Never mind that with a twinkle in his eye, the legendary investor added a rider: “…at your cost price.”
Dan Gilbert was interviewing Warren Buffett (full video interview at bottom of the post) on the occasion of Detroit Homecoming, a three-day event last week that focused on how to revitalize Detroit and attended by eminent business leaders.
On Detroit and GM
Buffett was philosophical on Detroit’s current travails, saying that its finances had gotten out of hand – something that happened to many cities. He drew an interesting parallel with New York, 40 years ago, which was in a situation much like Detroit today, but where people got together and thrashed out a solution (“not a bankruptcy, but much like one”) that ultimately worked out well for the city over the next few years.
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Buffett noted that the number of companies having headquarters in Detroit was the city’s strength.
He had great words for General Motors Company (NYSE:GM) CEO Barra – “She’s a real car guy,” who had a great passion for cars that showed through. Buffett said he always admired CEOs who were passionate about their business, and that Barra knew cars “backwards and forwards.”
The 2008 financial crisis
Buffett said the 10 most important words in the history of economics were uttered by George Bush on the lawns of the White House during the crisis: “If money doesn’t loosen up this sucker’s going down.”
“That is a great, great academic statement,” said Buffett, mentioning, however, that he never voted for Bush.
Do you think Detroit should have been bailed out?
Buffett sidestepped the question without giving a ‘yes’ or ‘no’ answer. “Bankruptcy is fine – it gets rid of things that shouldn’t have been done in the past,” he said. “As long as bankruptcy is handled quickly, bankruptcy is fine. That’s how you clean the slate.”
Warren Buffett on Detroit’s famed Ambassador Bridge and how Buffett almost bought it
Buffett went nostalgic on a failed transaction that denied him control of the company that owned the Ambassador Bridge. The bridge, which connected the US and Canada, and the Detroit-Canada Tunnel, appeared in Moody’s Manuals.
According to Buffett, at age 20, he had leafed through the 10,000 pages comprising the manuals – and got interested in the bridge (then called the Detroit International Bridge), and the Detroit and Canada Tunnel.
Later he bought up a 20+% in the bridge company but was outbid by Matty (Moroun) for the controlling stake.
“I believe the tolls went up quite a bit after that,” joked Buffett on the interview. “Matty made me look good,” he said to laughter.
What Detroit has to do to get its mojo back
According to Buffett locating headquarters of companies is terribly important for the beneficial impact on the city’s jobs and its revenue. Look at transportation, he advised, and at philanthropy within the town. We would be happy to buy a company that has its headquarters in Detroit, he said.