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TABLE OF CONTENTS

EXECUTIVE SUMMARY  i

UNDERSTANDING THE MACRO ECONOMY 1
Overview 1.1
The Case for Change 1.1
Challenges and Opportunities 1.2
Local Initiatives 1.3
Preliminary Framework 1.4

IDENTIFYING OPPORTUNITIES  2
Overview 2.1
Benchmarking Detroit and the Region 2.2 IN‐PROGRESS – December 16, 2010
Export Performance 2.3
Next Steps 2.4

OVERVIEW OF THE WORKFORCE 3
Overview of the Workforce 3.1
Workforce Benchmark 3.2
Identifying Opportunities 3.3 PHASE ONE: RESEARCH AND PRIORITIES
OVERVIEW OF CAPITAL MARKETS AND  POLICY AUDIT TOPIC: 
BUSINESS ENVIRONMENT 4
Financial Infrastructure  4.1
URBAN & REGIONAL ECONOMY
Business Environment 4.2

DEVELOPING AN INDUSTRIAL STRATEGY: NEXT STEPS  5
Industrial Land Inventory 5.1
Workforce Assessment and Matching  5.2
Developing an Industrial Strategy 5.3
Potential Blue Economy 5.4

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy

Executive Summary

STRENGTHENING DETROIT AS A REGIONAL JOB CENTER

9This report provides an inventory and preliminary evaluation of current labor, land and capital assets for the city of Detroit and its region.

9ICIC’s data reflect both quantitative and qualitative analysis. Quantitative methods range from compounded annualized growth rates to
regression analyses; it also includes ratios such as location quotient and export intensity.

9Results of the Phase 1 Policy Audit capture an astonishingly asset-rich city and region that have fallen below national trends in most every
category. However, Detroit’s “relative” weakness in labor, land and capital ratio’s do not reflect its “absolute” infrastructural strengths. In
particular, comparative advantages that have been identified include: competitive traded clusters, surplus manufacturing assets, and
untapped institutional investors.

9The key areas of strength will be extracted from the Phase 1 findings and developed into a viable holistic economic development strategy.
Detroit can and must create an economic development strategy that offers opportunities for both current and future residents. This will
not only create a viable long-term tax base for the city, it will increase the chances of success for every existing regional initiative.

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
1. UNDERSTANDING THE MACRO ECONOMY

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy

Overview
PRIVATE & PUBLIC SECTOR EMPLOYMENT, 2008
Detroit’s Top Employers Region’s Top Employers

1. Detroit Public Schools (13,800) 1. Ford (44, 000)


2, City of Detroit (13,200) 2. University of MI (26,400)
3. Detroit Medical Center (10,500) 3. General Motors Corp (20,800)
4. Henry Ford Health System (8,500) 4. Chrysler Group (19,800)
5. U.S. Government (6.300) 5. Henry Ford Health System (18,300)
6. Wayne State University (5,000) 6. U.S. Government (16, 700)
7. State of Michigan (4,900) 7. Beaumont Hospitals (15,300)
8. General Motors Corp.(4,700) 8. Detroit Public Schools (13,800)
9. Chrysler Group LLC (4,500) 9. City of Detroit (13,200)
10. U.S. Postal Service (4,100) 10. U.S Postal Service (12, 800)

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis; Crain’s; LEHD On The Map 4.0
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

Overview
EMPLOYMENT IN DETROIT, THE REGION, AND THE U.S.

• Detroit and the region have been


experiencing job loss for over a decade.

• Since 2008, the Detroit regional


economy has lost private sector jobs at
almost twice the national rate (13%
versus 7%).

• Employment data for the city are not


yet available. If the city lost jobs at the
same rate as the region between 2008-
2010, Detroit would have lost 3 of every
10 jobs located in the city in 1998.

SOURCE: Bureau of Labor Statistics, State of the Inner City Economies (SICE) database; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY
1.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

Overview
UNEMPLOYMENT RATE, 1990-2010
• In August 2010, unemployment rates
for Detroit, the Detroit region, and the
U.S. were 24.3%, 14.4%, and 9.5%
respectively.

SOURCE: Bureau of Labor Statistics; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY


1.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.1 The Case for Change


EMPLOYMENT AND POPULATION OVER TIME
• Between 1970 and today, the U.S. added
significantly more jobs than people. For
each job in 1970, there are 1.9 jobs today;
for each person, there are 1.6 people.
% of 1970 Employment
PLACE 1980 2008
Detroit 70% 47%
Pittsburgh 89% 72%
USA 128% 187%

% of 1970 Population
PLACE 1980 2008
Detroit 82% 55%
Pittsburgh 84% 58%
USA 115% 153%

SOURCE: Decennial U.S. Census, Projections; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY


1.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.1 The Case for Change


SOCIAL CONDITIONS IN DETROIT

Variable Detroit U.S. Detroit : U.S. • By many important measures, social


conditions in Detroit lag national standards:
Total Households 317,357 113,616,229
Family Households 188,297 75,530,746
o The poverty rate in Detroit is 2.5
Male householder, no wife present 20,360 5,247,957
times the national average.
Female householder, no husband present 91,439 14,471,312
Total One Person Head 111,799 19,719,269 o Single-parent households account
Male-Headed as % of Family Households 10.8% 6.9% 1.6 for almost 60% of all family
Female-Headed as % of Family Households 48.6% 19.2% 2.5 households, more than twice the
Total Single Parent as % of Households 59% 26% 2.3 national average.

Poverty Rate, 2009 36% 14% 2.5 o Average individual income and
Functional Illiteracy Rate, 1992 47% 23% 2.0 median household income are barely
half the national average.
Average Income for the Population 15+, 2009 18,199 33,072 55%
Median Household Income, 2009 26,098 50,221 52%

SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


1.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.2 Challenges and Opportunities


CHALLENGE: JOB SPRAWL

• A 2001 study of job sprawl identified


the Detroit region as one of the country’s
“extremely decentralized employment
metros.”

• Detroit had the second-lowest share of


employment within 3 miles of the CBD
and the second-lowest share of
employment within 10 miles. By these
measures, Detroit had the worst case of
job sprawl in the entire U.S.

• The hollowing out has continued:


Detroit lost 20% of its job base between
1998 and 2008; and likely experienced
substantial further job loss in the 2008-
2010 downturn.

