MAYOR KILPATRICK
DETROIT ECONOMIC CLUB ADDRESS
January 9, 2004
Good Morning.
We are officially 758 days away from Super Bowl 40 and the countdown to kickoff is indeed, in overdrive.
Thanks to Roger, Susan Sherer, the Host Committee, and business and community leaders throughout the City and southeastern Michigan, preparations are on track. We will be ready. The City of Detroit will be a first-class venue for the greatest show on earth.
But today I am here to talk about what comes next. What happens after history has been rewritten and Detroit has a dynamic new image?
What will make this City, this Region, and this State a top destination in 2010? What is our game plan for the next 25 years?
As Mayor of the City of Detroit I will help answer these questions today, but not as you might expect. That’s because this is not all about me.
This is about all of us, and all of our children. This is about our future. This is about how we see the world, and our country, and the role we want to play in it.
Since Henry Ford rolled out the first Model T, and the Temptations recorded “My Girl”… since then, Detroit and southeastern Michigan have been moving the world. From timeless Motown music to cars, trucks, and tanks and fuel cell technology, we have always been the leader – and home to some of the greatest minds, and hardest workers, on the planet.
The auto industry is the foundation upon which our State is built. And through the years it has been our economic backbone as we have weathered everything from recessions to the blackout, and fundamental shifts in the U.S. and global economies.
Everyone in this room is keenly, if not painfully, aware that we are in the midst of the greatest economic sea change since the Model T – with the steady erosion of manufacturing jobs and the rise of the service-based, high-tech economy. And everyone in this room knows the City, the Region, and the State must continue to adapt if we want to remain leaders, and leave a better world for our children.
The process is already well underway as the auto companies – and efforts like Next Energy – have planted the flag on fuel cell technology, and research and development. We are also becoming a high-tech hub thanks to companies like Compuware, EDS, and On Star – and the Governor’s catchy yet critical call for cities to be cool.
At the same time, we are re-examining how we educate our children and prepare them for this brave new world. The good old days are gone and a new era is dawning. From Detroit to Dewitt, we must give our children the skills and opportunities they need to compete and succeed.
It is also time that as leaders in this State, we take a long hard look at ourselves.
Around the world, countries are joining forces to develop cheaper, better, faster products and steal our jobs. Here in the U.S., local governments are teaming up to lure new business and create regional opportunities.
Yet here in Michigan we are addicted to provincial politics and to driving a wedge between the City and the surrounding counties. Over the past 50 years we have become consumed by negativity.. that has led to eternal stagnation in regional cooperation. We have become masters at pitting neighbors against neighbors.
If we are to be competitive in the new economy, this cannot continue. The time has come for us to put the past and the politics aside. The time has come to embrace each other, and for the good of our City, our Region, and our State – master the art of the deal.
If the foundation of our economy is the auto industry, the cornerstone is the travel and tourism industry that feeds $11 billion dollars each year into the State economy.
While much of that is spent by people enjoying the unrivaled beauty of our State, half of it is poured into the Detroit area – with the biggest piece of the pie directly connected to this building, Cobo Center.
As the home of the North American International Auto Show, this building is where Michigan’s two biggest economic pipelines meet. And as such it is the single most important venue in our State.
Today, Cobo itself is at a crossroad.
Over 50 years ago, the visionary Mayor Albert E. Cobo announced a bold plan to build a convention center of staggering proportions. He wanted 400,000 square feet of convention space on the Detroit River. He wanted the largest center of its kind in the nation. The price tag was somewhere around $50 million.
Predictably, he had plenty of opposition. City Council branded the project a “White Elephant” and the Detroit Free Press moaned that, “Man may well be on the moon before the bonds are paid off.”
But Mayor Cobo was not deterred.
At a time when America’s convention business was in its infancy and the entire Detroit Auto Show was smaller than today’s General Motor’s Experience, Mayor Cobo secured most of the financing and pushed the project through.
The Mayor did not live to see his dream realized, but Michigan quickly reaped the benefits when Cobo Center opened its doors in 1960. Conventions clamored to book space, the Detroit Auto Show permanently set up shop in 1965, thousands of visitors began flocking to downtown Detroit, and a river of tax dollars – which continues to this day – began flowing into state coffers.
Before long, the naysayers changed their tune – and by the 1980s they were lamenting that not only was Cobo vital, but now it was not big enough.
The Detroit Auto Show – which was then just a small, regional event – was dwarfed by other car shows. And convention centers big enough to swallow Cobo were popping up around the country.
