On Detroit’s east side, the abandoned Packard automaking facility looms tomb-like over 40 acres of once-prime real estate, its hollow buildings ringed with mounds of glass and littered with broken beams and broken dreams. The complex once housed busy workers assembling the cars that connected America, and it once hummed and hissed with the sounds of muscle meeting machinery.
But those sounds are long gone, replaced by the wind through the shattered windows; the scurrying of half-starved rats, picking their way through the rubble; the whispering of spray cans as graffiti artists paint the walls with their kisses of bright red and blue; the crackle of the flames that warm the hands of the homeless.
The complex was abandoned by Packard as long ago as the mid 1950s. And though other companies have found intermittent uses for it in the intervening years, it has remained for the most part a symbol of the decline of a once-great metropolis and its once-great industry, as Detroit the city has now followed GM the company into ignominious insolvency.
This is the story of how a city came to depend too much on one industry, and how one union took over the industry and therefore the town, killing both in the process.
THE BOOM TIMES
As World War II raged throughout Europe and Asia, factories and plants in America’s heartland became Roosevelt’s “arsenal of democracy,” churning out the planes, tanks, and guns that eventually drove the Axis powers to submission. At the height of the war, American plants spat out an astonishing eleven planes per hour.
When the fighting stopped, American manufacturers found themselves in a singular and unprecedented position. The industrial capacity of much of the world lay in ruins; the world needed rebuilding; and American factories and workers were uniquely positioned to supply that demand.
And so America prospered. And the cities that housed America’s industry especially prospered. In fact, as Steve Schifferes wrote for the BBC in 2007, “in the 1950s the Detroit area had the highest median income, and highest rate of home ownership, of any major U.S. city.”
But already in these boom times there were hints of the decay that lurked decades down the road. The force that would help propel Detroit into prosperity would also, in the longer term, prove the instrument of its demise. That force was the United Auto Workers union.
The UAW had, like other labor organizations, observed a wartime truce with captains of industry at the behest of Franklin Roosevelt. But it lost no time in agitating as soon as the guns fell silent: In November 1945, a mere three months after V-J Day, the union led a 113-day strike against General Motors known as the Great Postwar Strike, demanding and securing significant wage increases.
The industry could afford these higher labor costs in the decade following the war. Factories were bursting; Eisenhower would soon expand the nation’s highway system as never before, helping to create America’s insatiable car culture. According to Pulitzer-nominated historian James Stuart Olson, “there were 25.8 million registered cars in 1945. . . . By 1955 the number of registered automobiles exceeded 52 million.”
Americans became car addicts and Detroit our dealer. In addition to the Big Three that Americans are familiar with today, back then a variety of smaller automakers existed to fill America’s growing appetite for the road, including Bobbi-Kar, the Keller Motor Corporation, and Packard.
The Packard company was founded in Warren, Ohio, in 1899 by brothers James and William Packard. In 1903, the growing company relocated to Detroit into facilities designed by legendary industrial architect Albert Kahn. By the 1920s, Packard had used its Detroit plant — widely known as the most advanced of its kind — to dominate the luxury-car market in the United States. The 3.5-million-square-foot Packard complex employed an estimated 36,000 to 40,000 workers at the height of its production in the 1940s, or roughly 2 percent of the city’s entire population.
Riding the explosion of automobiles’ popularity was the United Auto Workers. Formed in 1935 by disgruntled members of the American Federation of Labor, with the help of legendary labor leader Walter Reuther, the UAW successfully organized General Motors in 1937 after its infamous 44-day sit-down strike. GM had little choice but to recognize the UAW — by the end of January that year more than 125,000 workers had shut down 50 GM plants. (Crippling a company that employed thousands of people at the height of the Great Depression, when over 14 percent of Americans couldn’t find work, is surely a triumph of avarice over ethics.)
After the fall of GM, the UAW marched to Chrysler, where it staged a similarly spectacular coup; in March of that same year, 17,000 workers went on strike at Chrysler’s nine Detroit plants. And just like GM, Chrysler capitulated, agreeing to recognize the UAW and agreeing to a host of other demands, including a general wage increase and seniority rights. Ford held out the longest, but inevitably waved the white flag in 1941.
It had taken the UAW a mere four years to seize and occupy the major players of the American auto industry.
