Before the Riot:
  The Economic Forces of Urban Deindustrialization in Post-War Detroit – 1945 to 1967




               ...
Moreo |1


Introduction:


       In the early morning hours of July 23rd, 1967, white Detroit Police officers raided a

“...
Moreo |2

decentralization of automotive factories.       Racial tension was boiling in Detroit, where the

migrating Blac...
Moreo |3

       One of the first contributing factors in deindustrialization to emerge after the War was the

lack of ava...
Moreo |4

eliminate the most hazardous jobs in the plant.        On a broad, national level, automotive

employment was in...
Moreo |5

       Automation efforts by Detroit’s automakers had other effects, both within and outside the

industry itsel...
Moreo |6

Packard could not afford to lose any more market share. The company abandoned all Detroit

production in 1956, c...
Moreo |7

integrate their neighborhoods. They mounted fierce opposition as well to plans for new public

housing projects ...
Moreo |8

built in 1941 and 1942 to ease traffic in the industrialized Highland Park area. The Willow Run,

or Detroit Ind...
Moreo |9

        All of this movement from cities to suburbs would change the way Americans shopped as

well. In the earl...
M o r e o | 10

developing the suburban frontier all across America, but little of the economic benefit to that

success w...
M o r e o | 11


Bibliography and Resources:


Blum, Peter H. Brewed In Detroit. Detroit: WSU Press, 1999.


Bryan, Ford R...
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Before The Riot Deindustrialization In Postwar Detroit

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A grad school paper describing the economics of Detroit\'s collapse after WWII but before the 1967 riots.

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Transcript of "Before The Riot Deindustrialization In Postwar Detroit"

