Meet the 'New' Motor City

Once-Insular City's Business Climate Warms to Outsiders -- and Green Shoots Are Starting to Show

By Published on .

On a recent morning at Zuma's Coffee Shop, an independently owned joint in the affluent Detroit suburb of Birmingham, a man in his mid 40s wearing jeans and a casual shirt sits in a windowless alcove hunched over his iPad, a BlackBerry on the table and a briefcase at his side. It's about 38 degrees, warm enough to melt the stubborn March snow cleaving to the roadsides -- sweater weather at worst for a native Michigander. Yet the man is clad in a down coat even inside the café.

Credit: Istockphoto/Westhoff
It's Joel Ewanick, GM's global marketing chief, on the job in Detroit for 10 months and no Michigan native, having left the more seasonable climes of Southern California at Hyundai, with a brief stop at Nissan in Nashville, Tenn., before accepting a move to Detroit that he had previously resisted.

Mr. Ewanick comes to this often empty alcove at Zuma's "to get some work done and to think," he said, before making the 25-mile trek from his home in Bloomfield Hills south to General Motors' glass and steel edifice on the Detroit River. Mr. Ewanick, who went from having only marketing responsibility for GM's North American operation to the whole world two months ago, said he often tries to stay outside the office -- known as "the tubes" around Detroit because of the multiple-cylinders configuration of the building -- and has to ration his meetings "or the important work is not going to get done."

That important work is marketing the post-bankruptcy GM that is still 40% owned by the U.S. Treasury. That job, and that of reshaping the new Chrysler and surging Ford, is increasingly being done by newcomers and outsiders such as Mr. Ewanick who are re-energizing the "new" Detroit, where creative green shoots are once again springing up. Among them at GM: CEO Daniel Akerson from the Carlyle Group; North American marketing head Chris Perry from Hyundai; Goodby Silverstein & Partners CEO Jeff Goodby, who has been leading Chevrolet creative since last summer; and Chairman Pat Fallon of Fallon Worldwide, Minneapolis, which now handles Cadillac. Also new to town: Chrysler CEO Sergio Marchionne and chief marketer Olivier Francois from Italian automaker Fiat; Chrysler agencies Wieden & Kennedy and Richards Group from Oregon and Texas, respectively. And perhaps most prominently, Ford CEO Alan Mulally from Boeing Co. and his chief global marketing executive, James Farley, from Toyota.

"There is still a lot of money here," said Toby Barlow, chief creative officer at Team Detroit, who is speaking at Ad Age's Idea Detroit Conference this week. "The auto companies are back, and they have some of the biggest budgets, and good people and good ideas and creativity will come to where the money is." Mr. Barlow himself is an outsider who arrived almost five years ago from New York and San Francisco before that.

Some of the outsiders are laying down roots; some are transient. Mr. Barlow, for example, lives in Lafayette Park in downtown Detroit and is a frequent megaphone of creative possibilities and business opportunities around the city. He also published a novel, "Sharp Teeth," in 2008, which is being developed into a movie by "Slumdog Millionaire" director Danny Boyle.


Former GM CEO Ed Whitacre Jr. has taken a condo in the Westin Cadillac Book Hotel, blocks from GM, not out in the posh suburbs. Ford's Mr. Farley lives in Birmingham, having grown up in the Grosse Pointe section of Detroit before spending most of his career with Toyota. Chrysler CMO Mr. Francois took an apartment in Royal Oak, close driving distance to his offices in Auburn Hills. The agency chiefs, like Mr. Goodby, have been hotel denizens at the Cadillac, along with dozens of staff whose frequent travel have been a boon to the restored downtown hotel and made its bar a hotspot. There are whispers around the Detroit agencies about GM's new out-of-town shops not being good for the city or the region because they are doing the national ad work and brand strategy at their home offices while populating local offices with dealer ad staff, account people and other business handlers, not the juicy creative stuff. "The days of one big office doing everything are over," said Mr. Goodby, who acknowledges the big campaigns so far have been created in the Bay Area.

But he quickly adds he wants that to change. Goodby Silverstein is locating 160 staff on Detroit's main drag on Woodward Avenue in a building that dates back to the 1920s, not in a glass office building in the suburbs. And he is talking about buying a big house downtown, so San Francisco staff can make extended stays.

For decades, Detroit was an insular town, hostile to outsiders. Ad agencies owned by New York- or London-based holding companies guarded their auto-client relationships like mama cubs. Packaged-goods executives who came to GM and Ford in the mid 1990s were filleted by natives, with nearly all of them high-tailing it out of town. But all that insularity bred mediocrity, especially in design of vehicles and management, which contributed to a lot of stale, price-driven advertising from shops that could produce better.

