AAH #772 - Hey Detroit, It's Time to Go on the Offense

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We've got these smart guys here. We'll let the audience know in a second who they are. We're going to have the quiz with all of you before because we're going to talk a lot about car companies on this show. Maybe we should introduce them.

Let's introduce them. We've got two Lee from Sino Auto Insights. We've got Glenn Stevens from Mish Auto. Great to have both of you here by the way. You've got to put your thinking caps on. Let's hear it.

It's still late in the year.

December 18, 2009 General Motors announced that it was shuttering a company. What company was this?

Volkswagen? No.

Saturn? No.

I wish we had one of those clock things that made noises.

Company?

No, because those were all...

Not a brand.

Company?

You're saying a brand.

GMAC. No, they are already sold GMAC.

All right, you're not going to get it.

Oh, of course.

It was sort of interesting looking back into their history. So General Motors bought a 50% stake in SAB in 89.

Then they got full ownership in 2000.

And they only had a run for nine years owning that company.

That was a two-time SAB owner.

You're a two-time SAB owner?

You have nine-three and the nine-three, the manual.

It was a very simple car.

Unfortunately, I had it in the Bay Area.

I burned the clutch a few times, driving up and down San Francisco Streets.

It was still nice.

It was very...

No quality issues, but it was a pretty simple car.

Gary, this is a perfect segue.

Because you're harkening back to a time when the Detroit automakers had a global view.

The board had invested or bought, I should say Volvo, Jaguar Land Rover, Aston Martin.

Who am I missing?

There might have been another in there.

GM figured it had to get SAB.

They were building up in Europe.

And since then, we've seen the Detroit automakers in full retreat.

Pulling out of markets all around the world.

Pulling out of market segments that they no longer compete in.

And Gary, you've been on this side for quite a while.

I'm saying it's time for Detroit to stop retreating and start going on the offense.

Well, okay.

You know, talking about companies changing.

I looked at numbers and I looked at Ford in the year 2000 and Ford in 2025.

And just think about this in terms of models being offered to the market.

Back then, it was like 25 models being offered.

Now it's down to 15.

Right.

And it's the same thing for general motors.

It's the same thing for Stellantis, formerly known as all those other names.

And this gets to your point of pulling back.

Retreating.

And to John's point, Ford had a cult following for the focus of Viesta in Europe.

To young kids loved it.

And then early years in China, the Viesta and focus were doing super well.

Like the late 2000s, early 2010s.

But then they just kind of lost their mojo.

It stopped investing.

Well, just think about the Crown Victoria loved by cab drivers, right?

I mean, things like that.

I mean, gone.

Gone.

Well, it's markets, it's models.

And the competition is very different today.

So China, I say China was not an industry not that long ago, and it really wasn't.

And today, it's a force that is just literally spreading around the world.

So it's kind of the stack up and then regulation and policy in those different markets made a big impact too,

as to what they did with their products.

But no question about it when they, when you look at those footprints and those boot prints,

they've changed dramatic.

Right.

Glenn, you hit on an important point here because China has a strategy.

China formulated a strategy 25 years ago of how it was going to dominate the global business.

Where's our strategy?

What strategy do we have at all as a country, as an industry?

I don't see any whatsoever.

I see this in full retreat, put up the tariff barrier, hide behind the walls, and hope we get through.

Okay.

I dispute this, John, because we have a strategy and it's right on the table there.

Well, that Glenn, Glenn has people there.

Michigan has a strategy.

Well, we're putting them in a shot.

So talk to us together.

So talk about your latest report.

So we've done this report.

We call it the Automobility Report.

We've done it since 2013.

We do it about every 18 months, and it's pretty much been the same.

It's a definitive look at all the different components of our ecosystem.

OEM, suppliers, talent, testing, everything we have.

Very much unique to the world still.

Even with all the global competition, there's a very unique ecosystem.

We do lead in a lot of things, particularly in North America.

But this year we decided to put two words in front of that Automobility State of.

What's the state of it?

What are the competitive forces?

What are we up against?

And what do we need to do about it?

We've called the action some of the points, and really what we're doing over the next nine months.

And to help us is we're building a roadmap and a policy strategy for our industry for Michigan.

So we're not on an island and we're not on two peninsula is wondering why the world's passing us by.

I mean, when I read the report.

It's astonishing to me.

The depth and breadth of the auto industry in this state still.

But I mean, it's certainly under under pressure.

I mean, and you guys have this stat 20% of all jobs in Michigan are in the mobility industry with 83 billion dollars in compensation paid out annually.

You know, the of the top 100 auto suppliers in North America 95 of them are in Michigan.

Yes.

I mean, it's stuff like that.

I don't think people really.

25 OEMs in Southeast Michigan.

What's 25?

There's 25.

Yes, there are.

They're in the report.

So you know the ones, but Jim Ford's the Lantis Hyundai Nissan Toyota three Chinese companies.

Right.

And you have three new ones relatively have lucid here now.

You have scout here now.

And you have slate.

These are these are OEMs.

So when you add them all up, some of them are small, some are mighty and big.

Yeah, there are 25 different OEMs doing research development testing engineering here in Southeast Michigan.

One one thing that I'd like to point out is that, you know, this report talks about tier ones.

But I think we're still looking through the lens of what the traditional tier ones are.

And we had a panel discussion.

And I kind of said, we have to have paradigm shift because now Nvidia is a tier one.

Now Amazon is a tier one.

And they're not going to take what a Bosch and a Vallejo used to take from the OEMs.

They're just going to go move on to a different business sector.

One that's going to be profitable for them.

Or at least something that gives them an opportunity to continue to build.

