Detroit’s Changing DNA
A look beyond Detroit’s bankruptcy reveals growth opportunities for Hispanic entrepreneurs and professionals
In the Mexicantown neighborhood of Detroit, the owners of Café con Leche, a coffee house that has become a local staple, are prepping for an expansion to a ritzy uptown storefront space whose rents were once cost prohibitive.
Downtown, Joe Ponce, executive director of global operations quality at General Motors, helps lead the company’s Hispanic Initiative Team in its search for qualified minority candidates who could become the next generation of leaders for the automaker—and help tap into the Hispanic car-buyer market.
Meanwhile in Miami, real estate developer Yamal Yidios Char extolls the opportunities in the once great global manufacturing titan while quietly preparing to put his money where his mouth is.
A common factor shared by these parties is how little the city’s recent bankruptcy affects their respective plans. The expectation is growing in some quarters that if Detroit is able to reinvent itself as a thriving city, Hispanics—especially new immigrants— will be an important part of the equation.
While the growth in the Latino population in Detroit hasn’t garnered the attention given to growing communities in New Orleans, Chicago and other cities, Hispanics have been making a home in the Motor City. In fact, the Hispanic influx of the past 15 years has run counter to the population attrition that today defines the city. A city of 1.8 million in 1950 has shrunk to 700,000. The city owes money to more than 100,000 creditors, totaling some $18 billion it doesn’t have.
Pensioners are owed about $3.5 billion and retirees are due $5.7 billion in health care—and as unsecured creditors they’re likely to get the shaft.
Yet the total number of Hispanics has grown 70 percent in the past 20 years and now accounts for 48,679 residents, according to the 2010 Census. Along with Asians, Hispanics represent the fastest growing ethnic group—really the only growing groups at all—in the city. Many are Mexicans who hail from Jalisco and migrated during a wave in the early 1990s.
Others moved first to cities like Chicago, Cleveland and St. Louis before coming to Detroit. Most have settled in the southwestern neighborhood dubbed, appropriately if unimaginatively, “Mexicantown,” which is 50 percent Hispanic. The area, close to downtown and hovering near “trendy” status, has enjoyed an influx of some $200 million in commercial investments in the past 15 years.
The labor makeup of the area remains predominantly semi-skilled working class, filling some of the few jobs remaining in manufacturing. But a growing segment of Mexicantown is comprised of educated, white-collar workers.
“Mexicantown is changing. It has changed,” says Jorge Chinea, center director of the Center for Latino/a and Latin American Studies at Wayne State University. “Obviously it has been a difficult half-century for Detroit. People have left, and they aren’t coming back. But among those who remain, we can make progress and advance.”
“Our neighborhood is so rich, so diverse. It really mirrors the changes happening throughout the country,” says state representative Rashida Tlaib, whose district includes Mexicantown. She points to the overall growth of a creative class—artists, techies and entrepreneurs—as new blood for the city.
Auto and Manufacturing
As the national economy continues to move away from a manufacturing industrial base, Detroit’s reputation becomes more past legend than current reality. Still synonymous with American auto manufacturing, the cars themselves are largely built elsewhere, including Mexico, Texas and Ohio, though Michigan remains home to the headquarters of General Motors, Ford and Chrysler. And over the past decade, many Hispanics have found a professional home in those corporations.
“GM is always seeking qualified candidates of all backgrounds; we want Latino candidates to fill more and more of our vacancies so we can understand and engage with that demographic,” says Ponce, who has worked in a leadership role with the Hispanic Initiative Team focusing on inclusion at GM. The “HIT” team has similar counterparts at each of the Big 3 and in other large corporations. While the city has seen its manufacturing base melt away, a few outposts remain, such as GM’s Detroit-Hamtramck assembly plant, employing a fare share of Latinos.
After the 1980s saw most auto plants inside Detroit shuttered, the high-wage, mid-skill jobs that left were replaced largely by small businesses—as well as low wage work at restaurants, retail stores and the like. Also, unemployment spiked and remains persistently high at 16 percent.
“If the city is to become great again, it will have to be with help of an immigrant community—that’s how its always happened,” Chinea says.
“Immigrants have always made this city better, helped it innovate.”
Room for the Creative Class
One of those motivated newcomers is Jordi Carbonell, a Spaniard who opened Café con Leche six years ago with wife Melissa Fernandez, a native Detroiter.
“Our business plan is strong, and the lower rents only make it stronger,” he says. The company has also experimented in “pop-up” locations, temporary storefronts in neighborhoods such as Lafayette Park. “Our brand is poised to capitalize on all these openings. The sky’s the limit.”
While Detroit is indeed in bankruptcy, it is also seeing a major renaissance in the urban core. Dan Gilbert, perhaps best knows as the owner of the Cleveland Cavaliers NBA franchise, is the founder and chairman of Quicken Loans and has spent about $1 billion in a bid to revive downtown Detroit, acquiring building after building. Perhaps more important than his money play, Gilbert is actively working to draw capital investment to downtown projects.
