Editor's Note: This feature is part of a SPIEGEL series that will continue all week on how the economic downturn is affecting people and companies around the world. No other downturn in history has hit as many of the world's economies. The current crisis is hitting migrant laborers in China, Russian oligarchs and even strong traditional German firms like the chemical giant BASF.
Ford was his life. Ford provided him with security, prosperity and happiness. Pictures of Henry Ford hung on his walls, and Ford's words were quoted in his home like verses from the Bible.
His grandfather, one of the legendary figures at Ford, was vice-president for production, responsible for the Rouge plant in Dearborn, a symbol of the rise of capitalism in the 1920s. His grandfather worked closely with Henry Ford I and later with Henry Ford II. He owned a mansion in Detroit and a house in Palm Beach. Throughout his life, his grandfather owned more cars than he could ever drive in his scant free time.
Today, Rob Eaton is sitting in his garage in a Detroit suburb, railing against Ford. A lot must have happened for someone like Eaton to be criticizing Ford. In fact, he loves Ford. Just as he loves his garage, with its carpeting and its underfloor heating, because it's nice and warm in the winter and because it's a place where he can be alone with his car, a Ford Mustang GT '94. The car, which he calls "my baby," is all that is left of Eaton's dream.
Eaton was an engineer at Ford, doing exactly what he had always wanted to do. He drove test cars from zero to 60 in a matter of seconds, dipping sharply into curves and testing their performance in ice, rain and wind. And then he made the cars better.
Eaton liked Detroit, and he liked what Detroit stood for. With a little hard work, anyone could make $100,000 (€74,000) a year there. The automakers even paid life-long pensions and provided health insurance for their employees' entire families. Over the course of a century, a social welfare state developed in Detroit that existed nowhere else in America. The United Auto Workers (UAW) union became a unique force in Detroit. Detroit itself became a place resistant to war and crisis alike. Those who, like Eaton, had employment contracts with Ford were sufficiently free of other cares to devote their full attention to cars. "I carry Ford in my heart," says Eaton.
That was until a few years ago, when he noticed that things were no longer moving forward at Ford. Eaton wanted to close the gap that separated his employer from other carmakers, and it irritated him that BMW was consistently ahead of Ford. But his bosses did nothing but issue new rules and procedures and order more and more pointless tests. The dictatorship of the bean counters had begun. "All we were doing were the things that the boss wanted because his boss wanted them," says Eaton.
He doesn't like to be reminded of those days. He feels cheated by Ford, cheated out of his passion. At some point, he says, Ford lost interest in developing its own products, instead striving to deliver what the foreign competition had already been making for a long time. Benchmarking was the new catchword, copycat products were developed and Eaton often found himself driving BMWs on Ford's test tracks. Ford wanted to emulate what its competitors were doing, as far as that was possible. But with each new model, Detroit fell further and further behind.
It was then that Eaton removed the photos from his wall, the shots of his grandfather next to the Fords, sitting, standing, in a conference room, at Christmas parties and in the plant.
When his second wife became pregnant again, Eaton made a decision. It was the most difficult decision of his life, he says, even more difficult than the decision to divorce his first wife. It was the end of 2006, things were not going well at Ford once again, and his friends were being laid off. Eaton went to his boss and told him that he was finished with Ford. He was asked to sign a document stating that he would never work for Ford again, and in February 2007 he received his last salary and severance pay. He never returned to his office at Ford.
Eaton is now a stay-at-home dad and drives a BMW 3-series, his secret act of revenge against Ford. He keeps the Mustang in the garage, except on special occasions.
But he retains a glimmer of hope, perhaps because he still loves Ford, or perhaps because his two children were born on the same days as the great Fords, his daughter on the birthday of Henry Ford I and his son on the birthday of Henry Ford II. He feels the coincidences are a good omen.
Maybe Detroit will finally learn its lesson, when the crisis gets too big, Eaton thinks to himself. Maybe Detroit will make a comeback, and maybe Ford will then produce a hybrid automobile that people will remember in 50 years, just as people today remember the old Ford Mustang or the 1953 Corvette.
