Sunday, July 8, 2012

American muscle.

When I left broadcast television 25 years ago this July, it didn’t take long to land communications clients in the car business. That was a no brainer, because I live in Dearborn, part of the motor city’s metro area and birthplace of Henry Ford.

One of the first car company jobs I pursued involved a bid meeting with several video and film producers attending. One savvy sales guy turned to his competitor and announced, “Hey, is that your brand new Toyota out there in the lot? That’s a beautiful car.” The Toyota owner sank in his chair. His odds for winning the bid had just plummeted. The job was with an American carmaker and he had just bought a foreign sedan. What could he have been thinking? Should have borrowed a buddy’s wheels for the day.

I’ve been self-employed most of my 33-year career, and I’ve owned American vehicles, except three times. I did lease two Volvos, for two years each, and one Mazda for three years. At the time, both brands were under the Ford Motor Company umbrella. Incidentally, my Mazda 6 was Michigan made by UAW workers.  Not all models are equally American. The Mazda boasted 55% U.S. content, plus U.S. assembly. I read the label. The Ford Fusion was assembled in Mexico.

Buying domestic products just seemed like the right thing to do. Plus, my late father was a UAW-GM worker and my wife’s brother worked for Ford his whole life, so we got the employee discounts. But I have also been supporting the products my family, friends and neighbors created with their minds, hands and hearts.

American pride and manufacturing are hot again, in Detroit and across the United States. The car business is on the rise and the U.S. brands are going strong. GM is again the world’s number one carmaker. It even sold twice as many electric Chevy Volts this June as it did at the same time in 2011. That surge occurred despite the recent, temporary decline in gas prices. I guess people are warming up to the new technology and acknowledging that volatile energy prices are here to stay. It was great to hear those reports as we celebrated America’s Independence Day this week.

The rebounding car business is always good news in U.S. cities where autos are made, but it’s just as important to our global economy right now. Make no mistake. At no time in modern history has the U.S. recovered from a recession without the car business leading the way. It’s never happened. Never.

If you’re into reading economic tealeaves, there’s some not-so-quiet momentum building. Even fuel-efficient sport utility vehicles (SUVs) are selling well. Meanwhile, Ford is predicting huge losses in Europe in the third quarter, so its U.S. sales success is more vital than ever.

In 2001, when the 9-11 attacks stomped on our economic brakes, it was the autos that helped prevent a complete stall. Remember, the “Keep America Rolling” campaign led by GM and all those zero-percent car loans? They stimulated huge sales and in turn, lots of other economic activity. Now there are millions of drivers who own 11-year-old models that they need to replace. They’ve been too nervous to make a move in aftermath of the Great Recession. (In my opinion, it was actually a depression with a safety net or airbag, including Social Security benefits, Medicare, Medicaid, unemployment and food stamps. Those protections weren’t around in 1929 when the stock market crashed.)

So, now, many of those 2001/2002 vehicle owners are starting to buy again and that is churning up a wave of economic activity.

Cars create jobs like no other manufactured goods. Do the math. When most folks buy new wheels they get some sort of financing. They may pay to secure those payments or buy an extended service plan as well. Then, of course, their mandatory auto insurance goes up to cover the increased value of their new ride. They might also request some special protection like rustproofing, tire and wheel coverage or anti-stain treatment for their upholstery. Dealers pay to train their sales and financing people and advertise to get you in the door, even hiring specialists to paint their windows like oversized signs or they rent huge green dinosaurs for their rooftops to attract shoppers.

Cars include steel, rubber, plastic, textiles, leather, aluminum, wood, glass, paint, chemicals, copper and a lot of computers and software. They require many experts to engineer, invent, prototype, test, install and service the myriad configurations and components that become personal transportation. What other item do you own that is complex enough to carry you and several other people at sixty miles per hour, in an upright or reclining position, surrounded in symphonic sound and independent climate control, wrapped in a crash-resistant cushion, complete with interior and exterior lighting, illuminating your way to help you avoid collisions with an anti-lock braking system and standard electronic stability control? You get the idea.

Meanwhile, I talked to a lawyer from the West Coast this weekend and he said his firm could easily hire six attorneys and six paralegals right now, but he can’t get his bank to loosen the purse strings. And he has millions in accounts receivable for collateral. Ironically, his father was once a Senior Vice President of Wells Fargo Bank.  This barrister makes his living defending huge corporations, yet he believes the banks are again playing an undue role in orchestrating our financial future. There’s another tealeaf to consider.

Recently, my wife, Ellen and I visited a local furniture boutique that features quality, American-made products. One afternoon in the sweltering heat there were a half dozen folks test driving the cushions and puzzling over fabric, leather and wood samples.

The economy is beginning to slowly accelerate.  We’ve seen car sales continue to improve. Next, housing should bounce off the bottom. That is, if the banks return to applying conventional mortgage standards. Then the realtor, carpenter, plumber, and big box hardware stores will get rolling.

Go ahead, buckle up. The world is looking to America to lead the recovery, and Detroit is revving up its engine.

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