Economy
Detroit and the surrounding region constitute a manufacturing powerhouse, most notably as home to the Big Three automobile companies, General Motors, Ford, and Chrysler. The city is an important center for global trade with large international law firms having their offices in both Detroit and Windsor. About 80,000 people work in downtown Detroit.
There are hundreds of offices and plants in the automotive support business: parts, electronics, and design suppliers. The domestic auto industry accounts directly and indirectly for one of every ten jobs in the United States. The area is also an important source of engineering job opportunities. A 2004 Border Transportation Partnership study showed that 150,000 jobs in the Windsor-Detroit region and $13 billion in annual production depend on the City of Detroit's international border crossing.
With its dependence on the auto industry, the Detroit area is more vulnerable to economic cycles than most large cities. A rise in automated manufacturing using robot technology, inexpensive labor in other parts of the world, and increased competition have led to a steady transformation of certain types of manufacturing jobs in the region. Local complications for the city include higher taxes than the nearby suburbs, with many unable to afford the levies on property In March 2007, metropolitan Detroit's unemployment rate was 6.5 percent. In the city, the unemployment rate was 14.2 percent at the end of 2005, leaving Detroit with more than one-third of residents below the poverty line. This is in part attributed to white flight following court-ordered busing during the 1970s. Parts of the city have abandoned and burned out shells of buildings. Though the city has struggled with finances, since 2006 it has balanced its budget with more funding available to demolish blighted properties.
The Big Three automakers have collectively lost market share to foreign rivals. However, Detroit's automakers have continued to gain volume from previous decades with the expansion of the American and global automotive markets. In 2003, Cadillac outscored all other luxury automakers in two of three quality surveys by AutoPacific, Strategic Vision, and J.D. Power. General Motors continues to lead all other automakers in Strategic Vision's Total Quality Index (TQI). In 1994, with rising demand for sport-utility vehicles and pickup trucks, the industry fought Clinton administration's efforts to implement an across the board Corporate Average Fuel Economy (CAFE) increase. In 2005, the Bush administration asked Congress for the authority to reform the CAFE standard from a single average to six different size based categories in an effort to resolve the issue. In the late 1990s, Detroit's automakers had gained market share and were enjoying record profits until the recession of 2001 and the subsequent September 11, 2001 attacks caused a severe decline in the stock market along with a pension and benefit funds crisis. Although retiree health care costs remain a significant issue, General Motors' investment strategy generated a $17.1 billion surplus in 2007 for its $101 billion U.S pension portfolio, a $35 billion reversal from its $17.8 billion in underfunding. With rising oil prices and war, consumers chose to purchase fewer trucks and SUVs. This negatively impacted the profits of Detroit's automakers. As a result, GM and Ford have implemented their respective turnaround plans. Concern among analysts over restored profits has fueled economic uncertainty in the metro Detroit area.
Initially, GM and Ford had sought to delay the introduction of unprofitable hybrids in favor of the all-fuel cell vehicle; however, with rising gasoline prices and foreign rivals marketing hybrid cars, Detroit's automakers responded. In 2006, Ford announced a dramatic increase in production of its hybrid gas-electric models, Ford and GM have also promoted E-85 ethanol capable flexible-fuel vehicles as a viable alternative to gasoline. General Motors has invested heavily in all fuel cell equipped vehicles, Chrysler's focus on biodiesel may boost sales. Two days after the September 11, 2001 attacks, GM announced it had developed the world's most powerful fuel cell stack capable of powering large commercial vehicles. In 2002, the state of Michigan established NextEnergy, a non-profit corporation whose purpose is to enable commercialization of various energy technologies, especially hydrogen fuel cells. Its main complex is located north of Wayne State University.
With new business in the suburbs, the region is competitive in emerging technologies including biotechnology, nanotechnology, information technology, cognotechnology, and hydrogen fuel cell development. The city of Detroit has made efforts to lure the region's growth companies downtown with advantages such as a wireless Internet zone, business tax incentives, entertainment, an international riverfront, and residential high rises. Thus far, the city has had some success, most notably the addition of Compuware World Headquarters, OnStar, EDS offices at the Renaissance Center, PricewaterhouseCoopers Plaza offices adjacent to Ford Field, and the 2006 completion of Ernst & Young's offices at One Kennedy Square. However, Comerica Bank decided to move its headquarters from Detroit to Dallas in 2007.
Quicken Loans is reportedly considering a consolidation of its suburban offices into a new downtown Detroit headquarters, a move considered to be a high importance to city planners to reestablish the historic downtown.
Some Fortune 500 companies headquartered in Detroit include General Motors, auto parts maker American Axle & Manufacturing, and DTE Energy. Detroit is home to Compuware and the national pizza chain Little Caesars. Downtown Detroit has major offices for Electronic Data Systems, Visteon, Delphi, Ford Motor Company, PricewaterhouseCoopers, Ernst & Young, Deloitte Touche, KPMG, the Jeep and Dodge Truck arm of DaimlerChrysler, GMAC, and OnStar. Other major industries include advertising, law, finance, chemicals, and computer software. One of the nation's largest law firms, Miller, Canfield, Paddock and Stone P.L.C., has offices in both Windsor and Detroit. Compuware's new headquarters, GM's move to the Renaissance Center, and the State of Michigan's redevelopment of Cadillac Place in the New Center district have provided new synergies for the redevelopment of downtown.
Casino gaming plays an important economic role, with Detroit the largest city in the United States to offer casino resorts. Casino Windsor, Canada's largest, complements the MGM Grand Detroit, Motor City Casino, and Greektown Casino in Detroit. The casinos have brought new tax revenue and jobs to the city, though, the city still has high unemployment. In 2006, downtown Detroit reported $1.3 billion in restorations and new developments which increased the number of construction jobs in the city. Medical service providers such as the Detroit Medical Center and Henry Ford Hospital are major employers in the city.
(Source: Wikipedia.org)
