Business Buys into Detroit's Progress

Posted on June 3, 2014

Behind hand-wringing over “the Grand Bargain” or whether Oakland County’s L. Brooks Patterson may scuttle a deal for a regional water authority is evidence of a rare commodity around here: optimism backed by results.

From Gov. Rick Snyder and the Legislature’s Republican leadership to Mayor Mike Duggan and a City Council led by Brenda Jones, business leaders attending last week’s Mackinac Policy Conference say they see political leadership working together to execute a restructuring agenda they readily support.

That’s a turnaround of a different sort. The comparatively nonpartisan cooperation, markers of the leadership styles of the Republican Snyder and the Democrat Duggan, is using the humbling opportunity of Chapter 9 bankruptcy to attack problems that have festered for years — and business, a critically important constituency, approves.

“It’s working together,” said Dan Loepp, CEO of Blue Cross Blue Shield of Michigan. “What’s happening in this state is phenomenal.”

The result is a credible optimism fueled by a building record of change that, for the first time in a long time, effectively counters deep cynicism that Detroit can never change, cannot slow (much less reverse) epic decline and despair, cannot stem disinvestment and a decamping population.

But it is. Even as overall population continues to ebb, the rate of decline is slowing and demand for downtown housing is skyrocketing; business is investing billions in private capital in the city, bolstering reform efforts; bankruptcy is offering a rare chance to shed debt, privatize selected operations, renegotiate labor contracts and restructure pension oversight. Chapter 9 is even improving the credit outlooks of major companies tied to Detroit because it is finally addressing long-ignored problems.

Only the willfully self-deluded mired in a 1970s time warp, populated by images of former Mayor Coleman Young and a prosecutor named Patterson, would deny that Detroit is moving in a positive direction not seen here in decades. Bankruptcy helps, but it’s not the only force pushing forward, drawing smart money and renewed national attention.

Detroit’s stock response to overwhelming evidence of the need for change — “We can’t” — suddenly is out of fashion. Financial collapse and political corruption, met with a unique confluence of leaders interested more in solutions and less in political ideology, are combining to change the historic dodge to “We can, because we don’t have any choice.”

And more: The forward progress, unmistakably driven by a new kind of cooperative leadership that recognizes Detroit’s role as an integral part of the state, is creating a virtuous circle among the business types. The more evidence of progress and cooperation they see, whether under the hammer of bankruptcy or not, the more Detroit is likely to figure in future investment and hiring decisions.

“Everybody up here is encouraged about Detroit, encouraged about what the mayor and the governor are doing,” DTE Energy Co. CEO Gerry Anderson said in an interview on the porch of the Grand Hotel. The mayor is “bringing a style” that business admires. “He crosses political boundaries, too, because of the way he is acting.”

Duggan played a starring role at this year’s Detroit Regional Chamber conference, a three-day event that produced more positive energy about Detroit (from business and both sides of the political aisle) than any Mackinac conference in the past 20 years or more.

The mayor exudes can-do — no, will-do — competence, business smarts and blue-collar practicality. Add a canny politician’s understanding that his ability to deliver the change he promises will pay dividends for the city, its support among business leaders and his political standing over the longer term.

It’s a simple equation, but one too poorly understood by several of Duggan’s predecessors in City Hall. He possesses a rare combination of support from business and Lansing, outstate Republicans and Detroit Democrats, as well as a singularly historic opportunity:

The mayor’s former classmate at the University of Michigan Law School, Emergency Manager Kevyn Orr, is engineering a restructuring of Detroit’s balance sheet, potentially leaving the mayor a sustainable financial model likely to be improved by the operational improvements he is targeting and pushing with each passing week.

There are no guarantees the Grand Coalition for Detroit will deliver as advertised. Snyder needs to win re-election; the Republicans would need to retain control of the Legislature; and Duggan would need to govern as mayor the same way he’s governing as mayor under an emergency manager.

But there’s no mistaking the dividends their problem-solving, non-confrontational styles are paying. They’re getting things done, surprising residents, confounding critics and showing business what it already knows — leadership focused on results can make a difference.