SOURCE: Toni Griffin and Detroit Collaborative Design Center, 2010; Glaeser, 2001; US Census 2000, ICIC special tabulation. INITIATIVE FOR A COMPETITIVE INNER CITY
1.3 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.3 Challenges and Opportunities


EMPLOYMENT CENTER ACCESS BY PUBLIC AND PRIVATE MEANS OF TRANSPORTATION
STERLING
HEIGHTS
76,000

SOUTHFIELD
94,600

DEARBORN
67,000

• The burdens associated with Detroit’s job sprawl fall disproportionately on low-income, workers without access to a private vehicle:
• One-way commute times using public transportation from Detroit to nearby job centers (within about 30 miles) can be over 2 hrs
– Round trip travel times to some job centers equate to half of a work day
• Riding the bus can take over 4 times as long as driving in a private vehicle to reach the same destination

• These findings implicate not only the sprawling built-form of the region, but also its weak public transportation network

SOURCE: ICIC analysis, SEMCOG INITIATIVE FOR A COMPETITIVE INNER CITY


1.3 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.2 Challenges and Opportunities


CHALLENGE: WORKFORCE
• Twenty percent of Detroit’s residents do
not have a high school degree, a rate that
is 50% higher than the national average.
Current U.S. Current U.S. • American workers without a high
Unemployment Unemployment school degree have suffered declines in
Rate : 15% Rate : 5% real wages and difficulty in securing
employment.

• The current economic slowdown has


disproportionately affected these workers.
The unemployment rate among <HS is
currently about 15% compared to 5% for
workers with a college degree.

• This is not a short-term problem. Of


the 25-64 year old residents without a
high school degree, 33% are younger than
DETROIT RESIDENT EDUCATION LEVELS COMPARED TO U.S. 45, compared to 17% in the rest of the
ALL RESIDENTS AGED 25-64 region, 28% in Cleveland
and 12% in Pittsburgh.

SOURCE: American Community Survey 2009 ; Bureau of Labor Statistics (BLS), September 2010 INITIATIVE FOR A COMPETITIVE INNER CITY
1.3 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.3 Challenges and Opportunities


LABOR FORCE STATUS ACROSS LARGE U.S. CITIES

• Only 34% of Detroit’s residents without a high school degree are currently employed. This is far less than the
average for other large U.S. cities.
• Only Philadelphia rivals Detroit in terms of low labor force participation rates among less-educated workers.
Philadelphia, however, has far fewer workers without a high school degree.
SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY
1.3 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.3 Local Initiatives

Engineering Society of Detroit


University Research Corridor
Western Michigan University
Central Michigan University

Detroit Regional Chamber


Michigan State University

Detroit Investment Fund


Wayne State University
University of Michigan

MI Manu Tech Center

Detroit Renaissance
Automation Alley

Ann Arbor Spark

Wayne County
Macomb OU

Next Energy

DTE Energy
Translinked
TechTown
MEDC
DEGC
NEI
Entrepreneurship
Bizdom University X X
Creative Corridor Incentive Fund X x x x
Detroit Business Innovation Development Fund X
MI Initiative for Innovation and Entrepreneurship
MI's Transition to a Knowledge-Based Economy Detroit
X x
SE Michigan
FastTrac
Michigan 
Business Leaders For Michigan
Creative Corridor
Alternative Energy
UEP Detroit 150 X
Alternative and Renewable Energy Economic Dvlp. x
Michigan Green Jobs Initiative
Wind Manufacturing Working Group
Hydraulic Hybrid Working Group
Renewable Energy Renaissance Zones
Centers of Energy Excellence Program
Advanced Battery Credits Program:
Waste-to-Energy
Clean Cities Coalition

SOURCE: Interviews, Secondary Research INITIATIVE FOR A COMPETITIVE INNER CITY


1.4 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.3 Local Initiatives (cont.)

Engineering Society of Detroit


University Research Corridor
Western Michigan University
Central Michigan University

Detroit Regional Chamber


Michigan State University

Detroit Investment Fund


Wayne State University
University of Michigan

MI Manu Tech Center

Detroit Renaissance
Automation Alley

Ann Arbor Spark

Wayne County
Macomb OU

Next Energy

DTE Energy
Translinked
TechTown
MEDC
DEGC
NEI
Life Sciences
Accelerate Michigan Innovation Competition
Michigan Life Science Research and Innovation Center
MichBio
Biosciences Research and Commercialization Center
Southeast Michigan Life Science Study Detroit
SE Michigan
Transportation and Logistics Michigan 
UEP Detroit 150
Assessment of Michigan’s Supply Chain Assets
Aerotropolis
NAFTA Super corridor x

Blue Economy
Green Jobs for Blue Waters
E3: Economy, Energy and Environment
Advanced Manufacturing
From Surviving to Thriving
Higher Education Recruitment Consortium
Michigan Transfer Network
Consortium for Advanced Manufacturing

SOURCE: Interviews, Secondary Research INITIATIVE FOR A COMPETITIVE INNER CITY


1.4 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.4 Preliminary Framework


MAJOR STATE AND REGIONAL INITIATIVES MICHIGAN ECONOMIC
DEVELOPMENT GROWTH
NEW ECONOMY INITIATIVE BROOKINGS INSTITUTION CORPORATION (MEDC)
The New Economy Initiative of Brookings has examined options for MEDC has identified the following as
Southeast Michigan has identified the revitalization of the economies of “Michigan Growth Sectors:”
five clusters as high opportunity the Great Lakes. According to SOM,
for the Southeast Michigan their recommendations can be • Alternative Energy
economy: summarized as: • Automotive Engineering
• Life Sciences
• Supply Chain Management • Use Global Trade Networks • Homeland Security/Defense
• Advanced Manufacturing • Capitalize on Clean Energy • Advanced Manufacturing
• Defense and Homeland Security • Leverage Innovation Infrastructure • Film Industry
• Advanced Energy from Universities
• Health Care MEDC has specialized business
Identified development opportunities development managers in
In addition, NEI supports local include: Alternative Energy, Advanced
entrepreneurship. Manufacturing, Medical Devices, and
• Infrastructure Defense.
Partners include the Detroit • Regional Innovation Clusters
Regional Chamber, Michigan • Advanced Manufacturing
Manufacturing Technology Center, • Regional Energy Research
Macomb Community College, and • Green Development
Next Energy.

