Michigan: Turn Out the Lights

My recent travels led me to the Motor City in search of something positive to write about. Alas, it was not meant to be, although the Tigers were rocking Comerica Park the day I caught a rare day game with an old college roommate...who had just lost his job.

Michigan’s unemployment rate of 7.1% leads the nation, which averages 4.5%. The state’s governor is about as popular with residents as Eliot Spitzer was on Wall Street...before his recent flip-flop. Loser.

Several executives of publicly-traded homebuilders have used the word suck to describe business conditions recently. Thankfully, the captains of the auto industry show more discretion, as they likely have more to complain about.

Fortunes change rapidly in the auto industry, however. in 1897 Charles B. King decided to pursue the manufacture of gasoline engines for the marine market after venture capitalists shot down his efforts to build engines for automobiles. Who could blame the VC’s?-only four automobiles prowled the mean streets of Detroit in 1897.

Still, Henry Ford was able to find savvier VC’s in 1899 and formed the Detroit Automobile Company in August of that year. Unfortunately he was out of business within eighteen months.

Thus, Ransom Eli Olds of the Olds Motor Works was the undisputed king of auto’s in 1900. Indeed, by 1902 the Curved Dash Oldsmobile (pictured below) was the best selling automobile in the country. Olds was on a roll, growing revenue from 410k in 1901 to $2.3 million by 1903. Ransom Eli Olds had it made. And Ford was plotting a comeback.

The heady success lead him to raise additional capital to expand his business. This move substantially diluted his voting control and by the summer of 1904 the new financial backers of the company were firmly in control, and Olds was out of the company he founded.  But Olds was not done and went on to build trucks-the R.E.O. Speedwagon.

The cyclical auto industry’s fortunes have waxed and waned over the past century. But lately the news has been dire. Oldsmobile was shuttered by General Motors and Michigan’s unemployment rate is currently higher than Mississippi’s.

In just a few minutes from the time this entry posts, the Ford Motor Company will close the doors of its Wixom, MI plant, long the home of the Ford Thunderbird. Wixom produced more than 6 million cars over its 50 year history and employed nearly 6,000 workers and 280,000 cars at its peak production.

As part of Ford’s downsizing, there are only about 1,100 workers left at the facility at its closing. Most will be retiring or moving to another Ford plant elsewhere. Others will be offered an educational buyout where they will be compensated for necessary re-training in another field. Wixom’s assembly line was over 15 miles long.

Lincoln Mark series and Continentals as well as the Ford GTs were also produced there during its operational life. The plant will be celebrating the rich history of Wixom by holding a final party this Saturday, the Wixom Legacy Celebration, which will honor 50 years worth of past and present employees.

Farewell Wixom
Hemmings Auto Blogs

Michigan is in a one-state recession. Is it any wonder the likes of Wilbur Ross are snatching up auto-related assets?

Wilbur knows how to profit from the changes. Michigan needs to learn how to Roll with them.

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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position in securities mentioned

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