While U.S. Auto Industry Rebounds, Detroit Lags Behind

The nation’s automakers have recovered from their sluggish sales, but the Motor City isn’t feeling much of it.

Posted: 02/12/2013 05:10 PM EST
While U.S. Auto Industry Rebounds, Detroit Lags Behind

(Photo: John Collins/Chase Photography)

REPORTING FROM DETROIT

For much of the 2012 election, there was the constant brandishing of the return of Detroit. Indeed, the skyscrapers of the General Motors headquarters gleams over the city’s downtown, as a symbol of the comeback of the world’s traditional automotive center.

But, to hear officials and residents tell it, too little of that recovery has had an influence on the fortunes of the city of Detroit or its residents.

“It hasn’t had as much of an impact on Detroit as one would think,” said Detroit Mayor Dave Bing, in an interview with BET.com.

Bing explained that there are only two automobile manufacturing plants within the city of Detroit, with the bulk being in the suburbs and in other areas within this region of the country. Each of the plants, he said, employed 3,000 to 4,000 workers.

“So that helps a lot, no doubt,” said Bing, who is mayor of a city of 700,000 residents. “But the growth area for us, in the city of Detroit, would be in the area of entertainment and health care. The health systems that we have in Detroit have been growing at a double-digit rate for the last five years. They are projected to continue that kind of growth rate for the next five years. Our primary industry, which is automotive; it’s not in the city anymore.”

Indeed, Detroit is seeing some success in its effort to diversify into other areas. One of the most visible additions to the economy in recent years has been in the area of entertainment. Three major casinos have opened in the last decade and there are a number of refurbished hotels downtown. In addition, there is a new $650 million downtown development project: A complex will include a new home for the Detroit Red Wings team in the National Hockey League.

At the same time, Bing and other civic leaders point to the estimated $800 million of investment by the Detroit Medical Center in the city’s midtown section. Some point to the fact that a development group, which includes basketball great and businessman Magic Johnson, has proposed redevelopment of a 162-acre former state fairground property. It would include 500,000 square feet of retail and housing area.

But these developments, welcomed as they are, have proven insufficient to have a significant impact on a city where unemployment remains staggeringly high.

“There are some neighborhoods in Detroit that are estimated to have a 50 percent or higher unemployment rate, and that’s what you can count,” said Charles Pugh, the Detroit City Council president, in an interview with BET.com. “Those are people who are seeking unemployment. For those people who no longer are looking because they have looked and looked and looked and have run out of options, those people aren’t even being counted. So it’s really not fully a calculated number.”

Pugh, like many in Detroit, insist that the key to any widespread resurgence the city might experience will have to be tied to new and novel ways of attracting businesses.

“We have some unique challenges, which also give us unique opportunities to think outside the box and have more incentivized business to move here,” Pugh said.

What Detroit needs, he said, is a plan that allows businesses and entrepreneurs to obtain land and facilities for little to nothing, with the prospect of them one day running successful companies – and hiring local residents.

Various forms of that have already occurred on a limited scale in the city’s midtown section, where middle-class young people have gravitated into trendy lofts and refurbished buildings. But officials contend that far more of that is needed.

“We need to be serious about putting together a package of incentives to attract businesses from all over the world,” Pugh said. “Whether it’s no taxes for the first 10 years, whether it’s just crazy incentives that will say that we are serious about making it easy for you to do business here and create jobs.”

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