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#201 NTSOS

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Posted 13 December 2010 - 13:47

Gas Stations of the 1920's

I want a set of Barney Oldfield tires! :)

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John

Edited by NTSOS, 13 December 2010 - 13:57.


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#202 Magoo

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Posted 13 December 2010 - 14:32

Those are awesome, John.

Here is my small contribution to the theme, my great grandfather's service station. Note that the single gasoline pump is on the curb.

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#203 NTSOS

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Posted 13 December 2010 - 14:48

Cool............where was it located Mac? :up:

John

#204 Grumbles

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Posted 13 December 2010 - 20:19

Gas Stations of the 1920's

I want a set of Barney Oldfield tires! :)

Posted Image


This one is particularly interesting; I wonder how common chassis dynos were back then. It looks to be more like a simple brake than a pump setup, but whatever it is quite a few onlookers have gathered for the show...


#205 Tony Matthews

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Posted 13 December 2010 - 21:10

Gas Stations of the 1920's

I want a set of Barney Oldfield tires! :)

Posted Image

John

I wanna see what 6 horse-power looks like!

#206 gruntguru

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Posted 14 December 2010 - 05:00

I wanna see what 6 horse-power looks like!

With your talent you should draw them - or perhaps draw one and make five copies.

Interesting, the dyno rollers appear to have guide flanges at the sides - not such a good idea.

#207 Lee Nicolle

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Posted 14 December 2010 - 05:40

With your talent you should draw them - or perhaps draw one and make five copies.

Interesting, the dyno rollers appear to have guide flanges at the sides - not such a good idea.

Wheel rims? Though probably too wide for the age

#208 Grumbles

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Posted 14 December 2010 - 06:50

The group of spectators and the fact that they have the car pulled down tight onto the rollers with a turnbuckle would indicate that they expect some big numbers from this car. An early dyno queen perhaps.
And if it turns out that the engine was pushed a bit beyond its limits, well they just clean up the mess with the rake and the bucket of sawdust under the bench.

All great photos, thanks John.

And Magoo, a ten bay garage would've been a fairly sizeable operation in it's day wouldn't it? Kerbside pumps were once very common over here (Aus) too; rural general stores often had a pump or two out the front

#209 Magoo

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Posted 15 December 2010 - 02:11

I'm not yet entirely convinced it is a dyno, at least as we know them... which immediately leads to the question of WTF it is then. There are several possibilities. The photo is intriguing enough that I looked up the original and enlarged it.

The accessory at ground level up near the LF wheel is sort of interesting as well. On the bottom, bucket part of the gadget is painted, "Gasometer measures leakage past pistons."

#210 Lee Nicolle

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Posted 15 December 2010 - 03:05

I'm not yet entirely convinced it is a dyno, at least as we know them... which immediately leads to the question of WTF it is then. There are several possibilities. The photo is intriguing enough that I looked up the original and enlarged it.

The accessory at ground level up near the LF wheel is sort of interesting as well. On the bottom, bucket part of the gadget is painted, "Gasometer measures leakage past pistons."

I have heard of home made dynos that really were nothing more than resistance to at least test the engine under load.
I am pretty sure there was dynos of some proper type both engine and chassis by the 20s. But only in big manufacturer type operations.
Really a chassis dyno was quite rare even 15 years ago. There was probably 6 in Adelaide but now there is 60 as they have got cheaper and simpler.

#211 Grumbles

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Posted 15 December 2010 - 03:50

I tend to think it is a dyno. To me the big object on the top of the post (near the "brakeman") would be a spring scale to read off the torque, while the smaller gauge below it would most likely be the tachometer.

I've got an old Dykes here somewhere with illustrations of a couple of different sorts of dynos, and these look to date back to around the 20's. Now that I think of it it also detailed some other devices that were used to motor a freshly rebuilt engine - the poured whitemetal bearing were often set very tight and were "burnt-in". Could the setup in the photo be a means of motoring an engine that had just had an inframe rebuild? Perhaps the brakeman is really operating a clutch? Though I can't see a power source..

The "Gasometer" appears to be an early version of a leakdown tester.

#212 johnny yuma

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Posted 15 December 2010 - 04:04

Appears the right side rear wheel only sits on a single roller with the left back wheel chocked . Power transmits across
to what looks like a big brake drum.The fellow nearby has his hand on a handbrake lever ? A rubber pipe comes out
of the device and up to a pressure gauge the guy with the lever could read.