  1. 1. Before the Riot: The Economic Forces of Urban Deindustrialization in Post-War Detroit – 1945 to 1967 Robert G. Moreo Wayne State University ECO 6800: Urban & Regional Economics December 21, 2009
  2. 2. Moreo |1 Introduction: In the early morning hours of July 23rd, 1967, white Detroit Police officers raided a “blind pig” after-hours club in an impoverished, African-American part of town – expecting to find a handful of people drinking illegally. They stumbled into a large party, celebrating the return of some friends from military service in Vietnam. The violence that unfolded over the next few days is frequently cited by observers as the beginning of Detroit’s long decline from being the 4th largest city in the U.S. – with a reputation as the “Paris of the Midwest” and the “Arsenal of Democracy” – to a deserted and economically devastated city, struggling to remain in the top dozen American cities by population. What a closer investigation into the period following World War II reveals is that Detroit was already a city on the decline before the midsummer violence of 1967. The industrial boom of the early 20th century and the promise of good-paying jobs for unskilled laborers had boosted Detroit’s population from less than half a million in 1910 to over 1.5 million people in 1930. Historians believe that the city’s population peaked close to 2 million people in the early 1950s, only to drop rapidly from that point on, back down to pre-war levels by the end of the next decade. The decline of Detroit should rightly be attributed to a mixture of social, political, technological and economic forces that combined in ways unequaled elsewhere in America. Because of the city’s unique reliance on a single industry, these forces hit Detroit harder than they did other cities of the time. Federal housing and transportation policies would change in the 1940s and 50s, spawning and subsidizing the growth of suburbs. Technology was changing the manufacturing industry, reducing the number of unskilled jobs available, and contributing to the
  3. 3. Moreo |2 decentralization of automotive factories. Racial tension was boiling in Detroit, where the migrating Black population had exploded like in no other place in America; but to place the blame for Detroit’s unparalleled downfall on racial animosity is to ignore twenty years of economic and political conditions which set the stage for the riot itself – blaming a symptom for the root cause of the disease. Development: When World War II ended in the summer of 1945, the city of Detroit was the 4th most populous in the United States – an industrial powerhouse, dubbed “The Arsenal of Democracy”. Detroit’s automotive manufacturing facilities had been converted to produce tanks, airplanes, and other military goods during the War, and blacks and other immigrants continued to flock to the city in search of factory jobs. The federal government had declared there could be no racial discrimination in filling defense jobs, and thousands of blacks fled the Jim Crow South, bound for Detroit. Between 1930 and 1950, the black population of Detroit would grow from 120,000 (7.6% of total) to 300,000 (16.1% of total), surpassing the number of foreign-born immigrants for the first time. This period of rapid change was not without conflict. Detroit’s black population had swelled along with the rapid expansion of the automotive industry since 1910. In the eighteen months following the Japanese attack on Pearl Harbor, an average of 640 people a day moved to Detroit as wartime production ramped up – one in seven of them black. On June 20th, 1943, what started as a fist fight between groups of black and white youths on Belle Isle spilled into the streets of Detroit, sparking riots that lasted three days.
  4. 4. Moreo |3 One of the first contributing factors in deindustrialization to emerge after the War was the lack of available industrial land for factory expansion. A 1951 survey revealed only 367 acres of undeveloped land along Detroit’s rail corridors – a necessary feature for the transport of materials and finished goods. This land was dispersed among 36 sites, the largest of which was only 54 acres. By contrast, Ford Motor Company’s Wayne, MI stamping and assembly plant – built in 1952 – sat on 229 acres. Factories built in the City in the 1910s and 1920s were compact, multi-story buildings, suited to the production technology available at the time. Technological advancements in the 1940s and 1950s required larger, single-story factory buildings to accommodate automated tools, and there simply wasn’t enough viable land within the City. The single most influential factor in decentralizing Detroit’s industrial economy was the development of automation. Not only did modern industrial processes necessitate a sprawling, single-story production facility; automation reduced the number of workers needed to do a job. One example given of the dramatic effects of automation is the case of Ford’s Rouge complex: the number of jobs at that facility dropped from 85,000 in 1945 to 30,000 by 1960. Automating processes was an industrialist’s dream: it simultaneously increased output and reduced labor costs. However, there were other factors driving industrial management to automate. Union strikes were becoming a regular occurrence in Detroit factories. Spreading production facilities throughout the country – often in small, rural settings – would reduce the effective ability of unions to organize. UAW work rules dictated production levels, and automated machines didn’t protest when output was increased. The automakers knew that automating factories would result in devastating job losses, but they tried diligently to hide that fact. Company management argued, somewhat truthfully, that automation would make workers’ jobs easier, and would
