Tough choices – Who to save…GM or Detroit?

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As GM prepares for a bankruptcy filing later this week, and as the region’s business and political leaders gather at the anachoristic Grand Hotel on Mackinac Island for the annual regional Policy Conference, the subject of where the company’s headquarters might be is high on the buzz list.

Moving its headquarters out of Detroit as part of the compression of its operations and realignment of its corporate real estate portfolio was out of the question until Fritz Henderson, the company’s new CEO, said he’d look at all options as the company struggled for survival. The “all options” in this case referred to the concept, raised by the mayor of the suburban community where GM has its Technology Center, that GM should leave Detroit and consolidate in excess space in Warren.

The proposal clarifies that the options “are presented not to move jobs from Detroit to Warren, but to reduce GM’s costs as a first important step to profitability and efficiency.”

“I present this to you not as a choice between Detroit and Warren, but as a matter of GM moving forward and surviving,” Fouts’ letter states.

The concept produced a firestorm of criticism. But is it really a bad idea? If the focus is on the survival of GM, an essential economic engine in the region and the country, why is the welfare of the city of Detroit the defining agenda? Is the focus on the city as the primary determinant something that could affect the success of GM’s reorganization and reorientation?

Ever since Mayor Coleman Young at the beginning of his administration in 1974 told the criminals in Detroit to “hit the other side of Eight Mile,” there have been tensions and rivalries between the city and its suburbs. Mayor Fouts, of Warren, is only the latest in a long line of suburban municipal and county leaders who have, as some would say, cannibalized the city of Detroit by offering invitations and incentives for companies to relocate from the city.

The city itself seems to have been suicidal over the last generation, not only exclusionary to development interests, but also corrupt, antagonistic, and lately, disfunctional and absurd in its behaviors. Making the choice to come to the city is harder and harder to do and, I expect, the case to stay in Detroit for many companies and institutions is less rational than philanthropic.

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GM’s headquarters location, however, seems to be consistently linked to the life and health of the city. Its first, iconic, headquarters was built in the early 1920’s in an area of Detroit eventually called the New Center. Grand Boulevard, a ring road that when constructed represented the outer limits of the city, became the location for the next wave in the progressive outward expansion of the city brought byu the success of the auto industry. GM became the catalysts for development of retail, entertainment, business, cultural and residential occupancies in the area.

Economic and social issues with seeds in earlier decades eventually grew into the 1960’s. The New Center struggled to keep business occupancies, the surrounding neighborhoods began to decline, and the 1967 Detroit riots pretty much defined the end of the New Center. GM continued to support some aspects of renovation and redevelopment in the area, but it was clear that the location had lost its cache and GM’s interest.

GM eventually moved to the Renaissance Center, along the riverfront and near the historic, “old center” of the city. Renaissance Center was a concept of Henry Ford II as Ford Motor Company’s contribution to rejuvenate the flagging economic health of the city. The development was considered faulted from its beginning because it pulled the life from the streets and buildings in the center of the city, and surrounded itself with high concrete walls interpreted as a defensive perimeter from the citizens of a city not yet recovering from the impacts of the riots.

I was part of a team of planning and design consultants hired by GM in the early 1990’s to realign the company’s real estate and facilities portfolio with the cyclical reorganization and consolidation of the business beginning to take place. A central concept was to reduce GM’s holdings and leases to a small number of “thematic” locations. The Technology Center in Warren, the Proving Grounds in Milford and the Truck Products Center in Pontiac, were among those locations, and GM Headquarters was, of course, another.

The GM Building was beginning to show its age, and its narrow fingers were not supportive to the emerging structure and operations of the company. It was expensive to maintain, and difficult to renovate while occupied. Concurrently, the Renaissance Center became available and, after an assessment of the appropriateness for its reorganized operations, GM purchased the complex in 1996 and began its renovation, including making the complex more open, better managed, easier to comprehend, and more engaged with the surrounding developments on the riverfront. GM was again celebrated for its role in the rejuvenation of the economic life of the city.

In recent months, GM has been actively buying out the employment of its white collar workers. The Renaissance Center headquarters of the company, as with other properties, is now only partially occupied. Further reduction in the size of the company and its markets will continue to have an impact on occupancy there.

