Dean Barber

A Comeback in the Making

In Corporate Site Selection and Economic Development, Economic Development, Site Selection on December 15, 2014 at 6:23 am

I have to think that the best sales people are optimists. They believe they will ultimately win out in convincing others to buy because they are offering a superior product or service and have the message to go with it.

Now they may be deluding themselves. Their product or service may not actually be all that good, but if they convince themselves that it is so, they come off as credible and authentic.

People like authentic, even from eccentrics and misguided kooks.

Economic developers, those charged with selling states, regions and communities, are generally an optimistic lot. And some are truly driven to doing good for a constituency. Few are kooks.

If and when economic developers do come to visit me in Dallas, I am interested in hearing from them on how they go about selling their communities. What are your target industries and why? What workforce training programs do you have in place? What is your inventory of buildings and sites?

It’s also good to put a name and face with a particular place for future reference.

In recent weeks, I have met in Dallas (or rather Plano) with economic developers from New Mexico, Louisiana, Arkansas and Michigan. I spent an entire morning, as part of a panel discussion attended by other consultants, at a downtown Dallas hotel with a gaggle of economic developers from Michigan.

That state in particular has captured my imagination by the sheer breadth of change in a relatively short period of time.

Michigan’s Turnaround Story

People love a story with drama, and I am no different. Michigan and its largest city Detroit were once on top, then hit bottom, and are now in the midst of a comeback. It’s an almost hymnal story of what once was lost but now that is found.

Now the cynics among us, and I plead guilty, would argue that Michigan’s turnaround was inevitable because of an improving national economy and an auto industry rebounding. That certainly helped.

But I also believe the state’s bookish and pragmatic governor, Rick Snyder, deserves more than a little credit in changing a culture of economic development in that state.

His leadership and vision has turned a losing ball club into a winning ball club. Economic developers in Michigan are now true believers or at least the ones I have met.

They are convinced they have a better product to sell, with lower taxes, improved worker training programs, and now they have right-to-work status to hang their hat on. (That was a shocker.)

And like their governor, they have not written off Detroit, but rather want to see it succeed and regain the status of a city with a future.

Saving Detroit

Gov. Snyder did not shy away from the mess that was Detroit. Decades of decline, exacerbated by a city government characterized by incompetence and corruption, was fast turning one of America’s greatest cities, a cradle of the nation’s manufacturing might, into a nightmarish hellhole.

In March 2013, the same month that Michigan became a right to work state, Snyder appointed Kevyn Orr, a Washington bankruptcy lawyer, to become Detroit’s emergency manager.

Orr had a daunting task. He took over a city with $18 billion in debt, where half the street lights were out and residents complained of having to wait nearly an hour for police to arrive after dialing 911.

Detroit subsequently filed for Chapter 9 bankruptcy on July 18, 2013, which was (and remains) the largest municipal bankruptcy filing in U.S. history by debt, exceeding Jefferson County, Alabama’s $4 billion filing in 2011

Two Big Announcements

There were two big announcements in Detroit last week. The one garnering widespread national news coverage was that Detroit had emerged from bankruptcy after just 20 months. The bankruptcy closeout was hailed by Gov. Snyder and city officials as an opportunity to begin anew.

Also last week, Little Caesars Pizza announced that it would build a new eight-story, 205,000-square-foot headquarters building in downtown Detroit, the first such project in a decade. Construction will begin in the spring and be complete by the end of 2016.

The headquarters expansion will happen on a vacant lot next to its current headquarters inside the Fox Theatre. An additional 600 jobs to the downtown are expected.

The Little Caesars building is part of a sprawling 45-block downtown “District Detroit” renovation effort unveiled over the summer. It includes a $450 million hockey arena for the Detroit Red Wings, construction of which began in September.

The Heavy Lifting Begins

So it’s very clear that good things are happening in Detroit, and the bankruptcy has certainly not deterred capital investment from happening in the downtown. If anything, Detroit’s emergence from bankruptcy sends a signal to the business community that the city is slowly but surely getting its act together.

But now the heavy lifting begins, as the city faces pressure to control spending while tackling problems that arose during the decades of urban decay.That was not lost on Mayor Mike Duggan.

“We still have enormous challenges delivering the services in the city every day, but at least now we are no longer a city that’s in bankruptcy,” Duggan said. “So we’re going to start fresh tomorrow.”