SOURCE: Project interviews; www.michiganadvantage.org; SOM project audit INITIATIVE FOR A COMPETITIVE INNER CITY


1.4 IN‐PROGRESS: NOVEMBER 1, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.4 Preliminary Framework


DETROIT WORKS: CREATING OPPORTUNITY
OPPORTUNITIES FOR
JOBS IN THE CITY CITY RESIDENTS COLLABORATION
A healthy regional economy will The new economy cannot be so The region’s most important asset is
make every aspect of the city’s new that it leaves current Detroit the city of Detroit. Based on our
recovery faster and easier. However, residents behind. Instead, we must discussions with stakeholders across
as Detroit’s history demonstrates, a create an economic vision of the city the region, we believe that this is a
healthy regional economy does not that complements existing initiatives commonly held view. This is the
guarantee a vibrant urban economy. by its focus and scope. In many welcome mat for our efforts: the
Distress and resurgence can co-exist cases, of course, the city’s economy recognition that Detroit’s assets,
within a region and across the will be deeply embedded in regional aspirations, and leadership are the
country, they often do. economic opportunities. In these success of the various regional
cases, it is our task to identify city initiatives.
The revitalization of Southeast strategies that will strengthen the
Michigan will have a geography. urban and regional economies. Our work approach reflects this
Unlike most of the other major opportunity and responsibility. We
regional efforts, our work will focus In other cases, the opportunities will view our work as complementary to
on the economy of the city of be strongly concentrated within the regional initiatives and our data and
Detroit. This will not only create a city. This is likely to be true of analysis as commonly held assets.
viable long-term tax base for the economic opportunities arising from We have and will continue to benefit
city, it will increase the chances of the city’s unique assets (eds, meds, from the incredible efforts already
success for every existing regional cultural) and diversity. underway.
initiative.
Our efforts will place a premium on
To achieve this, the project will identifying opportunities for
catalogue the city’s incredible Detroiters, including those
economic assets and leverage these residents without high levels of
in strategies to grow the city’s and formal education or training.
region’s economies.
SOURCE: ICIC INITIATIVE FOR A COMPETITIVE INNER CITY
1.5 IN‐PROGRESS: NOVEMBER 1, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.4 Preliminary Framework


OPPORTUNITIES: LEADING AND LEAP-FROGGING
NEW OPPORTUNITIES THE NEW AMERICAN
FOR RESIDENTS A NEW REGIONALISM ECONOMY
Despite three decades of rising The difficult history and tepid It is widely accepted that the next
income inequality and declining present relationship between American economy will have to be
wages for less-educated Americans, Detroit and its suburbs provide a driven by the country’s productive
there have been few concerted unique opportunity: creating a capabilities rather than its appetite
efforts to improve the job prospects national model for an urban- for consumption.
of these workers where they are. centered 21st century regionalism.
Detroit is poised to be a leader in
Detroit can and must create an The new economic regionalism will this new economy. Detroit, the
economic development strategy that be based on shared interests rather region, and the state of Michigan are
offers opportunities for all residents. than proximity per se. It will be a major producers of products that
This strategy must complement flexible, competitive regionalism that are consumed across the country
traditional education and training aligns and re-aligns geography to and the world. Detroit can build on
strategies to identify sectors and leverage a wide range of this legacy with the creation of
career paths in which less-educated opportunities; and uses competition export corridors to facilitate the
workers can succeed. to elicit cooperation. city’s and region’s strong
connections with global markets.
To create an opportunity economy, This new regionalism could include
Detroit can exploit the fact that the an anchor cluster in Midtown The city must recognize, as well, its
key inputs to creating opportunity – Detroit, a “Knowledge Corridor” unique opportunity to merge
job characteristics and location, anchored by U of M and WSU; and a uniquely urban assets—educational
residential patterns, and public Transportation, Logistics, and and medical facilities, world-class
transportation networks—are in Distribution cluster that spans cultural offerings, and a highly-skilled
flux. These can be configured to Southeast Michigan, Ohio and daytime workforce–with the city’s
create opportunities for residents. Ontario. vast industrial assets.

SOURCE: ICIC “’Leapfrogging’ is the notion that areas which have poorly-developed technology or INITIATIVE FOR A COMPETITIVE INNER CITY
1.5 economic bases can move themselves forward rapidly through the adoption of modern IN‐PROGRESS: DECEMBER 16, 2010
systems without going through intermediary steps.” Jamais Cascio, 2004
POLICY AUDIT TOPIC :  Urban & Regional Economy
UNDERSTANDING THE MACRO ECONOMY

1.4 Preliminary Framework


PRELIMINARY FRAMEWORK
OPPORTUNITY CORRIDORS:
…to link employment opportunities for Detroit residents with residential
neighborhoods and public transportation linkages.

Next steps: Identify industries and occupations that provide the most opportunity for
lower-skilled workers and examine cities with high labor force participation rates among
residents with lower levels of formal education.

INNOVATION CORRIDORS:
…to translate the region’s vast innovative and engineering capabilities into firm
formation and job creation.

Next steps: There are many strong initiatives underway at the local and regional scales;
interview organizations to understand how the city can promote success of these initiatives
and maximize their impact on the city’s economy. Identify high skill-based potential
innovation corridors, including Detroit-Ann Arbor.

EXPORT CORRIDORS:
…to facilitate the manufacture and distribution at the city’s and region’s exporting
firms.

Next steps: Work with SEMCOG to map the current spatial distribution of firms with mix of
high and low skill opportunities in export-intensive sectors as well as trade-enabling
transportation, logistics, and distribution firms to understand location patterns and
infrastructure requirements. Interview firms in the city and region regarding their location and
business environment needs. Investigate federal initiatives.
SOURCE: Graphics from SOM Policy Audit INITIATIVE FOR A COMPETITIVE INNER CITY
1.5 IN‐PROGRESS: DECEMBER 16, 2010
2. IDENTIFYING OPPORTUNITIES 

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES

2.1 Identifying Opportunities: Overview

IDENTIFY OPPORTUNITIES AND


BENCHMARKING ANALYSIS CHALLENGES
To understand the economic Analysis phase of the Detroit Assess competitive conditions associated with
performance of Detroit and the economy is an on-going process. potential opportunities: final market demand,
larger region, we do the following: Work performed to date includes: geography of supply chains, export opportunities,
emerging competitors. What is the size of the
1. Compile industry-level 1. Analysis of the city’s and region’s opportunity?
employment data for the 100 performance in local and traded
largest U.S. cities and their 83 clusters Assess the input demands and operating
regions requirements of the most promising opportunities
2. Primary research in the form of and compare to Detroit’s and region’s economic
2. Assign every industry to one of interviews, primarily with assets. What are the best matches? What will be
75 clusters using definitions business groups, capital required of the city and region?
provided by the Institute for providers and intermediaries,
Strategy and Competitiveness at and manufacturing firms Match opportunities with existing and projected
Harvard Business School assets related to land, workforce, and innovation
3. Secondary research on some of to create innovation corridors, export corridors,
3. Calculate concentration ratios the identified strengths and
and opportunity corridors.
(i.e., location quotients) and opportunities
1998-2008 growth rates for
Identify private sector conditions for growth;
each cluster in each city and potential local, regional, and national private
region sector champions; and public policies to protect
existing assets and strengths and stimulate latent
4. Benchmark Detroit’s assets and strengths.
performance against other U.S.
cities and regions

