The City of Detroit: Getting Its Due If GM Leaves Ren Cen?

May 28, 2009

While it may not make much difference to the world where General Motors has its HQ, it's big news here in Detroit. Yesterday, Jim Fouts, the mayor of Warren, Michigan, said he was delivering a proposal to GM about moving their HQ from Detroit's hopefully-named Renaissance Center out to the suburb of Warren where GM has a huge design and technical center.

These tough times make companies do what heretofore seemed unthinkable, at least that's the common way of thinking about things. In actuality, automakers have left Detroit before.

The main reason has always been because of economics, but the underlying issue is that Detroit city government has proven that it is incapable of providing a functional, business-friendly environment. Decades of corrupt, abrasive, racial politics have alienated all but the most altruistic business leaders and private citizens. Men like Roger Penske are to be lauded for their unfailing support of the city.

Perhaps Detroit just has to totally implode before it will turn around? This is a pervasive line of thinking among many in Southeast Michigan's business community. The city government is so broken at every level that it may not be able to keep major employers such as General Motors. The city will move one step closer to a melt down if GM takes Warren's offer.

General Motors - Not The First To Leave Detroit Or Ren Cen

Henry Ford II lead the development of the Renaissance Center that had its official beginning in 1971. He worked with other major Detroit personalities and businesses to fund the $500 million project. It would take until 1977 before the cluster of buildings was fully up and running. Ford Motor Company and many of its advertising and merchandising agencies were among the first large-scale tenants.

As the administration of Detroit Mayor Colman Young incessantly made Detroit a more untenable place to live and do business, the Renaissance Center faltered. Mortgage defaults were common. Eventually, Ford Motor Company restructured, and moved out of the Ren Cen and back to the Ford family homestead in Dearborn, Michigan.

Not long after, Chrysler Corporation moved most of its main operations out of the city of Highland Park, an enclave totally surrounded by Detroit. Chrysler's new HQ is in Auburn Hills, where the Detroit Pistons play basketball at The Palace.

The City of Detroit will suffer if GM moves to Warren, but Warren won't prosper by the move. Plant closings have helped boost Warren's unemployment rate to 17.3 percent and further depress home values. The Warren Mayor was quick to point out in brief comments that his city is offering GM large tax breaks and that his city, unlike Detroit, has no income tax. GM workers still at the Ren Cen wouldn't mind a 4-percent raise with their move to Warren.

We'll keep you posted as to further happenings. Regardless of GM's decision, things are still going to get uglier in Detroit before they get better.

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