Detroit is known for the big three automakers, crime, and being the biggest city to declare bankruptcy in U.S. history. Some believe Detroit is beyond redemption.
These three companies have the potential to prove otherwise.
From blight to boom
Driving through Detroit's neighborhoods, it's not unusual to see burned-out houses and overgrown empty lots. Over several decades, Detroit has seen its population shrink from more than 2 million to about 700,000. If Detroit is going to re-emerge as a growing, vibrant city, then something has to be done. That's where Bill Pulte IV comes in.
Pulte Group (PHM 1.38%) was founded by William Pulte II on Detroit's East Side. It has built more than 600,000 homes in 28 states. In 2011, Pulte Capital Group was created to augment its supply chain. In 2013, the Detroit Blight Authority was created. Now, Bill Pulte IV is CEO of Pulte Capital Group and chairman of the DBA. Instead of building houses, the younger Pulte has found a way to efficiently demolish them.
The DBA started as a pilot program last year to reduce blight in Detroit, clearing a 10-block area east of Eastern Market in Detroit. On Jan. 20, according to the Detroit Free Press, the DBA announced a larger project in the Brightmoor neighborhood, where 80% of property is designated as blight. Future plans for the sights have not been announced, but as blight is reduced, opportunities for rebuilding are sure to be discussed.
From blue collar to white collar
One way Detroit can transform itself into a world-class city is by encouraging more white-collar companies to make Detroit their home. Lowe Campbell Ewald, a subsidiary of Interpublic Group (IPG +0.00%), has just made its move to downtown Detroit official as of January 2014. Its hallmark campaign encouraged people to create their own ads for the Chevrolet Tahoe, engaging Chevy's target audience in a way that proved controversial but ultimately effective.
Lowe Campbell Ewald is new to downtown Detroit, but it isn't new to Detroit metro; it's been around for more than a century. However, the move to downtown shows that the company is invested in the city. It has also quickly acquired several new clients and opened a new office in New York. Some of its newest clients include the Detroit Lions, the University of Michigan, Lifelock, and Atkins. Lowe Campbell Ewald has also worked with OnStar, USAA, the United States Navy, and Cadillac. Its ability to integrate social media into marketing campaigns gives it a competitive edge.
From chrome and steel to silicon
If Detroit is to emerge stronger from its bankruptcy, the city will need companies like Compuware (CPWR +0.00%), whose world headquarters is located in Detroit. Compuware provides thousands of jobs with excellent benefits, helping it attract and retain the best talent. Its mission is to provide software solutions to companies around the world.
However, Compuware is in danger of being taken over by activist investor Elliot Management. Compuware has one year to prove that it can increase its stock value before Elliot exercises its right as majority shareholder. In exchange for this "standstill," Elliot will be able to nominate two directors to Compuware's board. So far, Compuware has shown a willingness to change by implementing cost-cutting strategies. In the end, this could end up being a positive transformation for the company.
The takeaway
Detroit has been known as the Motor City for a long time. It is true that car companies will always be part of the history and culture of the city. These three companies prove that Detroit can do much more than design and build great cars. The DBA is clearing away the ashes and the decay and setting the city up for a building boom. Compuware has a big trial to face in 2014. If it survives a takeover from Elliot, it will continue to be a formidable tech presence in the city landscape. Lowe Campbell Ewald is transforming the way we perceive products and services through the use of social media. If it continues to add clients of the same caliber as it did last year, 2014 should provide good returns.
Yes, Detroit filed for bankruptcy, and yes, its troubles are far from over. But from an economic and business standpoint, the worst days are behind, and now is the time to invest in Detroit.
