Reversal of Fortune

Detroit is behaving a lot like Silicon Valley. Again. By William R. Chapin with photography by Hayden Stainbaugh
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William R. Chapin
William R. Chapin // Photograph by Hayden Stinebaugh

It’s no secret auto manufacturing in Detroit has gone high-tech. According to MICHauto, an economic development initiative of the Detroit Regional Chamber, southeast Michigan is ranked No. 1 nationally for its number of advanced automotive industry jobs and businesses. The record also shows metro Detroit is positioned to lead the nation in connected and autonomous vehicle research and technology; in 2014, Michigan led the United States with 45 connected vehicle projects, followed by California with 31.

Bruce Katz, vice president of the Brookings Institution, a think tank in Washington, D.C., reported the auto industry accounts for one-third of all advanced industry employment, while more than 32,000 professionals in metro Detroit are employed in the computer systems design sector. Many of these technology professions feed into the larger automotive supply chain. 

Drawing from a 2015 Brookings study, America’s Advanced Industries, Katz said General Motors has been increasingly moving into the software space. Over the past five years, GM has filed 592 software patents, accounting for more than 15 percent of the automaker’s patent activity during that time.

As Michigan becomes the growing stra-tegic location for the emerging technology in connected and autonomous vehicles, more and more observers are calling Detroit a new Silicon Valley. 

The Motor City boasts the largest deployment of video imaging for traffic management, and the most extensive test beds in the world. The state also offers the second largest system of adaptive traffic signals in the country.

What may come as a surprise to some is that this isn’t the first time Detroit has been compared to the tech sector in California.  

Automotive executives in early 20th century Detroit behaved a lot like today’s executives in Silicon Valley. They regularly switched companies and launched spinoffs and startups. This culture of cross-pollination spread innovative manufacturing and design ideas across Detroit’s initial manufacturing sector. 

Over a short period of time, distant competitors couldn’t keep up with Motown’s research and development operations, and eventually failed or sold themselves to Detroit.

The Motor City and its environs had a lot to offer the nascent auto industry around the turn of the 20th century. Iron ore was readily available and there was ample timber (early car frames were made of wood). Rail and water routes made it easy to ship cars to Chicago or New York. And Detroit already hosted heavy industry like machine shops and stove works. Toledo, Cleveland, Milwaukee, and Buffalo could have made similar claims.

Detroit’s eventual dominance had more to do with a couple of historic chances rather than
any geographic advantage, writes historian Brian Palmer. First, innovators like Henry Ford and Ransom Olds happened to live in Michigan. 

There was no indication that Detroit would come to dominate car-making at the opening of the 20th century. According to economist Steven Klepper, of Carnegie Mellon University, none of the 69 companies that entered the auto industry between 1895 and 1900 were located in Detroit. 

Olds Motor Works became the city’s first major carmaker when it relocated from Lansing in 1900. Ransom Olds then made a decision that would shape the course of the industry — rather than creating hundreds of small components in-house for his Curved Dash Runabout, he subcontracted much of the work to companies in Detroit’s flourishing manufacturing sector. 

A few other executives from Olds, including my grandfather, Roy D. Chapin, co-founded Chalmers Motor Co. and the Hudson Motor Car Co., while William “Billy” Durant went on to found General Motors. All of these ventures were based in or near Detroit.

The number of U.S. carmakers peaked at 272 in 1909 — including not just those in Detroit, but also major manufacturers in New England and Ohio. During the 1910s, however, the Detroit brands pulled away. In 1915, 13 out of the country’s 15 most popular car brands were in Detroit. Motor City executives, particularly those at Ford, invested heavily in research and development, distancing their products from the out-of-towners.

The industry further consolidated in Detroit, and parts suppliers and skilled laborers followed the largest manufacturers, making it difficult for companies in other regions to compete.

While the history of the Detroit automotive industry is about the stories of innovative people whose vision and entrepreneurial spirit created new companies and products, it’s clear the technological advances underway in Detroit today prove that, indeed, history does repeat itself. 


William R. Chapin is president of the Automotive Hall of Fame in Dearborn. More information is available at automotivehalloffame.org

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