It also created a dysfunctional culture of constant meetings that Mr. Whitacre almost immediately started disassembling when he saw GM was following practices he "had never even heard of," said former GM Vice Chairman Bob Lutz, who is credited with reviving GM's design department. Mr. Lutz said GM's top managers were "obsessed with how complex they thought it was to run a global car company and they completely lost sight of the simple truth that if you focus on great product, the rest of the business will take care of itself." Mr. Lutz has a forthcoming book and speaking series about how Harvard and Wharton business schools ruined Detroit and killed creative management.

But in the "new" Detroit, outside influences are not only welcome, they are required. GM, for example, sold more cars outside the U.S. than it did in the 50 states last year. Buick is a bigger brand in China than in America, so it's no surprise that the new Buick Regal and Buick LaCrosse were designed in Shanghai, not Detroit. On a trip to China last year, GM's chief designer, Ed Welburn, said it is a new golden age of design, "but it's happening on a global scale, and that is an awesome thing we are participating in."

Team Detroit's Mr. Barlow said it took Ford's Mr. Mulally coming in from Boeing in Seattle to teach Ford what the company was good at: building Fords. "The previous managers spent all this money buying European brands like Jaguar and Volvo they couldn't manage, because they were down on the cars that were coming out of Detroit back in the late 1980s and '90s," Mr. Barlow said. "Alan has stripped all that away and has the entire global company focused like a laser on making the best Ford cars and trucks. ... It took an outsider to come up with that strategy."

It turns out Michigan is not so bad for foreign automakers. They may not want to build cars near the Motor City, but they come to Michigan for the know-how. Toyota developed and engineered the best-selling car in the U.S., the Camry, in Ann Arbor, not California or Japan; add the Tundra pickup, Sienna minivan, Highlander SUV and Avalon sedan to the list of vehicles that were born largely on Michigan soil.

For Nissan, the Altima sedan and Quest minivan are among those developed on GM's and Ford's back stoop in their massive R&D centers. Hyundai, too, has an R&D center in Ann Arbor where more of its vehicles for the U.S. are being engineered. "The manufacturing jobs have left, but the intellectual capital that is here is awesome and is the lifeblood of Detroit and Michigan's comeback," said David Cole, chairman emeritus of the Center for Auto Research in Ann Arbor.

By the raw numbers, Detroit's prospects look grim, and give snarky spit-ballers all the ammunition they need to deride Detroit. Fox News' Glen Beck recently labeled the city another Hiroshima after World War II. Michigan unemployment is 10.7%. Metro Detroit's rate is 11.1% and the city's jobless rate is 19%. Those numbers are probably soft because of the numbers of people who have had to drop out of the job market or who have left the state.

Michigan has lost 20%, or 500,000, of its jobs since 2000, according to MBG Information Services in Washington. There are some 10,000 buildings slated for demolition, said Detroit Mayor Dave Bing, that the cash-strapped city is trying to raze. Detroit city schools are under the direction of an emergency manager who is closing schools to create a student-to-teacher ratio of 60 to 1. The median sales price of a home in Wayne County is only about $38,000. To get police and fireman serving in Detroit to live there with their families, the city is offering them homes for $1,000. The U.S. government still owns about 40% of GM, the hub of downtown Detroit. Nearly 2 million people used to live in Detroit. Fewer than 900,000 remain.

The harsh numbers may be more daunting to those who have long lived with them since the riots of the 1960s that sent many families out of the city and into the suburbs. Which is why it's significant that it was French-born Mr. Francois who greenlighted Chrysler's brand positioning "Imported From Detroit" in a $9 million, two-minute Super Bowl ad last month. The ad, part love-letter to Detroit and postcard from the Motor City to the world, was conceived at Portland, Ore., agency Wieden & Kennedy and featured Detroit-born music superstar Eminem.

"The perception might be that here are these guys from Italy, and they are going to keep to themselves," said Mr. Francois during a trip to California to introduce the new Fiat 500 to the media. "I am fascinated by Detroit and very much want to make the comeback of Chrysler and the comeback of Detroit part of the same story."

Almost two months after the ad ran, ad executives are still talking about it. "I loved it," said Bill Ludwig, chairman of Campbell-Ewald, Warren, which lost the Chevy account to Goodby last year after Mr. Ewanick arrived. "The whole positioning Chrysler and Dodge have adopted about pride and cars you can be proud of even if you don't own it is great," he said.

Mr. Goodby agrees it was "a hell of an idea, and we loved it too." But the ad executive can't help but assert that GM is maybe "more Detroit" than Chrysler, given that the company kept its headquarters downtown when it could have vacated in 2009 and moved to its R&D campus in nearby Warren.

Mr. Ludwig's agency had done Chevrolet creative since the Woodrow Wilson White House days, but while stung, it was hardly killed when it lost Chevy. Like many agencies in the area, the shop saw what was coming in the auto sector and long ago started a push to become less dependent on GM. Chevy represented only 25% of the agency's revenue at the end, and it continues to work for more than two dozen clients including the U.S. Navy, Chicken of the Sea, AllTel and Ghiardelli Chocolate.

