Experts say GM plant closing not expected to stall Detroit’s rebound
DETROIT — General Motors’ planned shutdown of its Detroit-Hamtramck plant would leave only one auto assembly factory in the city known for “putting America on wheels,” but the closure and job losses are not expected to stall-out Detroit’s comeback since its 2014 bankruptcy exit.
Experts say a more tech-driven and medical industry economy is moving Detroit further from a reliance on manufacturing and that GM’s downsizing in the name of cost-cutting and investment in autonomous and electric vehicles won’t hurt as much as past mass layoffs and plant closings.
Detroit once was home to about a dozen massive assembly plants. A Fiat-Chrysler facility on the east side would be the last if GM closes its Detroit-Hamtramck plant. About 1,500 people work at the GM plant while Fiat-Chrysler’s Jefferson Avenue plant employs about 5,000. Fiat-Chrysler reportedly plans to reopen a former engine plant on the city’s east side to make Jeep Grand Cherokee SUVs with three rows of seats starting with the 2021 model year.
“Manufacturing is now a tech industry — you don’t have to hire as many people to make as much stuff,” said Ned Staebler, president and chief executive of the small business incubator Tech-Town Detroit. “It’s not just General Motors. Every major OEM [original equipment manufacturer], is going through similar processes. It’s a trend that is going to continue.”
GM wants to close four facilities in the United States and one in Canada. Nearly all of the 8,000 white-collar jobs GM expects to cut companywide would be at the automaker’s technical center just north of Detroit in Macomb County’s Warren.
Some of the 3,300 global blue-collar job losses would come from the Detroit-Hamtramck plant and a transmission facility in Warren.
The jobs account for only .2 percent of local county employment “muting the immediate effect of the plant closures,” Moody’s Investors Service said in a report.
That means there is less reliance on those jobs and plants to supply tax dollars needed to help pay for city services and fill out Detroit’s operating budget.
But, Moody’s wrote, the impact could grow “as GM reduces salaried employees, if reduced production hurts ancillary suppliers or if there is a broader slowdown in the industry.”
Detroit will experience some loss of tax revenue from the plant and people working there, said law professor Anthony Sabino of the Tobin College of Business at St. Johns University in New York.
Owners of shops and restaurants that catered to those workers will be impacted, too.
“This will not derail the [city’s] 21st century renaissance. They are working from a solid foundation. If this had happened prior to the city’s reorganization it could have been far more harmful,” Sabino said.
Detroit was about $12 billion in debt before filing for bankruptcy in 2013. Much of that was erased or restructured allowing the city to improve services, like police and fire, and invest in neighborhoods.
Detroit’s general fund balance was about $595 million at the end of the 2017 fiscal year, compared to a deficit of about $73 million that the city faced at the end of the 2013 fiscal year following years of a plummeting population and tax base.
A $36 million operating surplus was expected for the fiscal year 2018.