Detroit, Michigan-the home of America's big three car companies - is where the world's auto industry was born. But along with the car companies it depends on, this Midwestern city is experiencing hard times. VOA's Barry Wood reports from Detroit about the formidable challenges confronting the city.    

Detroit was once a grand and prosperous city. But race riots 40 years ago and white flight to the suburbs took a toll.  

Today much of Detroit is abandoned. A population that once approached two million has fallen by over half.

"I think the city of Detroit, like the auto industry, is at the bottom," says Keith Crain, who  publishes Crain's Detroit Business. "It has lost well over a million people who have just exited to the suburbs."

The steady erosion of the auto industry has taken the city to a new low.

Unemployment is nearly 10 percent. One-third of the population lives below the poverty line.

One kilometer from the city center, homeless people camp where trains once arrived and the Detroit Tigers played baseball. One homeless man exclaimed, "I don't want no food stamps. I'm used to working."

On Detroit's once prosperous east side, unemployed teacher Leslie Smith says he's never seen such a bad economy. "We've been in a depression for five years, where other people are just getting hit," Smith said.

With jobs scarce and the property market distressed, Smith is pessimistic. "I didn't even want my daughter to come back to Detroit to try to find a job" Smith said. "I'd rather she found one somewhere else. I've got three degrees and can't find a job."

Small businessman Daniel Goree says Detroit remains racially polarized. His heating business connects him with all ethnic groups, including the large Arab-American community. "The black people fear and distrust the white people," Goree said. "The white people have a stigma about what a black person is. And the Arabs, they're in the middle."

Eighty-five percent of Detroit's population is black. Despite hard times, there are signs of progress. Parts of the downtown are flourishing. 

Grace Keros, third generation owner of a landmark diner,  is optimistic. "New buildings, new places to see, people moving back into the city, investing in the city, believing in the city," Keros said. "Just look around, compared to two years ago, look what's happened, actually since the Super Bowl [the championship football match in 2006]."

For the moment Detroit appears balanced between desolation and renewal. But which way it will go is unclear.