Automotive, beer brewing, environmental engineering, non-profit financing, food and electrics: Detroit has a wide market and bankruptcy is just an opportunity.
AAM AMERICAN AXLE & MANUFACTORING THE FUTURE OF DETROIT
Technology is what’s changing the market; technology is what’s changing the the products that companies provide their customers. There is a demand for more fuel-efficient products, lower mass, that are energy-efficient to help reduce CO2 emissions in the interest of environmental protection. “What you’re seeing it’s an evolution of the products that we provide for our customers. At the same time, from a global perspective, our customers from around the world will look at things that are more capable, fuel-efficient, environmentally friendly. And I think you’ll have a situation in which different markets have different demands. So you’ll still have Detroit as the epicenter, but you’ll also have Germany as a strong automotive country. Some of the best OEMs are German, such as BMW, Mercedes, and that’s where a lot of the industry will come from,” states Christopher Son, Director of Investor Relations, Corporate Communications & Marketing
AAM is focused on technology leadership, operational excellence, and delivering a quality product for their customers. So they are working hard to attract the best and the brightest engineers in Detroit.
“We try to get the young kids early, so we partner up with some local universities such as Michigan University and Michigan State to get engineers to come and see what manufacturing is all about. They can do that in a couple of ways:
- They can be summer interns. During the summer, they come to our company and see what it’s like to be in a manufacturing and engineering environment.
- We also have a program where you can go to school full-time and work at the same time. Those are our co-op programs. So we try to get these kids who are still in school to come and see what opportunities are part of AAM. For associates here, we do performance reviews and career development. Everyone has training plans, and we do succession-progression. We talk to them about what they want in their careers and where we see them placed in the organization.
Regarding training, we do particular skillsset trainings. So for those skills that are particular to a job, we also do career enhancement. Maybe an employee wants to look at another part of the environment or a different aspect. One can also get technical training or leadership training,” states Terry Kemp, VP HR.
GENERAL MOTORS BEHIND THE CRISIS
The automotive industry crisis of 2008–2010 was part of a global financial downturn. The crisis affected European and Asian automobile manufacturers, but it was primarily felt in the American automobile manufacturing industry.
After this big crisis in 2008, companies have to change “Today the size of General Motors matches the market and economic conditions better than in 2008. We don’t have a 60% market share anymore; now we compete with automakers from all around the globe. We have suppliers from different sides of the world and we manufacture cars in the countries where we sell our products. We are a much smaller, yet more efficient company. Our workforce is smaller and efficient. Labor unions have renewed partnerships and the situation is a lot less contentious than in the past decades,” states Gregg Martin, Executive Director Communications & New Strategies at GM.
INVESTMENT IN TECH CONTINUES
“One of the things we did was reinvest billions of dollars in technology and in smaller and fewer but more efficient vehicles. Customers with their cars want to be safe, connected and respect the environment. Since GM went out of bankruptcy we have invested 8 billion dollars in the US economy and brought about 30,000 people back to work. So the rise of the US economy has been driven partly by the automotive industry but also by other kinds of manufacturing where jobs have been created. The US auto sector also created additional jobs for industry suppliers,” adds Martin.
A MORE VIBRANT INDUSTRY
The industry is now brighter in Detroit. The main car companies and their suppliers have a presence in and around Detroit and South Michigan. Of course there is a lot of growth in the South and the South West of the United States, but the main area for this industry remains Detroit. As Martin says, “It is home to thousands of engineers, executives and others workers. The size of Detroit now better matches the global nature of the business. We maintain our global HD in Detroit, we still have a plant here, so the industry will continue in Detroit.”
GM in the last 2 years has invested nearly $25 million in charitable giving that will help and improve the schools of Detroit, rebuild homes, preserve the arts and culture of Detroit. “Our employees have donated 2,000 hours of their own time to make this a better place to live,” says Martin. “It’s our labor, it’s our best minds, it’s our muscle to get the city back on track,” he continues.
