I wonder if Detroit's economy was more fragile because everything built on a handful of enormous corporations. I don't think there was much of a scene of small, innovative companies that didn't depend on the enormous corporations to be in business. Silicon Valley is full of start ups that can be successful on their own. What's really at the heart of SV is the system that makes startups. That's the universities, VCs and incubators.
Some history from Slate's article, "How Did Detroit Become Motor City?"[0] that speak to the points you make:
> everything built on a handful of enormous corporations
"Second, automotive executives in early-20th-century Detroit behaved a lot like Silicon Valley executives today: They regularly switched companies and launched spinoffs and startups. This culture of cross-pollination spread innovative manufacturing and design ideas among the Detroit manufacturers. Distant competitors couldn’t keep up with Motown’s research and development operations and eventually failed or sold themselves to Detroit."
> I don't think there was much of a scene of small, innovative companies that didn't depend on the enormous corporations to be in business
"The people who built the car’s parts eventually learned so much about automotive manufacturing that they went on to launch their own brands. Olds’ subcontractors included the Briscoe brothers, who helped build Buick, and machinist Henry Leland, who created Cadillac and Lincoln. The Dodge brothers also cut their teeth making parts for both Olds and Henry Ford. Ransom Olds, himself, eventually left Olds Motor Works to found the REO car company. A few other executives from Olds founded Chalmers and Hudson. William Durant, the man behind General Motors, was twice forced out of the company, forming Chevrolet and later Durant Motors while he was away. All of these ventures were based in or near Detroit."
This doesn't even include the thousands of automotive supplier upstarts in every part of the supply chain from bolts to tires to tooling.
Similar to Silicon Valley, Detroit was also globally dominant in automotive production prior to 1929 (with 90% of production centered there).
Germany and Japan didn't get seriously into the automotive game until the post-WWII era. And China not until the 2000s. But when they did, they become competitive quite quickly.
You're naive if you don't think the same thing will happen with internet companies. Today the US only represents under 15% of automotive production globally.
