Saturday, September 25, 2010

Detroit and Economic Development

I spent the better part of the week in Detroit with several of my economic development colleagues from around Kentucky selling the Bluegrass state to companies in Michigan and Canada. While together with so many economic development pros who have made their life's work helping build and grow communities, we could not help being struck by many of the problems Detroit is experiencing. Let's be clear Detroit is not in an economic downturn, they are in a modern Great Depression of the magnitude of the 1930s.

I have visited several major cities in the past 18 months, no major city looks more beleaguered than Detroit. Nearly one million people have left since Detroit was at it's peak population mid-century. Detroit is the first major US city to see it's population drop below 1 million.

Not a single national grocery chain operates in City today. And perhaps the most recognizable informal measure of disposable income, Detroit has only four Starbucks in the city. By comparison, Owensboro currently has four Starbucks operations.

Mayor David Bing estimates that the real unemployment rate in Detroit is close to 50 percent, since so many have given up trying to find work. Just 10 percent of adults have a college degree, 30 percent are on food stamps. There are an estimated 62,000 vacant lots or uninhabited buildings, the total of which would occupy the entire city of Boston.

Two key development issues have plagued Detroit, both of them are a result of the automobile. The first has been their dependence on that single industry without significant diversification for decades. That dependence also lead the city adopt a development pattern based on the automobile, suburban sprawl. The development handicapped the urban core and created a major void in the center of the city. To crawl back, Detroit will need to focus more on it's center.

Detroit has also suffered because, in the current age of talent and innovation driven economy, their two world class universities are out in the hinterland to the east and west of the city. Pittsburgh was able to successfully reinvent itself from a rust belt steel town to a vibrant and hip city through it's focus on education and quality of place. It did so largely due to Carnegie Mellon and the University of Pittsburgh. Today, this poster child of a blue collar town is more known for it's innovative health care and computer science than it's steel.

Richard Florida in his latest book the Great Reset, highlighted many bright spots for the Greater Detroit region going forward. Despite the challenge of proximity, Michigan and Michigan State are world class universities and still home to some of the best engineers and designers in the automotive industry. The region is pinning much hope on this position as innovator in the automotive industry as it changes in the future.

The region is also looking to become a logistics center, with a truly world class airport--that recently captured a large share of jobs from Kentucky with the expanded Delta hub at DTW.

Finally, it is joining some other prominent cities, including Pittsburgh, in the "shrinking cities" movement, focusing it's future not on growth, but quality. Quality of place through redeveloping blighted properties and quality of education.

These are lessons we are focused on here in Owensboro-- quality of place, cultivating talent, industry diversification and redeveloping the center. Thankfully, despite our challenges, we are ahead of the game--especially compared to rust belt regions large and small like Detroit.

- Posted using BlogPress from my iPad

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