Okay, you should then they're not going to take elaborate on that.

But I mean, so you're basically saying that the OEM is going to say, okay, we're going to pay a ten bucks for this.

And they're going to say no.

Well, so there was a great article.

I think it was a tech crunch article or a vertical about Luminar.

And how they invested $200 million into capital equipment for the Volvo contract.

And Volvo said, we're going to go 100 with 100,000, yeah, 100 some thousand LIDAR, to 300,000 LIDAR, to a million LIDAR.

And then they're like, yeah, that's not going to happen.

And you know, the 200 million was already committed and now Luminar is bankruptcy.

Well, Volvo said that they eliminated it because Luminar couldn't deliver.

Right.

That's Volvo side of the story.

He said, but the fact of the matter is they committed a lot of capital to that.

あとは今回のAZを超えたことがあるので、

4GM・インテーブアップを挑戦しているのは

二人はいかなり登場する訳がありますか?

うん阿道の網経過があったのでしょう。

特に私の丸い力を持つの専門と見えることがあるんだ。

これが19.5咳だわ。

19.5咳の大事の網経を新しいものがあまり彦割れているんだよ。

防裏スファンだと anti 戦は斧性のürü 40 womenが多くの瞬間を視crire

これは何か変化したのは今内容ですね

その声話についてはデーキ好奇性です

私のかけて私のして 1mmか

できないんですよ

彼女が全θイエスを守っている

各実力を受けていない

恋は時に存在する声を忘れていました

日本の思い出となっています。

今のポジションは未来の変化です!

Now the pendulum swinging all the way back!

彼らは私の当たりにピュキルを見たことをつけます。

その時は残念のその市場に、

私は、私たちのイメージにつけ入れ〜

協力にとっています。

JRを使って一番好きな情況と言われて、

So when I talk about having to go to the offense,

it's not just the CEOs of the domestic automakers that have got to say

we've got to put a plan together, the country's got to them.

We've got to adopt a regulatory mechanism

that doesn't swing from one extreme to the other

every time we change administrations.

OK.

But what you're not bringing into this discussion

is the fact that lots of people bought lots of Tesla's

これより放送するのは現代と新 key・新 aff Blue to Lik Singer

なので払った人の経済でつわります

韓国では私がいちごをイメージするために

私の経済部ühamenさとも結構それを

到達のプレゼントをこれを

ここでこの目的の一度の保護者すると、

私は、I think G.M.アドライトで

Katalacも下がり、

それぞれは遅れているかも

それは、

1番 dangerの仕事をしこえないのが

興味を要するのは1月初の

アドライトを一度

から2月1日を

one- yenのアドライトを

協力を知らないのも

1何も

アドライトを

プリニストラケートの交流に進むと比べたようなのが

唯一のタストラでかけていると

タストラだと

トナスの原型をできているところだと思いました

約1.6、1.5で

セシウトアップより

今の間に SweatBlairの

クリームラストラケートでは

私の前の佐藤の

冬に出されているような

マカプロムが

and we haven't talked about it but we all know that it …

roid down through the tiers and that's where a lot of the pain is

you know, the capital can't be deployed

capital it's sitting idle

capital it's you have to go back to your customer and say

I need relief

and so that's going on

I talked to a CEO last week and I said

What's the situation with TRF Centrain?

And you say you know what the number one problem I have is

is how much it's damaged my relationships with my customer

because the friction

ブレ勝器人が6%製品の少し秒されてやいから

ソンスのアッションを使ってみて

彼らは全員がしていっている

富裕を責せました

店も必要で出ていた

その側みたいに

国族とかマウルできた

果てがあったら、あなたのことを言っていると、

この卑力と関係があることはあるのが、

私たちのポテトについて、

このポテトについて、

自分も日本のシーダーを持っているんだ。

私たちのポテトについて、

しかし、 depending on where you're expanding your income,

このポイントがある、北までのスタッフを使いますか?

あるのに、世界な部分であります。

しかし、アーツティアは距離によるのではない。

このネイトレンジームは、3コンパニーの限り、

Z公開で今、和田院時代の交通努力ではなく、

不會だよね。

4月1日、元年のスタッフを作られます。

このお話を僕のことをやることを用意しました

Third thing っている

やりあえずのコンプレヤーの

迷子の方が

簡単に言った

お話を失う予定になった

1年後、

アメリ

高年加穂後にも、

自宅を負けて to

環境をしていますは

5年後にも、

異なるのにホイントに

全てがオレを

負けたら、

おかしいでしょ?

永遠の多くに

その後、

しかし【トスタップルーチャー】

エstoff邪魔を

負けたのは

We had two, we had Elizabeth Care from Carr, we had Daniel Howe, and we had April

Bear from Stateside moderated, and it was a great conversation, but you, and you

made this point to me, the shell of the vehicle, the mechanical part, anybody will be

able to do that, and can already, but it's the other guts that are going to be the

differentiator.

Yeah, we have to be able to walk into gum, you know, as private enterprises, but in support

of that, I'm not a politics guy or political guy, I just know that, if we were looking

at car manufacturing as being commoditized within the next 15 years, how would we create

a strategy to build around the next thing, because we already know we're probably not

going to get a lower cost vehicle built in the United States versus a China, so what

value add are the legacies here in the United States going to provide that customer

as one, right, because, you know, to your point, why can't Ford and GM, you know, be

grudgingly handshake and say, let's work on LMR together, we could save a billion

dollars each, probably, at least a billion dollars each, and probably get to market quicker,

because they worked together with Toyota, they worked together with all these other companies,

but Jim and both of them have announced that they have LMR technology.

