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<!DOCTYPE html>
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<title>Detroit Future City</title>
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<h1><a href="index.html">Detroit Future City</a></h1>
<ul class="breadcrumb">
<li><a href="index.html">Home</a> <span class="divider">»</span></li>
<li>Planning Elements <span class="divider">»</span></li>
<li class="active">Economic growth element</li>
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<h3>The economic growth element</h3>
<h4>Seven transformative ideas</h4>
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<a href="#1">1. A city of robust job growth</a>
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<a href="#2">2. A city of equitable economic growth</a>
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<a href="#3">3. A city of physically and strategically aligned economic assets</a>
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<a href="#4">4. A leader in urban industrial activity</a>
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<a href="#5">5. A city of regional and global economic assets</a>
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<a href="#6">6. A city that encourages minority business enterprises</a>
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<a href="#1">7. A city of immediate and long-ranging strategies for resident prosperty</a>
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<h4>Five strategies and actions</h4>
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<a href="#a">A. Support four key economic pillars</a>
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<a href="#b">B. Use a place-based strategy for growth</a>
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<a href="#c">C. Encourage local entrepreneurship and minority business participation</a>
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<a href="#d">D. Improve skills and support education reform</a>
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<a href="#e">E. Land regulations, transactions, and environmental actions</a>
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<h4>Transformative ideas: economic growth</h4>
<h5><a name="1"></a>1. A city of robust job growth </h5>
<p>Despite six decades of population loss, Detroit's future will be driven by its ability to increase employment in the city. Most discussions about Detroit's future to date have focused on land area and population. Yet if we compare Detroit with similar-sized cities, the number of jobs per resident is far more telling than the number of residents itself. Of the four cities closest in size to Detroit, only one has more residents, but all four have many more jobs and a higher ratio of jobs to residents. In fact, this is true for most American cities: only 5 of the top 100 cities have fewer jobs per resident than Detroit.</p>
<p>It is true that Detroit's dramatic loss of population will call for reconfiguration and repositioning of its infrastructure and land assets to create a new city form of diverse neighborhood types and land uses that are easier to serve, The key to fiscal sustainability and a better quality of life for Detroit is not simply higher population, although population increases would be welcome. <strong>Increasing the ratio of jobs to residents will contribute to the financial stability of the city while creating economic opportunity for the city's residents.</strong></p>
<h5><a name="2"></a>2. A city of equitable economic growth</h5>
<p>Detroit's economic growth must be based on fairness and equity.
Detroit's diversifying economy should be developed toward job growth for a variety of skill demands and business types. This approach will not only enhance equity, but will also foster growth by tapping under-utilized human capital, increasing local incomes and consumer demand, improving educational outcomes, and reducing fiscal, social, and human costs associated with poverty.1 More than half of Detroit's current employment base comes from four economic pillars that are well suited to creating jobs for people of all skills and backgrounds: education and medical employment (“Eds and Meds”); digital and creative jobs; industrial employment (both traditional and new technologies, large-scale and artisanal, manufacture and processes); and local entrepreneurship.</p>
<p>Within each of these key employment “pillars”, job opportunities and professional growth should be cultivated for people with a variety of educational backgrounds, skills, and interests. For example, in Eds and Meds, the innovative capacity of all workers— from medical staff, faculty, and researchers to maintenance, kitchen, and housekeeping staff—should be utilized and rewarded. In the small-scale industrial sector, and especially in the food sector, shared production spaces can offer low-cost options for local entrepreneurs and more broad-based ownership or sharing of business assets. Shared creative space is certainly vital to the information exchange and resource sharing necessary in the creative/digital fields, and can open up opportunities for training and career development, especially among youth and among adults seeking to start a second career.</p>
<p>A crucial step toward equitable job growth will also be the explicit recognition and dismantling of current barriers facing Detroit residents in terms of access to skills development and employment and entrepreneurship opportunities. In fact, those very barriers have forced many Detroiters into the informal economy as entrepreneurs, which in turn offers an opportunity to create new pathways to prosperity and job growth for an unknown number of sole proprietors who might one day be employers themselves. This is discussed in further detail in the Strategies section of this chapter.</p>
<h5><a name="3"></a>3. A city of physically and strategically aligned economic assets</h5>
<p>Detroit's economy does not require entirely new economic assets, but the physical and strategic alignment of existing ones. As in all successful cities, fostering economic strength and stability in Detroit will require a constant renewal and realignment of key business assets, education and workforce development, innovation potential, and infrastructure.</p>