  5. 5. Moreo |4 eliminate the most hazardous jobs in the plant. On a broad, national level, automotive employment was increasing, even as factories were being automated. However, industry leaders did nothing to address the real damage done at the local levels where outdated plants were closed, and jobs relocated elsewhere. By automating the dangerous, simplest tasks, automation had the biggest impact on entry-level, unskilled work – the only kind that black workers were able to get. White workers with seniority and skills were able to relocate when plants closed down, but entry-level blacks were left behind. Between 1947 and 1958, Detroit’s Big Three built twenty-five new factories in southeast Michigan – but none were in the city of Detroit. Even beyond suburban Detroit expansion were the “runaway shops” being constructed in smaller towns throughout the Midwest, in places like Lima, Ohio and Kokomo, Indiana. From the end of the War through 1967, Ford invested $2.5 billion building twelve new factories throughout the United States and into Canada – as well as building an additional seven suburban Detroit facilities. General Motors opened its new Tech Center facility in Warren in 1954, along with eight manufacturing plants in either suburban Detroit or the Flint area. GM spent additional billions constructing fifteen other factories around the country and in Canada. Chrysler was the least-capitalized of the Big Three, and had less to invest than GM and Ford. Because of this, Chrysler did invest in its three main Detroit locations in the 1950s – but also shifted some production and expanded in four suburban locations and nine others across the country and in Canada. Still, in 1960, Chrysler was Detroit’s largest employer. However, that number of employees had bottomed out around 60,000, which was approximately half of what it had been at its peak in 1950.
  6. 6. Moreo |5 Automation efforts by Detroit’s automakers had other effects, both within and outside the industry itself. Detroit’s two largest car companies – General Motors and Ford – had the most capital to invest in automation technology. As they invested and expanded beyond the city of Detroit, they were establishing a competitive advantage over Chrysler and the smaller, independent auto companies. In 1948, companies other than the Big Three controlled 18% of auto production. That number would drop as low as 4% in 1955. The one with the most significant presence in Detroit was the Packard Motor Car Company, housed in a massive turn- of-the-century, Albert Kahn-designed factory on East Grand Boulevard. After the War, the independent makers like Packard struggled to refurbish facilities from their wartime military use, and retool their machinery from pre-war car designs. General Motors’ Cadillac brand beat Packard to the market with a hugely successful 1948 model to compete in Packard’s mid-luxury segment, and once-elegant Packard would be relegated to compete with Buick and Oldsmobile. Labor unrest was much more disruptive to the smaller manufacturers, who didn’t have multiple facilities for production around the country. Many of Packard’s suppliers sold their plants and closed down. Despite its struggles, Packard was profitable up through 1953. Lagging sales, however, led Packard’s management to complete a merger with the Studebaker Corporation in 1954. That move followed a consolidation of three other major independent auto companies the same year, when the American Motors Corporation was created. The marriage between Studebaker and Packard was a rocky one from the start. Both companies brought financial troubles into the relationship, and declining sales. Perhaps the death blow to Packard was when Chrysler Corporation bought out Briggs, who had supplied Packard with auto bodies. In an attempt to save money, Packard leased back the smaller Briggs Connor Avenue plant and abandoned the East Grand factory in 1954. Production quality suffered greatly at a time when
  7. 7. Moreo |6 Packard could not afford to lose any more market share. The company abandoned all Detroit production in 1956, consolidating operations in Studebaker’s South Bend, Indiana factory. Studebaker-Packard ceased all operations in 1966. New technology also allowed the manufacturers to take on additional production that they had once delegated to smaller suppliers. While this advantage was beneficial to the bottom line of both Ford and General Motors, it resulted in a great deal of job loss for Detroit. The tool- and-die and metal fabrication industries were the 2nd and 3rd largest sources of the area’s manufacturing employment – comprising about twenty percent of all workers. These shops quickly followed the automakers into the suburbs, a move made easy in part because the racial make-up of the small, privately-owned companies was overwhelmingly white. The owners and skilled tradesmen who worked there left behind their Detroit homes and industrial buildings, and played a large role in the growth of the suburbs. All three of Detroit’s major auto companies began producing their own auto bodies, instead of contracting that work from independent body manufacturers like Briggs and Murray Auto Body. In a devastating three-year period, three major body manufacturers were either bought out or closed, and over ten thousand workers lost their jobs. It was not just industry that was leaving Detroit in the 1950s and 1960s. The Federal Housing Act of 1949 did two things to shape residential patterns in metropolitan Detroit. First, it authorized slum clearance programs intended to rid inner cities of the dangerous and dilapidated housing where the majority of poor blacks were concentrated. The idea, in and of itself, was noble; housing conditions in the oldest parts of the inner cities were terrible. The battle would be over what to do about displaced citizens. White Detroiters fought vigorously against efforts to
  8. 8. Moreo |7 integrate their neighborhoods. They mounted fierce opposition as well to plans for new public housing projects on the still-developing outskirts of town. In the end, many displaced black Detroiters were left to fend for themselves, and new public housing projects were limited to already poor sections of the inner city. As jobs were moving out of town, even middle-class blacks lacked the mobility of their white counterparts to follow. The second way that the 1949 Housing Act had an impact was in the introduction of FHA mortgage insurance. Before the federal government began this program, private lenders often required down payments of 20% or more to purchase a house. The FHA program allowed for down payments as little as 3% - as long as the property met certain criteria. For many years, the private lenders and insurance companies had institutionalized de facto segregation by declaring neighborhoods with high concentration of blacks as dangerous. The FHA did nothing to change those practices, and in fact strengthened them by placing high standards on what properties the FHA would underwrite. Older housing in the inner city would not qualify for the loans, while new suburban construction did. Therefore it became cheaper to finance a new home outside the city than to purchase an older one in Detroit. As manufacturing jobs moved to the suburbs, so too did the workers who could afford to. Left behind in the city were blacks and the poorest whites. Black workers with better incomes spread out to the newer neighborhoods around the city, which many whites quickly abandoned at the first hints of integration. In 1950, there were 51 Census tracts with a population of over 30,000 people; in 1960 there were 14, and in 1970 only seven, as Detroit’s population decreased and dispersed. All of this new suburban construction necessitated a new kind of infrastructure to support it. Expressway construction began in Detroit in the 1940s, initially to relieve traffic congestion and make travel easier to some of the wartime manufacturing plants. The Davison Freeway was
