Among the reasons I trust and respect Bloomberg is the news organization’s institutional modesty. The Wall Street Journal has developed the air of a sleazy Fleet Street tabloid, often blaring “exclusive” on stories that in my journalism days were termed “quick and dirty hits” that reporters banged out to let our editors know we were still alive. It should come as no surprise that WSJ’s top two editors hail from the UK, and that veteran Journal reporters are bailing in droves, sometimes against their wills.
Bloomberg occasionally slaps an “exclusive” label on its stories, which cheapens the publication. My Bloomberg subscription costs me about $40 a month, and for that kind of money, I expect all the content to be of the sort that I can’t find elsewhere. For the most part, the news service doesn’t disappoint, which is why I’m compelled to further enrich billionaire Mike Bloomberg every month, so I can savor the filet mignon of business journalism the best minds on Wall Street are feasting on.
Bloomberg reporter Brody Ford recently had an exclusive that I considered a blockbuster, one the business media ignored, perhaps because it wasn’t labeled an exclusive. Ford, a name that admittedly I don’t immediately associate with quality, obtained some internal Oracle documents revealing that news of California’s death as a magnet for the best and the brightest in technology is greatly exaggerated. Although Oracle officially moved its head office to Austin from Silicon Valley four years ago, the software company is very much alive in California.
Ford reported that Oracle still has more office workers in California, where the company was founded and based for decades, than in Texas. About 6,900 workers are assigned to Oracle’s California offices, nearly triple the 2,500 employees assigned to those in Texas. Moreover, most of Oracle’s U.S. employees aren’t assigned to any office, but rather are classified as remote workers. This includes Chief Executive Officer Safra Catz, who is listed as a “home worker” in Florida.
It’s understandable why Catz can’t be bothered to routinely go into the office. Oracle paid her a measly $5.3 million in fiscal 2023, a major pay cut from the $138 million she received in the previous fiscal year. CEOs also have families feed, and living in Florida allows Catz to squirrel away more of her modest 2023 compensation because the Sunshine State has no income tax for personal income.
It’s telling that Oracle in 2019 paid possibly as much as $350 million for naming rights of the urban baseball stadium the San Francisco Giants call home, one of the best ball parks in the country.
California’s reputation as the hub of America’s best technology talent has just received another public endorsement from GM CEO Mary Barra, who in a rare display of honesty was candid about the automaker’s decision to open a “technical center” in the Silicon Valley City of Mountain View, where Google is headquartered. Baris Cetinok, GM’s vice president of product, software and services, will be among the critical GM executives who will be assigned to GM’s Silicon Valley office, which will employ 200 workers.
GM is “going to go to where the talent is,” Barra told The Detroit News. “It’s not to say that our people aren’t great, but if you haven’t been a software engineer and doing the type of software that is needed, you don’t have time to learn. Bringing in the right talent, wherever they are, is going to be important.”
Back in March, I already declared California’s America’s automotive capital, and the trend was more advanced than I appreciated.
The future of automotive is software, and Elon Musk, despite dissing California’s politics and leadership, last year announced that the Bay Area would serve as Tesla’s global engineering headquarters and would occupy the former Hewlett Packard campus in Palo Alto, the company that spawned Silicon Valley’s prominence. Tesla’s first manufacturing plant is in Freemont, about 30 miles from Palo Alto.
“California is a tremendous manufacturer as well as a place of engineering and innovation,” Musk said when he announced Tesla’s commitment to Silicon Valley.
Ford also has an office in Palo Alto, which according to its website has nearly 300 researchers, engineers, designers and scientists and growing. The office has two new buildings and 182,000 square ft. of work and lab space and is focused “on bringing the best of Silicon Valley to accelerate the realization of Smart Vehicles for a Smart World.”
Ford has a team in Southern California working on developing a low-cost electric vehicle platform. The project was launched by former Tesla executive Alan Clarke, whose team is based in Irvine and includes engineers from Auto Motive Power (AMP), the EV power startup that Ford acquired in November 2023. AMP founder Anil Paryani, who overlapped with Clarke for about five years at Tesla, is also part of Ford’s EV skunkworks project.
Doug Field, who oversees Ford’s EVs and Digital Systems, is based in the Silicon Valley city of Los Gatos and Roz Ho, Ford’s chief connected vehicle officer, is in the San Francisco Bay area, according to their LinkedIn pages.
Google’s driverless taxi Waymo business, which has a deepening partnership with Stellantis, is headquartered in Silicon Valley. Cruise, GM’s disgraced driverless taxi business, has its shrinking operations in San Francisco.
Apple is another critical player in automotive software. This feature explaining why GM opted not to include Apple’s CarPlay in its vehicles is another example of Bloomberg’s stellar journalism. CarPlay has become a critical component of automotive operating systems, and Barra doesn’t want to cede control of valuable data that she can monetize at the expense of unwitting buyers of GM vehicles.
A telling insight from the Bloomberg story is that Apple’s engineers displayed a low regard for their counterparts at GM, essentially telling them to shut up and accept that Apple is more knowledgeable and experienced when it comes to software engineering.
The CEO of one of Michigan’s most prominent companies publicly admitting her state lacks the technical talent required to compete is a major slap in the face and may prove to be the final nail in Michigan’s economic coffin. Michigan has been on the decline for years, and the state lacks the political and business leadership to reverse the trend.
