Ford is out here this week making a big deal out of its new office complex, which is reborn out of Detroit’s long-abandoned Michigan Central Station. Partly, this is because Ford is extremely proud of this achievement. It also feels like Ford probably needs to explain why it spent so much money on a building when no one wants to go into an office anymore.
Tesla is a mess right now, with another proxy advisor telling shareholders to reject Elon Musk’s biggest paycheck in history, a lawsuit over insider trading, and some board shenanigans. Speaking of shenanigans, Toyota copped to even more test irregularities, forcing it to stop the shipment of certain vehicles.
And, finally on today’s The Morning Dump, people like to say that Kia dealers don’t work hard for their customers. That’s not true! One dealer group did a ton of work… allegedly defrauding Kia America.
Inside Ford’s Michigan Central Station
I’m reading a book about the Peking-to-Paris Rally in 1907; there’s a great chapter about the development of the automobile, and it makes the point that automobiles were too important to stay the plaything of the wealthy forever. Everyone knew it, but it wasn’t until Ford and the Model T that this democratized dream of mobility was fully realized.
Almost 120 years later, Ford is still here, although the automotive industry is in yet another upheaval. Ford is celebrating by opening up a new ‘Culture And Tech Hub’ built out of the once derelict Michigan Central Station in Detroit.
The abandoned 18-story building, and an adjacent building/campus, were redone at a cost of about $950 million and will, eventually, host about 2,500 employees. Here’s Ford Chairman Bill Ford explaining why the company did this:
“Michigan Central means a great deal to us all. In many ways, this building tells the story of our city. This Station was our Ellis Island – a place where dreamers in search of new jobs and new opportunities first set foot in Detroit. But once the last train pulled out, it became a place where hope left.
“In 2018, I decided it was time to change that by reimagining this station as a place of possibility again. Over the past six years, Ford Motor Company and teams of forward thinkers, designers, community leaders, and more than 3,000 skilled tradespeople have worked to bring this landmark back to life.”
That’s a really nice, hopeful vision for the place.
In an interview with CNBC there’s an explanation for this, especially as GM is downsizing and leaving the Rennaissance Center (maybe):
“We’re in a war for talent, our industry and our company,” Ford, who spearheaded the project, told CNBC. “And you need to give talent two things: You need to give them, first, really interesting problems to solve, and then you have to give them a great place to work. With Michigan Central, we checked both those boxes.”
Bill Ford decided to purchase the dilapidated building after years of trips to Silicon Valley for his Fontinalis venture capital firm and during his tenure as a member of the eBay board of directors. He’s long been outspoken about the need for the traditional automotive industry to compete with newer tech companies in both product and talent acquisition.
I don’t mind the swing, honestly, and Ford’s HQ in Dearborn isn’t a particularly exciting building.
Anyway, that’s the reserved, calm Bill Ford version of this. From Jim Farley in the Free Press we get a way more fun version:
“As someone who lived in Detroit during the era when everyone was bashing the city,” he told the Detroit Free Press, “… how incredibly awesome it is to be able to look at the same people and say, ‘You were wrong.’ The city is now growing. It’s kind of a little bit of revenge.”
There are lots of reasons why people have historically talked ish about Detroit, and there were certainly rough times, but the critiques were often, if not explicitly racist, happy to conveniently overlook the impact of structural inequality that contributed to the condition. People did love to act as if Detroit was just this empty, rundown shell, conveniently forgetting the many people who live there (about 80% of whom are black).
Ok, one more Farley quote:
The whole global media, and especially Time magazine: ‘The tragedy of Detroit’? All this bull—- that I just felt we were all being gang tackled by the national media without them really doing their homework. They didn’t know the spirit of Detroit.”
Get’em Jim Farley.
[Ed Note: I used to live in the city of Detroit, and I can tell you that cleaning up this building has cultural/psychological importance that cannot be understated. This is what I remember of the train station:
I will say that touring abandoned structures, especially automotive ones, was incredible. I may have to write about that someday. -DT]
Tesla Drama, Redux
So, Tesla CEO Elon Musk was awarded the biggest paycheck in human history (in part because he hit some humongous revenue goals and made many of his shareholders a little or a lot richer). One shareholder sued saying it wasn’t kosher and the Tesla Board of Directors, largely run by Musk associates or family, didn’t do its job. A Delaware judge agreed, and tossed the compensation, and so Tesla said it would ask investors to reapprove the pay package, as well as move the company HQ out of Deleware to Texas.
