With a massive change in course and a fair amount of luck, Detroit automakers can certainly recover. But what if they don’t? Optimists argue that there will always be cars produced in Detroit. That’s probably true, though in the worst-case scenario, the manufacturers would be little more than boutique operations, producing a few thousand vehicles for the die-hard Buy American crowd, who would rather walk than drive a foreign car.

There are historical parallels, like the railroad bust in the late 19th century. More recently—and more to the point—the end of the steel business in Pennsylvania shows what can happen when a region’s principal industry goes away. In the 1970s, the U.S. made more steel than any other country, with a number of mammoth companies—grand old names like Bethlehem Steel, Youngstown Sheet & Tube, Republic Steel, and the leader, U.S. Steel­—producing more than 150 million tons a year. But the failure to modernize factories, aggressive competition from imports, and rising labor costs (sound familiar?) sealed the fate of those firms, leading to consolidation and bankruptcy. Between 1974 and 2005, steel-manufacturing employment in the U.S. dropped nearly 93 percent, from more than 500,000 workers to about 37,000. Bethlehem and Republic were sold off in pieces, many of them acquired by International Steel, now part of Luxembourg’s ArcelorMittal, the world’s largest steel company. Today, the lone American survivor is U.S. Steel, an independent spinoff of Marathon Oil and a shell of its former self. U.S. Steel’s annual output is about 30 million tons, a mere 2 percent of global volume.

Pittsburgh was devastated but has since recovered; the city has more jobs now than it did at the height of the U.S. steel business, as many suppliers developed new revenue sources from non-rust-belt technologies. “With the mills gone, the suppliers found that their knowledge translated well to servicing cleaner industries like glass manufacturing, nuclear-power equipment, and emergency-room design,” says Carey Durkin Treado, research associate at the University of Pittsburgh’s Center for Industry Studies. Of course, Treado’s institution played a role: The University of Pittsburgh is one of the city’s biggest employers.

Unfortunately, Detroit doesn’t have a major college, and while the suppliers that serve Chrysler, Ford, and G.M. could potentially move into new industries, most haven’t yet. Companies like American Axle, Delphi, Lear, and Plastech will probably need to consolidate and shed jobs. “Over a five-year period, 90 percent of the tier ones”—companies supplying products directly to automakers—“that haven’t already filed for bankruptcy, will,” predicts Laurie Schmald Moncrieff, president of Schmald Tool & Die, in Burton, Michigan. Lear, a company that makes car seats, is cutting jobs in the Detroit area but recently built a $14 million plant near a Hyundai factory in Alabama and another in Tennessee to supply Nissan. In other words, some jobs stay in the U.S., but few stay in Detroit.

All of which means that the city will have to brace for even more severe social problems. It now has about half the population it had in the 1950s—further problems in the auto business are likely to translate into steeper declines—and its unemployment rate, at 7.7 percent, is the highest of any major U.S. metropolis. Detroit is transforming into a “third city,” a term coined by Carl Taylor, a sociology professor at Michigan State University, to apply to communities that develop their own, aberrant cultural ideas about drugs, weapons, and crime. Taylor has spent countless hours on the streets of Detroit, living in an angry subculture that, he says, increasingly includes laborers fired from nearby auto factories. “There’s no work on the horizon that’s going to pay them what they once made,” Taylor says.

In contrast is the city’s gleaming downtown section, with casinos, million-dollar condos, stadiums, and skyscrapers. This newly developed neighborhood will probably thrive, despite the downturn in the auto industry, because it has its own commercial infrastructure driven by gambling, tourism, and entertainment. But as carmakers stumble and the city’s problems fester, life downtown may not continue to be quite as comfortable. “It’s becoming more and more like Baghdad’s Green Zone,” Taylor says. “You dare not leave, because the neighborhoods outside aren’t ones you’d want to stroll through.”