  9. 9. Moreo |8 built in 1941 and 1942 to ease traffic in the industrialized Highland Park area. The Willow Run, or Detroit Industrial Expressway (now Interstate 94), was completed in 1942 in order to traffic workers from the city out to the Willow Run bomber plant in Ypsilanti. But the majority of highway construction came after the federal government passed the Federal Aid Highway Act of 1956, creating the Interstate Highway program. This act provided federal funding for new highway construction, and when combined with the 1949 Housing Act’s slum clearance authority, the effect would be disastrous to inner city residents. The Chrysler Freeway – today’s I-75 – demolished some of Detroit’s oldest black neighborhoods on the East Side. The first section out of downtown opened in 1964, and construction all the way out to Eight Mile Road was complete by 1969. The John C. Lodge Expressway started downtown as well, and opened in stages out to Eight Mile between 1953 and 1964 – the sunken construction often splitting old neighborhoods in two. What never materialized as part of the City’s initial expressway plan were the connections to public mass transit. The Motor City was not friendly to mass transit in the 1950s. The last streetcar ran in Detroit in 1956. Now city residents had to rely on their own personal automobiles or increasingly inadequate bus service to get to the jobs that were moving farther away. City planners of the time envisioned highways as a way for suburban residents to commute to the city for work and leisure, when the actual long-term result would be that suburbanites could easily minimize or avoid altogether their time in the city. Highway construction nationally also made the transportation of goods less centralized, and less connected to the old rail lines in the cities. One of the reasons the auto companies needed to build factories in states other than Michigan was to serve an increasingly mobile American population that was growing in the South and West.
  10. 10. Moreo |9 All of this movement from cities to suburbs would change the way Americans shopped as well. In the early 1950s, Detroit’s flagship J.L Hudson’s department store was the second- largest retail building in the nation – behind only Macy’s in New York City. It employed as many as 12,000 people, and contained 49 acres of shopping in one urban location. It is ironic that the company that began the phenomenon of “malls” was the one with the most to lose in the city. In 1954, J.L. Hudson’s opened Northland Center, in Southfield, just beyond Detroit’s northwest limit. Construction of the Lodge Freeway would soon make it easy for shoppers to leave the city and buy there, rather than downtown. Much like the new auto factories of the time, shopping malls were large, sprawling buildings with a massive need for parking space. Other malls soon sprang up all around the metro area: by the end of the 1960s, ten suburban shopping centers would be open for business, virtually eliminating the need for any suburban resident to shop in the city. Conclusion: In the last years before World War II, half of the nation’s automotive employment was located in the metropolitan Detroit region. In 1950 that number had already dropped to 35%, and by 1970 the Detroit area would employ only 20% of American auto workers. The city of Detroit once contained 338,000 manufacturing jobs, in 1947. There would be approximately 210,000 left by the time of the 1967 12th Street Riot – yet total manufacturing employment in the Detroit Tri-County region actually grew over this time frame. An estimated 134,000 total jobs moved from the city of Detroit into the suburbs between 1947 and 1963. The automobile industry was growing rapidly, as an increasingly affluent middle class was traveling along new highways and
  11. 11. M o r e o | 10 developing the suburban frontier all across America, but little of the economic benefit to that success was coming back to the city of Detroit. For a number of reasons – social, political, technological and economic – the automobile industry rapidly decentralized from its birthplace in Detroit, Michigan – beginning in the 1930s, but primarily taking place in the first two decades following World War II. Many who are unfamiliar with the historical details of Detroit’s postwar economy point to the riot of 1967 as the beginning of the City’s decline. The truth of the matter is that the very thing that had brought Detroit’s success in the first half of the 20th Century would be its downfall in the latter half. Reliance on the manufacturing of automobiles, and the various related manufacturing industries it supported, would leave Detroit in an unfortunate position when the economics of the industry changed. Through a combination of technological advances, government policies, competitive economics and other factors, jobs and people fled the city of Detroit long before the summer of 1967. Where the real failure lies is in the inability of union labor, business, City and State leaders to recognize the change that was coming, and to plan for a post-automotive Detroit.
  12. 12. M o r e o | 11 Bibliography and Resources: Blum, Peter H. Brewed In Detroit. Detroit: WSU Press, 1999. Bryan, Ford R. Rouge: Pictured in its Prime. Detroit: WSU Press, 2003. Cabadas, Joseph and Byron Olsen. The American Auto Factory. St. Paul, MN: MPI Publishing, 2002. City of Detroit Transportation Board. Detroit Expressway and Transit System. February, 1945. Cohen, Irwin. Echoes of Detroit: A 300-Year History. Haslet, MI: City Vision Publishing, 2000. Detroit Free Press. The Detroit Almanac. Ed. Gavrilovich, Peter, Bill McGraw. Detroit: Detroit Free Press, 2000. Gay, Cheri Y. Detroit Then and Now. San Diego: Thunder Bay Press, 2001. Henrickson, Wilma Wood, ed. Detroit Perspectives: Crossroads and Turning Points. Detroit: WSU Press, 1991. Pitrone, Jean M. Hudson’s: Hub of America’s Heartland. West Bloomfield, MI: Altwerger & Mandel Publishing, 1991. Sugrue, Thomas J. The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit. Princeton: Princeton University Press, 1996, 2005. Thompson, Heather Ann. Whose Detroit? Ithaca: Cornell University Press, 2001. Ward, James A. The Fall of the Packard Motor Car Company. Stanford: Stanford University Press, 1995.

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