In reporting on Barra crowing about GM’s Silicon Valley expansion, The Detroit News to its credit cited a 2004 study by economist Donald Grimes of the University of Michigan’s Research Seminar in Quantitative Economics and Lou Glazer, president of Michigan Future Inc., a nonpartisan nonprofit focused on “recreating a high prosperity Michigan.” The study found that manufacturing was no longer Michigan’s growth engine, and for the state to prosper, it would have to pivot and become a knowledge-based economy.
Michigan’s political and business officials didn’t heed the warning, resulting in the state dropping to 39th among the 50 states in personal income per capita in 2022 from 16th in 1999. Left unabated, Michigan in 2045 is predicted to rank 48th. To prevent this and push for a knowledge-based economy, Michigan needs to create vibrant cities for young professionals and encourage students to obtain degrees.
“You need to design an education system … so all kids are prepared to complete four-year degrees,” Glazer said. “Secondly, you need consistent messaging that four-year degrees are the best path to successful, prosperous 40-year careers, and we’re not doing either of those things.”
Gov. Gretchen Whitmer, a.k.a. “That Woman from Michigan,” is doing a stellar job ensuring her state gets left behind.
Michigan’s schools have long ranked among the nation’s worst, yet Whitmer in March signed a bill repealing a third grade reading retention law, also known as “Read by Grade Three.” The law required that Michigan schools hold students back from going to the fourth grade if they don’t pass their spring M-STEP testing. Rather than take measures to ensure adequate instruction and teaching, Whitmer argued it was better to pass illiterate students to help them reach their “full potential.”
Someone born and educated in Detroit is statistically doomed to a dead-end job.
Only one out of 20 students in the Detroit Public Schools Community District scored at a “proficient” level on the eighth grade National Assessment of Educational Progress reading test, Michigan Capital Confidential reported. Forty states performed better than Michigan on the fourth-grade reading test in 2022. Fewer than three out of ten students scored “at or above proficient.” Only three states scored “significantly lower than Michigan.”
Whitmer, who Michiganders in the know refer to as “Whitless,” prefers to squander Michigan taxpayer monies on GM’s and Ford’s flailing manufacturing operations.
GM far and away is Michigan’s biggest corporate moocher, having received $3.5 billion in state tax credits that could be applied between 2010 and 2019. Ford has received as much or more, when the $1.7 billion in tax credits Whitmer spearheaded so Ford could rip up fertile farmland and destroy century old trees in rural Marshall to build an electric battery plant are factored in.
An economic watchdog group deemed Whitmer’s Ford battery plant giveaway the biggest taxpayer ripoff of 2023. Adding insult to injury, Ford has scaled back the project to include only 1,700 jobs, not the 2,500 it promised.
In yet another example of Whitmer’s cluelessness, the governor removed a requirement that GM maintain a minimum of 4,000 employees at what is supposedly the company’s headquarters in the Renaissance Center in downtown Detroit to incentivize GM to retool an auto plant likely paying lower wages. GM subsequently moved about 3,000 jobs out of Detroit. It plans to shrink its Detroit footprint further when it relocates to a heavily taxpayer-funded downtown Detroit office building next year.
Barra has shamelessly claimed that a company with more than $170 billion in annual revenues only requires two floors in an office building to house its headquarters’ staff. I’ve previously argued that GM’s technical center in suburban Warren, which has some 24,000 employees, is the automaker’s true headquarters. Indeed, GM’s historic landmark-designated complex in Warren is where Barra held a news conference announcing the automaker’s California expansion.
Michigan is bleeding residents, particularly those with a college education. In an average year, about 9,000 residents with a bachelor’s degree or higher move out of state, pursuing higher wages than the “good paying jobs” Whitmer deemed Ford’s $41,500 a year battery plant positions requiring the handling of lithium, a potential health hazard.
Taxpayer funded University of Michigan has educated some impressive technology entrepreneurs, one of whom you possibly heard of. His name is Larry Page, the co-founder of Google. CFE, an organization that promotes entrepreneurship and community among U of M grads, recently featured five inspirational tech alumni. Three of them moved to California to set up their businesses.
Rivian was once headquartered in Michigan, but co-founder RJ Scaringe in 2020 moved the EV company’s headquarters to Southern California, reportedly because he viewed Cali as a “cool place to be” and Detroit as having “an old technology image.” I’d wager that Whitmer and her economic development flunkies were too busy smooching GM and Ford to take notice of Rivian’s departure. While there are some who’d wager that Rivian isn’t long for this world, I wouldn’t bet even a nickel that GM and Ford will survive a post-EV world.
Michigan was home to Burroughs Corp., which in its day was a respected computer company and a formidable competitor to IBM and other leading technology companies. With some creative and inspiring leadership, Michigan could easily restore its lost luster, but that can’t happen when leading companies celebrate the talent in California and elsewhere.
Even when it comes to automotive metal bending and assembly, Michigan is on a downward trajectory. Foreign automakers view Indiana and other states more favorably, although Toyota has agreed to buy batteries from a Michigan-based manufacturer, resulting in a $3 billion investment. By my back-of-the-envelope calculations, Toyota’s EV investments in the U.S. exceed that of GM’s and Ford’s.
Whitmer, of course, won’t be among those who will suffer from her failed leadership. Despite her dismal record, the media hails her as a worthy Democratic 2028 presidential candidate, and if Joe Biden gets reelected, she likely could land some plum job in Washington. While Michiganders reelected Whitmer to a second term, her opponent was an unqualified Trump-endorsed acolyte.
California Governor Gavin Newsom, another darling of the mainstream media, is as clueless as Whitmer, but he hasn’t yet managed to do irreparable harm to California’s tech leadership prowess. Fortunately for California taxpayers, attracting GM and Ford to the state hasn’t cost us a pretty penny.