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April 20th, 2012
No city has been more affected by Midwestern out-migration than Detroit.
Based on the latest census numbers, the city is losing about 2 people every hour.
Changing Gears has been talking with some of those people who are leaving our region.
Alex Ozark grew up in Detroit. He always wanted to work in the auto industry, but he’s not doing it with the Big Three. He’s doing it in California.
Charla Bear brings us this report:
Alex Ozark drives like a maniac in his company’s cars, treating a black SUV like a cross between a tank and a sports car.
“So we’ll do, we’ll do a hot lap.”
He deliberately hits potholes, runs over lane dividers, and takes corners really fast. So fast, I have a death grip on the grab handle.
I’ve heard bad stories about SUVs and rollover. “When the tires are squealing, everything’s ok,” says Ozark.
I sort of trust him. I mean, it is his job to know these things. He’s a durability engineer for Hyundai and Kia. That means he tests out vehicles at the company’s proving grounds, a set of tracks in the California desert designed to simulate different driving conditions. That is, if you stay on them.
“The plus is, when you go off, no big deal,” says Ozark.
In fact, he’s clearly thrilled by it. The 25-year-old says he’s wanted to push cars to the limit ever since he was a kid in Metro Detroit.
Growing up in the shadow of the Big Three US automakers, it’s probably tough not to fall in love with cars. Ozark gave his heart to one in particular at an early age.
“The Dodge Viper. Classic child’s love car, right?”
Not that he cares if you agree. To him, this car was the ultimate machine. It was even his reason for going to the University of Detroit-Mercy. He enrolled in the in the fall of 2004.
“At that time, it seemed like, oh man, this is going to be great. In 2008, there are going to be so many engineering possibilities and jobs available. This is like, the perfect job,” he says.
Of course, that’s not how it turned out.
In 2007, General Motors reported nearly $39 billion in losses. By the time Alex graduated from college, GM and Chrysler were headed toward bankruptcy.
“It was always just growing in the back of my head – you know what, customers don’t want this. There’s no innovation. There’s nothing new. This isn’t good. I don’t like you anymore,” he says.
With his sights no longer set on the Big Three, he says he really had no reason to stay in Michigan. Almost everyone he grew up with was gone. His mom and stepdad had moved to Virginia, his best friend was in San Diego. He started thinking about looking for a job in California.
“The sun is always out – it’s the Golden State. And I thought, there’s no better place to go work,” says Ozark. He figured with the state’s focus on high-tech and the environment, he was bound to find an innovative company. He saw an opening in the development group at Hyundai Kia and jumped on it.
“And, when I went there, what I saw were vehicles coming down the line that were now 40 miles per gallon vehicles, hybrids and electrics down the line. I can’t fathom doing anything else.”
So, you might think when GM came out with the Volt, one of the most fuel efficient cars on the road, it would change his opinion of The Big Three. Maybe rekindle a little of that passion he used to have. It didn’t. “I can’t extrapolate the Volt to the whole company,” says Ozark. “It’s just such a niche little product that they have that they aren’t even selling that much of.” Alex doesn’t buy that The Big Three have changed.
Chris Perry is vice president of marketing for GM’s Chevy line. The company brought him in a year and a half ago to help improve its image. He says his job would have been much harder before the automaker went belly up.
“If you look back on the history of our products, there were some pretty unspectacular products. That’s just the reality,” says Perry. He points to the Aveo and Cobalt, two compact cars the company no longer makes.
“We have to start with ‘What does the customer want out of this segment?’ and build a car that meets that [sic] criteria.”
GM’s market share is at a 90-year low, but it turned a record profit last year and it’s drawing budding engineers who are eager to help the company move in a new direction.
Scott Lenanna is a test engineer for abuse and safety testing of batteries at GM.
Lenanna has a lot in common with Ozark. He is 20-something, into cars, and he moved from home to find work. The only difference is that he is a California boy who came to Detroit.