The bigger rubber pipe runs off the engine breather to indicate blowby on the gasometer .

Or maybe I'm totally wrong !

#213 Tony Matthews

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Posted 15 December 2010 - 07:20

Interesting, the dyno rollers appear to have guide flanges at the sides - not such a good idea.

I don't think the rollers are flanged, I think it is a colour/texture difference on the outer edges, dark compared to the polished inner band. I also think there is a LH roller.

#214 Grumbles

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Posted 15 December 2010 - 07:52

I don't think the rollers are flanged, I think it is a colour/texture difference on the outer edges, dark compared to the polished inner band. I also think there is a LH roller.


Agreed on both. If you look at the very bottom of the right hand roller it appears to be flat.

The brake lever - if that's what it is - appears to have a weight attached via four setscrews, as if it was designed to maintain a set amount of drag on the brake.

#215 cheapracer

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Posted 15 December 2010 - 09:07

The accessory at ground level up near the LF wheel is sort of interesting as well. On the bottom, bucket part of the gadget is painted, "Gasometer measures leakage past pistons."


Heres my guess, it's a promotional tool for Havoline oil products - brink your car in and we run it, get a baseline then we put Havoline in to show the difference on the brake dynamometer.

Love the shoes and hats!

Thanks John. I have enjoyed Shorpy myself for some time ...

http://www.shorpy.com/

Edited by cheapracer, 15 December 2010 - 09:10.


#216 Tony Matthews

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Posted 15 December 2010 - 10:31

Love the shoes and hats!

Now I know what to get you for Christmas!

#217 Tony Matthews

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Posted 15 December 2010 - 22:33

Thanks John. I have enjoyed Shorpy myself for some time ...

http://www.shorpy.com/

Thanks from me, too. Never knew it existed, I may be some little time...

#218 OfficeLinebacker

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Posted 29 December 2010 - 20:44

This is something right along the lines of this thread:

http://www.marchandm...roit/index.html

A nice slideshow of urban decay, but of really nice buildings in and around Detroit. A couple of car plants in there. What do you say, Magoo?

#219 NTSOS

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Posted 29 December 2010 - 21:03

Wow.....thanks man! :up:

Juanito

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#220 Magoo

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Posted 30 December 2010 - 09:44

This is something right along the lines of this thread:

http://www.marchandm...roit/index.html

A nice slideshow of urban decay, but of really nice buildings in and around Detroit. A couple of car plants in there. What do you say, Magoo?


The Ruins of Detroit is a well-known book/photo collection. In the link above, the first photos are of the old Michigan Central rail station, which is still standing and can be seen from I-75 just south of the Lodge Freeway. The photo of the large factory floor with tulip pillars is Fisher Body 21 on Piquette Ave. The last photo is Packard Main on East Grand Blvd.

In later years a short-run or pilot paint and body line ran in Fisher 21. Some F-bodies (Camaros and Firebirds) were done there along with Cadillac 75 lwb limos. Two blocks east of the Ford Piquette plant, less than a mile west and across the Chrysler Expressway from the GM Hamtramck-Poletown plant where the Chevy Volt is built.

#221 Grumbles

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Posted 30 December 2010 - 10:28

Dumb question: what happened?
Why do so many of these scenes look like they were abandoned or evacuated overnight, as if it were the site of some terrible nuclear accident? Books still on shelves, rooms still furnished, fixtures and fittings, TV sets and so on... Did the closures of these businesses and their buildings happen on such a scale and at such a rate that none of this stuff had any value at all?

#222 Magoo

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Posted 30 December 2010 - 11:22

Dumb question: what happened?
Why do so many of these scenes look like they were abandoned or evacuated overnight, as if it were the site of some terrible nuclear accident? Books still on shelves, rooms still furnished, fixtures and fittings, TV sets and so on... Did the closures of these businesses and their buildings happen on such a scale and at such a rate that none of this stuff had any value at all?


Lots of things have happened, but one example... with both its tax base and enrollment collapsing, the Detroit Public School System has been forced to close something like 75 school buildings per year, and lacks the funding and manpower to do anything with the buildings but lock the doors and walk away. And while it looks like it has some value in the photographs, in a collapsing market all that stuff has salvage value at best. So the buildings and everything in them are essentially abandoned.

