Opinion: New large manufacturing plants not in Detroit's future

John E. Mogk

President Donald Trump's proposed tariffs on the auto industry highlight the enormous benefit large manufacturing plants are to American cities today.  Recently, The New York Times focused upon the anticipated impacts of tariffs on Spartanburg, South Carolina's BMW plant. The $.2.2 billion plant, built two decades ago using 1.5 square miles, employs 23,000 BMW and contract workers and drew more than 200 companies from two dozen countries to the Spartanburg area.  One-in-ten people earn a living making vehicles or their parts in Spartanburg.  Many more are employed in small businesses serving the workers and their families.

Detroit could reap all those benefits if the BMW plant or another like it was located here. The unemployment and poverty rates in Detroit are second to none and weigh heavily on the city's African-American community.  New manufacturing jobs would make a difference in Detroiters' lives. 

Mogk writes: "Detroit could reap all those benefits if the BMW plant or another like it was located here. "

So why don't we have another manufacturing plant?  Detroit simply does not have large enough assembled sites within its 40 square miles of vacant land. The recently acquired State Fairgrounds site is only 25 percent of what would be required.

No mayor since Coleman Young has been willing to create a large manufacturing job center by phasing out a neighborhood, no matter how few residents remain or how blighted it is.  Mayor Young created jobs for Detroit residents when he orchestrated the building of the GM Hamtramck and Chrysler Jefferson North Assembly plants in the late 1980s, both on one-square-mile sites. Similar to the BMW plant, they now provide thousands of jobs directly and many more indirectly to Detroit residents. 

Today, Detroit is headed in an uncharted direction to create jobs for residents, leaving large manufacturing facilities out.  For some, the downtown Detroit "tech boom" is the answer.  There is a growing concern, though, that unlike auto manufacturing, the tech boom is bypassing African-Americans. Some say small manufacturing, retail businesses, entrepreneurship, and urban agriculture will create an employment surge. But those sources alone are not likely to provide enough jobs to lift many residents in the city.  Meanwhile, large-scale manufacturing is cast aside, even though Detroit has the roads, rail, power, and waterways suited for industrial development. 

If eminent domain is required, it is important to understand that just compensation must be paid for acquired land.  Neighborhood residents are legally entitled to receive 125 percent of the fair market value for their homes and, if federal funds are involved, an additional payment of up to $22,500 to buy another house in a neighborhood of choice. 

A number of severely blighted neighborhoods in the city are 90 percent vacant. Clearing one for a large manufacturing facility would provide residents with enough funds to relocate to better living conditions, create jobs for unemployed residents, and benefit the city in many ways.  

Eminent domain is an important way to handle greed of speculators and assure that the compensation for property is equitable. The Michigan Constitution prohibits its use for economic development, but not for the elimination of blight found in most vacated neighborhoods. While there is a set standard for blight, legal experts disagree on whether blight must be proved for each separate property to be taken or only that the neighborhood as a whole is blighted. 

A decade ago as jobs fled oversees, major manufacturing was written off in the U.S.  A dramatic reversal appears to be taking shape driven by rising wage rates abroad and President Trump's actions making U.S. manufacturing more competitive. Follow Mayor  Young's example and prepare one or more large-scale manufacturing sites as part of the city's expanded job base strategy.          

John E. Mogk is Professor of Law at Wayne Law School.