SOURCE: ICIC INITIATIVE FOR A COMPETITIVE INNER CITY


2.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES

SNAPSHOT OF CITY AND REGIONAL ECONOMIC PERFORMANCE


• CITY OF DETROIT: Private sector job loss, 1998-2008: -19%

• Rank among 100 largest U.S. cities: 98

• #97: Cleveland / #99: Grand Rapids

• Largest job losses: Automotive, Commercial Services, Health Services, Financial Services

•Largest job gains: Information Technology, Casino Hotels, Entertainment, Local Logistical Services

• DETROIT REGION: Private sector job loss, 1998-2008: -9%

• Rank among 83 largest U.S. regions: 82

• #81: Cleveland / #83: New Orleans

• Largest job losses: Automotive, Commercial Services, Real Estate and Construction, Metal Manufacturing

• Largest job gains: Education, Health Services, Business Services, Transportation and LogisticsINITIATIVE FOR A COMPETITIVE INNER CITY
SOURCE XXXXXX
1.X IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES

2.2 Benchmarking Performance of Detroit’s Economic Clusters


THE ROLE OF TRADED AND LOCAL CLUSTERS
CLUSTERS AND MARKET SIZE TRADED CLUSTERS LOCAL CLUSTERS

A cluster is a set of “geographically Traded clusters serve customers The best examples of local clusters
proximate group[s] of interconnected spread across the country and the are consumer services like dry
companies” that influence each other as world. Traded clusters are strongly cleaners and restaurants, which
customers, suppliers and competitors. represented by manufacturing generally attract customers from
activities but also include IP- within a very small footprint.
Cluster actors include OEMs, suppliers, dominated sectors like IT and high-
machinery, providers, financial institutions, end financial and business services. Local clusters also include B-2-B
business associations, specialized services like local logistics, industrial
infrastructure providers, and other Because of their strong links to products and services, and financial
institutions that provide training, education, innovation, and their out-sized services like tax advisory services.
information, research, and technical contributions to value added, wages,
support. and taxes, traded clusters have been Although often overlooked, the
the focus of much of local, state, and strength or weakness of local
Cluster outputs can be sold in local federal economic development clusters can drive urban and regional
markets (i.e. the region or smaller) or can efforts. economies.
be shipped outside the region, to other
parts of the U.S. or internationally. Many of the Obama Administration’s Local clusters account for 70% of all
Clusters that primarily sell within the major economic development U.S. employment. Average wages are
region are termed “local”: clusters that sell efforts are related to traded lower than in traded clusters, but
outside the region are referred to as clusters, including: the appointment jobs are more accessible to workers
“traded.” of a manufacturing czar, the focus on without high levels of formal
exports, and the development of education.
cluster programs and policy.

To many, the performance of traded


clusters is the leading indicator of
SOURCE: Institute for Strategy and Competitiveness; ICIC
national economic competitiveness. INITIATIVE FOR A COMPETITIVE INNER CITY
2.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES 

2.2 Benchmarking Performance of Detroit’s Economic Clusters


DETROIT CITY EMPLOYMENT GROWTH RANK, 1998-2008

BENCHMARKING DETROIT
For each of the 40 economic clusters in
which Detroit competes, we ranked its
1998-2008 employment growth against
the country’s other 99 largest cities.
Detroit performed in the bottom
quartile (75th -100th percentile) in 21 of
the 40 clusters.

SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY
2.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES 

2.2 Benchmarking Performance of Region’s Economic Clusters


DETROIT REGION EMPLOYMENT GROWTH RANK, 1998-2008

BENCHMARKING THE
REGION
For each of the 50 economic clusters in
which the region competes, we ranked its
1998-2008 employment growth against
the country’s other 82 largest regions.
The region performed in the third
quartile (50th - 75th percentile) in 23 of
the 50 clusters.

SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY
2.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES

EXAMPLES OF DETROIT’S BEST-PERFORMING TRADED CLUSTERS


• INFORMATION TECHNOLOGY: The city’s employment increase is attributed to Compuware, which moved its
global headquarters from Farmington Hills to Detroit. Compuware is a software publisher and serves 45 of the top
50 Fortune 100 companies.

• BIOPHARMACEUTICALS: In 2007, Caraco Pharmaceutical Labs, Ltd. expanded to 650 employees. (In 2008-2009,
Caraco had problems with the FDA and was forced to close and layoff 430 employees, but is currently working to
reopen the Detroit plant.) Henry Ford is a site for biopharmaceutical research. Many observers believe that
biopharmaceuticals is a still largely untapped opportunity for the city and region.

• ENTERTAINMENT: The cluster includes entertainment venues; the city’s growth is likely attributable to on-site
employment at Comerica Park (opened in 2000) and Ford Field (opened in 2002) and supporting services. The
production-oriented parts of the cluster (e.g., recorded products, video production and distribution) could increase
with the burgeoning “creative class” being drawn to Detroit.

SOURCE XXXXXX INITIATIVE FOR A COMPETITIVE INNER CITY
1.X IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES

EXAMPLES OF DETROIT’S WORST-PERFORMING TRADED CLUSTERS


• PROCESSED FOODS: The city experienced a large decline in employment over the 1998-2008 period, due in part
to loss of meat-related activities like slaughterhouses. Processed foods is generally a strength in urban economies,
often fueled by food preferences of ethnic communities and entrepreneurial activities of foreign-born residents.
Detroit’s great food-related asset base, emerging interest in local agriculture, and strong agricultural base statewide
could potentially support a strong cluster.

• EDUCATION AND KNOWLEDGE CREATION: Detroit did not see any significant employment change in the
cluster between 1998 and 2008, while the cluster saw rapid growth in many cities in the country due mainly to rapid
expansion at private universities, especially large top-tier universities. Detroit’s private institutions, however, are
relatively small: University of Detroit Mercy has 5,500 students; College for Creative Studies has 1,300; Lewis College
of Business has 300 students; and Marygrove College has 1,300 students.

• TRANSPORTATION AND LOGISTICS: This was a significant source of job growth in cities and regions around the
country in the 1998-2008 period. Poor performance in Detroit’s cluster can be traced to the decline in scheduled
passenger air transportation (750 jobs). This decline overshadows the 500 jobs that were created in the General
Warehousing
SOURCE XXXXXX
and Storage industry over the same period. INITIATIVE FOR A COMPETITIVE INNER CITY
1.X IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES 

2.2 Benchmarking Performance of Region’s Economic Clusters


EMPLOYMENT GROWTH RANK BY CLUSTER TYPE, 1998-2008

What happened? Take-away?


