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Howes: Mich.’s good times breeds anxiety among business

From: The Detroit News

By Daniel Howes

December 11, 2015

How’s this for a disconnect:

Detroit’s automakers are posting record profits, United Auto Workers leaders are securing, barely, rich new contracts for their members, redevelopment in downtown Detroit is moving at a blistering pace and the state is enjoying one of the lowest unemployment rates in something like 15 years.

Then why do I detect rising anxiety among top business leaders? There’s a creeping sense that the gains of the past six years — mammoth restructuring in autos, the successful bankruptcy of Detroit, tax and budget reform in Lansing — are imperiled by complacency and denial of just how much still needs to be done for southeast Michigan to become competitive with rival states.

Why? Because the history of this region shows that material success goeth before the fall. And the fall typically delivers a hard landing, underscoring why it’s so important for talent here to get better educated, for business and government to be better aligned, for the economy to get more diversified without sacrificing competitive advantages.

You can see the uneasiness in the Detroit Regional Chamber’s “State of the Region” report this week. The compilation of progress, confirmation that the 11-county region of southeast Michigan is returning to some semblance of normalcy, issues a not-so-subtle warning that warrants more than hearing.

“Momentum is starting to slow and we need to prepare as a region for what comes next,” President Sandy Baruah says in statement. “There’s a lot to celebrate, but given the region’s long-term deficit of economic growth, normal levels are not enough.”

In an interview Thursday, he added: “The city’s carrying the region. Detroit’s moment in the sun is gonna’ go away some time. We’re the bright shiny object right now. People’s attention spans are short.”

Yes, they are. Especially so here, where the top of the auto cycle, cheap gas prices, low interest rates and a nominally stable economy historically conspire to create a collective amnesia about how bad things can get here — and why. Add the upswing of Detroit, some positive national spin and you get a recipe for a dish called false sense of security.

Returning to normal, circa 2105, is necessary but not sufficient. As much as the bellwether auto industry’s performance still sets the emotional vibe here, the fact is that it no longer employs the most people in southeast Michigan; the health-care sector does.

Breaking the bounds of economic normalcy will depend less on traditional industries and more on fostering the entrepreneurial eco-systems expanding in places like Ann Arbor and downtown Detroit, where Dan Gilbert-affiliated companies continue to assemble a critical mass of techy businesses and start-ups.

“We underachieved for a long time,” Matt Cullen, CEO of Rock Ventures, an affiliate of Quicken Loans Inc., says of Detroit. “We’ve got to overachieve for a long time.”

You sense the anxiety in increasingly insistent pushes by business leaders, some public and some not yet public, to coalesce around a common economic development strategy because Republican-led Lansing is too myopic to see past the next election.

You can hear it in frustration with the GOP-controlled Legislature, where “the business community no longer has anyone to go to,” as one CEO described it, notwithstanding strong ties to Gov. Rick Snyder. Deep suspicions about crony capitalism have now morphed into an animus toward state support for economic development precisely when Michigan needs to be more competitive, not less.

You can hear it in disgust with the dysfunction over education reform, in Detroit, certainly. But also in the willful refusal of too many in too many places across the state (talking about you, parents) who do not demand more of their politicians, their schools and their kids.

There’s plenty to be anxious about, provided the horizon stretches past the next quarter — because it does, to next year’s presidential election and a gubernatorial one two years hence that will mark the end of the most business-friendly (and savvy) governor Michigan has seen in generations.

“We’re running out of time,” one ranking executive told a private meeting of CEOs this week. “The governor is time-limited and the Legislature is dysfunctional.”

The cohesion achieved during Detroit’s historic bankruptcy is unraveling, slowly. With the crisis now a year removed, fissures between business and government threaten to widen once again, making meaningful progress on education, roads and economic development harder to achieve.

What a wasted opportunity. Credit business leaders for sounding the alarm while conditions are still good enough to do something about it — and if little happens, too many of the usual suspects will be to blame.