After the war, automakers competed for the dollars and loyalty of the returning GIs who were starting their families. In 1949 General Motors and Ford engaged in a price war, each wanting to get as many Americans as possible into the habit of buying its brand. Smaller companies like Packard, which had been in decline since the end of the war, found it hard to compete, especially given the higher costs and decreased flexibility that unionization inflicted on them. Unlike the giants, these small manufacturers operated on a razor-thin profit margin and had less capacity to absorb the demands that labor leaders made upon them.
As James Arthur Ward relates in his book The Fall of the Packard Motor Car Company, on June 17, 1948, the UAW led a strike, closing Packard’s Detroit plant for half a day. But this wasn’t enough for the union leaders: They also organized a walkout at the Bendix brake plant, cutting off Packard’s supply and forcing it to shut down for an entire week. Later that same year, guards at the UAW-organized Briggs Manufacturing plant also went on strike, once again cutting off Packard’s access to necessary parts, leaving the company no choice but to shut down for two entire weeks.
In other words, at a crucial time in the company’s history, when returning GIs were driving up demand and its larger competitors were slashing prices, Packard was sabotaged on multiple fronts by the UAW.
And the blows kept coming. Though Packard’s financial situation continued to deteriorate, the UAW led 8,000 workers on strike in August 1950, demanding higher wages and pensions. The strike lasted two weeks, and Packard had no choice but to make concessions — concessions that cost the company an additional $9 million per year, at a time when it could ill afford such expenditures.
In a desperate attempt to remain financially viable, Packard merged with Studebaker Corporation in 1954. Even though the new Packard-Studebaker became the fourth-largest auto company in the nation, this wasn’t enough to save the new entity. In 1956, it shut down its Detroit plant. Packard was gone for good, and the union had unwittingly killed it.
AN OPEN WOUND
So what has become of Packard’s vast mini-metropolis since the company abandoned it over half a century ago?
Did another company swoop in and snap up valued real estate, utilizing its productive capacity in order to boost its own (and the city’s) fortunes? Did the city purchase the land and turn it into a center for culture and public gathering, the way Athens did in 1999 when it converted its old gas factory into a performance and exhibition space?
No. Sadly. (How ironic that the Greek capital could serve as an example to the capital of the American auto industry.)
Instead, a variety of occupants have leased and used some parts of the plant, creating for the city a tangle of legal disputes over ownership rights and property taxes. But most of the complex has sat unoccupied and decaying, its hollow halls proving irresistible to the people and pathologies that thrive at civilization’s edge. As the president of the Detroit Fire Fighters Association, Dan McNamara, recently put it, the abandoned facility is “open to all kinds of people just doing illegal activities.” Especially arson.
Deputy Fire Commissioner Edsel Jenkins estimates that the abandoned Packard plant is the target of arsonists so often that it costs Detroit about $1 million each year to put the fires out. During the first nine months of 2012, firefighters were sent to the plant 59 times.
One ex-commissioner refused to allow his men to fight a fire from the inside, so unsound had the structure become. Jenkins questions the wisdom of sending men there at all: “When the firefighters respond to that scene, they’re just pouring water on a structure that has no useful purpose today. And with the budget constraints today, we have a lot less fire apparatus on the streets. So when these engine companies, truck companies, the rescue squads, chiefs, respond to the Packard Plant, they’re taking protection away from the other businesses, civilians and visitors in this city who could actually use our services.”
It’s not only firefighters who are at risk — the homeless, drug dealers, graffiti artists, and hordes of roaming and listless youth are omnipresent in this structural nightmare. As McNamara put, anyone who goes in to “[play] around, chipping something out of a wall or off a column or a truss, . . . they’re going to drop that building on top of their heads.” He concludes: “[The plant is] a threat. It’s an immediate, an imminent threat to public safety.”
And it’s not only the crumbling walls that menace the public. Predators are attracted to this habitat of helplessness, like lions to a Serengeti watering hole. Photographers and tourists (some come to chronicle the elaborate and dazzling graffiti, others are just curious) have been routinely and brutally beaten, found their cars stolen, and even been robbed at gunpoint while exploring one of America’s most notorious modern ruins. One victim who was jumped while admiring this uncurated gallery in 2012 said, “I am lucky to be here and haven’t stopped thinking about what could have happened.”
And then there is the refuse. The plant looks like trash, so citizens of Detroit treat it like trash, routinely using the grounds as a convenient landfill. Suffice to say, the results — used mattresses, burnt-out cars, discarded food and medicines — comprise a real and present danger to public health.
