Howes: Region's 'upward trajectory' bucks new headwinds

Daniel Howes
The Detroit News
The view of downtown Detroit as seen from the terrace of the Mike Ilitch School of Business at Wayne State University.

Just when the region is showing signs of "sustaining its upward trajectory," as the Detroit Regional Chamber terms it in its fifth annual "State of the Region" report, two of its automotive heavyweights are signaling tougher times may lie ahead.

General Motors Co. is poised cut 8,000 salaried jobs and idle production at four U.S. plants next year, affecting 3,300 jobs. Ford Motor Co. is contemplating (still) a restructuring plan that is expected to impact its salaried workforce, even as it lays plans to rehab the dilapidated Michigan Central Depot into a hub for next-generation autonomy, mobility and electrification.

Contradictory? Not exactly, according the report to be released Tuesday. The region's growth in real gross domestic product is outpacing the national rate, notching a 2.7-percent gain compared to 2.2 percent nationally. Per capita income in the Detroit region grew by 4.3 percent, compared to 4.1 percent nationally.

And as critical as GM and Ford remain to the regional economy — and the state's identity — the automakers account for a smaller overall share of the state's workforce and economic output. That's not-so-good news, considering this town's history, that might not be so bad.

"We are still on an upward trajectory," Sandy Baruah, CEO of the Detroit Regional Chamber, said in an interview Monday. Median home value growth between 2013 and 2017 rose by 42.4 percent, second only to Seattle. And growth in the millennial population over the same period expanded by nearly 10 percent, more than Atlanta, Boston, Pittsburgh and Chicago.

"There's a cool factor to Detroit," said Rick Hampson, Michigan president for Rhode Island-headquartered Citizens Bank, sponsor of the annual survey. Quicken Loans Inc. Dan Gilbert's family of companies "have been cool companies to work in for a long time."

But they're not the only ones, as both startups and legacy companies like GM and Ford woo tech talent in increasingly large numbers; as the rehabilitation of central downtown creeps beyond the Woodward corridor and Midtown; as steeply rising costs on the coasts make comparatively affordable Detroit more attractive.

Vacancy rates offer supporting evidence. Industrial vacancy rates in the region are among the lowest in the country for the fifth straight year, and for the first time in years office vacancy rates now track below the national average. All good.

Not so good: Detroit is the poorest major city among its peers, despite seeing its poverty rate improve to 34 percent from 41 percent five years ago. The metro region's overall population growth is anemic, creeping up a meager 0.3 percent between 2014 and 2017, compared to 3 percent nationally. Its community well-being index ranks the Detroit region 145th out of 189 communities, hardly the makings of a chamber recruiting campaign.

All of which serves as a prelude to the most consistently urgent — and, it appears, hard to address — conundrum: educational attainment in the region and across the state. It continues to get worse, the chamber found, echoing numerous other studies compiled by educational think tanks and business groups.

"We're a losing team in a losing league," Baruah said, making exactly zero attempts to sugar-coat a message that should embarrass parents and teachers, administrators and lawmakers across the state. "It's not just your neighbor's school district that is a problem. It's your school district that's a problem. When you look at the statewide numbers, we keep going down."

Ask yourself: How can Michigan make the case to become the next-century hub of transportation technology if it can't educate the talent to staff the companies providing that technology? How can it attract that talent from high-cost Silicon Valley or the northeast if it fails to offer anything approaching an educational value proposition?

Answer: It can't. And folks locked into a comfortable 20th-century model that effectively holds that mediocrity is good enough will learn the hard way that it's not. Not much of a legacy, that, to leave your children.

"This has been a red flashing light since we started this report," Baruah said. "If we don't solve this problem, it's going to be a problem." It already is.

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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.