All this doesn't have much to do with the recent auto industry collapse... things actually hit rock bottom for the city of Detroit shortly before that. It's the usual tale of neglect and corruption enabled by a decades of gradual decline. The absolute nadir and turning point was probably in spring of 2008, when the mayor was indicted for eight felony counts. I was in the outdoor deli at the ground floor in front of my building in downtown Detroit when the radio announcement was broadcast over the deli's PA system. At that moment, the 150 or so people present on the corner spontaneously broke into applause. Now the long, hard road back, but the city will never be what it was. It will have to come back considerably smaller. Large sections of the city will have to be returned to farms, parks, and prairie, and the residential and commercial districts reconcentrated and consolidated.

#223 Ray Bell

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Posted 30 December 2010 - 13:21

That, frankly, sounds like too big a job...

Where would the funding come from to do that? Returning city to prairie would be an immense task, with an unrewarding (financially) goal in view.

#224 desmo

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Posted 30 December 2010 - 15:36

Wasn't the land where Detriot stands originally maple forest? I just kind of assume that because anything in S Michigan left alone sufficiently long seems to turn into one.

#225 Ray Bell

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Posted 30 December 2010 - 21:41

That would make it easier, I guess...

The footings of old buildings could like in the dirt on the floor of the forest and few would ever know.

#226 Terry Walker

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Posted 01 January 2011 - 09:35

There was a TV documentary a while back, about the decline and fall of Detroit, and it included a bit about groups of people basically squatting on vacant lots, farming at subsistence level. The group actually made a modest profit in what amunted to subrban truck farming. Use the profit to buy the vacant lots, knock down abandoned houses, extend the farmland - next thing you know you have in fact reclaimed part of the old derelict suburbia for farming.

Street View in some areas takes you down what were once thriving suburbs which are now largely empty - a few scattered houses, many vacant lots. One city block is quite a few acres. There's a dollar to be made if you don't seek Lehman Bros sized bonuses each year.

In the long term, it will be used again, there's no doubt. It's the short term - the next decade or so - that's gonna be painful. The population drift towards the sunbelt is in effect opening up suburban land for recycling.

In my home town, Perth Western Australia, truck farming (or as we call it here, market gardening) used to be an inner suburban thing, but the rising price of residential land has forced it further and further away, to the distant oustkirts of a sprawling city. Sadly for us, we can't rely on a drift to the sunbelt - we are the sunbelt. The next 4 days will top out at 105 degrees we are told.

Edited by Terry Walker, 01 January 2011 - 09:36.


#227 desmo

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Posted 01 January 2011 - 18:25

There was a TV documentary a while back, about the decline and fall of Detroit, and it included a bit about groups of people basically squatting on vacant lots, farming at subsistence level. The group actually made a modest profit in what amunted to subrban truck farming. Use the profit to buy the vacant lots, knock down abandoned houses, extend the farmland - next thing you know you have in fact reclaimed part of the old derelict suburbia for farming.

Street View in some areas takes you down what were once thriving suburbs which are now largely empty - a few scattered houses, many vacant lots. One city block is quite a few acres. There's a dollar to be made if you don't seek Lehman Bros sized bonuses each year.

In the long term, it will be used again, there's no doubt. It's the short term - the next decade or so - that's gonna be painful. The population drift towards the sunbelt is in effect opening up suburban land for recycling.

In my home town, Perth Western Australia, truck farming (or as we call it here, market gardening) used to be an inner suburban thing, but the rising price of residential land has forced it further and further away, to the distant oustkirts of a sprawling city. Sadly for us, we can't rely on a drift to the sunbelt - we are the sunbelt. The next 4 days will top out at 105 degrees we are told.


I tried looking up the most dangerous/worst/highest crime in Detroit and touring them in Street View. To some degree they look scary, but much of those areas don't look particularly bad to me. You remove a handful of armed criminals and many of these neighborhoods look to me to have redevelopment potential and some even look fairly nice if a little run down as they stand. Without guns and crime, I would buy a house, fix it up and live there if it was cheap enough. All that vacant land looks perfect for urban agriculture too. Most cities were originally sited on good agricultural land because that was a good reason for people to live there.