ATWATER BREWERY THE CITY OF BREWERIES
In Detroit there are now around 140 breweries and microbreweries. Beer in the United States is manufactured by more than 2,100 breweries, which range in size from industry giants to brew pubs and microbreweries. Today, the US craft beer industry employs over 100,000 individuals brewing eleven million barrels of beer per year, and generating roughly $12 billion in retail sales as of 2012. The history of breweries in the Detroit metropolitan area began a long time ago, in 1830. Between the 1830s and 1840s settlers were mostly of English, Irish or Scottish origin. The early Detroit brewers had Anglo-Saxon names and brewed primarily a variety of ales, with some porter and stout.
“At one point in history, Detroit had more production breweries than any other city, and this is because of Detroit water, which is the most important ingredient,” says Mark Rieth, owner of Atwater brewery.
A GROWING MARKET
The number of craft brewers has grown from 8 in 1980 to 537 in 1994 to over 2,300 in 2012. The number of breweries in planning is skyrocketing. As of June 1, 2013 there are more than 1,500 breweries in development in the US.
“Since the 2008 crisis we grew and we have not been touched by the recession. The are two main reasons for this: one is our brand, which is very successful; we have been marketing our products since 1996. Also, the craft beer industry has been growing across the country. It has been the fastest growing segment of the spirits industry for the last 8 years,” says Rieth.
PM ENVIRONMENTAL THE BANKRUPTCY WAS EXPECTED AND IT IS AN OPPORTUNITY
Actually in the city, “There are several abandoned industrial facilities in which there are renewal projects,” says Michael Kulka, Ceo PM Environmental. Since the bankruptcy, the line of their services has not changed, but the volume of work has increased. “We have 5 different projects to redevelop Detroit. For example we are working in collaboration with an environmental attorney for the redevelopment of 150,000 square meters of formal house property that a developer from NY wants to develop for loft retail and art studios, providing a real eclectic use,” adds Kulka. For PM Environmental, as for many other companies from Detroit, the bankruptcy was not a surprise. “What happened has been an opportunity, and in truth there is competition and demand from people trying to have available buildings. For example since July we have been working on a Detroit-based bank building that will be renovated and will have a restaurant on the first floor and lofts and offices on the second and third floors,” explains Kulka.
CHELSEA MILLING COMPANY/JIFFY MIX
The metropolitan area, compared to Detroit, has suffered less with unemployment. “We probably have the lowest unemployment rate in the state. This is because we have a strong economic basis: it’s traditional manufacturing hi-tech, university and retails,” explains Jack Kennedy, Vice President and General Manager.
To remain in the market, Chelsea Milling Company has put all its strength into autonomous production.
“We store wheat. We mill wheat into flour. We print our own packaging materials. We also maintain low costs, and for this reason we do not advertise at all. We promote our product in grocery stores. But we do not advertise to final consumers. Our market is done by word of mouth,” states Kennedy. This allows the company to maintain a very tight control of quality at affordable costs.
A FLAT ORGANIZATION
The climate among employees at Chelsea is friendly and cheerful. “We have what we call ‘a metric store flat organization.’ We do not believe in a lot of hierarchy. So there is not a lot of communication between the management and the rest of the employees,” adds Kennedy.
After 130 years of history and presence on the market, the future for the company seems already outlined. “In 2006 ingredients of our products have become very, very expensive. We had to face the concept of needing to consolidate our own economic bases. We decided to go into institutional food services, and that has been a very successful idea. In only a few years this has become 45% of our total business. We feel very strongly that it will be our future,” concludes Kennedy.
DETROIT IS A MUCH BETTER PLACE THAN PEOPLE THINK
The company feels very strongly about their social responsibility. They are very tuned into the needs of the city. They spend a lot of time at community events. “We do a lot of charitable work as a company, especially around the community. We participate in the environmental clean -up of sensitive properties around the city, and we are very active in recycling as well as supporting the Chelsea community hospital,” adds Kennedy.