For example, they both collaborated on the 10-speed automatic charions mission, that's

in almost every F-150 in Silverado, when you talk to the engineers at either company,

they're both going, that was a great program, that really came together well, and then you

ask them, well, what's the follow-up, what are you working on now, oh, we're not, you

know, they have the success story and they just let it fritter away.

From our perspective, and this is what we're calling on the report, and we're going to

do with the roadmap next year is, we have an inflection point election next year in

this state and in the country with the midterms.

So if we just focus on our state and all those assets and all those people that are employed

and millions of people, it's our economic driver, yes, ag and travel and tourism are too,

but this is our economic driver, and if we don't do things differently, we cannot expect

the same result.

We kind of, in Michigan, want to force our way through these inflection points and

it doesn't work that way.

It's dramatically different now, so we have to wake the politicians up, and we've been

doing that, and Lansing, we're going to do more of it.

And we have a new governor coming on, so our intent is to hand a report and a blueprint

to that next governor when they take transition office next year, that's our plan.

But when you survey the landscape in Michigan, and you survey the number of factories that

we have here, whether it's assembly plants or supplier plants, and is it this mindset

of people wanting to continue to do what they've always done, but maybe let's just

do a little better this time to solve it, or are they recognizing what it seems to me

that you're suggesting is that you need a step change, that you need to be doing something

that is entirely different than has been the case for the last umpteen years.

I think most companies know the step change.

For example, the factories, there's going to be so much more automation.

We think there's a lot of automation and machine learning and AI and plants right

now, we haven't seen anything yet, because that's the only way they can be able to compete,

and that's the only way they can be able to drive cost efficiency, that is going to happen.

But you've got to have a lot around that.

You still have to have business climate policy, and you need to have talent, and I know

it sounds like a broken record, but ask anybody, we still don't have enough skilled trades.

We don't have skilled trades.

Right.

Which is a fault of the education system, to a degree, and as a fault of the automakers

too for not having apprentice programs.

Yeah, I think there's a lot of good things happening in that area, and we could go down

a rabbit hole, and I do all the time, but we do a really poor job with pathways in

our schools.

Right.

Exactly.

And those states, which are doing a better job, are the ones that are going to thrive,

and that's where you're going to have an automated and advanced manufacturing located.

Right.

And what I love is that that's part of your report too.

It is.

Education's got to get addressed, and that's why when I'm saying it's time to stop

retreating and go on offense, it's a comprehensive approach that we need.

It's not just, you know, trying to light a fire under the CEOs, they already got their

hands full.

They're trying to do stuff, although I do think that they could do more.

But yeah, education, keep part of it, regulatory environment, investment climate, you know,

we need to think about a comprehensive strategy, I don't like to call it an industrial

policy.

A lot of people get their hackles up when they hear that term.

That's what it is.

That's what I know it's what it is, but I'm using the term strategy and somebody goes,

I don't call it that.

I'm like, well, what do you want me to call it?

I call it strategy.

Right.

People don't seem to object against a strategy.

And I guess as politicians and economic development folks, do we lean into the incumbents

that are currently here, or do we do create outreach?

Because if you think about in broad sense, it's the Chinese companies that are actually

growing, that are adding people to their companies as opposed to replacing people, which

the GM's and forwards are basically doing.

And I had to qualify this on the panel because I wasn't sure how it was going to take,

you know, my dad, 27 and a half years of GM, my sister, 35, her husband, 30, but as a

Michiganer who wants people to have jobs, do we invite the Chinese, if we feel that

inevitably they're going to be building in the United States or North America?

Do we feel that inevitably?

I do.

I do because the 20-year-olds, the 25-year-olds on TikTok see Chinese cars every piece

of their feed now.

And they know what they're missing.

And there's going to be this swell of resentment on that stuff, I think.

But how do you let the Chinese in a way that's fair and equitable, I guess is the

term that I would look for, you're up against a state policy.

That is true.

They don't have, look, too, you know this as well as I do.

How many Chinese car companies are profitable?

Three or four?

That's it.

And their profitability is nose-diving right now.

You take away the government subsidies in China that industry collapses overnight.

So that's what we're up against.

Companies that can take the long term because their government's going to prop them up.

So, getting back to what Glenn was saying, how do we have investment policies in the United

States that encourage a long-term look?

Because right now for the investment community, long term is the end of next year.

That's long term for them.

That's a long way.

The end of 26?

Holy moly.

That's a long-term way.

Whereas the Chinese take a 10 to 20-year look at things.

You know, look at simple things that we've given away.

You know, lithium ion batteries, where were they invented right here in the United States?

When you look at, you know, rare earth magnets, general motors invented them.

What did they do?

They sold it to the Chinese for pennies on the dollar.

Because GM could not see an instant return on this stuff.

The Chinese saw a long-term benefit and now they dominate that segment.

So how do we put in regulations or laws in this country that reward the long-term look

at things that encourage investors to take the risk to put money into it?

John, I'm going to double down on that because Tesla announced that they're going to incorporate

Starlink into their vehicles.

That was huge.

Satellite with GM in the late 1980s and then on-star could have been the connected vehicle

and then they had EV1.

So all these things they were out of the curve, they just didn't, I think the bean counters

were the ones that were like, this is an immediately profitable, so we're going to

can it.

But some of these companies do have that vision.

I know, but we blame the bean counters.

But they're looking at the guidance that the company has given to Wall Street.

And that drives the stock price.

And you've got a board of directors who's telling management, you've got to increase your

holder value and you've got to do it every single quarter.

So I'm not saying we're going to rip up the system that we've got, but we can put rules

in place that reward long-term investment.

I agree, and I'm pretty optimistic about the hometown teams right now, but a lot

more optimistic about Stellantis than I was a year ago.