The types of jobs lost in the city and When we analyze performance by
region, such as white- and blue-collar jobs cluster type, it becomes apparent that
in the automotive industry, are associated the employment crisis is driven in
with high wages and high multipliers. Job large part by local demand –as
loss in these sectors had a devastating evidenced by the weak performance
effect on local demand, especially in of local clusters –and somewhat less
consumer services. so by overall competitiveness–as
evidenced by stronger performance in
traded clusters. Detroit can compete
in national and international markets.

Note: Ranks shown are on a un-weighted basis INITIATIVE FOR A COMPETITIVE INNER CITY


SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis IN‐PROGRESS: DECEMBER 16, 2010
2.2
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES 

2.3 Export Performance


FINDINGS FROM BROOKINGS STUDY

Export-Related Jobs,
Total Jobs from
Rank Share of Regional Rank
Exports, 2008
Jobs, 2008
• Only the Detroit and Silicon Valley (San
Los Angeles-Long Beach-Santa Ana 560,475 1 9.8% 23 Jose) regions rank in the top ten in both
New York-Northern New Jersey 481,946 2 5.6% 87 total export-related jobs and share of
export-related jobs.
Chicago-Naperville-Joliet 397,924 3 8.7% 43
Dallas-Fort Worth-Arlington, 303,514 4 10.0% 21 • The city of Detroit plays a key role in
Detroit-Warren-Livonia 239,910 5 12.5% 7 this performance: we estimate that 6% of
the region’s most export-intensive firms
Houston-Sugar Land-Baytown 235,193 6 8.9% 38
and 11% of the region’s trade-enabling
Boston-Cambridge-Quincy 223,070 7 8.9% 37 transportation, logistics, and distribution
San Jose-Sunnyvale-Santa Clara 212,157 8 22.7% 1 firms are located within the city of
Philadelphia-Camden-Wilmington, 201,634 9 7.1% 65 Detroit. (Across all sectors, 8% of the
region’s establishments are located in
Seattle-Tacoma-Bellevue, 196,000 10 10.7% 16 Detroit.)

SOURCE: Istrate, Rothwell, and Katz, July 2010; State of the Inner City Economies (SICE) database; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY
2.3 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
IDENTIFYING OPPORTUNITIES 

2.3 Export Performance


DETROIT REGION’S SHARE OF TOTAL U.S.
EMPLOYMENT IN MOST TRADE-INTENSIVE • The Detroit region’s share of
INDUSTRIES employment in the highest export
intensity sectors is 3x its share of
all national employment. This
accords with Brookings’ finding
that Detroit is one of the most
export-intensive regions in the
country.

• In addition to transportation,
Detroit has very high shares of
employment in the most export-
intensive portions of machinery
and primary metals.

• By identifying export intensity at


the industry level, we can examine
infrastructure needs of firms in the
city and region.
INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: State of the Inner City Economies (SICE) database; ICIC analysis
2.3
3. OVERVIEW OF THE WORKFORCE

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.1 Overview
TOTAL LABOR MARKET

PERCENT EMPLOYMENT STATUS WORKFORCE GENDER


POPULATION AGED 16-64 POPULATION AGED 16+

Less than 50% of Detroit’s residents are employed In Detroit, female residents are significantly
compared to 70% for the region. more likely to be employed. The reverse is true
in the region.

Note: 12/10 updated American Community Survey data will be used to update current information INITIATIVE FOR A COMPETITIVE INNER CITY
SOURCE: American Community Survey, 2009 IN‐PROGRESS: DECEMBER 16, 2010
3.1
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.1 Overview
DISTRIBUTION DYNAMICS

DETROIT VS. REGION: AGE


DISTRIBUTION FOR WORKING
POPULATION AGED 16+
Detroit City has an older working population
than the rest of the Detroit region.

This is unusual for a city, most of which tend to


skew younger.

SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


3.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.1 Overview
AGE DYNAMICS

WORKFORCE BY AGE

• Detroit residents of every age


are less likely to be employed than
their counterparts in the region.

• Of particular concern are the


high unemployment rates among
20-34 year old Detroit residents.

SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


3.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.2 Workforce Benchmark


EMPLOYMENT STATUS

EDUCATIONAL ATTAINMENT
POPULATION AGE 25-64

• Detroit residents of every


education level are less likely to be
employed than their counterparts in
the region. However, the gap closes
dramatically at higher levels of
educational attainment.

• Only 1 in 3 Detroit residents


without a high school degree is
employed, compared to 1 in 2 in the
rest of the region.

SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


3.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.2 Workforce Benchmark


NOT IN LABOR FORCE STATUS

SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


3.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.2 Workforce Benchmark


WHERE DETROITERS WORK

• Only 38% of Detroiters work in the city. This


is low by national standards.

• Nationally, lower-income, lower-skilled urban


residents rely heavily on jobs located within the
city. In the 2000 census, 75% of employed inner
city residents in the country’s largest cities
worked in the city. In Detroit, only 50% did.

SOURCE: SEMCOG; ICIC INITIATIVE FOR A COMPETITIVE INNER CITY


3.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.2 Workforce Benchmark


USE OF PUBLIC TRANSPORTATION
DETROIT VS. REGION: MEANS OF
TRANSPORTATION BY EDUCATION
• Residents of Detroit are 3 to 4 times
more likely to rely on public
transportation than similar workers
elsewhere in the region.

• For both Detroit and the region, public


transit use declines with higher levels of
educational attainment.

• We hypothesize that low labor force


participation rates among less-educated
Detroiters could be tied to weak linkages
between job location and public transit
access.

SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


3.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.2 Workforce Benchmark


USE OF PUBLIC TRANSPORTATION ACROSS CITIES

SOURCE: American Community Survey, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


3.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.2 Workforce Benchmark


CHALLENGE: ALIGNING WORKFORCE AND TRANSPORTATION

• It is critical that public transportation


be configured to enable residents to
access job opportunities within the city
and region. An overlay of existing bus
routes and educational attainment levels
suggests that there might currently be a
mismatch.

SOURCE: Graphic courtesy of Hamilton Anderson. INITIATIVE FOR A COMPETITIVE INNER CITY


3.2 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.3 Identifying Opportunities


IDENTIFYING NEW OPPORTUNITIES FOR DISPLACED WORKERS
• CALCULATE SKILL MATCH SCORE (SMS)
MATRIX: the total difference in skill sets used
between two occupations, repeated for all
possible job switches

• The smaller the SMS, the more similar the


skill sets used in two different occupations

• By summing up the % occupation


breakdown at a given SMS, we can find the
chances that a person switching jobs into an
industry would find a job in that industry at a
specific SMS

• Take-away: Preliminary work shows that


skill matching is a good predictor of actual
employment choices of displaced workers

SOURCE: O*NET data; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY


3.3 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF THE WORKFORCE

3.3 Identifying Opportunities


IDENTIFYING NEW OPPORTUNITIES FOR DISPLACED WORKERS
• About 90% of the jobs within the
General Freight Trucking industry are a
good match with the skill set of displaced
Miscellaneous Team Assemblers

• However, only 50% of the jobs within


the Coastal and Great Lakes Freight
Transportation industry are a good match.