A Different Kind of Crisis
For more than 30 years now, ever since the southern states began competing with Detroit for car and truck plants, Detroit has been in a permanent state of crisis. In those three decades, the Big Three -- Ford, General Motors and Chrysler -- have shed more than half of their jobs. Unemployment in Detroit is at 16.2 percent, and almost one-third of the city's population lives below the poverty line. In the 1950s, Detroit, with its then population of close to 2 million, was America's fourth-largest city. Nowadays the city has a mere 917,000 inhabitants.
Nevertheless, there was always the sense that things could have been worse. Because the industry knew that it could expect financial assistance from Washington when in need, all Detroit's crises never made the Big Three any wiser -- only more arrogant. Somehow Detroit always managed to keep going.
But then along came October 2008, which many observers regard as one of the worst months in Detroit's history. The three major US automakers reported their biggest declines in sales since World War II. October sales at Chrysler and Ford were a third lower than in the previous October, while General Motors' sales were down by 45 percent over the same period in 2007.
Industry executives insisted that without a government bailout, only Ford would stay in business. General Motors and Chrysler, they said, needed immediate financial help from Washington to avert bankruptcy within a matter of weeks.
This is a different kind of crisis. This time there is no stability anywhere in Detroit, where everything is in crisis: the real estate market, the banks, the Big Three, politics and the media. To cut costs, the city's two biggest daily newspapers have reduced home delivery to three days a week -- Thursdays, Fridays and Sundays. The city's young mayor, Kwame Kilpatrick, is now in a prison cell in downtown Detroit, after being forced to step down after lying under oath and using taxpayer money to pay for sex parties. The Detroit News commented sarcastically that Detroit now has its very own Nero, and that at a time when the city is heading for a budget crisis and an education disaster. Only one-third of all children in the city graduate from high school.
Although the government in Washington is now sending money to Detroit -- Chrysler and General Motors will receive $17.4 billion (€12.9 billion) in emergency funding by March 2009 -- this does not solve the problem. Aside from money, what Detroit lacks is the right cars. The vehicles it does produce are out of step with the times. They are too big, too dirty and too loud. And they cost too much to produce -- the Big Three spends up to $2,200 (€1,630) on employee benefits for every car it makes.
There is no light at the end of the tunnel, nothing the city can look forward to. It is now a matter of life and death for Detroit residents. Detroit is filled with people with no places to live, no families and no jobs. All they have left are their guns.
'Detroit Stopped Belonging to Us a Long Time Ago'
This harsh reality is what prompts Michael Shannon to loudly announce his presence whenever he enters an empty hallway, and to clearly identify himself as "Mike the real estate agent," so that he doesn't get shot.
Shannon is a large, amiable man, portly enough that he doesn't look threatening. He remains consistently calm and levelheaded, but determined enough to survive, especially when the "homies" try to shoot him from behind or when he catches them squatting in the houses he lists for sale, burning roof beams in the bathtubs to stay warm. He always wears jeans and sneakers, never a tie, he says, and he deliberately drives an old Jeep, not a Jaguar. Understatement is a market niche in Detroit. In keeping with his low-key image everyone, including the secretaries, calls him Mike. "There is no such thing as Mr. Shannon in my world," he says.
Shannon is standing in front of a house at 3880 Scotten Street. The house has four bedrooms, one bathroom, a garage and a garden the size of a tennis court. It was built shortly before Henry Ford brought the automobile to Detroit, when he opened his first plant to build the Model T and promised a daily wage of $5 for all workers. That was 100 years ago. The house is as old as the auto industry, which brought prosperity, good incomes and job security to Detroit. Those days are now long gone.
The bank recently foreclosed on the house on Scotten Street and evicted the owners. It ended up being listed by Shannon, which usually happens when a house is on its last legs. By then, the houses are often dilapidated, because the owners have long given up spending money on upkeep and repairs. Up to 16,000 houses now go into foreclosure in Detroit each month. No other American city is disintegrating as quickly.