“I’ll move to wherever the innovation and excitement is,” he says, but he never imagined that would be in Detroit, or at a US automaker. He always pictured himself at a Silicon Valley startup. But now that GM is into hybrid and electric cars, he sees things differently.
“I don’t think batteries are perfect right now, but us putting the Volt out into the market is pushing battery companies to innovate. So, not only are we innovating, we’re pushing other people to innovate.”
He says Detroit could use more young engineers with their “heads in the clouds” to help car companies think in new ways.
So does any of this convince Alex Ozark? Would he consider moving back?
“No. This world is pretty vast. It doesn’t make sense to go back to where I started,” he says. Not even if the Big Three produced the most amazing, innovative cars out there. Not even if they paid him a fortune. He says California is too much fun. He gets to ride a motorcycle, snowboard on real mountains, and skateboard by the beach. Most of all, he says just being there makes him a happier person.
“It seems like the dreariness and grayness of the skies in Michigan, it always had me depressed. As soon as I came out here and it was sunny – instant change,” he says.
Yet, no matter how much he says he’s done with Detroit, there are some ties he can’t sever.
On the Sunset Strip in Hollywood, Ozark introduces me to one of his favorite places in all of L.A., Coney Dog, a Detroit-style hot dog joint. He lights up as we make our way to a booth, past black and white photos of the city, hockey figurines and a waitress whose shirt says Detroit Grrrrl.
“It’s instantly comforting. The whole atmosphere. The diner feel. The Coney Dog availability,” says Ozark. And the Coney Dogs are the real deal, flown in from the Motor City and complete with Greek-style wet chili. The burgers are loose – no overly pressed patties here. Alex Ozark orders one of each.
“It tastes exactly like this place Comet Burger in Royal Oak. It’s perfect.”
So good, it’s worth the three-hour round trip – even if he’s by himself. But when he’s here, he’s never really alone. This place is a hub for displaced Michiganders, and he says they share a camaraderie that instantly makes him feel at home.
April 17th, 2012
Last year, everyone in the auto industry was chuffed about Detroit’s comeback.
The carmakers were enjoying a healthy rebound from the bankruptcies at General Motors and Chrysler. And for a while, at least, Chrysler outsold Toyota to make the Detroit Three the Big Three again.
But this year, Detroit’s market share has been slipping, and that has ramifications all across the Midwest.
In fact, the auto companies have fallen back to the market share level they held in 2009, as GM and Chrysler were struggling. In a piece for Forbes.com, I look at what happened to the Detroit companies during the first quarter.
Basically, there are three issues:
1) GM and Ford are losing share. In March, GM’s market share fell to a 90-year low. And while Ford’s car sales are up in 2012, they aren’t up as much as the competition. That’s one way a company can lose share, by not keeping up.
2) Toyota got stronger. Japan’s biggest carmaker was battered by millions of recalls, the tsunami and earthquake and floods in Thailand. But its market share is climbing back, thanks to new members of the Prius family, and the newest version of the Camry.
3) Korean and European companies are gaining. Hyundai and Kia are causing headaches for all kinds of automakers with their sales gains. Volkswagen is picking up market share, too, and it’s planning to build more cars at its new plant in Tennessee.
Here’s how Detroit’s market share looks, according to Autodata, Inc.
2012: 44.3 percent (through March)
2011: 47 percent
2010: 45.1 percent
2009: 44 percent
April 3rd, 2012
The auto industry reported strong sales in March, and for some auto companies, the news was even better.
Buyers at General Motors, Chrysler, Nissan and Hyundai paid record amounts for new vehicles during May, according to True Car.com, which tracks statistics about buying habits.
True Car bases its calculations on transaction prices: the final amount people pay, after incentives, bargaining and trade-ins. The numbers include the whole range of vehicles that the companies sell, such as cars, sport utilities, pickups, and minivans.
Transaction prices are way up since the beginning of 2010. Take a look at this chart by Meg Cramer of Changing Gears, which shows the industry average and what consumers at major carmakers are paying.