For sure.

And I don't know if you saw, I mean, to see Auburn Hills, Texan are alive against, to

me is pretty cool, right?

Especially what I do.

I hope it's not too late, that's my work.

They're making a go.

Yes, they are.

They're making a go.

The hiring people, they're rebuilding it.

They're going to invest in their product or invest in their plants and they're making

a go.

They're pushing the chips in.

So I was at the Ford, new Ford headquarters, got a tour of that a couple of weeks ago.

Very impressive.

I mean, they're packing it in to compete, right?

And I don't think you can argue with the General Motors product lineup right now.

We're setting the easy EV pullback aside, but what they all need is consistency because

you're right.

The White House changes in a couple of years and the Democrats come in and the green

agenda just gets jammed on our throat again, that's not going to work.

So we can only do so much there, but I do believe as a state in a region here with leadership,

we can do a lot, you know, we've flipped on our own issues, look at right to work.

That doesn't help the situation with attracting businesses, we go back and forth, back and forth.

Right, just for the audience, so right to work means you don't have to join a union

to have a union, you just don't have to join.

Right.

You don't have to join, right?

And the states that are growing with other parts of the industry are all right to work

states for the most part.

Right.

So do you think that is why I mean, you have this, the stat, which I think is notable.

In 2004, 3.1 million vehicles were built in southern states in 2024, that rose to 5 million.

Whereas in the Midwest, which includes Michigan, the production of new cars plummeted from

7.1 million built in 2004 to 5.2 million last year.

All you have to do is look at a map of the United States and map where non-UAW factories are.

They're all in the cell.

And they're all growing.

Right.

And all of the GM Ford Stellantis factories are all based in the Midwest.

Right.

No, look at this country.

You know, you mentioned that we have 95 out of 100 of the top tier suppliers in the world

located in Michigan.

We don't have one foreign automaker-based assembly plant in Michigan, none.

And Toyota, going back some years ago, wanted to put a plant in Michigan.

There's been quite a few OEMs that looked at over the last 20 years.

That's right.

Volkswagen was another one.

And they sent out feelers to try to find, you know, where would the UAW stand about

them coming?

It was like, you bet we're going to organize you.

You bet you're going to take a big three contract.

You bet you're going to pay the same thing that the big three pay.

And then, one, thank you very much.

I'm going to go to Indiana and Mississippi and Alabama and Georgia because I don't want

to put up with this stuff.

But that is what it is.

It is what it is.

Right.

So it's, what are we dealing with?

What do we have?

How do you protect it and retain it?

The 13 assembly plants, the 25 OEMs and 95, and that's just a tip of the iceberg.

The multiple, multiple of companies and small, you know, 10 employees, 75 employees across

our communities.

Which is where the real innovation is coming out of it.

Well, there is.

And that's where there's a lot of employment there and a lot of, a lot of investment in communities

and a lot of little, little league teams get sponsored by those, those companies.

We have to look at, again, back to what we're saying.

The forces we're dealing with are very different.

And then oh, yeah, we got this thing AI that is just blowing up the world on top of

it, right?

And so these are what we're dealing with.

So what do we do to make our hometown teams?

And I do consider Toyota to be a huge corporate citizen here.

They're an excellent question.

They are a huge part of our ecosystem, our culture, and our community here.

And so are a lot of the other OEMs.

So what do we do to help them?

And we have to take a longer view and then that's what we do.

No, I'm glad you brought that up because, you know, when we say Detroit,

everyone thinks GM Ford Chrysler historically, Toyota, as you pointed out.

2,000 people in Arizona.

Excellent.

And, you know, right down the road here, I mean, literally.

Nissan tech centers.

Nissan tech centers right around the corner here.

And the Hyundai one isn't far away either.

I live in Metro Detroit and they're great Korean restaurants,

they're great Japanese restaurants.

And that's because they come over here to take jobs.

Exactly.

So they should be included.

Right.

No, they should be.

And when I talk about time to stop retreating and go on the offense,

I want them to be part of that offensive plan.

Well, not to give you a specific last year.

We worked on an R&D tax credit for the state.

We didn't have one.

We were one of only a handful of states.

We have one now, but there's waffling on funding that now.

It doesn't make sense.

Lack of consistency.

But I'm going to throw this out there.

There's this fundamental, let's say push against innovation.

Because innovation Silicon Valley starts with two people,

and a computer or two computers or three computers.

And so we have to also consider what the next generation

of innovative companies is going to be.

Make it attractive for them.

Why isn't Uber here?

Weibo is probably going to be the best thing

that happened to competition in the Big Three.

Although they're probably grudging about

welcoming them to Detroit.

I actually think it's going to be an amazing thing.

Because we get to experience it firsthand in Detroit.

And then we know what else is going on in the rest of the world

because Waymo's now in Detroit.

And I think more companies like that need to be attractive.

But explain which means why this will be affecting the Big Three

that Waymo's here.

Well, because first of all, we only really talk about automotive.

And to me, automotive is now a slice

of what transportation and mobility is.

And Detroit and Michigan want to be

this global epicenter for mobility.

That's a tagline or a term that they've coined.

And to me, mobility is my son wanting an e-scooter

and being able to ride an e-scooter to school.

Instead of me getting in my car and driving him three-quarters

of a mile or getting on a bus and driving three-quarters of a mile.

Buses are better than individual cars.

But that's to me is mobility.

It stopped being one person, 90% of the time in a huge car.

And then picking their kids up for five minutes

and then dropping them off and getting in this huge car

again by themselves.

Specific, you know, picking up on that two things about Waymo.

And they were here before, by the way.

