DETROIT -- In the soaring atrium entrance of the global headquarters of General Motors Corp., you've got your Christmas theme and you've got your auto theme.
Christmas-wise, note the two majestic trees that rise, at a guess, 40 feet skyward. "Paid $300,000 for the two trees," says a maintenance worker, adding, "It's all re-rod inside of there." Three hundred thou seems a lot. "That was when everything was going good," Mr. Maintenance says.
The twin trees, with their red star/red ball/red poinsettia adornments, sit adjacent to twin 2009 CXL FWD Buick Enclaves in gold mist metallic with cashmere cocoa accents. Note the leather "seating surfaces," the leather-wrapped steering wheels and the proudly branded Bose sound system. If you tag $7,315 (U.S.) in options - and, really, who could resist? - onto a base price of $36,440, you're looking at $43,755 worth of very big car. The ultimate Christmas gift, the ultimate consumer good.
There are no notes of corporate contrition on display. No whiff of the violation of the trust of the American consumer, a message GM suddenly seized upon this week as part of its apologia to the buying class, before the U.S. Senate failed to agree on a proposed bailout, before the auto maker was brought to its knees.
Outside, the royal blue GM logo brands the top of the GM tower, the tallest of the five buildings that comprise the Renaissance Center, 700 feet of glass right on the Detroit River, "standing like a Buck Rogers monument over downtown." If you want to capture the tempo and mood swings of Detroit, it's a good idea to quote a little Elmore Leonard early in the tale. A Leonard character once said - for the record, it was Ordell Robbie in City Primeval: High Noon in Detroit - that if the GM tower fell over you could walk across it to Canada.
There's no sign that it's going to fall over. Not literally.
Figuratively, General Motors stands for many things. The rise and threatened collapse of the American auto industry is the top-line story of the day. The rise and fall (and near rise and repeat descent) of Detroit is the sister drama, theatrically enhanced by the city's broad exposure to the foreclosure crisis. But the central theme is the way in which Detroit quintessentially tells the tale of the rise of the modern-day American consumer, whose expectations were born here and grew and grew and grew, fuelled by car culture and carports and fixings and trappings until those expectations became, well, bigger than Christmas.
On the lower level of the "RenCen," as everyone calls the Renaissance Center, GM has prominently positioned a video screen of "GM Facts and Fiction." "Myth: With the largest work force in the auto industry, General Motors has far too many people working for it." "Fact: GM has cut its payroll drastically, by 45.8 per cent in the U.S. alone. In fact, GM is far from the largest employer in the industry. With 252,000 employees worldwide GM ranks fifth overall."
Here's a metaphor: Santa's green plush chair is positioned not alongside the usual elf-and-giant-candy-cane scene, but a cherry red Pontiac Solstice roadster convertible. GM thinks it might kill the Solstice. It is not known whether Santa has been informed.
The twilight hour on Randolph Street doesn't offer the glitter of an urban downtown on the cusp of the Christmas season. Steven Ross is where he usually is, behind the counter of Serman's, the men's and boys' clothiers that the family has been running out of this location in downtown Detroit for 91 years. Mr. Ross is 62 and meticulously turned out in a charcoal grey shirt, grey wool vest, grey, black and white paisley tie, and a black beret. He's adjusting a rubber pricing stamp so he can firmly lay down the inky imprint of $125 on blue clothing tags. "Boys' suits," he says, explaining. "I just got in some black boys' suits to fill in stock."
In the Sixties this was where Motown came to shop. "All of the Four Tops," Mr. Ross says. "In the Sixties it was everybody."
It's clear that while Mr. Ross is conservatively dressed, he mourns the demise of the Superfly years and is currently trying to console himself by talking up his inventory of flash, thousand-dollar Montee Holland suits with their asymmetrically cut vests, inverted jacket pleats and an extreme excitement of top stitching.
In the time Mr. Ross has been on Randolph Street he has seen the closing, by his count, of 16 independent men's clothing stores. That's the story of Detroit that's well known. Less well known has been the modest migration of young professionals to condos in the downtown core and the sliver of renewed hope for the city before the housing crisis hit. Last fall, a grocery store opened downtown near to where Martha Reeves, ex of the Vandellas and currently a member of city council, lives. This is news. And the 1920s Book Cadillac Hotel on Washington Avenue has just reopened under the Westin banner after a $180-million renovation - "A big, stinking deal," city planner Helen-Marie Sharpley says. And Zaccaro's gourmet market has opened on Woodward, serving the new class of urban condo dwellers.
