Detroit of the North

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Another week passes and another automotive company has set up shop in St. Petersburg. Last week, Hyundai finalized a December agreement to build a plant in the city. The buzz created by General Motors CEO Richard Wagoner dubbing St. Petersburg the "Detroit of the North" has yet to subside here, almost two years later. The city, now home to Ford, General Motors, Toyota and Nissan, in addition to the Korean newcomer, now brims with optimism over the economic possibilities of its new role as an automotive center, and rightly so. But if the city wants to maximize its growth and truly become a global center of the automotive industry, it should heed Detroit's lessons, both in growth and decline.

Detroit experienced a rapid period of economic growth as it evolved into the world's motor capital. It became a wealthy symbol of the opportunities that U.S. industrialization presented.

First and foremost, Detroit was not a simple manufacturing center; it was home to a critical mass of automotive minds. Henry Ford, Walter Chrysler, the Dodge brothers and other names that currently grace cars worldwide all converged to make the city a center of automotive innovation. These engineers fed off one another and, in turn, evolved from engineers tinkering in one-room workshops to industrial titans. For years, this trend continued because Detroit continued to attract the best and brightest automotive minds, which turned the city into an engine of growth for the U.S. economy. These companies didn't just mass-produce cars; they developed some of the most innovative technologies of their generation.

If St. Petersburg strives to become more than just a labor source, the city will need to attract not just manufacturing jobs, but research and design positions as well. The city is currently well positioned to do so because it is a major hub of an education system that has produced world-class engineers for generations. The St. Petersburg city government should ensure that the same tax breaks given for factories apply to research and design facilities. Both the city and federal governments have touted the creation of technoparks as a way to create centers of innovation. The city's new status as an automotive hub could foster the creation of an "automation alley." This would help to ensure that high-tech jobs come to the city and remain here for years to come.

Detroit's growth was also fueled by a large pool of labor that increasingly came from the United States and abroad. When Ford Motor Co. founder Henry Ford introduced a salary of $5 per day in 1914 -- an unprecedented high wage for a manufacturing job -- he advertised not only throughout the United States but also in Europe and other countries. Ford produced pamphlets touting the program in Hungarian, Polish and even Russian. This steady stream of labor coming to Detroit from around the world helped the city solidify its role as the center of a rapidly growing industry.

Despite St. Petersburg's economic growth, the city's population has not expanded over the past few years. Demand for labor far outstrips supply, with manufacturing leaders speaking of labor shortages as a very real problem constraining the city's growth. The city and federal governments need to formulate a policy that will ensure that the most capable engineers can come from across Russia to where they are needed most. Labor mobility will help local manufacturers take advantage of economies of scale and continue to build on their investments in St. Petersburg as opposed to looking elsewhere. Simplifying the work-permit and visa procedures for foreign workers would also help to ensure that companies have the requisite personnel to grow. As labor costs rise in Russia and the ruble appreciates, these measures will be especially important.

Both management and labor also need to work together to make St. Petersburg competitive in the global economy. In Detroit's case, both the senior corporate and union leadership failed to understand new economic trends that were transforming the automotive industry in the 1970s, '80s and '90s. As a result, they were too often combative and reactive, instead of cooperative and proactive. This shortsightedness led to the hemorrhaging of manufacturing jobs from the states of Michigan and Ohio, once the dynamic centers of U.S. industry.

Finally, St. Petersburg needs to realize that, while the automotive industry can promote growth and bring opportunity to a city, it is never wise to place all your eggs in one basket. A diverse tax base ensures that the city's economic fate remains independent of a very cyclical industry.

Even as late as 20 years ago, the decline of Detroit as one of the world's great industrial centers seemed improbable, maybe even unthinkable. As the U.S. industry lost ground to their more innovative rivals, however, the city's position as a center of ideas, as opposed to just labor, began to erode. Both labor and management bickered, and the decline continued. Detroit will hopefully one day re-emerge stronger from this position, having learned its lessons. For the time being, however, it provides a cautionary tale of how far a once-proud city can fall if it fails to evolve. St. Petersburg would be wise to study its history and learn from its mistakes.

Mac Broderick, a Detroit native, is a real estate consultant in St. Petersburg.