to regulate working conditions, pensions, and wages for the workers. To meet production demands, the iconic Ford River Rouge plant was opened in Dearborn, MI, creating over 90,000 jobs in the Detroit area.
The Mass Exodus
The implementation of the assembly line revolutionized the world of automotive manufacturing, creating an efficient and speedy process for the workers. However, the development of the assembly line rendered many of the plants in Detroit inefficient due to the multi-story layout of downtown factories. The building of factories in suburban areas with more square footage led to the mass exodus of Detroit.
Between 1947 and 1963, Detroit lost approximately 150,000 manufacturing jobs to suburban factories. During this time, smaller manufacturers went out of business and the Detroit Three vacated the city for the greener, larger pastures of the surrounding suburban areas.
A Racial Divide
During the exodus, many white automotive workers followed the factories and planted their roots in the suburban neighborhoods surrounding the city. This move out of Detroit proper created a large racial divide. The automotive industry employed many African American employees and offered fair wages. Ford Motor Company was recognized as one of the largest private employers of African-Americans the in U.S. No other industry offered wages high enough to cut a path to the middle class. However, when African-Americans attempted to make the move to suburban areas, they were widely rejected from home ownership, effectively forcing the workers to remain centralized in the inner city.
This segregation led to tension and a series of riots in the city, most notably the 12th Street riot. The most infamous riot of the past 100 years lasted 4 days and resulted in the death of 43 people, 1,400 burned buildings, $50 million in property damage, and 5,000 people were left homeless or displaced due to the damage.
The oil crisis of 1974 pushed American consumers toward the more fuel-efficient models of the Japanese auto manufacturers. The push for more fuel-efficient options left American automakers struggling to compete. What follows is 20 years of federal bailouts, record industry losses, and multiple worker strikes that halt North American production for weeks at a time.
By December of 2008, GM and Chrysler are awarded a provisional bailout of $17.4 billion from the Bush administration. One year later Chrysler and GM declared bankruptcy. The city of Detroit follows suit two years later and files the largest municipal bankruptcy in history.
Although Detroit suffers from a history plagued with highs and lows, the city was able to emerge from bankruptcy after 17 months. And while Motor City as we knew it may be long gone, the pride that citizens of Detroit have for their home is abundantly clear in their efforts to rebuild their beloved city.