So Mayor Coleman Alexander Young went to work forming a bi-partisan team with then-Senate Majority Leader John Engler, Oakland County Executive Dan Murphy, and others. Together, in a spirit of cooperation, they did the deal that nearly doubled Cobo to 700,000 square feet.
Suddenly, the Auto Show had the room it needed to be an international player. And with the late Heinz Prechter leading the charge, along with Dan Hayes from the Detroit Auto Dealers Association, the North American International Auto Show was born. The car capital of the world was at last home to the most influential auto show in the world.
Like the roar of a Hemi engine, the ripple effects across the Region were fast and dramatic.
The money spent on the expansion of Cobo provided a huge economic boost to the region. And the new Auto Show fueled the growth of businesses throughout Wayne, Oakland, and Macomb counties.
Today, each of the three counties is home to at least one major exhibit design and manufacturing business.
H.B. Stubbs in Warren, Exhibit Works in Livonia, and George P. Johnson in Auburn Hills employee hundreds upon hundreds of people. And while the Auto Show fueled their success, all three companies have become leaders across the country.
On a smaller, although still dramatic scale, there are companies like Viviano Florists in St. Clair Shores. This third-generation family-owned business supplies all of the flowers for the Auto Show.
In all, at least 200 businesses from the tri-county area provide goods or services for the North American International Auto Show, the Society of Automotive Engineers convention, and other conventions in this building. That doesn’t count all of the subcontractors who support those companies.
It also does not include the hotels, restaurants, and entertainment venues throughout the region that benefit from having over a million people set foot inside this building every year.
Measuring all of this in real dollars is tricky, but David Littman, chief economist at Comerica Bank, estimates the economic benefit of the Auto Show for the Region and the State will approach $550 million.
By way of comparison, the Super Bowl in San Diego generated $367 million for southern California – nearly $200 million dollars less than the Auto Show.
The benefit Cobo Center provides to the State in tax revenue is clear, and staggering. Year after year, for the past 50 years, the State has reaped a steadily increasing revenue stream from this facility. Dollars connected to Cobo have been building bridges, schools, and roads across Michigan for decades.
Make no mistake – we all have a vested interest in the future of this facility.
Few could have imagined 15 years ago, when Cobo underwent its massive expansion, we would be here today saying 700,000 square feet is suffocating. But today Cobo Center is just that – small and outdated, at least ten years past its time.
The Auto Show has outgrown the space with exhibits now jammed to the rafters to eke out every available square inch of the facility.
Companies have been forced to make creative use of other venues in the City – sometimes because there’s not enough space inside these walls.
To see how far we’ve fallen behind the rest of the country, you need look no further than Chicago where McCormick Place offers a tantalizing 2.2 million square feet of space – and routinely grabs shows that might come to Detroit if we had more to offer.
There is direct competition also coming from the south. Cleveland is desperately trying to build a 500,000 square foot center with a 600-room hotel – and last year Pittsburgh took the wraps off a brand new center with more than 300,000 square feet of exhibit space.
Many other cities, including Washington DC, Phoenix, Indianapolis, and New Orleans have also made recent moves to build new centers or re-invest in existing facilities.
In the past few years, most of the major metropolitan centers in the country have built or dramatically expanded their convention facilities. By doing nothing, metropolitan Detroit, the 10th largest metropolitan center in America, has slipped far out of the top ten in convention business. If not for the North American International Auto Show, we would be off the radar.
Looking at the Auto Show, Cobo is hopelessly antiquated when compared to the homes of the world’s other top shows. I have walked the floors – kicked the tires if you will – of the facilities in Frankfurt. It was one of the most impressive buildings and operations I have ever seen.
The North American International Auto Show is the premier show in the world. But thanks to larger, more dynamic facilities, the other shows are rapidly gaining ground. In the car capital of the world, we cannot allow this to happen.
Certainly, we have been aware of this disparity and we’ve been working to improve what we have.
In the past year we have opened up the entrance to the lower level Michigan Hall so that the space is more inviting. We have made landscaping improvements and invested in the infrastructure of Cobo to dramatically enhance its look, and operations.
We believe the changes have done wonders in the short-term, but we know that a makeover won’t solve the fundamental problem: we need more space.
A year ago I announced that we would examine, investigate, and explore options for the future of Cobo Center – and we immediately put a team in place.
Under the umbrella of the Tourism Economic Development Council – a regional and state organization – members of my team have been working closely with state and county leaders to determine what needs to happen and how we will pay for it. From the City of Detroit, chief development officer Walt Watkins has been leading this effort with Jim Nicholson from the TEDC.