#228 Magoo

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Posted 01 January 2011 - 20:43

I tried looking up the most dangerous/worst/highest crime in Detroit and touring them in Street View. To some degree they look scary, but much of those areas don't look particularly bad to me. You remove a handful of armed criminals and many of these neighborhoods look to me to have redevelopment potential and some even look fairly nice if a little run down as they stand. Without guns and crime, I would buy a house, fix it up and live there if it was cheap enough. All that vacant land looks perfect for urban agriculture too. Most cities were originally sited on good agricultural land because that was a good reason for people to live there.


Many of the neighborhoods are eerie indeed. They look almost like they are occupied when you drive through but really there's virtually nobody there. Thus they are surprisingly safe. With no victims to prey on the criminals move on. Crime rates for some offenses have fallen straight down -- armed robbery, burglary. Other crimes are way up, including arson due to all the abandoned homes being torched by meth heads, etc.

The scariest encounter I've had in old city Detroit recently was with a feral dog pack, near Fisher Body 21 as described above, which is a tricky area where Piquette Avenue was cut off and dead-ended by the expressway. There's an abandoned junkyard up on top of the vacated rail right-of-way where I thought I would walk in and get some photos. Surprise, there were about two dozen large and hungry dogs living in the cars. That was pretty tense for a moment as they loped out and formed a semi-circle around me but I backed myself out of there ok. On the other hand, a good friend was mugged and badly beaten walking back to his car after a Red Wings game with plenty of people nearby if not within sight -- as in most any large city, I suppose.

Some neighborhoods are being rehabilitated just as you envision... by artist types, new Bohemians, young couples. Low-brow gentrification, I suppose. You can buy a 3-4BR house, not perfect by any means and in need of work, but totally sound, for under $15,000, often well under. The property taxes are so low as to be negligible. In part as a result of this, it looks like the arts and music scene is starting to take off. If you are more ambitious there are luxury homes and even old mansions for pennies on the dollar. (From the robber-baron age of the auto industry in the '20s.) I wouldn't expect much in the way of capital appreciation in the short-to-mid-term but if you want a nice home for silly cheap, you can't beat it. Of course, these days real estate is a relative bargain almost everywhere in the USA.

A couple of sharp operators are currently buying up tracts of land around the city, apparently with large-scale urban farming and other uses in mind. There are also urban gardens, inner-city truck farms, boutique growers raising stuff for the haute cuisine restaurants in the suburbs, community and communal farms, every scheme you can imagine. In some of the more re-prairiefied areas, I have seen pheasant, deer, racoons, woodchucks, ducks and geese. Folks say there are coyotes, but of course you are not going to see them. Interesting times in Old Detroit.




#229 OfficeLinebacker

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Posted 01 January 2011 - 21:05

You can buy a 3-4BR house, not perfect by any means and in need of work, but totally sound, for under $15,000, often well under

uh, are you missing a zero on there?


#230 desmo

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Posted 01 January 2011 - 22:28

I'd believe 15K. I read a couple of years back houses could be bought in some of the neighborhoods with the worst reps for under 20K. For an artist/writer or telecommuter who can live/work anywhere- which is a lot of people nowadays- this starts to look seriously interesting as an opportunity. You get enough creative types in, the bobos will follow with gentrification, then of course it gets boring, precious and overpriced. And meantime the creative types have been priced out, moved on and hopefully made a tidy profit.

#231 Magoo

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Posted 02 January 2011 - 01:44

uh, are you missing a zero on there?


Just go to Zillow.com and type in Detroit, MI. Here's one I picked at random:

http://www.zillow.co.../88085209_zpid/

There are thousands of these homes. The listing prices barely matter; that's just a number they stuck up there. The banks will generally take any real offer if you have cash in hand and can close immediately. They just want them off the books. If it's a private owner, you will probably be the first shopper they have seen in a year, if ever. In these same neighborhoods you will find similar homes with more traditional asking prices, say $60-80K. These people just hung out For Sale signs, dreaming that someone will stumble past and rescue them from their upside-down mortgage. Not likely. First, the "troubled" inventory will have to be exhausted. Thanks, Wall St.-created housing bubble.

This one is not really a rehab project as discussed earlier. It's in a decent, functioning neighborhood and not a terribly old house (1940). This one even has central air, though we don't know if it works. What you will often find are the plaster and plumbing are shot from one or more winters unoccupied without heat, previous amateur remodeling of kitchen and bath, the usual. No big deal if you are handy. These homes were far better built than any new construction today at any price.



