Made In Detroit: The Story Behind The Motor City’s…

Made In Detroit: The Story Behind The Motor City’s…

Jul 23, 2015

“Made In Detroit: The Story Behind The Motor City’s Manufacturing Boom”

By Brian Sodoma, Forbes

A musician with an entrepreneurial streak, Zak Pashak had carved out a unique career path in his 20s. In his native Calgary, he opened and ran two music venues and founded a music festival. But he eventually became interested in urban planning and transportation issues.

Pashak wanted to use a bike more than his car, but he was disappointed in the bike-shopping experience. As he was looking for a simple model to get around town, he wasn’t interested in the racing bikes or mountain bikes that dominated showroom floors.

“People seemed disconnected from what I wanted,” he recalled.

The concept of a simple Danish-style utilitarian bike came to mind, and a business idea bloomed in 2010. He wanted to build the bikes himself and, perhaps oddly, he was drawn to Detroit, a place he’d heard a lot about—although mostly negative.

“I came because I knew it couldn’t be as bad as people said it was. I wanted to see it with my own eyes. I fell in love with the place,” he said. “The people stuck out for me right away. Wonderful, interesting people who had been through a lot, who were still very proud and super welcoming and excited that someone was checking out Detroit.

“You could tell it was ready for change.”

Pashak made a $2 million investment, establishing Detroit Bikes and buying a west downtown building with the capacity to manufacture 50,000 bikes a year. His sales goals and growth have been modest since opening in 2012. First, sell 1,000 bikes a year. This year he’ll hit 5,000 and the next goal is 10,000, at which point he’ll see a profit. He employs 10 people and also has a retail shop downtown. The simple concept of the Type A and Type B bikes—proudly made in the Motor City—sell for $699 and can be found at retail sites around the United States, Canada and Switzerland.

Pashak’s story is small but important, and is set among many larger ones. Detroit is pulling out of its recessionary funk by adding manufacturing jobs and courting new companies to the area, a welcomed change for a city many thought could never recover.

Detroit’s Change

Since 2009, Detroit has added 55,000 new manufacturing jobs. Of those, 28,000 are auto-related, according to labor data research firm, Economic Modeling Specialists International.

Among some of the highlights are companies such as the racing car seat manufacturer Recaro, which recorded more than $200 million in sales last year, thanks to orders from General Motors and Ford.

Detroit Chassis, which builds motor home and commercial van chassis, recently added 34 jobs to its workforce of 170. Multinational conglomerate Sakthi Automotive, which builds car safety components, is investing $31 million in a southwest Detroit high school building to house 650 employees, a move also driven by a boost in orders from General Motors and Ford.

Steve Arwood, chief operating officer for the Michigan Economic Development Corporation (MEDC), said these changes had been in the works for a while. Sakthi Automotive, for example, came to Michigan about five years ago and had its eye on expansion. With prices suppressed, people such as Pashak—along with major corporations—were kicking the tires on real estate deals.

“There’s been a steady movement of capital towards the city, and you really could see signs of it, even before the bankruptcy [in 2013],” Arwood said. “The Detroit story is one we get asked about wherever we go.

“To do it justice, we really have to get people to come out here and see it.”

Workforce Availability And Supply Chain

Maureen Krauss, vice president of economic development with the Detroit Regional Chamber, is one of those people getting others to “see” the Detroit story—and she invites them to participate in it, too.

Charged with courting companies to come to the state, Krauss can’t underestimate the importance of the auto industry comeback. One of Krauss’ biggest pitches to businesses considering relocating to Detroit is the availability of a highly skilled manufacturing workforce, anchored by years of auto industry manufacturing excellence.

Detroit also boasts a strong existing supply chain. The city is home to roughly 1,000 tool and die shops, said Krauss, which is critical infrastructure for manufacturers.

Last December, the state’s Workforce Development Agency announced $8.6 million in job training grants. It’s a move to prepare a workforce for increasingly technical manufacturing positions as well, Arwood added.

“The manufacturing we deal with today has become highly diversified,” he said. “Competition for engineers and advanced technical skills is a big deal here now.”

Brian Sodoma is a journalist who covers business and health, but is always on the lookout for interesting people in any field. He lives in Southern Nevada.

 

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