The Detroit Region Aerotropolis, envisioned as an industrial and logistics hub between Detroit Metropolitan Airport in Romulus and Willow Run Airport in Ypsilanti Township, is finally gaining altitude after an aborted takeoff in the fog of an economic recession nearly a decade ago.
Its preflight checklist is complete: Hire a full-time executive director, foster regional cooperation, leverage a host of tax incentives, and take advantage of a robust economy.
“It’s easy to sit back and answer the phone when the market’s hot and the economy’s booming,” says Rob Luce, CEO of the Detroit Region Aerotropolis, who was recruited from MICHauto, the automotive development initiative of the Detroit Regional Chamber. “When the market’s cooler, you rely more heavily on an organization pounding the pavement, prospecting, and researching — but I don’t know if we’ll ever have a year like (2017) in terms of job creation. And there’s a lot more in the pipeline.”
Luce and Marco Salomone, business development director of the Detroit Region Aerotropolis, are the organization’s only employees. The duo helped close three major deals worth $343 million in 2017, bringing 2,300 new jobs to Romulus and Huron Township, while the communities that comprise the Aerotropolis drew C&C Automotive, Mopar, Forward Air, HPP Cool Packaging, Windsor Machine, Preferred Packaging, Actia, and Kerr.
The major projects include a $140-million high-tech Amazon distribution center that will open later this year north of Detroit Metro Airport; a $98.6-million, 606,000-square-foot cold storage facility by Penske Logistics in Romulus; and the $105-million expansion of a Brose auto parts plant in Huron Township that will make it the German supplier’s largest plant in North America.
University of North Carolina business professor John Kasarda coined the word Aerotropolis more than a decade ago. In 2011, he released a book with journalist Greg Lindsay “Aerotropolis — The Way We’ll Live Next,” which cast a radical vision of airports becoming bustling cities rather than isolated passenger and cargo terminals. Kasarda logged millions of air miles to pitch his idea globally, and found enthusiastic support in South Korea, the Netherlands, and China.
Eventually Wayne County, which operated Detroit Metro Airport before the state established the Wayne County Airport Authority in 2002, showed interest in the idea.
Prior to the formation of the authority, which is made up of an independent, seven-member board of directors, the airport used federal noise abatement funds to acquire hundreds of surrounding acres. Tim Keyes, economic development director of Romulus, recalls that former Wayne County Economic Development Director Dewey Henry started talking about an industrial redevelopment plan before the turn of the century.
Kasarda and Lindsay wrote that an Aerotropolis could be a “test bed for new governance — the kind unencumbered by tax codes, turf warfare, and ancient history.”
Good timing was an asset, as well. While former Wayne County Executive Robert Ficano was “very, very heavy into the PR of the plan,” Keyes says he had little to show for it. Ficano led a regional delegation to Amsterdam’s Schiphol Airport in 2007 to see one of Kasarda’s examples. “Unfortunately,” Keyes says, “it came at the worst time (economic recession) any of us had seen in a long, long time.”
Two years after the recession, in 2010, the Michigan Legislature passed the Next Michigan Development Act, which was signed into law by Gov. Rick Snyder. It created seven development corporations, including the Aerotropolis. The act granted power to specific nonprofit development agencies to approve industrial and personal tax abatements as well as divert business taxes for infrastructure projects under a Local Development Finance Authority. The nonprofit organizations could establish Renaissance Zones, where businesses can avoid most taxes for up to 10 years, as well.
The incentives focused on new and expanding manufacturing and transportation, logistics, and distribution firms. To qualify, communities had to use some combination of air, ground, rail, and sea to move products. As part of the plan, Detroit Metro and Willow Run airports; portions of I-75, I-94, and I-275; and five rail lines make up the Aerotropolis, which offers 6,000 available acres for new development.
Until recently, the nonprofit corporation generated few results for the member communities of Romulus, Taylor, Huron Township, and Van Buren Township. Luce says he spent half his time during his last 18 months at MICHauto targeting new mobility companies as part of a business attraction strategy. In coming to the Aerotropolis, he says he effectively moved from one startup to another. In both roles, he made it a priority of building relationships based on trust and transparency. It’s a strategy that appears to be working.
“Rob is a breath of fresh air,” says Keyes, chairman of the Aerotropolis Development Corp. which oversees the Detroit Region Aerotropolis. In his position as economic development director of Romulus, he’s a customer, as well. “What the Aerotropolis gives our membership is two guys who go out and beat the bushes and sell this region every day. They’re marketing opportunities in Romulus and the three other communities.”
Wayne County Executive Warren Evans was skeptical of the Aerotropolis at first — not of the idea, but of its focus on foreign direct investment, especially from China. Evans preferred investing public resources to sustain existing businesses in the county’s 43 municipalities. Despite the lackluster results of the past, he saw an opportunity and tasked Khalil Rahal, the county’s economic development director, with assessing the Aerotropolis. Rahal says he found that “if anything, more attention from the county was needed.”
Wayne County today makes the biggest contribution to the Aerotropolis’ $500,000 annual budget. “Without the county executive’s support, I don’t know that the communities would be as committed to the cause,” Luce says.
Evans says a lack of fighting between local governments is responsible for its recent success. “I don’t have a dog in the fight about where things get located,” he says. “I just want them located here in Wayne County.”
Huron Township Supervisor David Glaab says the county sees the big picture, although some of his predecessors did not. “The organization (now) transcends local politics,” Glaab says. “When there’s a new development in any of the member communities, that’s a win for everybody.”