Meanwhile, key investments and stakeholders have kept the art scene thriving. Last year, the John S. and James L. Knight Foundation pulled the trigger on a $19.25 million project aimed at bolstering the local art scene, funding local artists and supporting legacy institutions like the Detroit Institute of Arts. Separately, since 2008 the Museo del Norte project has proliferated art throughout the Mexicantown landscape. Supported by the Latina/o Studies Program at the University of Michigan, it is a “museum without walls,” a program designed to perform the same services as a museum, but throughout the community and not contained within a single edifice.
Yet Detroit is not Manhattan. It is not Silicon Valley. It isn’t even Austin. While seeds of the art-tech scene are germinating, and shoots are starting to break the surface, it is happening in an environment where there is no true infrastructure to thrive—yet. Theaters, gallery space, collaborative environments, venture capital and incubators are sorely lacking. A strong postsecondary STEM curriculum—like those boasted by Stanford and MIT, or even Florida International University—is lacking.
Also, while the young professional and creative class has rebuilt sketchy neighborhoods like Park Slope and Williamsburg, no gentrified cities in the U.S. possess the current dearth of public services found in Detroit. The city’s police force is shrinking faster than its population, and emergency response times are among the worst in the western world. In 2003, the Detroit Metro Police had 3,700 officers. Only about 1,900 officers remain to respond to emergency calls in an area larger than Boston, Manhattan and San Francisco combined.
Still, that does not deter some investors who see opportunity where others see devastation. Yamal Yidios Char has no corporate or institutional allegiances to Detroit, and he is not an elected official. But the Miami-based developer agrees with Tlaib’s assessment. As CEO of Ytech International, the 30-year-old Char has led a number of lucrative rental property turnarounds and developments. Ytech’s portfolio is about $250 million, concentrated mostly in South Florida affordable rental units. He is now looking at a possible investment in Detroit.
“There is a tremendous upside potential to Detroit. The city is experiencing a downtown and cultural renaissance,” Char says. He’s tightlipped about the details, but he is willing to say that Ytech is in the early stages of negotiations to enter the market. When Ytech takes on a project, it is crucial that the locale have the potential to support a healthy community of renters. “The irony is that Detroit is going bankrupt at a time when the city has a viable plan for growth.”
Land can be had for a song in Detroit. Dozens of properties—many burned-out husks or charred plots—can be had for less than $1,000. Commercial space is available to lease for less than $2-per-square-foot—unheard of in a major American city.
Entire tracts sit fallow and abandoned, awaiting redevelopment. Char says the real estate numbers make Detroit a “long-term value play.” He’s betting that the city has seen its worse days and an upswing is in the works.
“This new segment of young, motivated, energetic people will bring with them a new economy, and more demand for properties,” he adds. Small business owners agree.
While government failure and corporate flight has undercut Detroit for decades, the key to its resurgence could be in those parties working together.
“We know there will be no intervention on the federal level. However, the state and HUD [U.S. Department of Housing and Urban Development] must intervene and remedy the situation in a public-private cooperation,” Char says.
“PPPs” are economic development ventures that come in many stripes, including finance only, build-finance and design-build-finance-maintain-operate. Char believes these models could hold the key to a Detroit renaissance.
Immigrants Needed, But wanted?
That would likely attract more Hispanics, from entrepreneurs and artists to skilled labor. There is, however, a dark side to being Hispanic in Detroit—one that may discourage some from emigrating there.
Detroit is a border city, and because of quirky peninsular geography Canada is actually to the south. As such, Border Patrol has set up shop, grown its agent ranks from 4,000 to 21,000 in the past 15 years and routinely harangues local Latinos, asking for documents and identification.
A 2011 report documented some 30,000 counts of Border Patrol abuse, often targeting legal, documented citizens whose only crimes appear to have been driving or walking while looking Hispanic.
Hispanic Detroiters are growing fed up with the profiling. Tlaib, who is of Middle Eastern decent, regularly engages with her constituents outside Café con Leche, hearing their concerns and helping them plan legal and legislative recourse to curb the abuses. She says Latinos and Arab-Americans are routinely hassled.
In March, a group of U.S. citizens and undocumented immigrants filed suit against Customs and Border Protection, alleging a pattern of abuse by agents who routinely handcuff, question and detain suspects for no apparent reason.
Along with Mexicantown, Detroit has other historically and ethnically divided neighborhoods, such as Greektown, Poletown East, Corktown (Irish) and Dearborn (Arab).
Each ethnic group populating these burgs endured similar hardships through their history as they integrated into the fabric of the Motor City. The story for Hispanic Detroiters will be no different, save that it will be written during a time rife with unparalleled opportunity and obstacles.
This article first appeared in the October/November 2013 issue of PODER Hispanic Magazine.