<p>On the side of land use and physical assets, tools such as zoning, public land disposition, incentives, and specific strategies can be used to promote concentrated employment districts as focal points around which to pool public, private, and philanthropic investment. The implications will be far-reaching and have the potential to improve the cost structure, innovative capacity, and competitive position of the city's businesses in regional, national, and international markets. Important efforts to create districts of economic activity already exist, most notably in the food cluster around Eastern Market and the education and health-related clusters in Midtown. Existing efforts must be supported and expanded to include Detroit's most important traditional and emerging economic strengths.</p>
<p>Organizational linkages must also be strengthened and sustained among city government and neighborhoods, business support organizations, employers and employees, and businesses and their suppliers. Although too many key companies and organizations today are islands, physically, they have a strong interest in re- knitting the physical, social, and cultural fabric that made Detroit's economy great.</p>
<h5><a name="4"></a>4. A leader in industrial activity</h5>
<p>Across the country, many have come to realize the critical role of manufacturing activity in promoting and sustaining innovation, especially in clusters where product and process are tightly linked, such as high-end apparel and biotech.2 Detroit has a unique combination of educational and medical institutions, information technology companies, low-cost industrial land, and an “industrial commons” that support manufacturing and industrial activity of all kinds. Detroit also has a skilled workforce, managers with operations experience, and broad design and engineering expertise among its residents. with proactive and coordinated investment, Detroit can remain an innovative hub for production.</p>
<p>In the food cluster, for example, Detroit has the assets and knowledge to lead in the design and production of urban farming tools. In the medical cluster, the Henry Ford Innovation Institute is focused on user-based innovation that translates insights from the city's medical practitioners into the next generation of surgical tools and medical devices. These are but two examples of the ways in which Detroit can build on its legacy of industrial activity, while creating new pathways to industrial and supporting jobs.</p>
<h5><a name="5"></a>5. A city of regional and global economic assets</h5>
<p>Detroit has a diverse base of businesses, organizations, and institutions that are essential to building and maintaining a competitive edge for southeast Michigan in the 21st century. Beginning more than a decade ago, many public, private, and philanthropic leaders recognized that economic decline in the city and region was not temporary but reflected a broader crisis in local economic assets and capabilities. These leaders and their organizations invested in the ideas, assets, institutions, and culture to enable growth in innovation-driven clusters like education and technology, while also remaking traditional economic clusters like food to better serve local needs. Huge investments were made in expanding the city's institutions and economy: The College for Creative Studies added major new buildings, an MFA program, and a high school; the Detroit Creative Corridor Center opened; Next Energy was founded; the education and medical institutions in Midtown became national models for maximizing local economic impact; Henry Ford Hospital opened an Innovation Institute to capture and commercialize the innovative capacity of medical practitioners; Wayne State University opened TechTown and announced a $93 million biotech hub; and a local son returned to Detroit with 7,000 workers and triggered a new wave of information technology growth in Downtown. Concurrently, local leaders remade traditional industries, including the Detroit Food Policy Council and Detroit Black Community Food Security's work in creating a vision for the national movement in food justice and food security issues. Local organizations such as New Economy Initiative and DEGC are working to promote local procurement and entrepreneurship opportunities across the city.</p>
<p>Recently, the american automotive sector has revitalized, and the role of southeast michigan in global automotive research and development expanded. The automotive renaissance in the region is part of a larger story in which u.s. manufacturing has become more competitive globally. One of the country's most influential consultancies, boston consulting group (bcg), recently estimated that due to improved competitiveness, the u.s. is likely to add between 2.5 and 5 million jobs in manufacturing and support industries by 2020.</p>
<h5><a name="6"></a>6. A city that supports minority business enterprises</h5>
<p>Business ownership shapes the location of opportunity and power in an economy: Business owners strongly influence organizational practices such as hiring, wage setting, and procurement and often serve in positions of civic and social leadership. One reason minority-owned business enterprises (MBEs) are so important to Detroit is that they are more likely to hire minority employees and utilize minority suppliers, thus increasing opportunity for a large number of Detroiters.</p>
<p>Minorities in Detroit already account for 89% of the city's population; however, the firms they own account for only 15% of private company revenues. African- American-owned businesses account for 94% of the city's MBEs, yet few of these companies grow enough to hire even one employee: Only one in thirty African- American companies in the city has at least one employee compared to one in three white-owned businesses.</p>
<p>These numbers reflect the enormous challenges to the MBE community in Detroit (as well as its potential). In a comparison of 25 U.S. cities, Detroit ranked seventh in African-American self-employment per capita. <strong>Strengthening business ownership in the city's largest population group is one of the best ways to grow businesses in the city.</strong></p>
