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Rejuvenating the Rust-Belt

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Rejuvenating the Rust-Belt

January 11, 2017

With Donald Trump winning most of the Rust-Belt states, the incoming administration needs to make sure that the Rust Belt shares in the coming relief.

Despite being one of the most visible real estate tycoons of the past decade, Trump has managed to breach the wall of distrust among these constituents towards big business interests. Trump and his team are uniquely positioned to usher in an unprecedented era of cooperation between public and private leaders for the benefit of businesses and workers.

Dan Gilbert, the founder of QuickenLoans, expressed high hopes this past weekend in an interview with Bloomberg TV that the next administration would have a positive effect on his urban revitalization effort in Detroit.

Detroit, the de facto epicenter of the Rust Belt, was once the Motor City – the automobile manufacturing center of the United States and the fifth largest city nationwide. More recently, Detroit has contended with the highest violent crime rate in the country, as well as the most prominent emigration exodus in the last 20 years.

Gilbert’s decision to move the headquarters of his mortgage lending giant from the suburbs to downtown Detroit in 2010 came as a surprise to many residents, as well as many of his colleagues in the business community.

Citing his childhood love for the city of his birth, as well as the bargain-basement prices for office space in downtown Detroit, Gilbert said that the move was well thought out, from both a personal and a business standpoint. Gilbert’s real estate firm, Bedrock Real Estate Services, has acquired over 75 buildings in the downtown Detroit area – becoming one of the region’s largest land owners - second only to the historical giant, General Motors.

As of this month, 90 companies have been attracted to downtown Detroit, directly or indirectly, because of QuickenLoan’s  $2 billion plus investment in the purchase, renovation, and resale of spaces in downtown Detroit. Seed funding through another of Gilbert’s ventures has also succeeded in igniting Detroit’s tech-start up community – a community further supplemented by Twitter’s decision to open a regional office there in 2012. Even Chrysler has been enticed to move one of its headquarter offices out of Auburn Hills and into downtown.

Since Gilbert’s move into downtown Detroit, unemployment citywide has been nearly cut in half – from 19% in January 2013, to 10.4% this month. The role of government in this improvement is also worth noting. In early 2013, the city had declared bankruptcy. The crumbling tax base, a byproduct of emigration and commercial decline contributed significantly to the city’s financial woes. In December of that year, the financial situation was stabilized. Gilbert cites the relative ease of business in that year, due to the partnership and regulatory flexibility of the government, as major drivers in Detroit’s success. It is largely in this respect, as deregulation looms large on Trump’s federal agenda, that Gilbert sees the forthcoming government as a blessing.

Still, Gilbert is under no illusion that the Motor City of the future will have the economic composition of the past. To the dismay of some, the most lucrative opportunities in Downtown Detroit are in technology, not manufacturing. While expressing admiration for both free trade and fair trade, Gilbert rings more adamant about the skill gap between the technical skills needed to make Detroit the locus of the self-driving car world, and those currently available in Detroit.

The Trump administration has an asset in the good will of businessmen such as Gilbert. They admire the president-elect’s real-world business experience. If the new administration can leverage this good will into a partnership of government, with the pragmatic ear of private enterprise, the revitalization of Detroit might easily become the basis of the new deal for many Americans across the Rust Belt.  

 

Shua-Kym McLean is a contributor to E21.

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