Meet Detroit's new employers
Tech startups, fashion entrepreneurs and medical researchers are helping diversify the economy in Motor City.
DETROIT (CNNMoney.com) -- Detroit needs jobs. The city's unemployment rate hovers around 28%, the worst in the nation, and the city's budget deficit is near $300 million. Both Detroit's residents and its government need new employers to recharge the local economy.
The city is best known for its fading manufacturing base, but Detroit and its surrounding metro area are also filled with entrepreneurial startups in a broader range of fields: IT, retail, fashion, engineering and cutting-edge medical research, to name just a few. We spoke with seven of them about the advantages -- and the challenges -- of building a business in an economically devastated region.
"Detroit may be a strange or unusual location for a high-tech bio company, but it's been very good for us," says Martyn Coombs, CEO of Asterand plc, a Detroit-based human-tissue bank.
Coombs and his fellow entrepreneurs cited similar reasons for launching in -- or, in one case, moving to -- metro Detroit.
They appreciate the area's low cost of living, which translates to relatively low overhead costs for businesses. They have access to skilled employees, thanks to the Michigan's universities and an automotive talent base that is looking for work. And Detroit Metro Airport remains a major transit hub, putting executives in easy striking of customers outside of Michigan.
The companies we spoke with are located throughout metro Detroit, including nearby suburbs such as Pleasant Ridge and Wixom, as well as Ann Arbor, which has become a hub for technology spin-off companies in Southeast Michigan.
"There is this notion that high-tech belongs at the coasts, or that the 'Rust Belt' is not really the place for this. That's patently untrue," says Ann Marie Sastry, CEO of Sakti3, an Ann Arbor firm working to develop advanced lithium-ion batteries for electric vehicles.
Entrepreneurs such as Chanell Scott, CEO of Detroit-based Guffly.com, say the city's challenges push entrepreneurs to find inventive ways to build a customer base. For instance, Guffly is a Detroit sponsor for Green Drinks, a monthly event where eco-minded people meet in various cities to network and discuss environmental issues. The Detroit event started in March and attracted about 50 people in October ----"not a small feat in a city that isn't known for being eco-friendly," Scott says. "Being in Detroit has forced us to try uncommon endeavors and make more creative choices in order to stand out.'
But the region also brings obstacles for entrepreneurs. Mike van Lent, CEO of Soar Technology in Ann Arbor, says the drumbeat of negative news about Detroit has made it hard at times to attract out-of-state employees to the metro area.
"The perception of Michigan in general, and Detroit specifically, is a difficult thing for us to manage, as it comes to recruiting."
Asterand has been able to attract the workers it needs for pharmaceutical research, but the company still deals with a brain drain of college graduates leaving Michigan.
"Right now, I feel many of the graduates and post-graduates feel they have to leave the state to find work," Coombs says. "What we're trying to do is create the kind of work that will allow them to stay here."
Area business owners would also like to see economic development officials do more to nurture new industries in and around Detroit. For instance, while the state has used tax credits to help attract film and alternative-energy businesses to Michigan, several of the executives we interviewed said they would like to similar incentives granted to tech companies and other growth firms.
"If I were king for a day, I would be pushing hard for economic diversity," says Josh Linkner, founder of interactive marketing company ePrize. "We can no longer rely on our manufacturing roots."
Photo gallery: 7 Detroit Innovators