#232 Magoo

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Posted 02 January 2011 - 02:26

I tend to think it is a dyno. To me the big object on the top of the post (near the "brakeman") would be a spring scale to read off the torque, while the smaller gauge below it would most likely be the tachometer.

I've got an old Dykes here somewhere with illustrations of a couple of different sorts of dynos, and these look to date back to around the 20's. Now that I think of it it also detailed some other devices that were used to motor a freshly rebuilt engine - the poured whitemetal bearing were often set very tight and were "burnt-in". Could the setup in the photo be a means of motoring an engine that had just had an inframe rebuild? Perhaps the brakeman is really operating a clutch? Though I can't see a power source..

The "Gasometer" appears to be an early version of a leakdown tester.


I also thought it might be for running in poured bearings. I can't see a power source either, but there does appear to be what might be a flat belt on the far side with a poor old Model T sitting at the ready, hmm. (Model T Ford = rented mule.) Alternate method: tow the car up and down the street on a rope until the rear wheels turn smoothly. At the factory they ran the engine on a stand with an electric motor. When the current fell below a predetermined level, the engine was deemed good to go.

I love the neighborhood audience with their little impromptu grandstand. Before television, people sought out their entertainment wherever they could. I'd go over and watch if I weren't doing anything.

#233 Tony Matthews

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Posted 02 January 2011 - 13:41

I'd go over and watch if I weren't doing anything.

So would I! Look and learn...

#234 mariner

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Posted 02 January 2011 - 14:13

Magoo - "Lots of things have happened, but one example... with both its tax base and enrollment collapsing, the Detroit Public School System has been forced to close something like 75 school buildings per year, and lacks the funding and manpower to do anything with the buildings but lock the doors and walk away."

Somewhere amongst all the portfolio's of "Detroit as the symbol of US urban decay etc." is one that is really sad, it shows the machine shop at a Detroit technical school lying in ruins ( as per Magoo above).

The question it raises in my mind is what came first - did the flight to the suburbs bleed the city schools of the funds and talent to train kids fro Detroit's core industry - engineering, or did the constant auto cutback's ( plus the impacts of smarter productivity ) destroy the jobs for which the training was designed? I am sure complacency and corruption helped as they usually do but it illustrates how you can reach a tipping point beyond which recovery becomes too hard.

BTW if anybody wants to read an in-depth historical analysis of Detroit then " The origins of the urban crisis" by Thomas Sugure is one of the definitve works. It is a very hard core micro-history book and you might not agree with the authors conclusions but it an impressively researched book.


#235 Magoo

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Posted 02 January 2011 - 20:06

Magoo - "Lots of things have happened, but one example... with both its tax base and enrollment collapsing, the Detroit Public School System has been forced to close something like 75 school buildings per year, and lacks the funding and manpower to do anything with the buildings but lock the doors and walk away."

Somewhere amongst all the portfolio's of "Detroit as the symbol of US urban decay etc." is one that is really sad, it shows the machine shop at a Detroit technical school lying in ruins ( as per Magoo above).

The question it raises in my mind is what came first - did the flight to the suburbs bleed the city schools of the funds and talent to train kids fro Detroit's core industry - engineering, or did the constant auto cutback's ( plus the impacts of smarter productivity ) destroy the jobs for which the training was designed? I am sure complacency and corruption helped as they usually do but it illustrates how you can reach a tipping point beyond which recovery becomes too hard.

BTW if anybody wants to read an in-depth historical analysis of Detroit then " The origins of the urban crisis" by Thomas Sugure is one of the definitve works. It is a very hard core micro-history book and you might not agree with the authors conclusions but it an impressively researched book.


Tom Sugrue absolutely nails it. Brilliant guy, all his books are great.

There is a word in the Detroit auto industry that many people will deny even exists: Nigger-mation. Not a very nice word, all apologies to anyone's sensibilities, but there was a very real concept behind it. It's one of the reasons the city of Detroit and the American auto industry got into this dismal condition. Why spend billions updating to newer, safer, more efficient plants like the Japanese are building when you can just run the old plants into the ground with a limitless supply of relatively cheap labor? It's not very efficient but it's not about efficiency, it's about quarterly earnings, share price, and market share.

