What A Bankrupt Detroit Means For The Auto Industry

Detroit this week became the largest American city ever to file for bankruptcy. Host Jacki Lyden talks with NPR business reporter Sonari Glinton about what Detroit's fiscal woes means for the nation's auto industry, which is famously linked to the city.

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JACKI LYDEN, HOST:

And as Jim just mentioned, residents in Detroit are waiting to see what bankruptcy will mean for the city and local businesses. Detroit's financial woes coincide with the rebound of the auto industry that was once headquartered there.

NPR's business reporter Sonari Glinton covers cars, among other industries, and he joins me now. Sonari, glad to have you on the program.

SONARI GLINTON, BYLINE: It's good to be here.

LYDEN: Just how closely tied are the city and the car business today?

GLINTON: Well, you know, they're psychically tied, they're financially tied. But when you really look at it, there's only one car company, General Motors, which is headquartered inside the city of Detroit. The company headquarters aren't actually in Detroit, and they haven't been for many, many decades. And also, if you just look at the cars that are made, there are only two and a half in Detroit. You know, two Chrysler plants and a half of a General Motors plant, which makes the Chevy Volt.

So there are not really a lot of cars that are coming out of Detroit proper. A healthy auto industry doesn't mean necessarily a healthy Detroit. And that's an important distinction when we all think of the American auto industry as Detroit. But really, the American auto industry has shifted southward. You have to include the Japanese imports who build cars here. So the physical center of gravity has moved much further south than Detroit.

LYDEN: How did GM and the Chrysler bankruptcy of just a few years ago affect the economy, which had already been languishing?

GLINTON: The companies aren't necessarily headquartered there, but there are a lot of workers, and many of them live in Detroit. And a lot of those people were affected by plant closures, by layoffs, by changing structure of their retirement benefits. Those things had to change. Those legacy costs that were part of what many people thought were the car companies' problems - those changed so that meant a lot of people lost jobs for good that aren't coming back. And a lot of people lost benefits that aren't coming back. And so that definitely affected the health of the economy immediately.

In the long term, a healthier industry people say means a healthier Detroit. But it's - it definitely was painful for a lot and a lot of people in the region.

LYDEN: Well, you've made the point that a lot of these car companies are either next door, such as in Dearborn, or have moved to other parts of the region. But let's take a look. There's still General Motors in the city. When the auto industry was bailed out, it was with the idea that a healthy auto industry would not only save a lot of jobs, it would help the city of Detroit. And now it's bankrupt anyway. Any sense, do you think, that the auto industry could or should have done more to help the city itself?

GLINTON: Well, in many ways when you think of the list of problems that Detroit has, it's not one or two, it's 20. This is about municipal finances, the city of Detroit itself, how it's handled, its finances and its pensions. Culturally, there's such a stigma about bankruptcies, but sometimes bankruptcy means that you can turn a new page and start fresh.

You know, this is not a surprise there has been an emergency manager. But many people think just like the auto industry got a reset with bankruptcy that there is some hope that this had to come and that this is the beginning of a chance for a success.

LYDEN: That's NPR's business reporter Sonari Glinton. Sonari, thank you.

GLINTON: Thank you.

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