A lot has happened since then, including a slide in the company’s stock price. Last week, two major firms that help advise shareholders to vote came out against the pay package, mostly recently ISS. From the Associated Press:
The firm said that Tesla met the pay package’s performance objectives, and it recognized the company’s substantial growth in size and profitability. But concerns about Musk spending too much time on other ventures that were raised in 2018 and since then have not been sufficiently addressed, ISS said.
“The grant, in many ways, failed to achieve the board’s other original objectives of focusing CEO Musk on the interests of Tesla shareholders, as opposed to other business endeavors, and aligning his financial interests more closely with those of Tesla stockholders,” ISS wrote.
Most advisory firms seem on board with Tesla moving out of Delaware, mostly because Texas doesn’t seem to have laws that are that different and it’s sort of assumed Texas judges/government are going to be friendly.
Even more amusing, the committee that was going to decide if the company should move was just two people, but then half the committee had to resign because of a conflict of interest according to Reuters:
Joe Gebbia, the Tesla director who exited a board committee that made key decisions about the car maker’s future, told Reuters that CEO Elon Musk had discussed purchasing a house from his start-up and that he was concerned their friendship could be seized on to attack the committee’s independence.
[…]
Gebbia stepped down from the committee in March after its mandate was expanded from deciding on the redomestication to also considering what to do about Musk’s pay package, the filing states. His exit left behind a special committee of one, an unusual corporate governance setup that has been criticized by some of Tesla’s shareholders.
A subcommittee of one is kinda hilarious, and Matt Levine has a good bit about what happens if Delaware rules against the relocation:
So shareholders will go to the Delaware judge saying “Elon Musk tried to pay himself $55 billion, and you stopped him from doing that because it was unfair to shareholders, and now he is trying to move Tesla to Texas so that he can (1) get rid of you and (2) pay himself $75 billion, so you have to stop him again.” And I think that is an argument that the Delaware judge might find compelling? I mean, she did stop Musk from paying himself $55 billion. Presumably this move will be even more offensive.
This is hilarious and probably won’t happen, but it’s still hilarious. I’m not a Tesla shareholder and I have no dog in this hunt, other than being a blogger and wanting the funniest thing to happen. Oh, yeah, there’s an insider trading lawsuit against Musk as well. I almost forgot about that.
Japan Finding Out Its Automakers Fudged A Bunch Of Tests
Hey, corporate culture is important! Bill Ford ain’t wrong about that.
Toyota, in its quest to be the biggest and the best, seems to have pressured its engineers to the point that they skipped some required tests at Daihatsu. Then Toyota had to stop selling certain vehicles as it uncovered more testing issues at other companies.
And, now, per Automotive News, Toyota is in yet another one of these pickles after doing a little more work. And this time Honda and Mazda had to admit to similar issues:
Mazda Motor Corp., Honda Motor Co. and two other companies were also caught similar certification testing missteps under a review prompted by Japan’s ministry of transportation, the ministry said in a statement on Monday.
Suzuki and Yamaha also uncovered inappropriate testing, according to the ministry.
“It is extremely regrettable that new fraudulent acts have come to light, since fraudulent acts in type designation applications undermine user confidence and shake the very foundation of the automobile certification system,” the ministry said.
Toyota, for its part, says its tests were more stringent and so the tests it skipped were NBD, although it apologized for the mistake. BTW, two proxy firms are telling people not to re-appoint Akio Toyoda as Chairman of Toyota over all this.
Remember, you can’t make a tomlette without breaking some Gregs.
Kia Says Dealer Defrauded Them For $500,000
Dan O’Brien Kia has a mascot and it’s Dan O’Brien, I guess, who is this bald dude with a big beard. It’s creepy and uncanny valley-ish.
