Changes ahead for auto industry provide opportunity for region

The Future Is Cloudy and Bright 

By Sandy K. Baruah 

January is always an exciting time in the Detroit region. The promise of a new year, and of course, the arrival of the North American International Auto Show, one of the premier global events on the automotive calendar and an opportunity to not only showcase the world-leading mobility assets of our region, but also the incredible and real urban renaissance of the city of Detroit.

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2017, however, brings an unprecedented number of questions that could potentially impact our mobility industry.

  • Have we seen peak demand for vehicles?
  • How will the trend towards longer vehicle loan terms impact the market?
  • Will we see spiraling incentives if demand weakens?
  • Will fuel prices remain low and the demand for more pro table SUVs and CUVs continue unabated?
  • How will the Trump Administration’s pro-business, limited-regulation and potentially anti-trade policies impact the industry?
  • Will the supply chain be impacted by possible changes to the North American Free Trade Agreement?
  • And, of course, how will the continuing transformation of mobility as a product to mobility as a service – and the emergence of non-traditional players – impact our industry?

While nobody really knows for sure what the answer to these questions are, there seem to be some key principals that bode well for Michigan’s most important industry.

Michigan-based mobility companies, both at the original equipment and supplier levels, have not forgotten the hard lessons of the Great Recession. This is evident in their cautious deployment of capital and far more restrained use of debt. Break-even points have been lowered substantially and there is a far greater focus on profitability as opposed to market share. OEMs have been far from sentimental in axing unprofitable legacy nameplates and brands. Suppliers and OEMs alike have resisted major capital investments in production facilities for fear of having underutilized capacity even though they have struggled to meet historic levels of demand.

While no one saw the fuel price spike of 2007 coming, with ample yet dormant shale reserves in the United States, and a strongly pro-energy president coming into office, it seems unlikely that America will experience some kind of fuel crisis or price spike. This is good for consumers, good for the economy, and therefore, good for the automotive industry, which stand ready to meet the demand for high-riding, flexible yet fuel-efficient crossovers and utilities.

On the cautionary side, however, remains concerns over ever-lengthening loan terms. Also, the growing use of incentives is troubling several analysts. Fall 2016 vehicle sales were trending below 2015’s record levels, only to see an exceptionally strong November that was driven by a surprising growth in incentives.

But perhaps the best news of all for the immediate and long-term future is the posture of Michigan’s mobility companies regarding product. As recently as a decade ago criticism that U.S.-based companies were not always producing world-beating products was not far off the mark. But today, these companies have gone from “zero to hero” in record time. Just look at any automotive “best” list and you will see that American brands, and products produced in America, are earning more than their fair share of accolades.

Our Michigan-based companies have made this  region the most active and concentrated place for next-generation mobility research, testing and deployment. No place on the planet can compare. We have the advantage going into the future. Our friends in Silicon Valley have recognized this and have started to establish a presence in Michigan, just as our companies have done the same in the Valley.

It is certainly an exciting time in Michigan and for the industry we love. Michigan’s challenge is unique. We have to take the lead in creating world-beating products today and tomorrow, while preparing for the most revolutionary change in the industry since its creation over a century ago. Fundamental change is in the air, including a very different president. It is certainly a great time to be associated with Michigan and the automotive industry – and I am equally certain that all of us associated with the industry will indeed earn our paychecks.

Sandy K. Baruah is the president and CEO of the Detroit Regional Chamber.

Changes on the Horizon

Former U.S. Rep. Harold Ford Jr. speaks on current state of affairs and potential changes ahead in political world 

By Daniel A. Washington 

After spending 10 years in the U.S. House of Representatives as a Democratic Party member, Harold Ford Jr. has become a regular contributor on MSNBC and CNBC discussing policy and politics.

No stranger to Michigan’s Center Stage, Ford spoke with the Detroiter before this year’s Mackinac Policy Conference, where he will again be appearing — this time on the political climate of the nation ahead of the upcoming presidential election.

