Detroit was the San Francisco of its day. Because of survivorship bias, path dependence of supply chains and organizational advantages, etc., the large automakers of the mature industry enjoyed excess profits. These profits were geographically constrained, and so local interest groups - unions, city governments, etc. - could extract some of them for themselves. The problem is that these extracted rents are sticky. The interest groups that capture them tend to contrive moral stories about why and how they were able to capture them. So, when something comes along like Toyota and Honda, the industry that was once bathing in excess now suddenly is hampered with excess costs which are difficult to remove. When the tipping point arrives, the bottom falls out fast. In the case of automakers, we now have the perverse outcome that there is a thriving automobile manufacturing industry in the country except for the one place that was in a position to maintain it. Suffocated by its own success. The rent seeking around automakers, coincidentally, seems to have been a somewhat equalizing force, mostly being claimed for working class union members and city services (though corruption was part of the story, too, as it inevitably is when rent seeking is endemic). The rent seeking around tech, finance, trade, etc., in the Closed Access cities seems to be a force for exclusion and inequality through housing - a sort of meritocratic kleptocracy.
The broad story of frontier economic leadership in the 21st century may come down to a race between Western cities that have a legacy of risk taking and creativity, but are unable to allow the density that would realize the full value of that culture, and Eastern cities that are capable of building densely but that still seem to be developing the culture of risk taking and creativity that draw so many of the world's brightest to Western universities and innovation centers. Maybe I don't know what I'm talking about regarding the Eastern cities. Please add color in the comments, if you have thoughts on the matter.
Anyway, I thought this story about Ford was interesting, given this backdrop.
The company is doubling the size of its staff in Palo Alto, California, to more than 300 employees, expanding its offices and labs in that city, and signing new partnerships with companies that are developing technology for self-driving cars. The moves are the latest by Fields to reposition Ford into a full-fledged mobility company.
Since he became CEO in 2014, Fields has moved quickly to expand Ford's operations in Silicon Valley. Within months of taking the helm, he opened the company's research and development center in Palo Alto, saying the automaker wanted to be "part of the conversation" in an area rich with tech talent and engineers working on autonomous-drive vehicles.
Geography is as important as ever, ironically, even in endeavors that require few geological inputs. So, even Detroit is moving to Silicon Valley.