So, what now?

GM’s continued presence at this location is considered to be essential for the continued life of the city. It provides a real as well as psychological grounding for the economic and social life of the city, and even passively is an important basis for other development initiatives in the city. GM’s commitment can give others considering moves to the city a confidence that there is continuity and strength there. The large numbers of people who would remain with GM or be other tenants in the building provide at least daytime economic life to the limited retail and service businesses in the city. And longer term planning, like the proposed light rail transit system, would depend on GM as an anchor to the system and the basis for the other economic life and transformational development it is intended to catalyze along its route. Without GM occupancy, I do not think the system has any relevance.

So GM is essential to the life of the city, but is the Renaissance Center essential to the life of GM? I am deeply concerned about the city that has been the base for my career and the basis for my lifestyle. But I am fascinated by the question of how place affects performance, and the question of Detroit or Warren is provocative. So here are some speculations and provocations, not positions, as a means to gather further information and sustain further analysis and planning.

The Renaissance Center is a drain on the resources and energies of the company at the most critical time in its history. And it doesn’t really do all that much for the daily life of the city.

GM’s diminished scale – brands, people, plants, market share, resources – cannot justify nor sustain a multi-site empire. It had already effectively abandoned millions of square feet developed in the 1990’s for its Truck Products groups in Pontiac, just north of Detroit. The Milford Proving Grounds, a specialty campus, will certainly be underutilized in the new company. The Technical Center, a diverse campus for research, design and engineering, is underutilized and underdeveloped.

And Renaissance Center, where GM had been pusing other tenants out earlier in the decade, is now a swiss cheese of occupancy for a company not yet scaled or regorganized for its next generation. The complex is the transposition of a multi-tenant mixed use concept from another city and another economy. Peachtree Center in Atlanta was its model, and Portman’s duplication of the concept in Detroit – bad design and bad planning and in the wrong location – may, other than through taxation, have harmed the city more than helped.

A complex of five silos with small floorplates and no interconnectedness except through public spaces and defensive security at its base, separates the functions and staff of the company, reduces its speed and efficiency, and cannot provide the environment for new thinking and new acting demanded by the urgency of the current condition.

And Renaissance Center is a self-contained complex. Despite the best efforts to open the place up in its recent renovations, the people in the complex do not mix with the city. Work, food, services, parking and entertainment are all there, and people who have worked in the complex for years still do not know the names of the streets within blocks of the headquarters. If the complex had been built inboard a few blocks, at Grand Circus Park, the city might have had a diverse and lively downtown; built across a ten lane boulevard from the rest of the downtown, the complex is a symbol of renaissance but not a catalyst for it.

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The Technical Center in Warren focuses the company on its purpose – its products. It is itself a great symbol of leading design and engineering, and can catalyze energy, focus and achievement by linking the administration and management of the company with its product vision and quality.

The GM Technical Center, designed principally in the 60’s by Eero Saarinen remains an iconic and inspiring complex. As a campus of dedicated buildings, it clarifies and articulates the functions and purposes of the company – research, design, engineering, integration, fabrication, supply chain management – and the differentiating components of its products – styling, powertrain and technology. Locating the headquarters here would not only make the company more efficient, but provide a symbolic and physical environment for its renaissance.

Underutilized but recent buildings, originally planned for engineering teams, have light-filled, large, open floorplates that could change the insular culture sustained at the Renaissance Center, creating integrated and efficient teams connected and visible to each other and united around common and shared purpose.

I have worked on a number of studies for renovation, redevelopment and new development at the Technical Center, and know it can sustain the life of a smaller company, but also its expansion in future success.

So, which is more important? To make a probably interim, potentially ineffective, politically-motivated commitment to the Renaissance Center? Or to make a catalytic, transformational, refocused, repurposed company that can contribute in its rebirth to new economic development in the region?

What are your thoughts?

This just in –

Granholm, Bing fight to keep GM in Detroit’s Renaissance Center

Warren offers tax breaks to lure HQ to Tech Center

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3 thoughts on “Tough choices – Who to save…GM or Detroit?

  1. Pingback: Making choices in Detroit « MEREDITH

  2. Pingback: Tough choices in Detroit « ––––––––––MEREDITH––––––––––strategy design | design strategy

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