What is the most relevant issue facing American politics today that didn’t exist 25 years ago?

I think that the one thing that threatens the fabric of the country more than anything today is the uneven distribution of wealth. I see Democratic candidates always talk about it, but it’s truly a serious issue. I’m really not sure how we sustain a society that has such a disparity. I think we’re not doing enough in the short term or immediate term. We’re not doing enough in the schools. Investments need to be made, and they aren’t happening fast enough.

What does Donald Trump’s success mean for the two-party system?

His success is going to change it; he is not a typical Republican or conservative. Early in his campaign he took on the feelings and sentiments of Fox News and super PACs. I think that many people support him because he’s the voice of many who think that  things are wrong with what is going on in American politics.

Regardless of (whether) he is worth $5 million or $10 million, he’s worth more than the average American family, so people are looking to him as someone who can get things done. Donald Trump’s “Make America Great Again” is really something many Americans can relate to, and I can’t blame them. I think Trump’s success should put to bed naysayers of the notion that the two-party system is weak.

How must American politics progress to engage the millennial generation as they age?

I differ with the proposition. I think that millennials are like any other group of people. You must closely look at them and see how to engage. I think that if you look at the last three cycles — led by Obama and others — millennials were really active. President Obama’s presidential bids showed that he was new and fresh and that people really wanted something different. He wrapped his campaign with technology in regard to raising money and getting his message to the masses.

Even though I’m a Hillary Clinton supporter, there’s a tremendous amount of millennial energy around the Bernie Sanders campaign. I think like with any group, you have to speak to what they care most about. Oftentimes, people discredit millennials’ position on issues as being too extreme and unrealistic, but I think we have to aim extremely high and make our leaders continue to think bolder and bigger to deliver results.

What do you think of the media’s role in the presidential election thus far?

The press focuses so much time on each candidate that sometimes it makes the race feel like forever. We’re just getting into voting, but so much has been covered that it makes the voter disinterested and fall in and out of the race. I hope as we get closer (to the election) the real issues take main stage, whether that is taxes or education.

What will be the legacy of President Obama years from now compared to when he departs office?

I think that the biggest thing in regards to his legacy is what the Affordable Care Act will look like in four or five years. I think the momentum won’t subside, but instead increase as we get smarter and make the cost of care cheaper and more affordable. In recent days, we’ve seen big health providers withdraw from certain parts of the Act. I think the president will be looked upon favorably in terms of health care because he was aggressive in pushing it and helping stabilize coverage for the nation. In four or five years, we’ll see how the deal with the  Iranians really panned out, as well. Those two things really stand out to me in terms of his legacy.

What is your take on the federal government’s role (e.g., EPA and congressional hearings) and response in the Flint water crisis?

What happened in Flint is an inexcusable abomination. I think the bulk of responsibility rests with state officials and leaders. I think that if the state reached out to the EPA and others and didn’t get responses, then they too should be held responsible. I think that if you were in a community with higher income and more affluent jobs, we would have found and seen a different response to such a tragedy. I think that class is a large reason as to why it happened. I think, ultimately, the accountability and responsibility rest with the state officials first and foremost.

Daniel A. Washington is a marketing and communications coordinator at the Detroit Regional Chamber.

Spotlighting Race in America

Award-winning journalist Soledad O’Brien fights for race conversation at media table 

By Daniel A. Washington 

Chances are you’ve heard the name Soledad O’Brien — maybe on television, providing commentary or narrating documentaries on race relations in the United States.

Arguably most known for her work in producing the multi-part documentary series “Black in America,” O’Brien has earned numerous awards for shedding light on often overlooked injustices endured by mi-norities in America. A former anchor for CNN, and current CEO of Starfish Media Group, she spoke with the Detroiter prior to the Mackinac Policy Conference, where she helped lead a discussion on national politics and the importance of race, economics and inclusion.