The "American dream thing," says Shannon, has wreaked havoc. He draws large quotes in the air with his fingers to indicate that this is a dream he no longer believes in. Shannon says that he saw how the dream tricked people, every time he entered their homes and saw how they were filled with stereos and TV sets they couldn't afford, with expensive cars parked outside. They believed that they could have everything, spending time in the new casinos in Detroit's Greektown neighborhood and forgetting about their jobs. "People were suddenly living in places where they really didn't belong," says Shannon. "Seventy percent of people in Detroit are underwater. They owe more on their mortgages than their houses are worth."
Today, Shannon feels disgusted by the houses he lists, because they have, in fact, ceased to be real houses. He uses antiseptic wipes to get rid of the stench of decay, the dirt and the bacteria. "What you see here are no longer houses, just termite festivals." But there are few other opportunities to make money in Detroit these days. People have to once more learn to be satisfied with what they have, says Shannon.
The last time Shannon was here, people had ransacked the house, taking away the sink and the toilet. They also cut a large hole into the living room wall to search for copper pipes -- the metal can still be sold to scrap dealers for a little money. Detroit has reached a new level of desperation.
Shannon walks around the property one last time, checking for garbage in the front yard, making sure that the grass outside isn't too high and that all the windows are intact. These things can get expensive, because the city imposes steep fines for such violations, and Shannon could end up paying more in fines than the house is worth. The city too has to find a way to survive, even if it means making money from its own demise. It's every man for himself in Detroit these days, as the city cannibalizes itself.
The house now costs $780 (€578), less than a good color TV set, says Shannon. But even this is too much for most people in Detroit today. The buyers come from other states, from New York, California, Florida, sometimes even from abroad. Every day, they buy up another piece of Detroit -- but merely to take advantage of tax breaks and government subsidies. They already own half the city, says Shannon. "Detroit stopped belonging to us a long time ago."
'A Hybrid Hope'
Detroit has never been this weak, and the politicians who previously adopted a hands-off approach to the city suddenly want their say. The Democrats, and even the Republicans, have suddenly discovered the environment and are putting pressure on Detroit. They want it to clean up its act, produce smaller cars and better satisfy emissions standards.
The pressure is coming from all sides. In California, Governor Arnold Schwarzenegger is pushing for stricter emissions standards. "The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil," said President-elect Barack Obama. In May 2008, Business Week published a story about General Motors entitled "GM: Live Green or Die." Detroit will not be able to wiggle its way out of its current predicament.
Nowadays, the city is marked by a sense of helplessness. Detroit, of all cities, the city that dictated its tastes to the world for so long, that designed unforgettable cars with tail fins and put a generation of muscle cars on the streets, is losing control over itself. Until now, Detroit was able to sell anything. No one fundamentally questioned its products, Detroit could afford the best social standards, and the cars that rolled off its assembly lines became part of a cult. They were mentioned in songs by artists from Bob Seger to Bruce Springsteen. And now outsiders are about to determine their fate? What do they know about Detroit? Wasn't Detroit much too big to fail?
This arrogance now threatens to spell disaster for Detroit. The auto executives merely looked on as foreign carmakers, from Toyota to Honda to BMW, built factories in the southern states and gained political clout there as a result. They were asleep at the wheel when Toyota entered the world of NASCAR racing and proceeded to become more American than the Americans. And while the rest of the world developed more fuel-efficient cars, Detroit kept making bigger and bigger SUVs. In Detroit, the green wave always remained an empty promise. The Big Three did develop electric and hybrid cars, and they promised "super-cars" when it came to fuel efficiency, but in the end they just kept on producing more giant cars and trucks. In Detroit, the departure into a green future was always nothing but a half-hearted attempt. And yet few in Detroit felt any pangs of self-doubt as a result.
The green revolution contradicted the city's self-image. For years, it successfully resisted developing a significant public transportation system, and it secretly remains slightly proud of its filth, of downtown ruins like the old Packard plant, formerly known as Motor City Industrial Park. Luxury cars were assembled there until 1956, when the factory was shut down and began to decay.
Today, the site contains 325,000 square meters (3.5 million square feet) of garbage. It's a morbid place popular among tourists. The wind picks up clouds of dust at the abandoned plant and carries it through much of downtown Detroit. Detroiters live with it, imagining that the site resembles Baghdad after the American invasion. It represents part of their approach to life at the edge of the abyss, a way of thinking they dub the "fuck-you mentality." It's an attitude that allows them to go on, stoic and undaunted to the very end.