<h5><a name="7"></a>7. A city of immediate and long-ranging strategies for resident prosperity</h5>
<p>Although Detroit has an urgent need to support and develop high-quality education and skills to prosper in the 21st century, there is little evidence for the oft-stated claim that “Detroit can't fix its economy until it fixes K-12.” <strong>In fact, improving education and increasing economic opportunity are complementary strategies: providing economic opportunities for Detroit's adults will improve fiscal conditions in the city, support the academic performance of their children, and create the incentives for children and adults alike to invest in education and skills development.</strong></p>
<p>The dramatic downturn in the regional economy has curtailed opportunities for lower-skilled workers across the region. This opportunity gap must be addressed alongside the skills gap. In fact, the lack of job opportunities seems to have profoundly weakened the link between educational attainment and prosperity for Detroiters. Nationwide, high school graduation reduces the chance of living in poverty by 56%, and going on to earn a two-year degree reduces poverty by an additional 51%. Yet in Detroit, the corresponding reductions are much smaller (39% and 33%).</p>
<p>Strategies to combat the city's poverty must acknowledge the need for a dual approach. Public, private, and philanthropic priorities should support a concurrent approach to the creation of new job opportunities along with educational improvements.</p>
<h4>Strategies and Actions</h4>
<h5><a name="a"></a>A. Support four key economic pillars</h5>
<p>A strategy that targets the sectors of the economy that are most likely to generate broad-based economic growth will allow the public, private, and philanthropic sectors to align strategies and resources around economic growth “pillars” that can create jobs, foster economic opportunity and social equity, and best utilize the city's land assets. These opportunities fall into four broad categories: Education and Medical; Industrial; Digital/Creative; and Local Entrepreneurship.</p>
<p>The most recent 30-year regional employment forecast for Detroit, developed by the Southeast Michigan Council of Governments (SEMCOG), shows some employment growth in Detroit between 2010 and 2015, followed by a leveling off after 2015. For the entire 2010-2040 period, SEMCOG projects the entire Southeast Michigan regional economy will add 300,000 net new jobs, of which just over 7,000 will land in the City of Detroit. Although these projections provide an important sightline into the dynamics of the city's and region's economies, and can be used as a baseline for understanding future job growth, they suffer from an unavoidable flaw: They were developed assuming “business as usual.”</p>
<p>The “business as usual” projections do not account for or anticipate the potential impact of aligning future investments with existing major civic investments in the four pillar economic areas. Coupled with critical changes in the city's productive landscape— including the resurgence of the downtown district and the emergence of the city as a hub for digital and creative businesses—these investments indicate that continued, intentional investment in the Four Key Economic Growth Pillars will yield potent benefits.</p>
<h6>Implementation actions: </h6>
<ol>
<li>Align cluster strategies with the Detroit Strategic Framework.</li>
<li>Establish cluster-based collaboration with labor market intermediaries.</li>
</ol>
<h5><a name="b"></a>B. Use a place-based strategy for growth</h5>
<p>Seven specific employment districts have the greatest potential to unleash large- scale job creation in Detroit. These districts will promote a deliberate spatial pattern to business activity, generate multiple benefits to the economy, and help alleviate critical fiscal and social issues in the city. Reinvesting in specific employment districts will create the scale required for efficient investments in infrastructure and services; allow development of effective strategies for building demolition and land assembly; and create dense employment nodes that can facilitate transportation connections between Detroit residents and businesses, an issue that currently plagues the least-advantaged Detroiters but also employers who would benefit from a larger labor pool with more reliable transportation options. This concept will have a secondary (but critical) effect of raising property values in the employment districts, thus reducing the required subsidy for new construction and creating conditions to support private real estate activity.</p>
<p>These efforts will rely on an alignment among all levels of government (city, state, federal), the private sector, and the philanthropic community. Many in the private sector have voiced support for concentrating economic activity, with the understanding that it will increase the feasibility and efficiency of private-sector attempts to address shortcomings in the existing operating environment. Some private companies already pool resources to fund shared security and emergency services. Concentrating activity would make these investments more efficient and could create conditions for private-public-philanthropic partnerships to address other critical issues like transportation linkages between residents and employment opportunities. To help target resources and develop effective infrastructure, land use, and worker-support policies, each employment district will require a menu of strategies and investments tailored to the opportunities they present.</p>
<h6>Implementation Actions</h6>
<ol>
<li>Align public, private, and philanthropic investments in employment districts.</li>
<li>Develop detailed action plans for primary employment districts. </li>
<li>Encourage industrial business improvement districts (IBIDS).</li>
<li>Become a national leader in green industrial districts.</li>
</ol>
<h5><a name="c"></a>C. Encourage local entrepreneurship and minority business participation</h5>