Transaction prices are rising because automakers have aligned their production with customer demand, eliminating the necessity for big incentives, said Jesse Toprak, vice president of industry trends and insights at True Car.
“The auto manufacturers have found their sweet spot,” Toprak said.
Higher transaction prices are good news for Midwest communities that have car and parts plants, because it generally means steady or increasing sales. If transaction prices were to drop dramatically, it could mean problems for the industry that might translate to production slowdowns or even layoffs.
Overall, consumers paid an average of $30,091 for a vehicle in March, just a little below the record set in November. That’s up $1,977 from a year ago, and up $143 from last month.
At GM, the average transaction last month was $33,289, according to True Car. That’s a big jump for GM compared where it was two summers ago, before it had introduced vehicles like the Chevrolet Cruze and Volt, and while it was still closing some of its factories.
Chrysler’s average transaction price, $29,842, is the latest leap for the company, whose sales essentially stalled when it was dealing with bankruptcy three years ago.
For Nissan, its $28,322 March transaction price is up almost $2,000 in just a year. Nissan is on a sales roll, and has gotten plenty of attention for its electric Leaf.
At Hyundai, buyers are paying less than at the other players, an average of $21,717 in March. But that still puts Hyundai into the $20,000 and up category, after months in which its vehicles sold in the teens of thousands.
If anything, the chart is good news for car dealers and communities, and maybe not such good news for bargain hunting consumers. But, True Car and plenty of other sites on the Web offer car buying tips.
Have you been car shopping recent? What’s been your experience on prices?
Five must-read stories about the Midwest economy
1) Bridging the debate from Detroit to Windsor. The annual Mackinac Policy Conference is under way in Michigan, and the idea of a new bridge between the U.S. and Canada is taking center stage. Michigan’s governor, Rick Snyder, says the bridge is an important economic development tool. But the owners of the Ambassador Bridge are fighting the idea, and even members of Snyder’s own Republican party are skeptical. There is plenty of MPC coverage at our partner Michigan Radio, and you can get updates from attendees on Twitter via #mpc11.
2) A new college neighborhood: One of the largest downtown apartment developments that Cleveland has seen for years will rise at Cleveland State University in 2012. Campus Village is aimed at CSU faculty, staff and graduate students as well as young professionals. It will include nine buildings with 308 units, a parking garage, outdoor pool, stores and restaurants on 6.8 acres. Three buildings are scheduled to open by next August, and the others by October 2012.
3) Kids are actually eating breakfast: There’s some good news from the efforts in Chicago aimed at getting kids to eat the first meal of the day. Chicago schools have been gradually rolling out the federal Breakfast in the Classroom program, which is now mandatory in city run grammar schools. The final schools begin the program today. But already, nearly 300,000 students at some 475 schools are now participating in the program. Early numbers show the percentage of kids eating breakfast has jumped from 26 percent to 62 percent at schools that added the program, Louise Esaian, head of food programs for CPS, told our partner WBEZ.
4) Auto sales winners and losers: Yesterday, we told you that Chrysler had returned to the Big Three automakers for the first time since February 2006. Now, Edmunds.com offers some winners and losers from May auto sales and there is lots of news affecting operations in our region. Along with Chrysler, the big news was Korea’s Hyundai and Kia, which have a development center outside Ypsilanti, Mich. Taken as one, the sister companies shot past Honda, which has big operations in Ohio, to rank as the No. 5 automaker last month. Toyota, meanwhile, came in at No. 4. The carmaker, which has safety and design operations in and near Ann Arbor, has ranked as high as second in the American market, behind G.M.
5) Where is he now? It hardly seems possible, but one year ago tonight, Armando Galarraga pitched a near-perfect game for the Detroit Tigers. Since then, however, his fortunes have fallen. Galarraga gained major points on the graciousness scale for refusing to challenge umpire Jim Joyce’s call that robbed him of a place in history, even though Joyce admitted he was wrong. The Tiger pitcher got a car from G.M. in a ceremony the next day. But he’s now in the minor leagues. You can find him toiling on the Reno Aces, a AAA team in Nevada.