One of those Detroiters is Dan Frost. Frost owns the larger of two Hummer dealerships in Detroit. There were once three, but the third dealership recently closed. The Hummer, produced by General Motors, is Detroit's biggest monster vehicle. Its mileage is around 16 mpg (15 liters per 100 kilometers), and it symbolizes everything that has gone wrong in Detroit in recent years. While the rest of the world worried about the environment, while climate change shifted the political agenda in America, and while Toyota introduced a mass-market hybrid car, the Prius, into the US market in 2001, Detroit kept on building eight-cylinder vehicles and emphasized decadence and opulence.
Frost is a small, wiry man who wears a suit and tie. His short arms always seem to be in motion. Whenever he wants to make a point, he shows his own newspaper ad and says: "Do you see this article here? It says that 24 other cars have worse emissions levels than the Hummer."
Frost despises all the talk of a green economy. It comes from California, he says, where no one takes the terror attacks of Sept. 11, 2001 seriously and "where the fruits and nuts grow." Sept. 11 was a transforming event for him. It was Sept. 11 that proved him right, and afterwards he sold more Hummers than ever before. His annual sales grew tenfold in the first year after the attacks. Only a quarter year later, his sales were 20 times what they had been before Sept. 11. Americans yearned for more security, a yearning that extended to their cars, and they needed a new status symbol of power. General Motors also made a lot of money with the Hummer. At the time, the company turned a profit of more than $10,000 (€7,400) for each Hummer sold.
But now GM wants to sell its Hummer division, arguing that the Hummer spoils its image. "I don't care who buys Hummer," says Frost. "Let the Chinese take it over, or even, for all I care, people from the Middle East." He doesn't sound enthusiastic, but he also has no intention of abandoning ship. Frost doesn't like to be forced to do anything.
But perhaps compulsion is the only way to bring about change in Detroit. A few weeks ago, when the CEOs of the Big Three went to Washington for the first time to make their case for a government bailout, they did not convey the impression of wanting to change anything. They arrived separately, each traveling in his own private jet -- as if they hadn't noticed that the rest of the world is talking of conserving energy.
They arrived without a plan, and without answers to pressing questions. When Congressman Peter Roskam asked the men whether they would do without their salaries if the government bailed them out, the three executives responded flippantly. "I don't have a position on that today," said GM CEO Rick Wagoner. "I think I'm okay where I am," said Ford CEO Alan Mulally, referring to his annual salary of $21 million (€15.5 million).
The excursion turned into a PR disaster for Detroit, and the three chief executives flew home empty-handed. Detroit is apparently incapable of bringing about the necessary change on its own, so the political world must force Detroit to change. On their next visit to Washington, the three CEOs arrived in a hybrid car and vowed to reduce their salaries to just $1 each per year.
'Salvation Will Come'
It is a Sunday before Christmas, and the service begins at 11 a.m. at the Greater Grace Temple, Detroit's largest church. A massive structure as brawny as the cars Detroit produces, it cost $35 million (€26 million) to build. Bishop Charles Ellis III is standing on the stage, calling upon his parishioners to fast with him on behalf of the auto industry. "We have to do a little bit more," he says. "We have to pray a little more."
Ellis gave a major sermon last week, entitled "A hybrid hope." Three hybrid vehicles were driven onto the church stage, a Ford Escape, a Chevrolet Tahoe and a Chrysler Aspen -- all hefty SUV's, but hybrids at least. "God existed before the automobile came along," he said. He was flanked by men from the union, who said that they had done everything they could, and that their only choice now was to do what every doctor does when he no options left: to entrust his patient to the good Lord.
Ellis believes that everything will improve again once the crisis is over. He also believes in the Second Coming of Jesus Christ. He says that he doesn't know how far along we are already, or which crisis will trigger the return of Christ. It could have been Hurricane Katrina, he says, or perhaps the crisis in Detroit's auto industry.
"Salvation will come," he says, "if the crisis is big enough."