FORECLOSING THE FUTURE
After allowing the vast complex to stand rotting in its midst for half a century, in May 2013 the county finally took possession of the rubble. It will be put on auction in September; the county is asking for an opening bid of $975,000, the sum total of back property taxes owed. In other words, the city puts no value on the land itself — the taxman just wants his due.
And no wonder. The city has been for decades in a fiscal, demographic, and social death spiral. Thanks in large part to pension obligations driven by its unionized public workforce, by 2013 the city was carrying billions in debt. Unfortunately, the tax base needed to fund these huge obligations has been eroding for decades — from 1950 to 2012, the population fell from 1.85 million to a mere 700,000.
By 2010, the decline was so marked that Mayor (and former NBA great) Dave Bing proposed the unthinkable — the bulldozing of nearly one-fourth of the city. As Business Insider reported at the time: “Faced with a $300 million budget deficit and a rapidly dwindling tax base, Detroit finds itself having to make some really hard choices. . . . The true unemployment rate for those still living in Detroit is estimated to be somewhere around 45 to 50 percent, and poverty and desperation have become entrenched everywhere. In many areas of the city, only one or two houses remain occupied on an entire city block. . . . And yes, it is true that there are actually some houses in Detroit that you can buy for just one dollar. According to one recent estimate, Detroit has 33,500 empty houses and 91,000 vacant residential lots.”
The mayor claimed the city had no choice but to let its abandoned properties go. “There is just too much land and too many expenses for us to continue to manage the city as we have in the past,” he said. “If we don’t [bulldoze], this whole city is going to go down.” (The mayor’s attitude was eerily reminiscent of the famous alleged quotation from an unnamed U.S. officer in the village of Ben Tre during the Vietnam War, who claimed American forces had to “destroy the town to save it.”)
Not coincidentally, the long and torturous decades of Detroit’s decline coincided with the entrenchment of UAW power. A 2008 report by James Sherk of the Heritage Foundation found that the average UAW worker at the Big Three earned $75 an hour, including wages and benefits, “$25 to $30 an hour more than American workers at [non-unionized] Japanese auto plants.” Union contracts also allowed “surplus workers” — in other words, workers who were no longer needed — to collect nearly full salary while they remained idle.
In the light of this Mad Hatter math, the 2009 bankruptcy of General Motors was all but inevitable.
EATEN ALIVE FROM BOTH ENDS
Can the UAW really be blamed for the sorry fate of Packard — and Detroit?
Yes, to a large extent. It’s not certain that Packard would have survived had the union not been such a financial and logistical burden. But there is no question that the UAW made it more, not less, difficult for Packard to weather the Sturm und Drang of the business cycle.
In the Eighties and Nineties, when foreign-owned companies like Toyota were entering the U.S. market in large numbers, UAW contracts bound and gagged the Big Three with costs and obligations that fatally restricted their ability to innovate and compete, just as the UAW had done to Packard against the Big Three in the Fifties.
This absence of flexibility has proven disastrous for the workers that the UAW claims to champion: As we wrote for Forbes, since the turn of the 21st century, “the Detroit-based auto companies have shed 200,000 jobs — three-fifths of [their] hourly workforce.”
And the dying industry has dragged its home city into the grave along with it. On Thursday, July 18, Detroit — suffocating under more than $18 billion in debt — filed for Chapter 9 bankruptcy protection, making it the largest city in U.S. history to go bust. The Motor City had at last run out of gas.
True, the causes of Detroit’s decline have been many and varied. Corruption and bad management played a role, for sure. But between the UAW’s crippling its prime and vital industry, and its unionized public-sector workforce demanding larger and larger shares of the public purse, the Motor City has been eaten alive from both ends by . . . what? How to characterize this thing that has consumed one of our great cities?
After World War II, the Japanese people struggled to come to terms with the fact that two of their cities had been erased from the map. Japanese filmmakers channeled the nightmares of all Nippon with their films featuring giant monsters wakened by nuclear explosions, monsters like Godzilla, that then proceeded to lay waste to their cities.
At the time when Japan lay in ruins and its people were imagining monsters to explain their supine and smoldering existence, Detroit was a shining and bursting example of America’s industrial might.
Now Detroit lies broke and broken. But no imaginary monsters or foreign bombs are needed to explain its demise. Only three letters are needed:
— Matt Patterson is editor-in-chief for WorkplaceChoice.org. Julia Tavlas is a contributor for WorkplaceChoice.org.