A $47-million neighbourhood stabilization plan has just been approved by city council, targeting neighbourhoods like Brightmoor and Herman Gardens. Abandoned, stripped, boarded-up, torched prewar bungalows dot a Monopoly board where there is no Park Place. "People who have lived in their houses 30, 40 years," Mr. Diggs says. "They're still taking care of their garden and everything and there's a burned-out hulk next door to them. That's a terrible thing."
Council has been fighting over that $47-million. Mr. Diggs' department recommended directing half of that to demolition. Council approved $14-million, How far will that go? One block of Mettatel Street presents an ugly face to the world with more burned-out homes than occupied ones. Where's the hope in that?
Here's what you do not expect: Drive the stately historic neighbourhood of Boston Edison, once home to Henry Ford, S.S. Kresge, Horace Rackham (one of the original 12 shareholders in the Ford Motor Co.) and the Fisher brothers, whose Fisher Body Corp. was a major supplier of car bodies to the auto manufacturers and whose homes included an 11-bedroom Italian Renaissance mansion with a four-car garage and carriage house. What you do not expect to see is the encroachment of urban blight here too. Vacant properties. Boarded-up homes. A torching or two in the back. A "magnificent historic home" on Boston Boulevard is for sale. Beautiful woodwork, leaded glass throughout, 4,600 square feet. Asking $270,000. "There's a lot of potential," sighs city planner Ms. Sharpley. "That's all the city is, is potential."
Mr. Ross owns property downtown beyond Serman's - "We're investors," he says - and he believes that Detroit will be an exciting place again one day.
From the vantage point of his cash register, Mr. Ross makes a number of societal observations. Time was, he used to sell 1,000 boys' suits for Easter in four weeks on the layaway plan. "They didn't have credit card debt and they knew how to manage their money. Twenty. Twenty-five. Ten dollars a week. They'd lay it away two months in advance," he says. "Now there's hardly any layaway business. Why? They don't even have the money for layaway."
The consumer is tapped out. "It's a totally way blown out of proportion consumer-oriented society," Mr. Ross says. "People have no control. Consumers have no control ...This credit card thing has almost destroyed our whole society."
The other day Mr. Ross caught notice of Ted Turner on David Letterman. "Save first, spend second," was Mr. Ross's takeaway from the interview. Mr. Turner was in fine form, excoriating the auto bailout, which he deemed a "rat hole," and sharing his views on what it would take to set the world right. "For the past 40 years we've equated how much we had with how happy we were. Advertising tells us you buy a big car, a new TV, you're going to be happier. But I really don't think we were happier ... I think we're going to have to get to know our neighbours and maybe play bridge with them, you know, and you don't have to drive all the way across town."
Traffic is down in downtown Detroit. Interim Mayor Kenneth Cockrel Jr. has launched a "Shop Detroit" initiative, with "Shop Detroit" dollars. Five bucks off every purchase of $25 or more. "The city is hurting on a lot of different levels," the Mayor tells council, his enormous frame barely contained within one of the pasty office chairs that surrounds council's modest board table, which itself is cordoned off from the public by a rather silly red rope. Councillor Kwame Kenyatta offers a sharper assessment: "There is a lack of understanding that the city is going through a crisis that it has never been in before." He's trumped by councillor JoAnn Watson: "It's not about Detroit. It's about this nation. We are connected by a heart valve to this nation."
About eight months ago, Steven Ross realized Serman's needed a new sales strategy. "You want to see what keeps me going?" he asks as he beetles off to a back room and beetles back, handing over a glossy store flyer. "This is what keeps me going. Read it. What does it say?"
Buy One, Get Two Free.
"Half off doesn't work any more, and buy one get one free doesn't work any more," Mr. Ross says. What kind of money is he making? "I'm doing okay. I sell them a couple pair of shoes. A shirt and a tie. I'm not losing money."
Cadillac and Hugh Hefner. That was the birth of our modern consumer culture. Maybe Procter & Gamble would have been the third leg of that.
- Michael Solomon, professor of marketing and director of the Center for Consumer Research at Saint Joseph's University in Philadelphia.
The 1959 Cadillac Series 62 convertible, creamy white with cherry red interior, sits shiningly on display in the RenCen. "Let me take you up," says Tom, who appears to be the GM version of the Wal-Mart greeter. Visitors are cautioned to keep off the low-rise platform on which the Caddy sits but, Tom says, no one's about, so let's get a closer look.
Note the chrome grillwork; the enormous, yet sexily slender, steering wheel; the rocket-fired tail fins. "This thing is 18 feet, 11 inches long," Tom says. "Five inches longer than the Suburban."
