Howes: Global hunger to invest in Detroit lags hype

The home of General Motors Co., the namesake of two rivals in the suburbs and a sprawling supply base should be a magnet for foreign investment.

Right? Wrong, according to a new study by the Global Cities Initiative, a joint project of the Brookings Institution and JPMorgan Chase & Co. Inc. The city that put America on wheels badly lags its peers in both investment and jobs from foreign-owned enterprises.

"The majority of Detroit peer cities exhibit higher" foreign direct investment "intensity," the study finds. Foreign-owned employment in the metro remains fairly constant, but the city claims just 12.1 percent of total foreign-owned employment in the Metro area, down 12 percent over the 20-year period ending in 2011.

No surprise, considering Detroit's long downward spiral to Chapter 9 bankruptcy and the decidedly negative message the road to near-collapse sent to would-be investors. That, and the historic enmity toward foreign companies too many of its people blame for economic woes now proven to be largely self-inflicted.

Chronic mediocrity and being the epicenter of urban decline can do that. So can a collective sense of entitlement now giving way to real signs of urban rejuvenation and realism rooted in the near-death experiences of bailout, bankruptcy and globalization.

Can you say opportunity? For way too long, Detroit lacked a "good story" to tell would-be investors and the facts to go along with it. City Hall was a financial basket case; downtown was a ghost town; public education and the talent it produced proved insufficient for modern business needs.

The political culture banked on economic home runs (can you say casinos?) instead of working to reform the business climate, improve basic services or trying to meet foreign investors on their own terms and in their own languages, wherever possible.

The result is a city that "grossly underperforms" in competition for foreign investment, said Rodrick Miller, CEO of the Detroit Economic Growth Corp. The critical building block for urban economies and job-creation has been hobbled by regional dissonance, the weight of its past and a whiff of xenophobia lingering mostly in union halls.

News flash: The cash foreign companies could invest here is green, too; so are their paychecks. Brookings found jobs offered by their U.S. affiliates earned more than $77,000 four years ago, compared to $60,000 for the average U.S. worker employed by an American-owned company.

"We're learning to crawl," Sandy Baruah, president of the Detroit Regional Chamber, said Wednesday at a Global Cities Initiative conference hosted by the Detroit Economic Club. "We don't have a shared roadmap or strategy. We don't know where we're going as a region."

The split is stark: Companies from 41 countries and 142 so-called "global city regions" invest directly in the Metro area, compared to companies from 15 countries — led by Italy, Germany, Canada and Sweden — invested directly in the city.

That's not an end; it's a beginning, potentially. The revived automakers, resurgence in downtown and Midtown, a better managed City Hall, available (and affordable) industrial sites and a refreshingly positive tone offer encouraging reasons for foreign investors to take a second look.

"We are here as a greenfield," said M. Manickam, chairman of India's Sakhti Group, whose interests in sugar, automotive components, retail finance and health services, among other things, collect $1.2 billion annual revenue.

"We are building from ground-zero," he continued, adding that the company was asked three years ago by GM to locate a production facility in Detroit. "We are looking at training people. We're really happy with the support we're getting from the city."

What else? Making Detroit more attractive for would-be foreign investment is not just a job for the city. It also requires private-sector executives to detail their needs, and their complaints, frankly; non-profits and foundations to use their resources and influence to bolster the business environment.

It requires government to improve basic service delivery. It requires state legislators to recognize that competing states, global cities and countries are investing heavily in efforts to improve their roads, bridges and public transportation in ways unknown to in many parts of Michigan.

It requires state and local officials to recognize that the longer they embrace half-measures to address meaningfully a broken, underperforming education system, the longer foreign investment will go elsewhere — because it has choices.

"It's about talent," Baruah said. "There isn't a company that doesn't want to hire Detroiters. The question is, what are the skills?"

That's not the only question. Detroit wasted a lot of years denying the global competition that pushed it from the top of the economic heap — a reality no longer debatable.

The question is what will its leadership do with its fresh opportunity, a chance to redirect fundamentally the arc of its comeback story.

daniel.howes@detroitnews.com

(313) 222-2106

Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at http://detroitnews.com/staff/27151