The group, based out of New England, has been slowly selling off its dealership after numerous issues, including allegedly deceiving its customers (for which it was forced to pay $1.25 million). This latest accusation from Kia states that O’Brien’s dealerships essentially pretended to sell a bunch of cars the dealer did not sell. From Automotive News:
The defendants “engaged in a pattern and practice” of falsely reporting retail sales when no sale had occurred to the customer named in an RDR, no sale at all took place, a vehicle was transferred to a different dealership and the transaction was mischaracterized as a retail sale, or a vehicle was sold to a wholesaler, broker or fleet purchaser,” the complaint says.
“In addition, the defendants deliberately failed to report the reversal or cancellation of certain sales previously reported in order to dishonestly retain incentive payments,” according to the complaint.
According to the lawsuit, the alleged scheme included the transfer of new inventory back and forth between O’Brien’s Kia and non-Kia stores to cover up irregularities and unrealized sales.
O’Brien’s attorney is seeking to have the case dismissed.
What I’m Listening To While Writing TMD
We did Lauryn Hill’s “Ex-Factor” so I guess it’s only right to do something from Wyclef’s best album, “The Carnival” featuring… Lauryn Hill like 19 times. I love this album.
The Big Question
Is Detroit back? Was it always here? When was the last time you were in Detroit? If you live there, for how long?
There’s another “landmark” building/complex, that is unfortunately most likely too far gone to do anything with – the Packard plant.
This building was built to last – it should stand like the pyramids in Egypt. The floors are like 3 feet thick.
Back in the 1980’s/1990’s, we would store a few cars there during the winter. Some space was rented out by a guy who restored Packards, and much of the space itself was a wasteland of old Packard parts, strewn about like a junkyard. It was a fantasy, like being in a playground for gearheads. But the cars that were stored there were incredible!
Not the greatest place to be. They tried to limit who could come in, with guarded entrances, electric gates, etc. They guy we rented from said that whenever he stopped to work the gate, he always had a .38 in his other hand. I remember asking if that was really necessary, and he said “I’ve pulled it three times.”
But there were all kinds of businesses set up there, including raves, paintball/laser tag, some industrial coating type businesses, etc.
Everyone says it should be re-developed, but some of the most distinguishing features, like the bridge between two buildings that said “Packard,” has collapsed.
They sell the property over and over at tax auctions for like $1.00, and no one can ever follow up with anything, so it’s always going back to the city. Not sure who owns it now…
It looks like the city is tearing down the old Packard plant, and that it will be completely razed by the end of 2024. Total cost of the demo looks to be $26 million, paid for by ARPA funds. The city hopes to attract a new auto-related business to the site.
https://www.detroitnews.com/story/news/local/detroit-city/2024/03/04/demo-update-detroits-packard-plant-to-be-torn-down-by-end-of-year-mayor-duggan-new-auto-suppliers-mi/72834989007/
I doubt anybody’s going to do anything with the former plant location. There’s too much land on the west side of the city that doesn’t need to be cleaned up (the place is a Superfund site still) and would be cheaper to route new water, steam, and electrical lines to. Even just a little ways north, 10 Mile Road has a business park there that somebody would be more willing to build in.
Detroit is definitely back! I grew up in Highland Park from 1970 to 1994 so to hear people wanting to visit Detroit for a vacation is nothing short of amazing! I was also lucky enough to walk through the old train station when it was abandoned/distressed so I am extremely happy Ford threw in so much money to fix it up. It feels as good as when the big three kept the DIA alive during their hard times.
My only adventure in Detroit was in 1984 as part of our months-long honeymoon in our 1976 VW camper bus. We stopped somewhere in Detroit, and someone in a VW bug jumped out of their bug, ran over and gave us a big hug! There were that few VWs at that time.
Matt, would you mind sharing the title of the Peking to Paris book? There are excellent videos on YouTube under HERO-ERA, and it is timely as they are sharing the current P2P
Google says “The Race to the Future” by Kassia St. Clair.
Thank you! I would have expected a variety of books
You’re welcome.
That’s the book! I got sent a review copy. We should have an excerpt soon.
Just bought it. There are some interesting books, could be a good a article. Some fun ones:
First Overland (London to Singapore in Land Rovers)
Survival of the quickest (with a Montero and 944 London to Africa)
Road Fever (GMC from Southern to. Northern America)
Adventures of a capitalist (SLK on 4×4 chassis around the world)