MBA@UNC Global Immersion: Detroit - Day Two

MBA@UNC Global Immersions are offered four times a year as unique opportunities for students to travel to major domestic and international business destinations with their fellow classmates, participate in engaging discussions with their professors and elite industry leaders, as well as apply what they have learned to real-life problems. At the Detroit immersion, MBA@UNC students participated in one of two tracks: consulting or urban development. Each track provided MBA@UNC students with the opportunity to learn about how Detroit is rebuilding itself into an entrepreneur’s city. Did you miss our account of the first day of the Detroit immersion? Read about the beginning of MBA@UNC’s time in Motor City.


 

On day two of the Detroit immersion, MBA@UNC students went directly to their tracks after breakfast. The urban development track got a taste of urban entrepreneurship and job growth in Detroit from UNC College of Arts and Sciences Professor Emil Malizia and then learned the importance of urban development from Dr. Jim Johnson, the William R. Kenan Jr. Distinguished Professor of Strategy and Entrepreneurship.

Urban Entrepreneurship and Job Growth with Emil Malizia, UNC College of Arts & Sciences

Professor Malizia began his class with a hypothesis: “Within U.S. metro areas, compact urban development will trump decentralized suburban development in the future.” Why? Because capital investment and innovation will seek urban locations, and demographics will favor places with urban amenities.

He went on to discuss two basic theories associated with urban entrepreneurship. There is the Amenity Theory, which claims that cities and downtowns that have amenities attract talent (the creative class). Then there is the Economic Base Theory, which says cities survive and thrive through specialization and trade. Here are some key takeaways from his introduction to urban entrepreneurship and job growth:

  • Successful cities and metro areas have the critical mass and dynamic economic base to generate “agglomeration economies” that will promote future job growth, innovation, entrepreneurship and economic development.
  • Downtowns and locations with urban amenities are becoming the most attractive places for firms especially in the service sectors because they:
    • Allow more face-to-face interaction.
    • Allow the “collisions” that spawn innovation.
    • Have deep labor pools to attract and retain talent.
    • Have redeveloped older buildings that offer suitable office space.
  • Gen Y and millennials prefer convenience more than ownership and want to work and live in dense, diverse, connected and walkable places.

Halfway through class, Professor Malizia began using Detroit as a case study. He noted interesting facts about Detroit’s past — all of which have had a direct impact on the sustainability of Detroit’s future. Here are the most interesting tidbits he shared:

  • From 1950 to 2005, Detroit lost 29 percent of its housing stock, 52 percent of its population, 55 percent of its employment, and 60 percent of its property tax revenues. How did this decline occur? Detroit was not an attractive place for investment. Detroit could not offer what manufacturing facilities needed.
  • Since 1960, about 14,000 houses have been built in the suburbs annually, whereas 4,000 have been abandoned in Detroit each year.
  • In 2010, the Detroit metro area had 600,000 more housing units than households.

Professor Malizia then transitioned to talking about Detroit today. These are the facts worth remembering:

  • Detroit’s economic base and housing market create anxiety and insecurity for everyone. Detroiters tend to cope with this disrespect in dysfunctional ways through segregation, intolerance and scapegoating.
  • One major cause of Detroit’s housing problems is continued homebuilding in the suburbs. But no legal vehicle exists to dampen the suburban growth machine that continues to overbuild the area. Supply overwhelms demand in Detroit making market-based solutions infeasible.
  • Although each city is unique, research indicates that we can enhance the vibrancy of Detroit in several ways:
    • Provide different housing types, especially affordable housing.
    • Support multiple modes of transportation to promote walking.
    • Add density and compactness to increase critical mass without damaging uniqueness.
    • Preserve iconic buildings, public places and open spaces.
    • Resolve conflicts between different downtown activities with districting.
    • Provide adequate land for the expansion of export services.

The Importance of Urban Development with Jim Johnson, UNC Kenan-Flagler Business School 

After Professor Malizia’s class, Dr. Johnson took over. A passionate academic who kept students engaged throughout the entirety of his class, Dr. Johnson talked about the disruptive demographic and economic trends that have and will continue to have implications for Detroit’s future. Once he completed a trip down memory lane — sharing the story of Detroit’s past complications with urban development — Dr. Johnson finished the class with some key actions the city should take moving forward:

  • Embrace immigrants.
  • Promote encore entrepreneurship.
  • Pursue age-friendly community economic development.
  • Rebrand public education.
  • Incentivize migration.

The Henry Ford Museum 

The day ended with MBA@UNC students building relationships while exploring the Henry Ford Museum. Although most students expected to only see old models of cars, they were pleasantly surprised to also find the bus Rosa Parks refused to give up her seat in, which sparked the Civil Rights movement; an entire exhibit dedicated to The Beatles; as well as the Wienermobile.