They were retrofitting their vehicles in Detroit.

They do that in Arizona now.

But I see there being two things.

First of all, I think that technology being present

in our ecosystem is significant.

And I think people seeing it is important.

But I also am hopeful that it's going to solve some of,

particularly in the city of Detroit,

some of the transit problems we have.

It's a micro mobility solution.

And it will connect places and we don't have.

That's a big issue.

But you know, the other thing I would really,

I was at Michigan Central two nights ago for their rap party,

their annual, I got to tell you,

we are standing there and seeing, you know,

200 startup companies and down there now.

Yeah.

That's the future.

Yeah, yeah, yeah.

We're going to hear more about that.

Let's talk more about it.

But first, we're going to take a quick commercial break

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All right.

We're talking about how this American auto industry

has got to get back on the offensive,

stop all this retreating that's been doing around the world

and from different market segments.

But going just before the break,

you were hitting on what I think is going to be

the North Star for where we've got the head to,

all the startups that are happening right now.

Absolutely.

And I want to hear you talking about that.

But first, just as an anecdote, right in this immediate,

so yesterday I was doing an interview with a company,

I won't say who just yet, talking about an automation breakthrough

that they're working on with a Japanese company

that will be out by the end of next year.

Right down the road here in our industrial park

is a startup, handful of guys,

that have developed a software defined EV battery.

They came knocking on the door here going,

I put them in touch with the EV battery lab.

They knocked on the right door.

There's another company down the road here

that is working on carbon capture for locomotives.

And what I'm getting at is this is all sort of fallen

into my lab by accident that I ran into these people

and these companies.

And I'm going, oh my God, this is really cool stuff.

This is bleeding edge.

And if I know these three, how many more out there

are there that are working on all this stuff?

And so, but you pick up the ball

because I'm working with 200 startups.

I'll give you a few, but I'm going to let him riff

because this is his world.

So look at the history, 120 years old,

this town was built on startups, right?

We all know that.

It's culture, it's DNA.

The US patent office put its fourth patent office here

about 15, 20 years ago because of the technology

and the patent generation that comes out of the big companies.

Now what we're doing is we're seeing this growth

and investment and innovation.

And Bill Ford saw, that was his vision for the train station.

Detroit will soon have five innovation districts

across auto, mobility, clean energy, and life sciences, five.

Didn't even have but one, not that long ago,

tying that to Ann Arbor, tying that to McComb, Oakland,

and then into Ontario.

The game changer for us is going to be enabling new technologies.

And I maintain, there are people, men and women

who work for the incumbents who have ideas,

who will bring these things alive.

That's who's filling these garages around you.

And there will people who will come here

if they know the funding's here,

the policy's right and the talent's here.

Over to you.

So we talk about this all the time.

So my day job is running the consultancy,

but I also moonlight as helping startups as a mentor,

advisors, some funds, due diligence for investments.

And so I get to know, I work out a new lab

a couple days a week.

I get to know all those founders pretty well.

I'm excited.

And the new lab, again, for the audience that don't know.

We're talking all this into a,

God, you're right, Terminal.

New lab was an innovation space

right next door to Michigan Central.

So new lab is an innovation company

that forward via Michigan Central hired

to manage this innovation space.

Right, right.

And they're, the space now has around 120, 130 founders

and startups working out of there.

It's particular specialty is hard tech.

So they have around $12 million, $15 million

with a capital equipment, CNC machines, 3D printers,

you name it, they have it to build prototypes.

And you know, one of the big things

and to Glen's point, I'm gonna fast forward a little bit.

The automotive industry historically has been so good

to the United States or to Michigan in the last 50 years

that the idea of taking risk

and starting a startup has kind of gone away.

And the whole failure thing is still looked down upon

whereas in Silicon Valley and in China,

it's a badge of honor.

And so I think getting back to that

and what we're likely going to see

is a lot of layoffs forcing people

to become entrepreneurs.

We're already seeing it.

Yeah.

And so if we can encourage that,

then again, write small checks

because so the reality is if you're a hard tech,

you don't get a ton of investment of the entire pie

because most investors think software

which gives a quicker return.

The hard tech companies need larger checks

in a longer timeline.

And so we specialize that in Michigan and the Midwest

but the money is concentrated amongst the few

whereas out on the coast and Silicon Valley

and in Boston and New York,

there's more entrepreneurs and smart entrepreneurs

than investors that want to invest in them.

And so there's more demand on the entrepreneur side

as opposed to here.

But these are things that we should still encourage.

So how do you change that then?

I mean, success breeds success, right?

You show some success stories to investors

they're gonna go where's more.

It's building, but again,

you have to put the fundamental things in place.

You need transit.

Like we need transit between Ann Arbor and Detroit.

Imagine if we had a train that was going back

and forth regularly.

Imagine if we had a train that connected Detroit

to Grand Rapids or Detroit to Chicago.

We need policy.

We need to invest in the R&D tax credit

but we need to make it a place where founders are welcome

and we need funders to be able to be here funding

in that flowing too.

So it's building that ecosystem

but really what it is it's changing the economy.

Look, I would love for there to be three more assembly

plants in Michigan but let's not kid ourselves.

That's not gonna happen.

I hope there's some reshoring.

We're seeing a little bit of it.

It's too early because there hasn't been

consistent trade policy.

But let's assume we're gonna get some more manufacturing

but it's not gonna move the needle

for this region and this economy.

But new innovation and funding that new

will be across different sectors.

That's where we've got to change

and that's where the conversation is actually

on economic development right now too.

I'll give you a specific example really quickly Gary.

There's a company, DMS, who just read.

It's a great example.

Acquisition, now they're now called Voltava.