If any single item personified the expression of American consumerism, the Caddy is it, the ultimate byproduct, reminds Prof. Solomon, of the genius of Alfred Sloan. The General Motors visionary introduced the concept of market segmentation, which in turn introduced tiered pricing, which reinforced the underpinnings for a host of social expressions. "Upward mobility" and the vastly overused "aspirational" are two. When Detroit Mayor Coleman Young was criticized for touring his domain in a Cadillac convertible, he is said to have said: "Do you want the mayor of your city driving down Woodward in a Dodge Rambler?"
The Caddy was the tops of the tops, and Prof. Solomon wonders, given the right-of-passage role the car has played in the life of the American male, whether it's going too far to suggest that America has been "potentially emasculated by the thought of General Motors going down the sewer." It may, yet.
The census records that 28 per cent of the metropolitan labour force in 1950 Detroit was deployed in motor vehicle manufacture. In Profile of a Metropolis, written in 1962, authors Robert Mowitz and Deil Wright noted that Detroit was the only major metropolitan area in the U.S. to have such a large percentage of its labour force devoted to a single product. The peak production year for the auto industry was 1955, round about the time that Detroit reached its population peak of 1.9 million. "[T]he prosperity that followed World War II provided the mass market with the income to satisfy the urge to own and drive automobiles," the authors wrote.
Or the desire to own an ever flashier automobile, a larger home, a nicer fridge.
This scene, commonplace in today's consumer culture, was freshly set by Sloan Wilson, who created the narrative template for consumer desire in The Man in the Gray Flannel Suit, published in 1955. Tom and Betsy Rath are forever fretting about the collapsing state of their car and plotting to break out of their little house on Greentree Avenue. "The biggest parties of all were moving-out parties, given by those who finally were able to buy a bigger house. Of course there were a few men in the area who had given up hope of rising in the world, and a few who had moved from worse surroundings and considered Greentree Avenue a desirable end of the road, but they and their families suffered a kind of social ostracism. On Greentree Avenue, contentment was an object of contempt."
Consumer spending rose between 1952 and 1955 to approximately 62 per cent of gross domestic product. Mathieu Savary, senior analyst at BCA Research in Montreal, notes that there wasn't much financial innovation in the 1950s. The banking industry, he says, "was still stifled by the heavy regulation following the Depression." The credit card was unknown.
In Detroit in the Fifties, social mobility was marked not only by trading up but moving out. A traffic study conducted early in the decade forecast a 76-per-cent increase in vehicle traffic by 1980. In approving an extension of the Lodge Expressway, city burghers sealed a predictable migration to the suburbs, encouraging city dwellers to trade up and out, and, neatly, ensuring a homegrown market for the latest model car. A 1955 "Tu-Tone" Buick Century four-door Riviera hardtop - the Hot Rod Buick - could be purchased for a base price of $2,601. You too could be Broderick Crawford in Highway Patrol.
By failing to establish an extensive and effective inner-city transportation system, Detroit made itself the very model of social destabilization. There are those who blame the auto industry for that.
The streetcars that used to clatter down Elmore Leonard's beloved Woodward Avenue to Jefferson, where GM's headquarters looms, are long gone. There is no subway. And the in-city buses don't link up to the out-city buses. In Profile of a Metropolis, a congressman wondered, prophetically: "Why speed the exodus from the city of the middle- and upper-income families?"
What Detroit has is the People Mover. The 50-cent, one-way skytrain that passes by the RenCen and 12 other stops downtown runs a loop that traverses a distance of a mere 2.9 miles, an easy jog. It was meant to be the linchpin for a top-of-the-line transit system. Instead it connects to ... nothing. Had Detroiters been the Jetsons this wouldn't have been a problem.
There are sparkling silver reindeer to match the sparkling silver modern-art Christmas trees that decorate the makeup and perfume floor at Saks Fifth Avenue. Tom Ford's White Patchouli is spritzed on a wrist as an Ugg-wearing blonde laden with Nordstrom and Neiman Marcus bags does that bedroom slipper scurry past designer this and that.
Where's the recession?
Oh, here it is. For the first time ever, Saks has launched a no-money-down, no-interest-for-12-months promotion on purchases of at least $2,000. "We've done promotions before where we've had maybe a six-month, no payment, no interest [offer], but it's always been on jewellery," says Kim Nye, the store's vice-president and general manager.
Ms. Nye rattles off a quick list of high-end designers. Armani. Burberry. Ralph Lauren. "Name any of them," she says. "Chanel's on sale now."
