A multitude of factors came together at just the right time to assure that the automotive industry, which was the backbone of Detroit’s wealth, would leave and go overseas. A few other factors then came along to aggravate Detroit’s tailspin into economic oblivion.
A factor that is often overlooked, which affected not only industry in Detroit, but industry in the United States in general, is containerization.
It seems like something simple, but twenty-foot containers that became globally standardized in shipping after WWII transformed the way we moved cargo around the planet.
Below is a photo of a modern port that contains thousands of shipping containers that, once unloaded from a ship, can either be hitched to a freight truck or placed on trains for shipping to their next destination.
(Image source: NOAA).
Prior to standardization using shipping containers, this is what a dock looked like. It required dozens of dock workers working around the clock to unload a single ship.
(Image source: State Library of South Australia).
Today, container ships are massive and carry thousands of twenty-foot-equivelant units (TEU’s) to destinations all over the planet. Modern software handles the logistics of loading and unloading the containers in a logistically sound sequence, based on the port of destination of the various cargo containers. One person, operating a container gantry crane, will then unload containers from the ship, doing the same work in mere minutes that previously took dock workers many hours.
(As you can see, modern container ships can carry over 20,000 TEU’s. Source: The Geography of Transport Systems).
This made shipping of automotive components incredibly cheap, where before the labor costs and the poor logistics of shipping made it less feasible to make such components overseas. Simultaneously, it made the importation of foreign goods into the United States much cheaper, even when accounting for tariffs.
Containerization was the basis for creating the globalized world that we live in today. It’s why even cheap goods like your t-shirts, underwear, and shoes can be made with components from one country (e.g., Egypt), but manufactured in another country (e.g., Bangladesh) and sold in a third country (e.g., The United States). All at a very low price.
(General Motors supply chain in 2024. Image source: Esri UK).
Due to the disruption in the global shipping market caused by containerization, by the late 1970s and early 1980s, the writing was on the wall for nearly all goods made in the United States. At this point, Detroit would have to choose a new path and reinvent itself as something new. Instead, the unions and regional governments dug their heads into the sand and pretended as if the sky was not falling. This exacerbated the decline of manufacturing in Detroit that was already inevitable.
Detroit never really made a successful shift away from a manufacturing-based economy, although to be fair, few other manufacturing cities in the Rustbelt did either.
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