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Post-bankruptcy Detroit looks to build momentum in 2015

Feb 2, 2015

2014 was a big year for Detroit. It was the year the city emerged from bankruptcy, shed a crippling load of debt and saw a renewal of interest from outside investors.

Despite the positive buzz, 2015 will be another year of challenges for the motor city, as it seeks to continue creating jobs, while also slowly starting the process of rebuilding neighborhoods.

But, if you’re looking for proof that the “Detroit brand” still sells, take a look at Shinola. The epitome of hipster chic, the company makes thousand-dollar watches and high end leather goods.

Shinola moved to Detroit in 2013 with the idea of tapping into a kind of collective pining for America’s blue collar manufacturing past. Their big idea was that “Made in Detroit” would sell better than “Made in America,” and they were right.

"Often it is positioned that Shinola has done something wonderful for Detroit,” says Shinola CEO Steve Bock.

“The reality of the situation is that Detroit has done a wonderful job of helping Shinola get off the ground, we are very very happy with our decision to come here."

Shinola employs 350 people, with 260 actually based in Detroit.  The company has plans to add 5-6 new stores in 2015. Following the resolution of the city’s Chapter 9 bankruptcy, hiring in the downtown tech industry.  Real estate in the central corridor is also red hot. But to focus too much on downtown, ignores a much broader need to deliver jobs.

“If we put all of our efforts downtown, we'll lose the neighborhoods and we'll never be able to grow or achieve this new economy,” says Dave Egner, Director of the New Economy Initiative, which aims to foster entrepreneurship in Detroit. 

“Detroit and Michigan in general have great resources for startups and great resources around corporate issues,” he says, “there is almost no attention in the middle markets.”

Egner says the key to fostering job growth in 2015 is to help those small and mid-size businesses expand and hire.

Despite all the positive trends, Detroit’s unemployment rate still is still hovering around 14 percent—roughly twice the state average.

But unlike previous “come to Jesus” moments for the city. This time she says Detroit can’t ignore the need for investment in small and medium-sized businesses.

"In the past it was always about tax breaks and get the big company to come in from somewhere else,” she Crain’s Detroit Business Editor Amy Haimerl. “That's wonderful, but we're also focusing on the other end of jobs creation which are neighborhood businesses, small businesses which may only hire 3-4 people at a time."

Haimerl says skills-gap training will by a big factor in future job growth.  The construction industry is hiring for a new $650 million dollar sports arena development, as well as I-94 freeway expansion.

"Those are all construction jobs which will pay well and Detroiters can take if they skills to perform the work. If they don't the employers are going to have to go somewhere else," she says.

Job growth is one thing, but for many Detroiters the first step forward is as simple as streetlights— close to half of which haven’t worked in years. This has been a particular problem for restaurants and shops.

“So a lot of businesses had to cut down their hours, because you know, after a certain time there was no business,” says Estaban Perez.  Perez is manager of La Terezza Mexican restaurant in Southwest Detroit.

Detroit is now turning on some 500 new LED streetlights per week. And Perez says other, small but big, things are happening too. Trash is getting picked up, Police response times are decreasing, and things he says, just seem better.

“Corktown is growing, Southwest Detroit is growing, so we're all coming together as a city,” he says “So, right now Detroit is the place to be, whether you want to open up a business, whether you want to buy a house."

That last part is actually a lot harder than it sounds.  Banks are largely not lending for mortgages or home improvement loans in Detroit.  According to the Mayor’s office of 4,000 single-family homes sold in Detroit last year, ninety percent were bought with cash.

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