What is one of the most relevant issues facing American politics today?

How do you make sure that people feel represented? I see it all the time while interviewing people. This election is a real wake-up call and a lot of people are unhappy with the current state of affairs with the political system.

You have done a lot to shine a light on race relations in “Black in America.” What do you think the state of race relations are today in this country?

I think it is a very interesting time we live in. I think people think it’s a horrible time, but I’m not one of them. I think this time presents a number of highs and lows of living people trying to grapple with the issue and conversation of race in America. I think the idea that we would all get together and fix it is a little naive. I believe we are at a time where people are pushing back in a way. These are historic narratives that people are rallying and fighting against. I really thought that this presidential race was going to give way to the #BlackLivesMatter movement, but we have instead seen an uprising in staunch white America push back. I don’t think we’re at the worst ever (time for race relations), but instead are experiencing the ebb and flow just like during other times in our history.

What are some of the key takeaways people need to understand about race in America?

I think the biggest takeaway is people don’t understand the history of how and what this country was built on. I think it makes people very uncomfortable to discuss the realities of race and class. I was talking to someone on Twitter and had to explain that indeed slavery has an effect on today’s issues and, more importantly, a race of people gravely affected. I think when you don’t understand your history you get angry, and being really misinformed causes racial tension and issues that only deepen the resentment. Demographics have shifted in this country. I think people really need to go back and understand the roots of our history, especially in regard to slavery. If you don’t do that, then you won’t understand why people are angry and feeling as if their life or the lives of those most affected has yet to be restored.

With the 50th anniversary of the 1967 riots approaching, what do you think Detroit needs to focus on moving forward in terms of race?

I am a big believer that when faced with a challenge, you deal with it upfront. In Detroit, there’s a lot of opportunity and you can’t stay stuck in the past. You have to respect it and look forward to telling a new
narrative. Detroit needs to look to its future and see what it can do to make tomorrow better.

What is your take on the federal government’s role (EPA, congressional hearings) and response in the Flint water crisis?

The federal government’s role is to protect the people and, in this case, their water. There is no doubt that there has been and is an injustice that has occurred against the people of Flint. No apology or discussion can undo what has been done. This issue has opened the door and shed light on others across America in regard to the quality of water and its consumption. Going back to Flint, the biggest tragedy is the long list of officials that didn’t care, which in turn caused so many lives to suffer.

What is one issue that didn’t necessarily exist 25 years ago?

I would say eight to nine years ago when I look back, we were not allowed to acknowledge, let alone say, white supremacy on air. I recall having a conversation with my boss at the time about the idea that black people are treated differently by police. He would not hear any of it. He said all parents both black and white taught their children the same things in regard to respect and fear of police officers. This notion that different interactions existed was unheard of.

We now do understand that when it comes to policing there are completely different reactions for the white and black civilian. That is a big shift. We now care and are aware that blacks have been forced to live differently and approach police interaction different. I‘ve seen huge strides in this understanding, but there’s still a lot of work to be done considering the recent tragedies of unarmed black men losing their lives to police brutality.

What is your take on the presidential primary race so far?

It is very interesting from a reporter’s perspective. From a voter’s perspective, it’s a hot mess. I think there are a lot of voters on the GOP side who feel their leaders are really ignoring them. On the Democratic side, you look at the most recent debate and see some glaring problems. I think it’s very challenging for voters thus far; you get the sense that it isn’t really about the issues and more about the name-calling and accusations that dominate the headlines and conversation.

What do you think of the media’s role in the presidential election thus far?

I think the media is a combination of institutions, not just one entity. Some have done a great job reporting the facts, and others have been really disappointing and not doing what they should as journalists. Some have decided to encourage and even push the name-calling and madness to drive ratings. I think some media outlets are doing a great job and upholding the responsibility of journalism.

Daniel A. Washington is a marketing and communications coordinator at the Detroit Regional Chamber.