#236 desmo

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Posted 02 January 2011 - 20:42

Could there be a more perfect spot to site a new auto factory or development than present day Detroit? Crazy cheap land and houses, rail lines, ports and other transportation infrastructure in place, probably still a good selection of suppliers with experience in the area, lots of workers hungry for a job, all in the heart of the largest market in the world.

I must be missing something.

#237 Magoo

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Posted 02 January 2011 - 21:34

Could there be a more perfect spot to site a new auto factory or development than present day Detroit? Crazy cheap land and houses, rail lines, ports and other transportation infrastructure in place, probably still a good selection of suppliers with experience in the area, lots of workers hungry for a job, all in the heart of the largest market in the world.

I must be missing something.


No, it's the perfect location for anything in the auto industry. The resources match those of anywhere in the world. Not for nothing have Toyota, Bosch, Hyundai, and everyone else built engineering and R&D facilities in SE Michigan. The talent and experience are here. If it can be done with cars, it can be done in Detroit. McLaren doesn't have shit, no really. I wish I could give tours around the city for car enthusiasts. Their heads would explode at what they would see.

And the new plants and investment are great for the city and badly needed, thank God for them, but they are not going to restore Detroit back to what it was. I just attended an opening reception at the completely rebuilt Ford Focus plant (Wayne aka Michigan Assembly) on Michigan Avenue last week. Ford invested $550 Million, everything top-notch, green all the way. Totally automated, 1900 employees in the whole building. Just as a guess, that might be a fourth what it was at its peak. And with the two-tier system, new wages will be half the traditional rates -- barely middle-class, if that. What made Detroit is gone. That ship has sailed.

#238 desmo

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Posted 02 January 2011 - 23:18

How much money does one need to make in a place with $10K houses? And between the presumably hugely smaller per-car labor content, those half traditional wages and the car talent and infrastructure already in place how could anyone compete on a cost basis?

If I'm Sergio Marchionne, I'm seriously looking at building FIAT/Lancias in Detroit and putting them on ships back to the EU. The Japanese and Euros couldn't possibly compete on cost. How the hell does Germany, any other EU country or Japan with their astronomical labor/living expenses survive building cars competing against that as a manufacturing base of operations? You couldn't buy an outhouse in the EU or Japan for $10K.



#239 Magoo

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Posted 03 January 2011 - 15:51

How much money does one need to make in a place with $10K houses? And between the presumably hugely smaller per-car labor content, those half traditional wages and the car talent and infrastructure already in place how could anyone compete on a cost basis?

If I'm Sergio Marchionne, I'm seriously looking at building FIAT/Lancias in Detroit and putting them on ships back to the EU. The Japanese and Euros couldn't possibly compete on cost. How the hell does Germany, any other EU country or Japan with their astronomical labor/living expenses survive building cars competing against that as a manufacturing base of operations? You couldn't buy an outhouse in the EU or Japan for $10K.


Next time you see Sergio at the laundramat, please put in a word. He has been making some noises sort of along those lines, I guess we'll see.


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#240 Canuck

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Posted 03 January 2011 - 17:53

Detroit's future will be an interesting story to watch unfold. I look at some of those photographs and can't help wondering "how much it would cost to dismantle that and bring it here?".

#241 mariner

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Posted 04 January 2011 - 10:22

Unfortunately for Detroit cheap housing alone does not make a global mfg location. Detroit clearly has many things going for it in skills/technology etc. but so does Munich/Tokyo/Shanghai etc.

As a rough rule mfg investment follows the cheapest labour. That's partially because $10M investment and 2,000 workers at $5/hr are cheaper than $10M investment and 2,000 workers at $20/hr and partially becuse the fastest growing markets are often the ones with lower initial wages e.g China at the moment. So Detroit ( or wherever) has to be cheaper than the cheapest on a landed cost basis and not just cheaper than another high cost location like Europe.

It takes a lot of capital to reduce labour content enough to close a gap like the $5 vs $20 above and that increases depreciation so the challenge is even harder. Also a lot of the plant capital is non labour related ( e.g tooling, machining lines, buildings etc. ) so spending capital on cutting high cost labour is seldom as useful as moving all the capital to low cost labour. Obviously shipping costs are a penalty for remote sourcing like China but the huge cost reductions in container shipping over the last 20 years have reduced that penalty for small items so it makes sense to source parts in cheap labour locations.Tthis starts the "hollowing out " process in older locations like Detroit.

