The World Edition - Economy - Recovery for Struggling Detroit in the Near Future

Recovery for Struggling Detroit in the Near Future

By Billy Malfese
OCTOBER 5, 2007

Detroit has long been associated with an economic dilemma after the fallout from General Motors, Ford and Chrysler in recent years, but city planners and developers are optimistic about turning things around in the future.

The auto industry still accounts for one out of every ten jobs in the entire United States, but recent layoffs in this industry has greatly contributed to Detroit's economic slump and ensuing population decrease.

With its high dependence on the auto industry, the Detroit area is more vulnerable to economic cycles than most large cities. A rise in automated manufacturing using robots, inexpensive labor in other parts of the world and increased competition have led to a steady decline of certain types of manufacturing jobs in the region. Local complications for the city include higher taxes than the nearby suburbs, with many unable to afford the levies on property.

In March 2007, metropolitan Detroit's unemployment rate was 6.5%. In the city, the unemployment rate was 14.2% at the end of 2005, leaving Detroit with more than one-third of residents below the poverty line. With all these negative factors coming into play, it will take a lot of effort and money to re-develop Detroit to make it into a powerhouse city it once was.

"One of the biggest challenges I see is the region's shrinking population. Detroit's population has been on the decrease for many years," Commercial real estate broker Myrna Burroughs said.

The city of Detroit has made efforts to lure the region's growth companies downtown with advantages such as a wireless Internet zone, business tax incentives, entertainment, an international riverfront, and residential high rises. A more organized approach to tax abatements and a restructuring of the city’s tax structure will make it a more appealing place for residents and businesses as well. Also being talked about is a mass transit system, along with building more modern public facilities in an effort to revitalize the city.

The Detroit International Riverfront is a newly constructed plaza and series of parks that stretch for three miles along the Detroit River. The riverfront development includes trees, fountains, skyscrapers, luxury high rise residential areas and shopping areas. The first 2.6 miles of continuous RiverWalk opened to the public on June 6, 2007. The remainder of the $200 million development is expected to open in stages, and will not be completed before 2012.

Casino gaming also plays an important economic role as Detroit is the largest city in the United States to offer casino resorts. Casino Windsor complements the MGM Grand Detroit, Motor City Casino, and Greektown Casino in Detroit. The casinos have brought new tax revenue and jobs to the city, although the city still has an unusually high unemployment rate. In 2006, downtown Detroit reported $1.3 billion in restorations and new developments which increased the number of construction jobs in the city.

With new business in the suburbs, the region is competitive in emerging industries including biotechnology, nanotechnology, information technology and hydrogen fuel cell development. So far, the city has had some success in attracting corporations to establish headquarters in Detroit, most notably the addition of Compuware World Headquarters, OnStar, EDS offices at the Renaissance Center, and PricewaterhouseCoopers. Detroit also hosted the 2005 Major League Baseball All-Star Game and the 2006 Super Bowl, which are events only awarded to deserving cities.

"The city, with all its potential and inexpensive land and buildings available for purchase, provides a great opportunity," city engineer Scott Clein said.

Detroit faces many challenges in its quest to regain economic stability and attract residents to live there. Many steps have been taken to revitalize the area, including the building of new housing developments, the Riverfront and the impact of the Casino industry. City planners and developers must plan accordingly to attempt to serve the needs of the people of Detroit, while implementing new strategies to rejuvenate the city.

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