It's the second largest minority owned supplier

in New Jersey.

Is Detroit manufacturing system?

Yeah, it used to be DMS.

So they have a division called Kinetic

that's trying to help stand up startups

by building prototypes, getting them

towards mass production and job one.

So we need more suppliers to be entrepreneurial

to take on some risk because

and this is the challenging thing at a time

where they probably need to be holding on

to all the capital they can

because of all this uncertainty.

But that's where those small suppliers

who were entrepreneurs, small time entrepreneurs

back in the day probably need to think back

and say who gave me my opportunities

or who helped me, I need to pay that forward.

I think if we can get more and more people on board

to do that, and obviously you can tell

this is where I'm really passionate about.

It's one of the biggest reasons I move back to Michigan.

It was because I was kind of drinking the Kool-Aid

and I want to be a difference maker.

And so I get a lot of joy out of being part

of this ecosystem and trying to help here and there.

So this sort of goes to what the three of you

have been talking about and I want to get

some reflection on this.

So in your report, you're looking at jobs,

positions that are going to be available in 2032,

which is not that far from now.

So you have software developers,

3,360 annual openings a year.

You've got industrial engineers, 1785 per year.

Mechanical engineers, 2075 per year.

And the least of all of the ones that you have on your list

are industrial machinery mechanics 2000 per year.

So it sounds to me that what you're doing

is you're talking to guys who are innovative

who are engineers, whether they're mechanical engineers

or software developers involved in that.

And you talked about the education system.

How many mechanical engineers are being put out

in China on an annual basis?

I mean, it's just like a frightening number, right?

So how do we get those people to come to Michigan

and not to stay in Silicon Valley where you were

and say, you know, auto industry,

that's 19th century, we don't need that.

Again, he can talk to it because he lived in that

ecosystem, that rainforest.

The mechanical and electrical engineers

that were generating, we do it as well as anybody

in the world, they're feeding the beast we have.

They really are.

And that's why companies,

Rivian came here to get the company off the ground

because of that talent, right?

Now, we're, what's all the news about Rivian right now?

It's AI, it's automation, it's machine learning.

That competency is not something we're known for.

They didn't do that in plummet.

They did not.

And we generate a lot of those people here,

Michigan, Michigan tech, but we lose them, right?

Because the ecosystem, and I know it sounds like

it isn't overused where, but I used it.

We don't have what Silicon Valley and Austin

and Boston and research triangle.

Multiple industries where people move around, right?

They move around between industries.

They hop around and you have this buzz that's going on.

Then you have the founder community

and that's what makes those go.

That's what we have to build here.

I think the most overused expression that I always had

is we need to diversify away

from the automotive industry.

We need to use the auto industry

as a platform for diversification

and help the company grow.

Oh, that's a huge opportunity.

Exactly.

Huge opportunity, because if you believe

that car manufacturing is going to be like

the low margin part, it's going to be additive.

When you're in a Waymo, what are you going to do for an hour?

What are you going to do for 20 minutes?

You're going to entertain yourself, you're going to shop,

you're going to do that.

These are opportunities within the vehicle

that new companies or existing companies

that want to go work with the GM,

want to go work with the Ford,

can open a little office to do, right?

And then to Glenn's point,

so I spent seven years in Silicon Valley

and it was just a mind-blowing experience.

And I wasn't an Apple.

I mean, I wasn't an employee of Apple.

I was an employee of Silicon Valley to your point

because they just go to different companies and they work.

And my thesis is having lived abroad for so long.

US innovations are really good,

but China has speed and they have numbers.

There's four times as many people.

So we need to continue to bring in the Japanese companies,

the Korean companies, the British companies,

the German companies to really round out our competition,

our competitiveness to the rest of the world.

It's difficult right now in this moment

because the current administration

is kind of poking some of our allies in the eye a little bit.

But we need to all work together

because that's where all the opportunity is to me.

That's where the growth is.

Quick story.

I went to Silicon Valley 10 years ago

with my Mishado brochure

and I talked to Apple, Tesla, Google,

and this little company that became Cruz.

I sat in Kyle Vote's kitchen in the warehouse district

before GM Bottom and I said,

well, what do you think about Detroit and Michigan?

And they said, and it was just him,

you guys are great metal benders.

You bend the metal, we'll do the brains and the innovation.

We have to do both here and that has not changed.

And now when you look at what's happening

again, all these forces around us

and the ability for us to foster startups,

that's the future for us.

You know, if we don't do it,

we can't force our way through the environment.

See, I think you both are hitting on something important.

I don't think the legacies are gonna do this at all.

I don't think they're capable of doing it.

It's going to take new startups

working in the industry

or the mobility industry, let's call it,

that are going to bring this region

and this industry back to.

That was Bill Ford's vision for Michigan Central

and then the book depository become a new lab.

Right.

And they're doing it

and it's spent a lot of money doing it

and it's working.

Don't know, I agree.

But they're doing it outside of the Ford Motorcom.

Look, Ford's putting all of its investment

in future EVs in its skunkwork operations.

It recognized, it couldn't,

I'm not gonna say it couldn't do it here,

but it couldn't do it within the confines

of the Ford Motor Company.

And I think GM's running into the same problem.

I think Stellantis is already ran into that problem.

So what does that say about the industry and Detroit?

What it says is we need these startups.

We need, look,

if you go back to the nine,

from about 1900 to around 1930,

Detroit was the Silicon Valley of the world.

This is where the entrepreneurs were.

This is where the innovation came out.

We haven't lost that completely,

but they're kind of smoldering embers right now.

We need to get the flames going.

I don't know the exact history,

but I know that there were dozens of brands

and the competition created the innovation.