<p>As many Detroit leaders have recognized, growing the base of the city's entrepreneurs is a great opportunity for employment and wealth creation. Opportunities for the self-employed and small businesses are likely to increase over time: Nationally, employment growth has been fastest in those parts of the economy that serve local markets rather than national and international (“traded”) markets. These opportunities will grow as consumers turn increasingly to local products and larger national and international companies continue to outsource secondary functions, such as building and facilities maintenance. These are significant but often overlooked opportunities. For example, the Local Business Services cluster (“Local B2B”) in Detroit employs about 25,000 people (including self-employed) and could employ thousands more if local demand for these services was met by Detroit-based companies. The opportunities that exist in Detroit today can support different forms of enterprise, self-employment, small business ownership, and scaling of existing businesses.</p>
<p>The local business clusters are also a good opportunity to diversify the city's base of businesses. Many of the opportunities in the local clusters do not require large amounts of start-up capital, yet offer proximity to a large and broad base of customers. Moreover, some of the infrastructure to support these initiatives has already been built. The Midtown educational and medical institutions are national leaders in identifying opportunities for local suppliers, and DEGC has started a multi- year Local B2B initiative to increase local opportunities in this cluster. Broadening and deepening existing efforts and identifying new opportunities could lead to the creation of thousands of jobs in the city.</p>
<h6>Implementation actions</h6>
<ol>
<li>Promote short-term approaches to increase the number and success of MBEs and DBEs in the City.</li>
<li>Support the development of low-cost, shared spaces for clusters with high levels of self employment.</li>
<li>Provide young Detroiters with exposure to and experience in Digital / Creative and other new economy clusters.</li>
<li>Develop a comprehensive long-term strategy to increase and strengthen the City's MBEs.</li>
</ol>
<h5><a name="d"></a>D. Improve skills and support education reform</h5>
<p>Skills building and education reform are key factors driving economic growth in Detroit. Even more important, they shape opportunity, incomes, and quality of life for Detroiters. Although the Framework does not discuss K-12 reform, the strategies here will complement K-12 improvement in the city's public schools by increasing high school graduation rates and improving the value of two-year degrees held by Detroiters; better linking the needs of employers with workforce training investments, a direction already underway among the city's workforce training providers and community colleges; increasing training opportunities for degreed Detroiters already in the workforce; developing strategies to address challenges faced by African American high school graduates nationally in securing full-time employment opportunities;8 and in general, increasing overall opportunities for Detroiters by better linking residents to Detroit jobs as well as overcoming challenges with physical access to workforce opportunities by better aligning employment and training locations with residential areas in the city.</p>
<p>This approach attempts to increase the opportunities and means for Detroiters to improve their education and skills levels, then reward these investments with job opportunities, career paths, and higher wages. The approach recognizes that education and skills are the primary determinants of economic quality of life and must be matched with opportunities to utilize these skills and be rewarded.</p>
<h6>Implementation Actions</h6>
<ol>
<li>“Hire Detroit”: Strengthen local hiring practices.</li>
<li>Link workforce investments to transportation.</li>
<li>Coordinate workforce development best practices.</li>
<li>Revitalize incumbent workforce training.</li>
<li>Expand public-private partnerships for workforce development.</li>
<li>Commission a study to identify levers to improve graduation rates and poor labor market outcomes of Detroiters.</li>
</ol>
<h5><a name="e"></a>E. Land regulations, transactions, and environmental actions</h5>
<p>The condition, location, and configuration of Detroit's job-producing land presents many challenges that are critical to address in order to generate economic activity and jobs for all Detroiters. The regulation of land in employment districts can have far-reaching impacts, including blight reduction, improved safety, and ultimately a surge in private investment.</p>
<p>A critical opportunity lies in developing and popularizing organizational and funding mechanisms for “clean and safe” programs to dramatically improve the character and security of Detroit's industrial and commercial zones and employment centers. Perception is reality, so focusing on the look and feel of key employment areas is essential to their success. Branding and character campaigns can also dramatically improve the allure of certain areas to specific economic clusters, while conceptual site and district planning exercises can help brokers and developers to concretely envision the potential of an area and plan for land assembly as appropriate. In addition, attention to the natural environment will create modern and green employment districts that improve the health of workers and nearby residents.</p>
<h6>Implementation actions</h6>
<ol>
<li>Create an industrial side-lot program.</li>
<li>Create a priority permitting process for employment districts.</li>
<li>Focus on land banking industrial and commercial property.</li>
<li>Identify alternative capital sources for real estate development. </li>
<li>Articulate a reverse change-of-use policy.</li>
<li>Create master-planned industrial hubs.</li>
<li>Address underutilization of industrial building space and land.</li>
<li>Address weaknesses in the local brokerage sector.</li>
</ol>
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