• Take-away: The Detroit Works


economic development strategy will
identify specific strategies within broad,
often regional, opportunities. This will
allow the city to identify close matches to
existing residents’ skill profiles and/or
anticipate training needs.

SOURCE: O*NET data; ICIC analysis INITIATIVE FOR A COMPETITIVE INNER CITY


3.3 IN‐PROGRESS: DECEMBER 16, 2010
4. OVERVIEW OF CAPITAL MARKETS AND BUSINESS 
ENVIRONMENT

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF CAPITAL MARKETS

4.1 Financial Infrastructure

Lack of Significant Commercial and Investment Banking Presence: The lack of commercial banking headquarters in the city of Detroit and the
surrounding region were cited to have implications on the volume and types of transactions and investments being done in the area.

Implications on Government-Based Sources of Capital (for which there are data available):

1) NMTC: From 2004 – 2008, the city of Detroit received 1/4 of the total New Markets Tax Credit (NMTC) investments received by
Baltimore and less than 40% of that of Cleveland. Furthermore, of the 40 NMTC investments made, only one project was for
‘business-purpose’ while the rest were real-estate transactions. Some attribute the limited banking infrastructure, particularly the
lack of headquarter banking functions and limited capacity of the local branches, as barriers to completing a higher volume of
leveraged and other complex NMTC transactions.

2) SBA Loans: Large commercial lenders play a very small role in extending SBA loans to small businesses. A case in point, Bank of
America gave out six loans in 2009 in the entire state of Michigan in the total amount of $190k. With the decline in community
banking institutions, this may limit the reach of SBA loans to small businesses.

3) The lack of understanding about and advocacy for the local economy by smaller local branches is cited as limiting credit to Detroit-
based projects.

SOURCE: Project Interviews; U.S. Department of Treasury INITIATIVE FOR A COMPETITIVE INNER CITY


4.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF CAPITAL MARKETS

4.1 Financial Infrastructure


Limited Institutional Investment in Private Equity and Venture Capital: Michigan-based national grant-making foundations and large institutional
investors have provided little to no funding to Michigan’s venture network, which is a crucial source of capital for newly emerging industries in
the area. Overall, there is a lack of large-scale, sustained level of local funding to the Michigan-based VC community, which has the ability foster
the next growth industries.

Michigan* Michigan as Percent of US


Gross State
Product,
2008 2009 2008 2009 2008

No. of VC Firms in Existence 15 16 No. of VC Firms in Existence 1.7% 2.0% 2.8%

No. of Investment Professionals 43 44 No. of Investment Professionals 0.6% 0.6% 2.8%

Total Capital Under Management $1B $1.1B Total Capital Under Management 0.5% 0.6% 2.8%

Avg VC Under Mgmt by Firm $73M $76M Avg VC Under Mgmt by Firm 33% 34%

VC Funds Raised $173M $160M VC Funds Raised 0.6% 1.1% 2.8%

Avg VC Fund Size $38M $39M Avg VC Fund Size 26% 37%

*Data represent venture firms headquartered in Michigan

SOURCE: Michigan Venture Capital Association, 2009 INITIATIVE FOR A COMPETITIVE INNER CITY


4.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF CAPITAL MARKETS

4.1 Financial Infrastructure: Challenges and Opportunities

Other Capital Market Challenges:

1) Asset Base
¾ Asset liquidations from foreclosure and fire sales have destroyed the secondary market demand for equipment and land
¾ Personal assets, an important source of financing and/or collateral for smaller businesses, have declined with housing prices

2) Perception of Risk
¾ Investors are ambivalent about the city’s commitment to transparent governance

3) Private Equity/VC
¾ Detroit business assets are not attractive targets for Michigan VCs, which prefer life sciences and alternative energy firms
¾ Michigan VCs are not large enough to get substantial institutional investors (e.g., universities, pensions, etc.)
¾ One expert estimates that Michigan venture funds still only have 20% of what they could invest
¾ According to one source, Michigan companies account for well less than half of the portfolios of Michigan VCs

SOURCE: Project Interviews INITIATIVE FOR A COMPETITIVE INNER CITY


4.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF CAPITAL MARKETS

4.1 Financial Infrastructure: Challenges and Opportunities


Promising Developments:

1) Quicken Loans relocates to Detroit


¾ In summer 2010, Quicken Loans moved 1,700 employees to new downtown offices
¾ With this move, Detroit immediately becomes a national leader in the retail mortgage business

2) University-Related Assets
¾ According to local VCs, Wayne State is generating more commercially viable ideas
¾ TechTown is incubating firms in areas that are attractive to VCs, especially life sciences and alternative energy
¾ Ann Arbor is an important city site for VCs; potential linkages between Detroit and Ann Arbor have not been fully explored

3) New Markets Tax Credits (NMTCs)


¾ Detroit- and Michigan-based CDEs have historically received little in the way of NMTC allocations

¾ In 2008 and 2009, however, four Michigan-based CDEs received almost $180 million in NMTC allocations, compared to $100M in
state allocations for the entire 2003-2007 period
¾ All four CDEs can spend allocation in Detroit; one is focused solely on Detroit, another on Wayne County (including Detroit), and
a third on Detroit and Lansing

SOURCE: CRAINS, Michigan Advantage, WWW.BIZDOM.COM INITIATIVE FOR A COMPETITIVE INNER CITY


4.1 IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
OVERVIEW OF CAPITAL MARKETS

4.2 Business Environment: Early Observations


Observations:

1) The dominance of large, vertical firms during much of the city’s and region’s industrial era inhibited the development of an
independent, robust economic institutional infrastructure (e.g., local capital markets, education and training, strong relationships
with universities). This creates many challenges, including limited transferability of best practices from elsewhere in the country.

2) Similarly, relationships with one or a small number of very large OEMs left supplier firms in the region with truncated skill sets;
“build to print” did not allow suppliers to develop design, engineering, or marketing capabilities. In recent years, first-tier suppliers
have grown very large and have been asked to take on more design work, but the relationship with OEMs is still very unequal and
suppliers have struggled with profitability, bankruptcy, and survival. However, supplier deaths have driven more business to
survivors.