And so with three big OEM conglomerates here,

it's hard to get any breathing room.

But if one or two start to gain steam, if you're a startup,

and really, really push the OEMs,

number one, the OEMs are gonna be better off.

Number two, it makes that startup

if they can survive stronger, okay?

And it makes it a global company

as opposed to a Michigan company or a US company,

because the reality is if John started a startup,

the software development startup or any kind of startup,

he would still have to go to Silicon Valley

to get the big check.

But if he felt some loyalty

or there was some true opportunity

in the state of Michigan, maybe he would stay, right?

Because anything that deals with AI or software,

you're either gonna go to Pittsburgh,

or you're gonna go to Boston,

or you're gonna go to Silicon Valley, right?

And that's okay, but you said you know,

Pittsburgh is a place for AI,

when we've historically known Pittsburgh for steel.

Yeah, that's a great point.

It all came out of Carnegie Mellon.

Exactly right.

It came out of it.

That's right.

And number of Carnegie Mellon grays.

Oh, that's right, I forgot.

Yeah.

I mean, if you think about it, 2007 was the DARPA challenge,

it all, like a lot.

All those guys were grad students.

So, like, Sterling Anderson was part of a team, I think,

and then Anderson was also part of a team.

And then Sebastian Thryn,

who actually started the Waymo.

Yep.

So, that's the thing.

We can still, we can go to Pittsburgh

and try to get them to come here, right?

Like, to me, it's like,

there's a lot of ingrown innovation happening,

but we should also welcome,

because the innovators here,

they need to be battle tested too.

And that's not gonna happen if it's only Michigan company.

Well, okay, I would, you brought up Rivian.

And so, okay, if we look at Rivian,

I mean, they did a lot of their engineering development,

literally down the street.

I saw the first prototype in their office,

I'm sure you saw it too.

Yeah.

And so, what did they basically do was,

they said, okay, we're gonna move to California,

but we'll keep our facility in suburban Detroit,

but it's much less important than it was.

It's factory, normal Illinois, right?

The old diamond store motors.

It was available on it.

It was available, it was easy.

But where are they gonna build their second plant?

Not in Michigan.

Georgia.

So, is that still?

Well, if they build, okay.

If they don't, we're at the land.

They got the land.

And they got the money from the state.

Okay, but again, they're not gonna come here

because of the union.

I mean, it's that, I hate to put it in that simple.

That's a fact and we could go down that.

I do think, I will make the comment.

I do think that the UAWs are partners.

They help build the state.

And they are the partners and there are contracts

and there are agreements and they are the lifeblood

of those manufacturing plants.

They gotta be part of this.

You know, they have to be part of this.

I know that's a difficult thing.

At times, particularly in the contracts,

come up, they have to be part of this.

They have to be aware of it.

Agreed, totally, totally.

It's the reality.

It is.

They're not going anywhere.

We don't want them to go anywhere,

but they gotta be partners.

They gotta understand.

How do you take a UAW plant

and make it competitive with the Chinese?

I wouldn't be who I am.

My family wouldn't be who we are without the UAW

because my dad just a union job

that really helped kind of create.

It's going to become more effective.

My way through college is a UAW worker.

But to do the people who are in this startup world,

these, you know, the 200 companies that Glenn mentioned,

I mean, are they cognizant of the UAW

or is that something completely forth?

We're not even thinking about manufacturing, you know?

That's kind of a, that's kind of like,

a couple of them are.

Yeah, we know.

That's kind of like an afterthought for them for now.

You know, because they're putting up fires every day,

trying to keep the doors open,

trying to find it's their first dollar of revenue,

their second dollar, their third customer,

their fourth customer.

And that's why we should not poo, poo failure.

We should encourage it as long as, you know,

they're working really hard

because it creates this urgency number one,

number two, it creates an excitement

because now young people are looking at Detroit

like, what's going on over there?

It's not just building cars anymore.

You know, and the city of Detroit is just having

such a resurgence because the lions and the pistons

and stuff like that.

So more people are just looking at Detroit in general

outside of Michigan and the United States.

And this is a tremendous opportunity

to Glenn's point because there's a new governor

because of the midterms.

And so if we can get everybody on board,

and this is where I'll poop with a little bit,

there's a lot of performative things going on

like people wanting to take pictures with entrepreneurs

and try to get some of that shine.

But we have to continue to identify who those hard,

those people that want to do the hard things

and help these entrepreneurs, you know.

So should the state underwrite the people

or state absolutely has to invest in innovation.

And it has done it incrementally.

But you know who's doing it?

Ohio.

Been doing it for 20 years.

Their innovation funding is 100 times what we are.

Ohio.

So the state absolutely has to take an active role

in funding innovation.

There was some in the last budget.

It's been under fire.

Again, flip, flopping back and forth.

No, you have to create an ecosystem and an environment

and you can help that with funds.

But it really does come to the private sector too.

You need Chris Thomas and Jessica Robinson

and Assembly Ventures.

We need more Assembly Ventures here.

Riley Brennan.

Riley Brennan, yeah, we need more of them here.

They created Tupor.

So basically every year you invest

a little bit of money in a Michigan-based company.

And to your point, Glenn, I was in Texas

for South by South West Austin last year or earlier this year.

And one of the startups was like, oh yeah,

we were just in a meeting with the governor's office

and he said that they have $46 billion

to make it rain for us to do business here.

And so it's not just about the money though.

It's about the skills and it's this whole menu of items

because if it's just about money

then everybody's going to go to the...

Well, you know, and that's the other thing about this.

If we put a policy together

that depends on government handouts...

No, no, no.

It's not going to work.