This week the store is offering an additional 50 per cent off on items already reduced by 40 per cent, taking that $1,000 cashmere sweater down to 300 bucks. "Everything has a cadence of markdown," Ms. Nye says. "It's just that the markdown cadence has escalated."
This particular Saks anchors one half of the Somerset Collection in Troy, Mich., a 20-minute drive from the centre of Detroit. The word "mall" is far too un-luxe a word to capture the full fabulousness of what is on display. Gucci. Louis Vuitton. Tiffany & Co. Pick your retailer.
The Hervé Léger by Max Azria collection is here and nowhere else in the Midwest. "It lifts you, it tucks you, it's amazing," says a bushy-tailed sales clerk of the famous Léger "bandage" dresses, which look like an elegant version of the kind of tensor swaddling one would self-apply after a nasty sprain.
The cream bandage wedding dress, priced at nine grand, will not be going on sale.
Saks was built as a standalone store in 1967, eventually joined by its luxury brethren to serve the prophesied migration of the upper classes to Royal Oak and Birmingham and Troy, an economic runnel into which all good fortune poured as consumers became increasingly defined as much by what they drove as where they shopped.
In a report released last week, Mathieu Savary at BCA Research sets the inflection point for consumer spending at 1980. Prior to that date, spending as a percentage of U.S. gross domestic product bobbled around the 62-per-cent mark. Since 1980, that ratio has shot up to 70 per cent. "[T]he U.S. economy has become increasingly consumer spending-driven," Mr. Savary wrote. "As a result, the rest of the world economy has become highly geared toward serving the American consumer."
The rise in spending, you will not be surprised to hear, has been built on leverage. No-money-down houses. Free cars. At first.
Prof. Solomon parses the now-fashionable observation that the new economic order will, or has, given birth to a chastened consumer, less focused on the material. Hmmm. "I don't think people are going to become agrarian nomads any time soon," he says. Yet we may well have changed. "We will always find something to compare ourselves to," he says. "But it may not be a glittery luxury good." Like a car.
Downtown observers of the Detroit scene cast a jaundiced eye upon the latest round of bad news. "We're facing losing one of our major industries," says planning director Douglass Diggs. "You become like the coal mine town and the coal mine shuts down."
That chapter is not being written. Not yet. "The auto industry pretty much built the middle class in America," Mr. Diggs says. "We've got to keep the wheels turning somehow."
Fewer wheels. Yesterday, a desperate GM announced it would slash production by a third in the first quarter of next year.
At the Motown Cafe, Simon Sinishtaj notes that he is seeing his regulars less regularly. "Where you been?" "Oh, I've been packing my lunch." That kind of thing. Of course, it's the regular folk who are paying the first, highest price, the final tally for which is not yet known. Speaking of the auto companies. "The CEOs and the big top dogs," wonders Mr. Sinishtaj, darting back and forth in front of the pass-through window. "How much do you think they do?"
He's 28, and he's been thinking. "You know Americans. We're so used to living good. Eating out. Spending." It's a want-to-much society, he says. "Don't you ever think of that?" The 100-dollar sneakers. He talks about those. And the $275 that some "salon" is charging for a bottle of Grey Goose. "What do they give you? A big tall glass of orange juice and a big, tall glass of cranberry juice for your mixture for a fifth of Grey Goose that you can buy for forty bucks."
It's the appearance of wealth. Like a new automobile. "It's telling people, look, I made it. I got the nice car."
He hears the pawn shops are booming.
There's a very fashionable sign hanging on the front door of the cafe. "Cash only."
LESSONS FROM HISTORY
Housing bear markets and consumer retrenchment
| NORWAY | FINLAND | BRITAIN | SWEDEN | AVERAGE | |
| Real house prices | Q2,1987- Q1, 1993 | Q1, 1989- Q1, 1993 | Q2, 1989-Q4, 1995 | Q2, 1990- Q4, 1995 | |
| Percentage point change | -42% | -50% | -37% | -28% | -39% |
| Household savings rate | Q4, 1986- Q4, 1993 | Q3, 1988-Q3, 1992 | Q3, 1988- Q1, 1992 | Q4, 1987- Q1, 1993 | |
| Percentage point increase in savings rate | 10.3% | 13.2% | 9.5% | 14.2% | 11.8% |
| Real consumption | Q2, 1986- Q4, 1988 | Q4, 1989- Q2, 1993 | Q2, 1990- Q1, 1992 | Q1, 1990- Q2, 1993 | |
| Percentage point change | -4.3% | -10% | -3.3% | -8.4% | -6.5% |
KATHRYN TAM/THE GLOBE AND MAIL: SOURCE: BCA RESEARCH
© The Globe and Mail