3) A “go-it-alone” regional political culture and a history of animus and non-cooperation have left few formal building blocks for
cooperation. At the same time, at the level of individual firms and organizations, there is a welcoming attitude towards alliances
across the region.

4) Prior success has created a culture of very high expectations regarding the city’s and region’s role in the national and global
economies. This can foster greatness or paralysis.

SOURCE: CRAINS, Michigan Advantage, WWW.BIZDOM.COM INITIATIVE FOR A COMPETITIVE INNER CITY


4.2 IN‐PROGRESS: DECEMBER 16, 2010
5. DEVELOPING AN INDUSTRIAL STRATEGY: PROCESS AND 
NEXT STEPS 

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
DEVELOPING AN INDUSTRIAL STRATEGY: NEXT STEPS 

5.1 DETROIT INDUSTRIAL ASSETS INVENTORY

THE CORNERSTONE OF THE INDUSTRIAL ASSETS INVENTORY IS


A SITE-BY-SITE SURVEY OF DETROIT’S INDUSTRIAL CORRIDORS.

• The purpose of the industrial inventory is to provide an up-to-date


understanding of the characteristics, function and performance of the
city’s industrial areas, and provide a basis for future recommendations.

• The inventory will generate hybrid datasets by updating, confirming,


and combining existing datasets with new on-the-ground survey data.

• The industrial corridors consist of 10,054 acres of land, excluding


right-of-ways, and are defined where contiguous industrial uses
predominate, but other land uses within the boundary of an industrial
area will also be surveyed.

INITIATIVE FOR A COMPETITIVE INNER CITY
5.1 IN‐PROGRESS: NOVEMBER 1, 2010
INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: NOVEMBER 1, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
DEVELOPING AN INDUSTRIAL STRATEGY: NEXT STEPS 

5.1 DETROIT INDUSTRIAL ASSETS INVENTORY

OTHER INDUSTRIAL ASSETS TO BE


MAPPED WILL INCLUDE PHYSICAL
INFRASTRUCTURE AND MAPPING OF
INDUSTRIAL FIRMS

• Because of its manufacturing and export


history, Detroit has a strong backbone of
transportation- and distribution-related
infrastructure. The industrial strategy work
will coordinate with work on city systems
and infrastructure to strengthen the
strategies for each.

• Another key asset are the firms


themselves: Detroit is home to key firm-
level capabilities in manufacturing, exports,
and transportation, logistics, and
distribution (TLD). We will coordinate
with efforts underway to create a database
of firms that operate within the city of
Detroit.

SOURCE: Graphic courtesy of Happold Consulting Policy Audit INITIATIVE FOR A COMPETITIVE INNER CITY


5.1 IN‐PROGRESS: NOVEMBER 1, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
DEVELOPING AN INDUSTRIAL STRATEGY: NEXT STEPS 

5.2 WORKFORCE ASSESSMENT AND MATCHING

IDENTIFY OPPORTUNITIES FOR LOWER-SKILLED


DETROIT RESIDENTS AND DISPLACED WORKERS.

• Identify industries that typically employ large numbers of


lower-skilled workers and assess the viability of their
growth in Detroit. Identify specific opportunities for
displaced workers.

• Examine cities that have high employment and labor


force participation rates among high school graduates and
workers without a high school degree to identify relevant
practices and policies.

• Identify potential “Opportunity Corridors”: job site


locations that can link economic opportunity, housing, and
transportation.

SOURCE: Graphic courtesy of Hamilton Anderson, Policy Audit, October 2010 INITIATIVE FOR A COMPETITIVE INNER CITY
5.2 IN‐PROGRESS: NOVEMBER 1, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy
DEVELOPING AN INDUSTRIAL STRATEGY: NEXT STEPS 

5.3 DEVELOPING AN INDUSTRIAL STRATEGY


DEVELOP A STRATEGY TO MAXIMIZE THE CITY’S ECONOMIC
OPPORTUNITIES

• Assess competitive conditions associated with potential opportunities: final


market demand, geography of supply chains, export opportunities, emerging
competitors. What is the size of the opportunity?

• Assess the input demands and operating requirements of identified growth


clusters and compare to Detroit’s and region’s economic assets. What are the
best matches? What will be required of the city and region?

• Match opportunities with existing and projected assets related to land,


workforce, and innovation to create innovation corridors, export corridors,
and opportunity corridors.

• Identify private sector conditions for growth, as well as potential local,


regional, and national private sector champions; and public policies to protect
existing assets and strength and stimulate latent assets and strengths

SOURCE: Graphic courtesy of Interface Studios INITIATIVE FOR A COMPETITIVE INNER CITY


5.3 IN‐PROGRESS: NOVEMBER 1, 2010
POLICY AUDIT TOPIC :  Urban & Regional Economy

5.4 Detroit’s Potential Blue Economy


OVERVIEW
MAKING SOUTHEAST MICHIGAN INTO A BLUE
ECONOMY HUB

• The region can be a catalytic agent in transforming MI into a global


center of water-related research & development, water quality
improvement, water-based technological manufacturing, recreational and
water-dependent enterprises.

• Skill-based jobs exist in water and wastewater technology development


focused on tools to conserve, treat, measure, monitor, reuse, recycle, and
smartly manage water.

• Labor-based jobs can be obtained through expansion and attraction


efforts aimed at water-intensive industries such as agriculture, food, and
beverage processing and through infrastructure repairs and upgrades.

• Continued development of the Detroit River will augment regional


recreational activities and strengthen Great Lakes tourism

INITIATIVE FOR A COMPETITIVE INNER CITY
SOURCE: ESD Institute: Michigan’s Blue Economy Initiative; Michigan’s Blue Economy Report; www.greenjobs4bluewaters.com IN‐PROGRESS: DECEMBER 16, 2010
5.4
POLICY AUDIT TOPIC :  Urban & Regional Economy

5.4 Detroit’s Potential Blue Economy


RIVER RECREATIONAL OPPORTUNITIES
THE DETROIT RIVER IS CORE TO THE REGIONS
“LIVE.WORK.PLAY” OPPORTUNITY

• The city of Detroit, in collaboration with General Motors, Kresge & the
Detroit River Conservancy, have begun to build the largest sustainable
urban waterfront in North America.

•The 5.5 mile Detroit Riverwalk will span from the Ambassador Bridge to
Belle Isle and would spawn other economic multiplier activities including
plazas, pavilions, parks, harbors and green spaces

•Innovative housing typology has emerged from Detroit’s riverfront


expansion and has made people who were once visitors into residents.

•Riverfronts serve as conduits for attracting the “creative class”


demographic who often augment the local tax base and lead the way for
expansion of retail and real-estate development.