We need policy not handouts.

But not subsidy.

Agreed.

But we also need government to take an active role.

I get the privilege to talk to a lot of CEOs

on a regular basis like you do

and I was in talking to one a week ago

and you know what, he wanted to talk about affordable housing.

Not just in Michigan where he operates all of his plants

and it sounds like a broken record.

No, it's a huge problem.

So Michigan has to address those issues.

People live in places where there's strong schools,

strong community, strong infrastructure,

see broadband.

That's why they live where they live.

And then if you want the incumbents to grow

that's where they're going to grow

and that's what people are going to want to be here

particularly in the software area.

And then if you want the founders to grow

you've got to give them the things they want

back to that railway line

that goes back and forth to Ann Arbor and Detroit.

Got to make that happen.

Okay, but what about what about Ford and General Motors?

Let's just use those two

since they are domestic companies.

And they're going to say,

well that's all fine and well

to help these small startups

and to do these various things.

But we are competing with global goliaths.

Okay, we're fighting tooth and nail.

We're having challenges

whether it's the challenges from Wall Street

or the challenges from the market

or the challenges of environmental issues.

You name it, we need help.

We're getting black and blue

and they are, right?

They're not only getting black and blue

they're also a bit under assault

by their own backyard.

I mean, they've been under attack.

There were tax credits given.

They still are to be honored.

They're very controversial right now.

People want to peel them back

but they were given to the OEMs.

Okay, we got to honor our commitments

but we also have to invest in what they need

for the future.

And frankly, flip off and back and forth on policy.

We, our politicians have to understand this.

I just went to Lansing in September,

eight o'clock, briefing and a four o'clock briefing

invited every legislator to come in

and I showed them the five forces,

including China.

And I showed them the 9,000 vehicle ships

that UID's got six on the ocean right now

and two being built.

And we want them to know

because these are our hometown teams.

We have to make sure we protect them and enable them

and not make them feel like they're unwelcome.

And then when we look forward,

we got to make more companies feel like they're welcome

like Lucid, like Scout, and Slate.

What do you think?

I mean, how does a state, how does a country

protect the development of new ideas

as well as protect what has been a 120-year industry

turning out vehicles and do both things?

I mean, you said earlier about walking

and chewing gum at the same time.

Well, this is like walking chewing gum

and juggling at the same time.

Rubbing your belly and tapping your head, right?

Yeah, so it looked.

It comes down to leadership and strategy.

It comes down to leadership that understands

the comprehensive, the big picture.

And now we start to put together

a comprehensive strategy that, again,

I would say isn't about government handouts

and subsidies and things like that,

but it's policy, excuse me,

that encourages the right kind of education

where we're training kids not just to go to college

because the reality is the vast majority

are not going to college.

The majority, though, can be trained in skills,

especially manufacturing skills.

We have an acute shortage of skilled tradespeople.

Those jobs pay really well, by the way.

I mean, really well.

So, those are probably the protective ones from AI.

They are?

Yeah, oh yeah.

You can't off shore them.

You can't outsource them.

These are jobs that have got to be done

by human beings, but you need a leadership

and policy to make this happen.

And you need shows like this

with people sitting around who deal with the leaders

in the industry and in government

to get the viewership talking about it

to their peers and to their leaders.

This is how it all starts.

Yes, yes.

First, you got to start identifying the problem

and then start talking about solutions.

If you want a strong, healthy future in the state you live in,

I know your audience is wide.

Global.

It's global, but you look at just the belt

that goes down to the south.

What of Kentucky and South Carolina

and Alabama and Tennessee?

They've had very consistent policy

even across different governors.

That's a fact.

I've been in all of my work with all of them.

Governor Snyder got it here.

I will give Governor Whitmer credit.

She's understood this and believed in it

wanted to make a difference.

But they're past now and she leaves office.

So we had a huge decision about, because you're right.

The first word you use was leadership.

That's where it all starts.

And you know, we're talking about Detroit

and I mentioned our audience is global.

For all you viewers in South Korea

and Germany and England

and every other car producing country, same issues.

Exact same issues.

It really is.

Yeah, they are.

You know, we're talking about Detroit.

We all live here.

Our families are here.

Our friends are here.

This is our community.

We want to see it done.

But it's not just relegated to Detroit.

As I said, that CEO said it's housing everywhere.

The issues are the same.

But where growth places that are growing

or they provide the things we're talking about today.

And I feel the United States is much better positioned

than some of those other countries that you had mentioned.

And because of structural issues,

because of the lack of culture of technology

or technology companies, you know, we have that.

So we have the experience across a ton

of different types of employees.

You know, and if we can convince them

because it's a better life to live in Michigan

as a software developer or whatever, right?

Like, maybe that's not impossible.

But I don't think it's impossible.

You know, it's entirely possible.

Yeah, for sure.

I agree.

You know, there's nothing that can't be done

once you imagine it.

Literally, I mean, so we start to have Henry Ford.

Yeah.

So all we got to do is start the imagination

and I think we've done this on this show.

But it's probably time to wrap it up.

So to Lee, Glenn Stevens, awesome to have you guys.

Thank you guys.

Thanks for having us.

And good luck.

Yeah, and yeah, let my job,

what I get up every morning to do,

it's what I think about it.

And Gary, let's congratulate ourselves

on a year's worth of auto line after hours.

This is the last show of 2025.

But we'll be back again in 26 and keep the ball rolling.

January 8th.

That'll be all of these fools.

Happy holidays.

Yeah.

Happy New York.

Appreciate your time, guys.

Thank you.

Thanks everybody for having tuned in.

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AAH #772 - Hey Detroit, It's Time to Go on the Offense

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