At the beginning of December they presented me with their initial report and we’ve spent the better part of the past month working to hammer out details. There is still much work to be done, but this is what I can report to you…
Today I am announcing the City of Detroit is seeking to build a brand new convention center with at least 1 million square feet of exhibit space – with doors to open for the North American International Auto Show in January 2009.
Competition demands that this cannot be simply a box to house conventions and exhibits. It must be a dynamic facility that will not only be an architectural gem, but will include expansive food courts, abundant covered parking, and first-class banquet and meeting rooms.
It must be a facility that in size, scope, and beauty, matches any convention center in Europe or Asia – and it must surpass anything in America.
This Region must restore its long-lost leadership position in convention business, bringing it on par with the role we play in the global economy.
Regarding the notion of expanding this building. The team from the TEDC determined that along with its 43-year-old core, the cost of a vertical expansion – which would be our only option – is not cost effective.
So where would a new convention center be located? It would be irresponsible to divulge details about possible locations because we do not want to repeat land-grab situations that have plagued us in the past.
All I can tell you is it will be located in what is the economic engine for the State of Michigan – the City of Detroit.
Detroit has been the center of it all for over 300 years.. ever since Antoine de la Mothe Cadillac came ashore not far from where we are today.
Since Day One, all roads have led to Detroit. And as our City reinvents itself yet again, we will continue to drive the economy of this State.
Now.. the billion-dollar question of how to pay for a new convention center.
As a first step, we have determined the funding and operation of the convention center must be governed by an authority – not a City.
This is the structure of most successful centers in America. And the fact is, substantial City, Regional, and State cooperation will be necessary to get the deal done.
There are a myriad of possibilities for funding. Across the country, financing plans for convention centers include everything from tax-free bonds to restaurant taxes, to public or private corporations – or any combination thereof.
If you look at our regional competition, Pittsburgh – a city teetering on the brink of bankruptcy – has taken the risky approach of largely funding its new center with tax-free bonds.
We cannot rely that heavily on bonds here. The payments on a billion dollar plus package are beyond the capacity of the City.
In Cleveland, city leaders have yet to put a shovel in the ground because they are at war over tax proposals being floated to fund a new center. At one time or another, there have been plans to hike the sales, restaurant, and hotel tax in Cuyahoga County.
There is one strategy that is of particular interest to the team – and I believe holds promise for Detroit. And it’s being done in Denver right now.
After voters passed a bond issue to fund a $300 million expansion of the Colorado Convention Center, Mayor Wellington Webb engineered a creative deal to also build a major hotel as part of the complex. And the best part is the hotel – which is owned by taxpayers, but operated by Hyatt – pays for itself.
I’ll spare you the details of the deal now but I will tell you that I will be taking a team to Denver next month to meet with everyone involved.
Based on that trip – and ongoing meetings with leaders in Wayne, Oakland, and Macomb counties – I am confident we can nail down the final funding proposal in the coming months.
The clock is ticking.
With each passing day, as the economy shifts further to service-based and high-tech industries, the demand grows for convention space.
And with each passing day, other cities are putting shovels in the ground. And still others are taking our convention business.
Take for example the Society of Manufacturing Engineers FABTECH convention. The show fled from Cobo to Chicago. The Material Handling Industry of America packed up for Cleveland. And the United Auto Workers Skilled Trades Annual Convention shipped out years ago to Chicago and has now landed in Las Vegas.
We must bring those events, and those dollars, back to Detroit – and we must be competitive for new conventions.
Our marquee event, the North American International Auto Show, has reached its limit in this building.
The Detroit Auto Dealers are committed to this City being their home. We must build a new center to help the Show remain the world leader.
The economic impact all of this has on the City, the Region, and the State demands that we do not delay. We must work fast and we must work together to build a new convention center and make this region a dynamic destination.
Already, the foundation is being laid – and the world is coming.
Our Region will reap the rewards this year when the Ryder Cup tees off at Oakland Hills. In 2005 Major League Baseball steps up to the plate at Comerica Park with the All-Star Game.
Soon after that, the NCAA will set up shop in Detroit with the College Wrestling Championships. And of course, March Madness will grip this Region for two years as tens upon tens of thousands come to enjoy the Men’s Basketball Regionals and the Final Four.
In the middle of it all, we will host Super Bowl 40…
And when those fans arrive, I want to personally install the sign that says, “Please pardon our construction. This is the future home of America’s greatest convention center. Enjoy the game. We’ll see you back here in 2009.”
Thank you.