•The Michigan Natural Resources Trust Fund recently recommend $34M


go to Detroit, most of which will be used is for land
acquisition and to extend the Dequindre Cut.

INITIATIVE FOR A COMPETITIVE INNER CITY
SOURCE: ESD Institute: Michigan’s Blue Economy Initiative; Michigan’s Blue Economy Report; www.greenjobs4bluewaters.com IN‐PROGRESS: DECEMBER 16, 2010
5.4
POLICY AUDIT TOPIC :  Urban & Regional Economy

5.4 Detroit’s Potential Blue Economy


WATER TECHNOLOGIES
Detroit's municipal water system is the largest single-site waste water treatment plant and also one of the most costly in the country. Implementation of private/public
partnerships with DWSD and water tech companies demonstrations can be deployed that will help make the region a leader in the Blue Economy
•Treatment
• Microbial fuel cell (MFC) technology, ultraviolet treatment, Temperature-phased
anaerobic digestion (TPAD), bio-polymers removal, biogas recovery, ultrasonic
sludge pre-treatment, and phosphorus recovery all increase potable and sewage
water quality –reducing sewage treatment plant costs, and increasing tourism potential
• DynamOx (www.dynamox.com) is located in Warren, MI

• Reuse & Recycle


• Membrane bioreactors, advanced oxidation, and ultraviolet disinfection allow
for the reuse of the wastewater (generally for non-potable purposes) – which allows
industry users to get more with less water. This issue is increasingly important as water
availability decreases in the coming decades both nationally and internationally
• Ion-Exchangers soften water and allow for the extraction and reuse of
particulates from wastewater (i.e. metals, fertilizer, etc)
• Emefcy (www.emefcy.com) just signed a cooperation agreement with MI to
generate energy from wastewater – the most significant cost in a treatment plant
is energy, so this technology has significant cost savings implications.

• Conservation • Sanitary sewer overflow (SSO) and combined sewer overflow (CSO)
• End-user conservation technologies • Monitor, repair, and right-size water and sewer • Greenways and wetlands can be engineered to reduce sewer overflow speeds and
like low flow toilets, aerated shower pipes to minimize pressure points and leaks – absorb the overflow before reaching environmentally and ecologically sensitive water
important for the U.S.’s aging infrastructure and bodies like the Rouge and Detroit River. At the same time they can reduce
heads, and grey water recycling save could save millions in water and energy costs
end-users money and represent a growing seasonal and rain-based flooding – an important consideration for many Detroiter’s
• Blackmer’s (www.blackmer.com) world
market and their basements
headquarters and CESO (www.cesoinc.com) are
• Falcon WaterFree’s U.S. headquarters both in MI and Miya (www.miya-water.com) • URS (http://www.urscorp.com) has an office in Detroit
is in MI (www.falconwaterfree.com) partnered with SE MI towns and counties to bring INITIATIVE FOR A COMPETITIVE INNER CITY
applicable technologies and green jobs IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: ESD Institute: Michigan’s Blue Economy Initiative; The Water Opportunity for Ontario; www.greenjobs4bluewaters.com
5.4
POLICY AUDIT TOPIC :  Urban & Regional Economy

5.4 Detroit’s Potential Blue Economy


WATER-INTENSIVE INDUSTRIES
DWSD’s five water treatment plants pumps an average of 610 million gallons per day to 35% of Michigan’s population and was built with excess capacity to
capitalize on a growing manufacturing footprint.

• Scarcity of clean, fresh water presents an increasing risk in many


water-intensive industries that are beginning to properly account
for water risk in their supply chain analysis

• Excess capacity in the region’s water and electric utilities create a


comparative advantage to address the needs of economic
development in the midst of a global freshwater shortage

• DWSD is operating at 75% of its capacity and could produce an


additional 500-700 million gallons per day.
DTE is also significantly underutilized

• Declines or disruptions in water supply can undermine profits of


industrial and manufacturing operations

“There are substitutes for oil, but there are none for fresh water”
- CERES and the Pacific Institute

INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: ESD Institute: Michigan’s Blue Economy Initiative; Intergovernmental Panel on Climate Change (www.ipcc.ch)
5.4
POLICY AUDIT TOPIC :  Urban & Regional Economy

5.4 Detroit’s Potential Blue Economy


WATER-INTENSIVE INDUSTRIES IN SEMCOG
The region is not a new entrant to water intensive-industries and is currently home to a variety of electric power, semiconductors, bio-pharma, chemical, beverage and
food processing companies
Electronics:
STMicroelectronics (Semiconductors)

Lithium Ion Batteries:


Turtlerock Greentech (Toda America-Lithium Ion Cathodes
Johnson Control Power Solutions (Hybrid, Electric Vehicles)

Bottling:
Pepsi (Aquafina/Pepsi )
Michigan Soft Drink Association
Nestle (Ice Mountain, Gerber)
Brown-Forman (Jack Daniels, Southern Comfort)

Food Processing:
Archer Daniels Midland (Agribusiness)
Sara Lee (Food Processing)

Chemicals:
Praxair (Industrial Gas)
Water is used to generate power and for heating and cooling Potash (Mining Fertilizer)
Water is used as a product ingredient and throughout cleaning and sterilization processes BASF (Global Chemical Company)
Water is used as an ingredient in beverages and as a byproduct in the processing and dispensing DuPont (Global Chemical Company)
of food and beverages Henkel (Water Treatment, Adhesives)
PPG (Chemicals, Coatings)
Water is used in production processes and for scrubbing and cooling
INITIATIVE FOR A COMPETITIVE INNER CITY
IN‐PROGRESS: DECEMBER 16, 2010
SOURCE: ESD Institute: Michigan’s Blue Economy Initiative; The Water Opportunity for Ontario; www.greenjobs4bluewaters.com
5.4
POLICY AUDIT TOPIC :  Urban & Regional Economy

5.4 Detroit’s Potential Blue Economy


WATER OPPORTUNITIES
Michigan, lacks an organization with the sole mission to create a Blue Economy, similar to “Next Energy”

Michigan has four requisite elements for


building a Blue Economy:
1. Abundant clean fresh water

2. Well managed and resilient utilities


with excess delivery capacity

3. Strong academic institutions

4. Core competencies in manufacturing


and manufacturing engineering

“There are substitutes for oil, but there are none for fresh water”
INITIATIVE FOR A COMPETITIVE INNER CITY
SOURCE: ESD Institute: Michigan’s Blue Economy Initiative; The Water Opportunity for Ontario; www.greenjobs4bluewaters.com
IN‐PROGRESS: DECEMBER 16, 2010
5.4

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