TOGGLED DETROIT, AN HUB OF TECHNOLOGY
The industry and employment data of the Automation Alley, Technology Industry Report claim that the Detroit region is an established hub of technology firms and workers. Innovation measures, such as patent awards and STEM degree completions, suggest that Detroit’s technology sector remains on the upswing.
It’s a long drive to the Silicon Valley, but there is little doubt that Detroit’s tech sector has shifted into high gear.
“If you are wondering where to start a manufacturing business, you should do so in a place where people have skills in technology. For mechanical assembly and electronic assembly, you want people with skills in supply chain management, material management, inventory control, shipping, receiving logistics, quality system, management, development. Everything needed to make manufacturing successful is right here in Detroit,” says David Simon, President.
TECHNOLOGY TO FACE THE CRISIS
Companies apply different strategies to remain in the market and overcome periods of crisis. “Our strategy to stay in the market has been to make substantial investments in automation equipment, which, in addition to giving great benefits in terms of quality and consistency of product, also creates a very competitive global base in terms of price, because the direct costs are very low,” states Simon. “The company is really focused on the US market for 2 reasons: one being that research, support and our property are based in the US, and two, that this is where our customers are and there are tremendous advantages to be able to ship our products from the factory into the local market. In this way our products are built and quickly sold to the commercial and industrial properties,” adds Simon.
THE POSITIVE EFFECT OF BANKRUPTCY
The effects of the bankruptcy have even been positive for the technology segment and for the city in general. It seems that there is a tremendous sense of entrepreneurialism in people looking toward the future. “Once that bottom was hit, things went better and we saw the local economy improve in all areas,” adds Simon.
BILL HIGHWAY THE BEST PLACE TO START A TECH COMPANY
The company settled in Detroit 14 years ago in 1999. “When we settled here,there weren’t many technology companies. Today there are hundreds of them. This is a great place even in this period in time. It may be the best place in the US, because there is so much awareness and investment in helping companies get up and running. The state of Michigan knows that the city will come back at its best,” states Vince Thomas Chairman & Founder of Bill Highway.
A WAY TO SUPPORT THE COMMUNITY
The company has 14,000 customers, and it brings in the business (banking transitions, economic transitions from all over the country and Canada, through the city of Detroit. “Our customers are the typical large non-profit organizations with $10 million revenue or more a year. In the last year we dedicated ourselves to attracting more customers in Michigan and in the city of Detroit to help this area come back to its booming years and to help companies work more efficiently and then grow. It is the best way to help, to help them to hire more people and have an economic impact individually as a company,” adds Thomas.
TEAM MEMBER SUCCESS
Bill Highway provides a range of important initiatives and programs on work-life balance and space for children to its employees. “We don’t call our team HR, but we call it “team member success.” Our culture is focused on finding things that are applicable to individuals, for example unique talent,” states Brenda Gallick, HR Director.
A NEW TREND AMONG GRADUATES
There is a new trend in the city. “In the past young people, after graduation, were looking for really vibrant environments like New York, Chicago, and places like Dallas. Now what we see is that the graduates remain in Detroit. They get jobs in the city. Even people from other states come and get jobs here,” says Thomas. “Detroit has many things to be changed and built. Other cities, like New York, are fantastic but you cannot change anything there. Here, there is a lot to be created and this makes Detroit a wonderful place for young people to be,” continues Thomas.
CORPORATE SOCIAL RESPONSABILITY
“In terms of the community we get involved in a lot of projects. One example is the challenge Detroit Program where we provide volunteers paid time off,” states Gallick.
Challenge Detroit is an urban revitalization project bringing together individuals of various intellects and backgrounds to live, work, play, give and lead in Detroit by uniting area companies, non-profits and cultural institutions.
Published in the hard-copy of Work Style Magazine, Fall 2013