29 May 2012

Detroit Business is Up

Story first appeared in The Detroit News.

Not since the upbeat days of the Archer administration have so many Metro Detroit business and civic leaders shared so much optimism as they again converge on Mackinac Island for their annual confab, starting today.

Despite serious financial challenges at City Hall, a growing amount of private capital is flowing into the beleaguered city to claim first-mover advantage on the ground floor of a new Detroit. Driving the change is an inter-generational entrepreneurialism that sees business opportunity and the chance to reshape positively the city's battered, undervalued assets.

The conditions are right: The hometown auto industry, on the verge of collapse three years ago, is roaring back with profitable sales driven by innovation, new leaders and lean, competitive operations. The state, led by the Governor, is delivering financial stability and more business-friendly policies just as the auto restructuring is taking hold and the national economy is improving, however slowly.

And Detroit? A looming financial collapse that required still-evolving state intervention promises, if nothing else, to arrest a slide that has been accelerating under the pressure of weak leadership and even weaker financial management. Still, that would be progress.

It is a good chance, anyway, if conditions that the region's business and civic leaders cannot control -- the details of Detroit's financial workout, the economic impact of political instability in the eurozone, the outcome of November's elections at the state and federal levels -- cut the right way and quicken an unmistakable sense of momentum.

The emerging set of players do think differently, in many respects, because they've been entrepreneurial.

The optimism is legitimate, bolstered by the fact that the painful economic decline of Michigan's "lost decade" and the automotive meltdown finally are forging the real structural reform that '90s-era leaders in autos and the city failed to deliver. Instead of fleeing a manifestly troubled and poorly managed city, savvy business is investing heavily in the municipal equivalent of an undervalued stock.

They're also bringing more taxpaying employees into a city desperately in need of them, a critical precondition for reversing Detroit's population flight, bolstering its tax base and attracting new investment in retail and other services.

What gives you confidence now is some of those structural issues are fixed at the autos and are on their way to being fixed at the state.

Investment in Detroit, focused on downtown and Midtown, increasingly is less dependent on do-good philanthropy and what Cullen called "huge levels" of public subsidies. It's important to note these things are more market-driven. Do we need some support in Detroit? Yes, we do. But the gap continues to shrink.

And the evidence mounts:

Two hospital systems -- Detroit Medical Center and Henry Ford Health Systems -- together are spending more than $1.5 billion in their respective Detroit locations. Blue Cross Blue Shield of Michigan, among other corporate players, is concentrating its workforce downtown.

Gilbert's Quicken Loans Inc. has acquired nine buildings downtown totaling 2.5 million square feet, spent roughly $250 million on renovations, consolidated 5,000 employees in the city and claimed the role as Detroit's corporate change agent-in-chief. Chrysler Group LLC is opening an office in Gilbert's Dime building, to be renamed "Chrysler House," to house its Great Lakes region sales staff and CEO Sergio Marchionne -- when he's in town.

Downtown office buildings, relics of Detroit's golden age, are being eyed for possible conversion to lofts to satisfy growing demand for rental space. Whole Foods, the trendy Texas-based food retailer, is beginning work on a Midtown store that arguably is as valuable for the statement it makes as the fresh produce it will offer the city.

The list goes on: The Ilitches, owners of the Detroit Tigers and Red Wings, are moving ahead with plans to build a new arena near their Foxtown headquarters -- a development that would make that quarter of the city a year-round hub of professional sports and likely spawn a whole new round of spin-off investment in restaurants, bars and small retail.

People see opportunity, not reasons we shouldn't be doing something. There's enough positive momentum. It really is about building that sense of confidence.

And not growing complacent, a recurring malady in a town -- and state -- that has suffered the hard lessons of arrogance, confrontation and ignoring the competition. There is another way, and it's beginning to unspool in the heart of a city given up for dead.

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