Buss: Don’t assume Detroit story just gets better
The arc of optimism that helped Detroit emerge from bankruptcy and drove Michigan’s recent economic recovery is waning.
Reading the tea leaves, state business leaders confirm a coming slowdown, and Detroit’s business markets remain challenged.
Narratives can be fragile when the facts start to work against them. Detroit and Michigan as a whole finally got their stories moving the right way, but recently, unpleasant developments have begun to challenge them. And they’ll be much quicker to fall apart than they were to put together.
There’s of course Flint, which has ruined Gov. Rick Snyder’s brand for the foreseeable future. That brand — the “Comeback Kid” championing the “Comeback State” — has been uniquely tied to Michigan’s economic recovery and Detroit’s ability to survive.
But the outlook is not as rosy as the boosters would have us believe.
“There are a lot of things that are really broken,” said Rodrick Miller, president and CEO of the Detroit Economic Growth Corp., about Detroit’s business environment.
Miller said the businesses thriving outside downtown and Midtown are mostly small retail shops, neighborhood services, restaurants and social entrepreneurs. There’s still no move toward a larger, flagship retail store in the central city because the market still just isn’t there.
Nor is the workforce.
A January report from JPMorgan Chase & Co. on Detroit’s workforce shows a quarter of the labor force is unemployed. There are only enough jobs in Detroit to employ 37 percent of the population. And just 26 percent of Detroit jobs are held by people who live in Detroit.
Those numbers beg for skills training, and for a more inclusive Detroit jobs market.
Miller’s group is focused on skills training for Detroiters to equip them for jobs that do open up. Snyder’s administration has embarked on a similar task statewide.
But as Business Leaders for Michigan said, it’s hard to move the needle quickly.
In Detroit, retail startups face a market that’s too small and unreliable, and startups trying to enter established industries, such as automotive, find the barrier for entry into the Motor City’s bread and butter industry is too high. Auto supply companies that try to open here don’t have the capacity to scale production quickly enough, and Miller said unions’ “issues with seniority” also cause headaches.
And lest Detroiters think they can fall back on established auto jobs when all else fails, think again.
The “brains” behind mobility and self-driving cars — the future of the industry — could very well be in Silicon Valley, not Detroit. Industry veterans and state business leaders believe Detroit will always be the leader in automotive development and production because so many suppliers, engineers and other aspects are here. But it’s going to take innovative thinking for Detroit to keep its lead if the software develops elsewhere.
One bright spot is the University of Michigan’s Mcity, which is helping lead industry transformation, and plans for Willow Run airport to become a leading center.
But auto labor continues to be outsourced from Detroit: FCA US and Ford both recently announced production moves to Mexico. And stocks for the Big Three didn’t budge when record profits were recently posted. Investors know the industry is cyclical, it’s peaking and the extent of the coming downturn is unknown.
The city’s and state’s problems didn’t develop overnight, and need time to be fixed. But to those who have been waiting for a full recovery in Detroit and throughout the state, time might be running out.
Kaitlyn Buss is an editorial writer at The Detroit News.