Print Friendly and PDF

The New Detroit Product

By Sandy K. Baruah

Page 6

Detroit is bankrupt. There is no way to write that sentence that doesn’t sting.There is no sugarcoating
the city’s  financial situation and doing so would be a great disservice. It is a city that struggles to fulfill its basic function of providing reliable lighting and public safety services to its residents.Challenges of blight, declining population, political corruption and poor schools have persisted for decades. These are undeniable facts that the entire city must confront.

But through the nation’s most notable municipal bankruptcy and unprecedented  fiscal challenges, there lies unprecedented opportunity. First, however, we have to strike away the notion that bankruptcy is a death knell. In 21st century America, that’s not the case. We fly on once bankrupt airlines. We drive cars
produced by once bankrupt companies. We read newspapers from bankrupt, or soon to be bankrupt, media companies. Bankruptcy is not an end, but a tool to restructure the future.

In Detroit’s case, bankruptcy affords the city the opportunity to tackle the city’s long-standing insolvency and create a plan to put Detroit on the path to a sustainable government – which for years has been the  final obstacle to robust economic growth for the Motor City.

When General Motors and Chrysler led bankruptcy there was one path to emerge successful: Use the restructuring to sharpen their focus on the product. The two iconic carmakers used bankruptcy to re-engineer the way they do business to once again produce phenomenal automobiles. Consumers around the world responded and now GM and Chrysler are fully participating in a resurgent auto industry and thriving amid a highly competitive global environment. Yes, bankruptcy helped resolve balance sheet challenges, but that alone was not sufficient for survival. A  fixed balance sheet coupled with world-class competitive products was the combination that yielded success, and the city of Detroit must take note of this crucial synergy.

As Detroit navigates bankruptcy, it needs to share a similar focus and must emerge with a new Detroit product. The new Detroit product must be a city with a functioning government that efficiently provides basic public services such as lighting and public safety. A city that creates opportunity for its residents to pursue a high quality of life and entices families to call it home. A city that provides an economic ecosystem where businesses can thrive. Emergency Manager Kevyn Orr’s early decision to reinvest in these areas demonstrates the  first steps in redefining the Detroit product. A year from now, his plan should serve as a blueprint for the new Detroit product, which will ultimately be a vibrant global city.

While Detroit’s challenges are unique, it is certainly not alone in facing bankruptcy. Cities such as New York, Washington, D.C. and Pittsburgh all battled through tremendous  financial hurdles in previous decades — only to emerge stronger. Their flirtation with bankruptcy is now a minor footnote in their respective histories, but the conditions that pushed them to the brink were very real.

The good news is that the depth of Detroit’s challenges is surpassed by the breadth of its assets. Detroit still offers amenities, professional sports venues, cultural institutions like the Detroit Institute of Arts, and majestic buildings that defined 20th century architecture, only a city can offer. Detroit is also positioned on a strategic entryway to the international supply chain as the globalized world offers limitless export opportunities. Detroit is rapidly becoming a destination for young creative entrepreneurs who are rejuvenating the city.

Most importantly, Detroit anchors a region loaded with resources – highly skilled workers, top-notch universities, integrated transportation and distribution resources, and unrivaled manufacturing and R & D infrastructure. Not to mention its standing as the global epicenter of the dynamic juggernaut that is the automotive industry.

It is because of those assets that people and businesses continue to invest in Detroit – to the tune of more than $10 billion in the city since 2006. The private sector does not suffer foolish bets, and it has become clear for several years now that the private sector is betting big on Detroit, and for good reason. Along with
that investment, there has been unprecedented collaboration between business, community and philanthropy to drive the current transformation and to make Detroit a destination for their employees and their families. You can see the fruits of these efforts every day walking downtown. You can feel the energy. It continues now, as the private sector has been unfazed by bankruptcy.

That is why Detroit, even amid bankruptcy, is a city of opportunities. A city experiencing a dramatic transformation that is edging it toward a historic comeback. It’s a city that the Detroit Regional Chamber is proud to call home and one the Chamber is committed to  fighting for until it reemerges as the powerhouse global city it is destined to be.

Sandy K. Baruah is the president and CEO of the Detroit Regional Chamber.