Mr. Ludwig, a longtime Detroit resident, said outsiders are infusing the area with a new perspective that is healthy. "When my son was traveling in Europe, he told me the people thought it was cool he was from Detroit, where the cool American muscle cars and great music were from." Campbell-Ewald, said Mr. Ludwig, had pitched "Imported From Detroit" as a line to launch the redesigned 2007 Malibu. GM executives at the time rejected it, always timid about pushing the "Detroit" button.

Doner Advertising CEO David DeMuth is a little bemused by executives from Italy, San Francisco and Portland vying for who is "more Detroit." "How many times have I heard new-business consultants say the client doesn't want a 'Detroit agency,'" he said.

Doner, based in Southfield, about 12 miles northwest of Detroit, lost its business with California-based Mazda last summer after 13 years (ironically to Team Detroit, which is opening up an office in Los Angeles to service it), but within weeks picked up all of Chrysler's retail ad business.

"It's the first time being in Detroit was such a big plus because [Mr.] Francois said he liked that we were local." Even nearby boutique agency Impatto got the assignment to launch the Fiat brand for the company this year, rather than a New York or West Coast shop.

In addition to Chrysler, Doner has added Choice Hotels, Harman Audio, Cat's Pride, Wilson (sporting goods) and OhioHealth as clients.

When Chrysler fired longtime agency BBDO in 2010, it was a big blow to Detroit. The office closed and some 485 people were jobless. (A decade ago, the shop had 2,000 employees.) But creative jobs are coming back. Goodby will have 160. Team Detroit has more than 1,000 and headcount was up 8% last year. Fallon will have around 60. Doner's headcount will be up almost 100 this year. "I know things are improving because people are leaving for other jobs and there was none of that for two years," said Mr. DeMuth. His partner, Rob Strasberg, came to the agency in 2008 amidst the economic meltdown from Miami agency Crispin, Porter & Bogusky.

"Some of my friends thought it was kind of crazy, but the opportunity is huge here," said Mr. Strasberg, who has been remaking the agency's creative department around social media, digital creative and "any idea" that will connect a person with a brand. Doner was behind the curve and still sought to sell clients mostly TV ads when he arrived. "There is a real idea economy building here," he said, "in part because I think we all know the manufacturing economy is not going to be what brings Michigan back."

The film industry has also given the city and region a shot in the arm. Tax credits have made Michigan a hot spot for movies such as "Gran Torino" and "Scream 4," as well as TV series such as HBO's "Hung" and ABC's "Detroit 187." The new Republican-led Michigan statehouse, though, is looking to roll back the incentives, claiming that the tax credits are more expensive than the jobs created are giving back. That analysis is much in dispute, but some projects have already pulled out of the state expecting the incentives to go away.

There is a nascent idea of building a "creative corridor" around Metro Detroit, with former E-prize executive Matthew Clayson as executive director of the effort, which seeks to cross-pollinate creative ventures and help them get off the ground with advice and by helping businesses hook up with local sources of capital. Downtown Detroit is seen as a perfect geographic hub because of the availability of inexpensive space and a forthcoming light rail that is going into the Woodward Avenue corridor. The theory is if more agencies and other businesses open up in the city, the more need there will be for services to accommodate their employees, such as restaurants, dry cleaners and even yoga studios.

These are signs of progress. Interactive marketing agency Dice Marketing listed Metro Detroit as the fastest-growing area for tech jobs in the country. And Travel and Leisure magazine named Detroit one of the "world's most underrated" cities: "What most people would consider as evidence of Motor City's sad decline -- empty lots, abandoned houses, and disused factories -- others view as unparalleled opportunities for artists, designers, and other creative types."

There have been some truly avant-garde ideas about how to advance Detroit out of the bad statistics. One idea is to pay families, or compel them by the city asserting eminent domain law, to move from their homes scattered around the city into more concentrated neighborhoods. Mr. Bing has shelved that in the face of fierce opposition by residents. Another would be to take the small-scale urban farming going on in the city and expand it to big urban farms created from lots of contiguous abandoned properties. So far that idea is still in the incubator, too.

The ideas are coming fast and furious, not only how to help GM and Chrysler shed the shackles of government ownership, but also how to help the city get past a difficult economic history and present. A few weeks after the Ad Age Idea Conference, another conference comes to town: The Rust Belt to Artist Belt conference, started and run successfully for two years by the Cleveland Partnership for Arts and Culture, which will bring people together with the help of the Creative Corridor Center on April 6 and 7.

When Team Detroit's Mr. Barlow came to Motor City, his friends in New York said, "I'll see you in six months." Almost five years later, said Mr. Barlow, "This is a great place to play if you are a creative."

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