A Tough Call

Duggan said that the reorganization plan, which allows Detroit to shed $7 billion of its debts and to spend about $1.7 billion to remake its dismal city services over the next 10 years, “gives us the tools to have a chance to succeed.”

The restructuring plan also calls for the pensions of non-uniformed public employees to be cut by 4.5 percent, with cost-of-living increases eliminated. Police and firefighters will see cuts in their cost-of-living increases.

For Snyder, Detroit was a problem that simply had to be addressed, for the good of the city and the state.

“It was a tough call to decide to go into bankruptcy, but again, we set an aggressive timetable. And the good part is, it turned out very well. It was a difficult situation,” Snyder said in an interview with Time magazine.

“And I always want to recognize that there are retirees making sacrifices, other people making sacrifices. But for the circumstances we were in, this is a very constructive, positive outcome that really positions the city to start a new chapter and grow.”

Only Minutes Apart

Not long after Detroit filed for bankruptcy back in 2013, I walked in one of its blighted neighborhoods. I guess it was a neighborhood. Maybe I should call it a former neighborhood. For it was there where I flushed a wild pheasant from what was essentially a wild grass pasture where houses once stood.

It was a very odd sensation. Here I was in the city limits, but it felt like a no man’s land, where a great battle had had been waged and the people had fled the horror, with only a few straggling back.

But not far away, really only a few miles, I witnessed a very different Detroit, where growth and energy was quite evident. This is what I saw in downtown Detroit, especially along a seven-mile spine of Woodward Avenue, the haunt of young professionals.

And this is where Little Caesars will build its new headquarters building. Judging from the vitality that I saw, I am not surprised.

Michigan’s economy will add more than 132,000 jobs in 2015 and 2016, according to the latest predictions by University of Michigan economists. That would mean that by the end of 2016, the state would have added nearly 463,000 jobs since the summer of 2009.

A Novel Idea

As governor, Snyder sees himself as the problem solver in chief. His philosophy is one of “relentless positive action” and relying on good will to gain trust of others that results in a team effort. Partisanship politics should take a back seat.

“There’s too much ‘R’ and ‘D,’ there’s too much ‘liberal’ and ‘conservative,” Snyder told Time. “We need people to recognize that we’re all Michiganders, and in the country that we’re all Americans, and we should be focused on problem solving.

“What would Washington be like if everyone agreed not to fight or blame one another,” he added. “There’d be a whole lot of time to get work done.”

Now that’s a novel idea. Are you listening Washington?

I plan to be back in Michigan next month for the Detroit Auto Show, where I hope to learn more about Detroit and a resurgent auto industry. I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas.

If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help.

If you liked what you read here, invite me to speak at your next meeting.

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  1. Thanks Dean for writing this article about the state I adopted 50 years ago. fifty years ago I came to Michigan for a job. You probable will have a hard time believing this: Twenty three hours after I arrived in Ypsilanti. I was working for GM. Why am I telling you this. I have watched Detroit and Michigan become the same as what I left in Eastern Kentucky. At this time I’m watching my grand children go through the same things I went through in Ky.
    Fast forward to today. THERE IS LIGHT AT THE END OF THE TUNNEL. Your article tells it so true. Thanks again and I’m still hoping to meet you sometime when you are here in Michigan. Al Boggs, 3379 Onsted Hwy. Adrian, Mi.

  2. I was with Dean that day he flushed the pheasant from the “neighborhood”. One element of the seven square mile spine around Woodward Avenue from downtown to new town that deserves a great deal of the credit for the amazing positive spirit in the community is the partnerships that have been forged between business and non profits. Most of the development has occurred without the participation of the former mayor and city council action. P3s are alive and well in Detroit.

    We can’t forget though that Detroit still faces massive issues. How to manage a 145+ sq mi city where the population could fit in about 45 sq mi if it were a truly compacted population like Chicago or New York, more development/jobs are needed in the blighted areas, and continuing to be creative in reducing risk for appropriate development opportunities. Good luck Detroit, you still need it.

  3. My bad, I hit post comment too soon. Thanks Dean for a thoughtful piece.

  4. Thanks Dean for your thoughtful piece. I agree with your assessment that there are still problems to solve in our Region, and believe me, we work on them every day. There is also an optimism that we have not seen in quite awhile here. In addition, the trend lines are heading in the right direction. The opportunities have never been greater. We look forward to your visit during the auto show!

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