I live about a two hour's highway drive from Windsor, Ontario, a Canadian city that borders Detroit, an American city that once thrived as the 'Motor City', home to the Big Three automakers, General Motors, Chrysler and Ford. It was on the streets of Detroit that Henry Ford drove his first vehicle. While Ford had opened the first auto manufacturing plant in 1898 as the Detroit Automobile Company, it only produced two cars and went bankrupt three years later. It was Ransom Olds who opened the first successful car manufacturer in Detroit in 1899, a.k.a. Oldsmobile.
Ford would come back in November, 1901 to form the Henry Ford Company but left the following year and in June, 1903 formed the Ford Motor Company. Two of its initial investors were two brothers, John and Horace Dodge. The Henry Ford Company morphed into the more familiar Cadillac Motor Company. By this time, the city's population grew to just under 300,000 inhabitants.
Long before that, the legendary Stroh Brewing Company set up shop in Detroit in 1850, eventually acquiring Schlitz, Old Milwaukee, Colt 45 and Lone Star brands.
General Motors came in 1908 while Chrysler Corp., came in June, 1925. Today, General Motors is the only car company still headquartered in Detroit. Ford moved its headquarters to Dearborn, Michigan long ago and hasn't built car in Detroit since 1910. Nevertheless, by 1950 Detroit grew to become America's fourth largest city with about 300,000 manufacturing jobs and a population of 1.85 million.
Then, in 1958 the Packard Motor Car Company went under. This marks the beginning of Detroit's slow downfall. When the 1970s arrived, the Saudi oil embargo drove gas prices higher and foreign car manufacturers began flooding the American markets with much smaller, compact vehicles such as the Toyota Corolla. This impacted the Big Three who were used to manufacturing large vehicles and as a result, lost huge market share to foreign car manufacturers. Even Stroh's was sold off to competing breweries.
As outsourcing began to take hold in the 1980s, more and more jobs left the city. In July, 1992 Moody's cut the city's debt rating to junk status. In June, 2013 the city stopped paying on some of its debts totaling $18.5 Billion and finally, just one month later filed Chapter 9 bankruptcy, making it the largest municipal bankruptcy filing in U.S. history. The city continues to struggle to this day. What was once thriving neighborhoods are now crumbling, derelict buildings.
Detroit's hub as a manufacturing base began to crumble over a fifty year period starting in the 1950s. It can be blamed on outsourcing. It can be blamed on demographics. It can be blamed on competition. Detroit is an excellent example of a once thriving 'motropolis', reduced to a shell of its former self.
Detroit's population peaked at 3.966 million in 1970 and today, its population has shrunk to 3.52 million Where did those 400,000+ people go? I'm sure some ended up in the thriving city of San Francisco.
Lately, the news coming out of San Fran is just horrible. Feces and used needles on the streets. Large hotels and shopping malls going into receivership. Crime is rampant. The odd shoplifter of old is now mobs of gangs running through stores and stealing whatever they can. That can be blamed on the city's leadership and their 'defund the police' agenda. Try to defend yourself and you could end up in jail.
AT&T has just announced they are closing their flagship store in SanFrancisco. T-Moblie did the same with their flagship store last month. The amount of stores closing up in the city is eye watering. You can count Office Depot, Whole Foods, Disney Store, Nordstrom and Cinemark Theater, to name a few. Most of these companies claim the store closures are caused by changing consumer shopping habits. Some are now openly saying the real reasons are high crime and incessant shoplifting which obviously affects their bottom line.
San Fran's city council can learn a thing or two by taking a close look at Detroit which at one time was the fastest growing city in America. An article in the LA Times dated July 29, 2022 states that California ranks second in the U.S.A. for outbound moves, preferring other states like Texas, Nevada and Florida. The exodus began in 2020 and hasn't let up. Between April 2020 and January 2022, some 350,000 residents left California. That's almost the total amount of people that Detroit lost, albeit over a 50 year period. This California exodus occurred in about a year and a half! By all accounts, the exodus out of California continues unabated.
Is San Francisco, one of the 20 biggest cities in America the next Detroit? Only the rich can afford to live there these days. The high cost of living, income and property taxes, crime, theft, drugs and politicians who don't give a damn about what's going on or are as incompetent as a monkey at the helm of a fast moving train is contributing to the city's downfall. Or will it be Los Angeles, which lost some 33,000 residents in 2021 and another 41,000 in 2022?
With a deficit of over $200 million for fiscal year '23 / '24 and a whopping $527.5 million deficit the following year, things are NOT looking better down the road as a projected deficit of $725 million is expected for fiscal year '25 / '26 and a shattering $1.22 billion the year after that. With those kinds of projected numbers, it should be clear to anyone with basic math skills that San Francisco is headed for bankruptcy. It's just a matter of time now.
The truth is, cities come and go, rise and fall. The smart people are smart enough to relocate to more pleasant climates where the cost of living is much lower. If that's what has to be done, then so be it. You don't want to be living in any city that's going bankrupt before your eyes. As the exodus continues, the city's and the state's tax base will shrink further. This is probably why the San Francisco city council has projected ever higher budget deficit forecasts. They know people and companies are leaving and leaving for good.
Detroit was once one of the fastest growing cities in America. It's rise was epic. It's downfall was slow and painful. It should be seen as a lesson by all that things don't stay rosy forever. Other major cities around the world also have similar deficits and mounting debt problems.
There's so much more to this fascinating and ever evolving story. See links in the references section for more interesting reading on the subject.
Peace and love to everyone!
I'm now also on Substack where I will soon begin new podcasts as well as post extra material.
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