The other factor is that global mfrs like what they call " natural currency hedging" so , for example BMW make their SUV's in the USA partially beacuse that is a big SUV market and the things are costly to ship but also because the exports of SUV's from USA to Europe tends to balance out the currency risks shipping the 5 series from Europe to the USA.


I am not saying places like Detoit cannot recover but it more likley to be import substitutionlike the Insiginia based Buick being transferred from Germany to the USA than exporting.


#242 desmo

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Posted 04 January 2011 - 16:05

Chasing after low wage environments to base manufacturing plants with huge required long term capital investments is risky business. Reliable data for China is scarce but it appears likely that China is near or perhaps even at or past the Lewis Turning Point where labor surpluses are the dominant driver of costs. Manufacturing capacity driven by low labor costs is already leaking out of China to countries like Vietnam and India. It's one thing to subcontract product for manufacture to non-capital intensive plants to make shoes or clothing etc. where if the labor situation changes production can be relatively easily be moved, it's entirely another to invest billions in plants requiring decades to rationalize whose sole essential raison d'ĂȘtre is the presumption of a limitless supply of cheap labor. It probably does make some sense to make cautious investments in joint venture production- China isn't keen on letting foreign manufacturers operate without tight state control- just to ensure access to the internal Chinese market. That said, China probably views these joint ventures as much or more as manufacturing technology transfer systems than true long-term partnerships. Once the Chinese feel they have learned whatever they can from the partnership, there's really nothing to stop them from steamrolling those joint ventures into worthlessness by technology and knowledge transfer to unfairly advantaged state run competitors where all the profits can be funneled undiluted into the hands of CCP bigwigs. Which leads to the next problem with putting many chips on the Chinese square, unchecked official corruption.

China for all its meteoric growth and economic dynamism is let's not forget an authoritarian one party state and thus with no reliable rule of law. In the end the law is whatever the CCP says it is, there are no real checks or balances on state power in place. The tables are thus all tilted strongly in the state's favor and any foreign investor thinking that there will be any recourse should the state's interests begin to diverge from their own is probably delusional. There's also the inherent political and social instability of a rapidly expanding economy under rigid authoritarian state control. History tells us this is a recipe for crippling systemic corruption at best and as long as the one party political dynamic is in place, catastrophic political and social collapse is always looming as a real threat. What happens when the growth curve levels off and the Chinese see citizens of neighboring states enjoying greater prosperity and freedom than the CCP can deliver them? Long term investment in China is a bet that incremental economic political reform towards multiparty democracy and a market economy can be phased in in an orderly manner. You feeling lucky there?

Compared to that, Detroit with its low costs, First World infrastructures- including critical and necessary legal, cultural, educational and political infrastrucure- begins to look like a safe bet.

#243 mariner

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Posted 04 January 2011 - 17:00

Desmo, the current US auto market is about 11.5M units with less than 75% US sourced so the local production is about 9M units. You can add the MB and BMW exports of SUV's plus sales to Canada/Mexico less Canadian/Mexican production for the US and the number will become under 9M because of all the GM/Ford/chrysler souricng in Canada/Mexico. So the whole NAFTA production is around 9M. The Chines emarket this year is 18.2M units with quite low imports.

So the China auto production is now about twice that of the US and that ratio is rising fast. Agreed the US market could go back to 16M one day but by then China is likely to be 20M+. So with the rate of growth in China being so high and the cost/volume balance shifting China's way any big OEM is going to divert scarce capital to China ( and India and the rest of Asia). That leaves less for investment in the US and Europe. So putting aside the actual new product investment ( R+D,design and tooling)which may remain in teh US or Germany/Japan the new plant capacity etc. capital is going into the growth countries. Only a very dumb company would install less than the most up to date equipment in new plants so the new growth areas enventually get as modern plant as Detroit etc. The Chines labour cost can go up several fold and still be below the US as it starts so low. Only aggressive devauation by teh US governemnt would be able to significantly speed up the rate of the wage gap closing.

I suspect It as always been that way, when the US economy was booming in the turn of the 19th/20th century the US had the most modern of everything. One example -only US steel companies had the abiltiy to build the infrastructure of the Panama canal. Today China has been able to supply most of the Three Gorges Dam equipment locally I beleive since it has just modernised.