Luce regularly courts transportation, logistics, and distribution businesses as well as advanced manufacturing and next-generation mobility companies. One drawing card is the nonprofit American Center for Mobility, next to Willow Run Airport, that validates connected and automated vehicles. “I think the ACM has the potential to be a magnet for corporate investment as much as Detroit Metro,” Luce says.
Southeast Michigan’s talent pool may top the list of priorities for businesses considering the Aerotropolis. “One of the coolest things about Detroit is the hardworking and tech-savvy people,” says Shevaun Brown, regional operations PR manager for Amazon. The online retailer’s 855,000-square-foot fulfillment center in Romulus will be “a symphony of humans and technology,” and the first Michigan location to use Amazon Robotics.
Here’s how it works: Automated “orange hockey pucks,” as Brown calls them, resemble oversized Roomba Robot Vacuums. They weigh 320 pounds, can carry 750 pounds, and drive five feet per second. The robots navigate embedded tracks similar to the automated guided vehicles used in auto plants, and carry stacks of yellow bins of products to workers who pick and fill orders. The goods then travel along high-speed conveyors for packing and shipping.
Luce says the corporation is using tax increment financing for the first time to repay half of what Romulus borrowed to finish connecting Vining and Ecorse roads near Amazon’s upcoming operation. The upgrades that sold Amazon could help draw neighbors. “Who’s not going to want to be next to Amazon?” Rahal says. “Keep your eye on the property next to Amazon.”
The 80 acres Amazon will operate from is part of Metro World, an industrial development that covers 1,000 acres north of Detroit Metro Airport. Luce says the space could fill up in the next three to four years, with a few zoning changes. One 200-acre segment on Vining Road embodies Luce’s three favorite words: dry, huge, and cleared. In other words, it’s shovel-ready.
On a recent driving tour, Luce pointed out the best plots and the few existing buildings that could accept new tenants. So far, he’s created a database of more than 40 greenfield sites covering 6,000 acres of available land. Each listing contains at least 25 acres zoned commercial or industrial.
Luce also points out the biggest drawback. “A lot of the area out here is wet,” he says. “It’s challenging to build a 250,000-square-foot building if you’ve got to put $5 million or $10 million in the ground to mitigate wetlands.” But he adds tax breaks could help defray that cost.
“Incentives can’t take a bad property and make it good, but they can make a good property even better,” says Kevin Hegg, vice president of Ashley Capital, a national industrial developer that has its regional operation in Canton Township. The company owns 300 acres of the Metro World property and is planning to construct spec buildings on 250 acres at the northwest corner of Haggerty and Ecorse roads.
“As far as development, there’s safety in numbers,” Hegg says. “Development breeds other development. It brings validation for an area, a seal of approval. Most tenants don’t want to be pioneers.”
Then there’s speed. Penske Logistics was in a hurry to get its 606,000-square-foot cold storage facility built in Romulus. It chose InSite Real Estate in Oak Brook, Ill., given the real estate brokerage office recently completed a Mopar distribution facility for Fiat Chrysler Automobiles nearby.
“Rob Luce and the mayor’s staff have been very good with moving the project along,” says Nate Barnes, director of real estate for Penske Logistics. “That’s the benefit of the Aerotropolis, right there — not fighting over the business, but trying to figure out how to get it there.”
Still, Luce says business attraction isn’t cheap. “It’s expensive to do the research and then go out and meet these companies, whether it be in China or at a trade show in Traverse City. I think that’s probably part of why this struggled to get off the ground. Quite frankly, it was never funded to do what it was created to do until now.”
Ready For Takeoff
One of the 2017 signature projects in the Detroit Region Aerotropolis began as a brownfield in Huron Township.
German auto supplier Brose bought the shell of a former Mopar parts plant as part of a $105-million investment in 2012. Next year, it will become the family-held German company’s largest plant in North America, and the number of workers will grow from 645 to 990.
“This is a just a perfect area for us to invest and attract other businesses that will come with us,” says Frank Lubischer, North America president of Brose. The 108-year-old company did not require strategic suppliers to locate nearby, but it may someday.
Getting businesses to locate near projects like Brose is a priority for Rob Luce, CEO of the Detroit Region Aerotropolis, a nonprofit economic development agency. He’s marketing 6,000 acres of land with tax incentives to help pay for new roads and sewers. Brose is in one of Huron Township’s two Local Development Finance Authority zones, which allows representative companies to defer business taxes to pay for improvements, such as wetlands remediation, over a period of 10 years.
Brose, which is doubling in size, receives 1,000 different parts a day at the new location. The “mechatronics” company makes more than 500 products that it ships to five customers in four countries. When the expansion is complete, 300 percent more outbound loads will leave the plant daily on 52 trucks.
The added space features a high bay storage and logistics system tall enough to need airport approval. Storage trays with the exact part will arrive at the precise point in assembly through better sequencing, tracking, and tracing. “We can manage inventory much better by being aware of how and when parts are being matched to customer delivery,” Lubischer says.
In turn, laser and metal active gas, or MAG welding, and in-line painting are being vertically integrated in the plant. “This is one of Brose’s main Industry 4.0 projects to maintain and extend on our industry leadership,” Lubischer says. Also known as the fourth industrial revolution, Industry 4.0 refers to automation and data exchange in manufacturing technologies. It includes cyber-physical systems, and the Internet of Things, along with cloud and cognitive computing.
And what of Mopar? The Fiat Chrysler Automotive unit opened a $10.4-million, 500,000-square-foot LEED Gold-certified distribution center in Romulus last December. The two-shift operation employs 100 workers who use tablets and other digital tools to make the plant practically paperless.
“Ten or 15 years ago, we all thought Michigan may be bleeding out,” Lubischer says. “That hasn’t happened, and that’s a good thing.”