Howes: Empty Ilitch promises loom over FCA plant package
City Council’s Planning and Economic Development Committee on Thursday is expected to consider the incentives Detroit is offering Fiat Chrysler Automobiles NV to build a new Jeep plant on the east side, the Motor City’s first new assembly plant in some 30 years.
Looming above the process is something that has nothing to do with the auto industry: namely, the failure of Ilitch Holdings Inc. to make good on ancillary developments promised with its billion-dollar District Detroit, partially financed with public money.
This is a problem. Not just for the public credibility of the Ilitch family, but for would-be investors like FCA pursuing big-ticket projects seeking taxpayer-funded incentives. Be it Dan Gilbert’s Hudson’s and Monroe Block projects, Ford Motor Co.’s rehab of the Michigan Central Depot or FCA’s Mack Avenue plant, all of them must navigate public skepticism exacerbated by the unfulfilled promises of a District Detroit anchored by Little Caesars Arena.
Worse, to assemble the land FCA needs to build out Mack Assembly, the city was forced to negotiate with the Moroun family. Mere mention of the Morouns has residents in southwest Detroit outraged that the Ambassador Bridge mogul's price for securing the automaker's land means giving him a bigger chunk of their neighborhood.
This is a problem, too, even if City Hall thinks it's necessary to meet FCA's investment conditions and demanding timeline to get the automaker's new plant open next year. A $2.5 billion investment promising to create 4,950 high-paying manufacturing jobs in the nation's poorest major city can be a motivation all its own — because it's exceedingly rare in this town, even across the country.
It's understandable that long histories of unfulfilled promises from the Ilitches and Morouns engender deep suspicion among Detroit politicians and residents, many of whom are conditioned by bitter experience to be wary of business leaders paying big bucks to return to the city. Neither family is proposing to build next-generation Jeep Grand Cherokees in the the city, to solidify Michigan's claim to be the largest producer of the hottest SUV brand on the planet.
The intensely private interests of the Ilitch and Moroun families — Old Detroit players accustomed to a) getting their way and b) being accountable to virtually no one because c) they were just about the only investors — are being replaced by a new breed of developers and corporations that do what they say they're going to do because it's good business in post-bankruptcy Detroit.
Mortgage king Dan Gilbert's Bedrock Detroit rehabbed iconic downtown buildings. DTE Energy Co. expanded its corporate campus. Residential developers like The Platform and the Roxbury Group built new residential developments. Ford's effort to shape a campus in Corktown anchored by a renovated train station is deliberately soliciting input from the surrounding community of business leaders and interested residents.
FCA's new Mack Avenue plant is next up, a project that should have a better chance of delivering as promised because new city requirements aim to ensure it. Using city income tax payments, an "investment monitoring tool" devised in the CFO's office would require FCA to affirm each year how many of its employees live in the city — or face financial penalties.
Tom Lewand, the city's group executive for jobs and the economy, is meeting this week to brief council members on the benefits of the city's deal with FCA. A top question so far: "How are we going to make sure we get the highest number of Detroiters into those jobs," he said. "There's always been skepticism that businesses won't do what they say."
That's not surprising in a town whose proletarian DNA depended on the big employers it reflexively distrusted. But its leaders also should consider reality: even as FCA is on track to receive $283 million in city and state subsidies for its investment in Mack, General Motors Co. has stopped production in Lordstown, Ohio, and will follow suit at its Detroit-Hamtramck Assembly early next year.
Meaning the chance for Detroit or any other Michigan city to land a new assembly plant paying premium manufacturing wages is exceedingly rare. Rarer still is the price the city is proposing to pay in incentives to woo FCA compared to other auto plant projects across the country in the past decade.
A chart assembled by the Detroit Economic Development Growth Corp. from goodjobsfirst.org says the city's incentives amount to $57,172 per job, or 11% of the total investment. That compares to $225,000 per job, or 56% of total investment in the Toyota-Mazda joint venture in Huntsville, Ala., last year.
Mayor Mike Duggan's administration has a responsibility to hold FCA, or any other investor, accountable for the promises made in exchange taxpayer subsidies to create jobs and tax revenue. Now it needs to determine how it can hold the likes of the Ilitches to the same standard it's set for FCA, Ford and Gilbert, among others — because folks are watching, closely.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him at 3 p.m. and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.