To take Intel as another example when it builds a chip fab. facilty in China to feed the huge IC demand of Chinese electronics assembly it biulds a 100% up to date plant. It has no choice since it has to deliver state of th art product to the local assembly lines as that's where Apple etc. do all their production. Intel will not build in China until it cannot supply fom the US or Ireland effectively but even in an industry where labour costs are a small portion of total coast like IC's growth countries tend to get the newest stuff.

Whether relying on joint ventures with state companies in China is a good strategic idea is another matter and people like Gm might avoid becoming to dependent on China for US sales but that is more of a strategic than economic question I think.



#244 Greg Locock

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Posted 04 January 2011 - 21:32

I think people tend to overstate the value of cheap labor for vehicle manufacturers. Has anybody got a breakdown of the total variable cost of labor in a car, not just final assembly, but all the way back through to components?








#245 gruntguru

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Posted 04 January 2011 - 23:18

Only aggressive devauation by teh US governemnt would be able to significantly speed up the rate of the wage gap closing.

Coming your way - soon.

#246 Magoo

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Posted 05 January 2011 - 16:48

I think people tend to overstate the value of cheap labor for vehicle manufacturers. Has anybody got a breakdown of the total variable cost of labor in a car, not just final assembly, but all the way back through to components?


That is a really excellent and perceptive question. Throw away all your boss's stuff and take his office. It's umm, variable, and speaking in real terms as opposed to accounting (rabbit hole) I am going to say that true VLC represents about 10-12 percent of vehicle invoice, 14 percent max worst case. Note the first thing I did there was set aside dealer markup, which is >VLC.

In the car's final price to the consumer it goes like this, from within the rabbit hole: materials, fixed cost (incl. non-variable labor, say chassis design engineers), dealer markup, manufacturing cost including VLC, promotion and rebating, warranty and transportation, book margin. Of course, true labor cost in human terms (i.e., humans getting paid to do stuff) includes far more than VLC. For example, when Wagoner was canned, GM's true total labor cost decreased about a buck a car. I always marvel at the ability of the American working class to organize a circular firing squad whenever the economy turns down, with only the slightest prodding from their betters.


#247 mariner

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Posted 05 January 2011 - 17:07

In the ultimate analyis all costs are labour, capital ( AKA peoples prior savings ) or taxes. However there are so many variables on the way that detail analysis is hard e.g. labour productivity, terms of trade between nations ( where a weaker currency like the Yuan transfers income to people using a stronger one like the USD) etc, etc.

So if you take a Chinese sourced aftermarket crankshaft the chinese mfr will see the raw steel as materials and the Chinese steel plant used australian iron ore and coal as its materials. However part of the cost of the iron ore was the bulldozer drivers wages in OZ getting the stuff out and part of the coal cost was the wages of the Oz train driver taking it to the docks. The iron ore company in OZ sees the bulldozer as capital but part of it's cost is the labour in Peoria, Illinois where it was built. And course the hobby of that guy in Peoria is hot rods and he buys the chinese crank because it is cheaper and so on ...

People study of this stuff and recently somebody pointed out that 100% of an Ipholnes mfr price is treated as Chinese income ( and US trade deficit) because final assembly is in China. However some of the components and all the R+D and Apple profit is actualy US based and represenst a , partially unrecorded, US export to China.

Big wheels have littler wheels etc.

#248 Magoo

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Posted 05 January 2011 - 19:53

All so true. Companies invariably overestimate the savings/underestimate the real costs of outsourcing and offshore production. I suspect many may never really know. It's simply the done thing.

#249 gruntguru

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Posted 06 January 2011 - 02:44

That is a really excellent and perceptive question. Throw away all your boss's stuff and take his office. It's umm, variable, and speaking in real terms as opposed to accounting (rabbit hole) I am going to say that true VLC represents about 10-12 percent of vehicle invoice, 14 percent max worst case. Note the first thing I did there was set aside dealer markup, which is >VLC.

I wonder how the level of dealer markup compares in the "not-so-free" markets eg China? "Dealer markup" after all comprises mostly "marketing" costs eg fancy premises/location, TV ads, slick salesmen etc.

#250 gruntguru

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Posted 06 January 2011 - 02:49

People study of this stuff and recently somebody pointed out that 100% of an Ipholnes mfr price is treated as Chinese income ( and US trade deficit) because final assembly is in China.

Of course 100% of an I-Phone's mfr price would be an amazingly small sum. Anyone have a figure?