Finley: Who will build, staff Detroit's new spaces?
Over the next five years, the music of Detroit will be played by jackhammers, welding torches and concrete mixers as the city moves through what promises to be its most intensive development surge in nearly a century.
Ford Motor Co.'s reveal this week of its plan to use the Michigan Central Depot for a new mobility headquarters confirms, in the words of Rock Venture's Matt Cullen, "the sustainability of the redevelopment of the city of Detroit."
"It creates the confidence that this will last," says Cullen, who has worked 30 years for this moment. "That's important because it allows people to make career decisions, investment decisions, public infrastructure investments with a different mindset."
Ford's Corktown project joins Dan Gilbert's plans to put up the city's tallest building on the Hudson's site and remake the Monroe Block, the Ilitch family's development of The District around Little Caesar's, The Platform Group's investments in New Center, and other work ongoing both downtown and in the neighborhoods. And, oh, the start of the Gordie Howe Bridge.
Not since the 1920s, when Detroit was frantically building a city to accommodate the exploding automobile industry, has there been so much money going into the ground here so fast.
It's great news. But it comes with some big question marks:
Who's going to build all that new space? And who's going to fill it?
"The biggest obstacle is construction workers," says Steve Maun, Detroit project manager for Ash NYC, which just opened the Siren Hotel in the old Wurlitzer Building. "It's going to put a huge strain on the city. We don’t have enough workers now with what’s already going on."
That's a worry shared across the development community. Metro Detroit's inventory of contractors, sub-contractors and skilled trades workers took a heavy hit during the decade long recession that opened this century, and it's never fully recovered, despite the growing demand.
"The reality is that even those who are trying as hard as they can to employ local, we just haven’t been growing as much construction talent as we need," says Eric Larson, who is building The Corner mixed-use development on part of the Tiger Stadium site. "We're going to have to be creative."
For Larson, creativity means using pre-fabricated units that are built off-site and shipped to Detroit.
He says builders can't expect to find all of the needed workers in Metro Detroit, and will have to import help.
"When the casinos were being built we were hiring people from Toledo, Chicago and places all around," Larson says. "We'll have to do a little of that. We're also going to have to build our local work force."
While waiting for the local skilled trades ranks to improve, Larson says Detroit should reconsider the impossible demand that 50 percent of employees on projects supported by tax dollars be city residents. Builders who don't meet that mandate face stiff fines.
"Instead of focusing on fines, focus on positive programs to boost the local employment," Larson says. "The penalties drive up the cost and at some point, money has options. What we don’t want to do is create a situation where we don’t have consistency, a positive environment."
The upside of the fines is that some of the money is used for training programs. Developers are counting on such efforts to quickly beef up the talent pool.
Still, they acknowledge competition for workers will be fierce even under the best scenario, and will drive up costs.
"The cost of construction is changing in Detroit over four years ago because of the shortage of labor," Maun says. "You ask for bids, the contractor is already filled out, so he gives a crazy expensive quote because he doesn’t need the work. Prices start to go up up up. Too much work and not enough workers -- and it's going to get worse."
Maun says projects that should take 15 or 16 months to complete are now taking up to two years because of the delays in finding contractors.
George Jackson, the former economic development chief in Detroit and now a developer himself, says hunting for workers in other places may prove futile.
"The economy is strong everywhere," he says.
Jackson predicts Gilbert's Hudson's project will present a particular challenge because it's been 20 years since a new skyscraper was built in Detroit. The specialty high-rise workers needed don't exist in the city.
Cullen believes Detroit can push past the construction workforce barrier.
"Do we have enough people here today? Absolutely not," he says. "But demand is a good problem.
"It wasn’t very long ago that skilled trades people had to move away for opportunity. Now, I would also expect we’ll have the same kind of flow of people back."
When all those new offices and apartments are completed, the next challenge is filling them.
"Once you open a hotel, the construction worries are over and you’re a hospitality business," Maun says. "You don’t have trained people for desk and other jobs. Where are they going to come from?"
Downtown Detroit's building boom has not been accompanied by a corresponding regional population and jobs explosion.
So for the short term, at least, the default place to find the workers to occupy Detroit's new spaces is the suburbs.
David Dubensky, head of Ford Land, says most of the automaker's Corktown staff will be transfers from its Dearborn facilities.
Suburban political leaders are already complaining about raids on their office buildings by Detroit developers, and on new state tax breaks that encourage them to do so.
Cullen believes the excitement about Detroit will attract employers -- and workers -- from outside the region.
"I get 10 resumes a week from people who used to live here and want to come back," he says. We’ve been a donor region for a long, long time. We’re changing that around."
Catch The Nolan Finley Show weekdays 7-9 a.m. on 910 AM Superstation.