Daniel Howes: Michigan’s Auto Industry Faces the Ultimate Test

Daniel Howes, columnist and associate business editor at The Detroit News, spoke with Detroit Regional Chamber President and CEO Sandy K. Baruah in a Tele-Town Hall today on the Detroit region’s ability to endure an economic downturn and the potential impact on its automotive industry.

While the shape of the economic recovery is unpredictable, Howes said he expects the recession to affect the country in regions as the coronavirus did. While Gov. Gretchen Whitmer is sending different groups back to work at a time, it’s difficult to know what the staging will look like to predict who’s next.

Small businesses are frustrated that they couldn’t return to work sooner, said Howes. They are struggling to obtain funding from the federal government along with nonprofits.

An Uncertain Future

Coming out of the COVID-19 crisis, no one can predict what demand’s going to look like for automotive companies, said Howes, though he predicts car companies will throw out long-term incentives and other strategies to try to stimulate demand.

While demand was strong going into the crisis, it doesn’t guarantee how companies will come out on the other side. While operations have gotten tighter, the real question is if automotive companies will be able to manage a real downturn better than they did in 2008 and 2009, he said.

“This is going to be the real test on whether or not they have the smarts and the financial heft to get through an unprecedented experience,” said Howes.

Companies are already placing mobility ventures on hold, said Howes, like General Motors Co.’s ride-sharing service Maven. An economic downturn could also dampen the incentive to buy and sell electric vehicles, and employment will likely trump environmental issues for policymakers for now, he added.

Auto Industry Steps Up

Howes acknowledged the automotive industry’s ability to quickly pivot to manufacturing personal protection equipment (PPE) when the nation needed it most. Ford was able to use its scale to make a quantum jump in the production of ventilators, he said.

News outlets have started calling the automotive industry’s move to manufacture PPE the “Arsenal of Health”, a reference to Franklin D. Rosevelt’s phrase the “Arsenal of Democracy” from World War II, continued Howes.

“I think it speaks to the character of the industry,” said Howes. “This doesn’t surprise me at all. This is the way they role — these are their values.”