Breaking the Myopic Mold: Q&A with David Egner of Detroit’s New Economy Initiative

4/26/10Follow @wroush

If you ask people who’s lighting the innovation fires around Detroit, pretty soon you get directed to the New Economy Initiative for Southeast Michigan. This coalition of 10 community and philanthropic organizations was formed in 2008 with the goal of pooling resources to “restore southeast Michigan to a position of leadership in the new global economy,” according to the group’s website.

Ambitious seems like the right word for that vision, given the scale of Detroit’s problems.The population has dropped by more than half since 1950, the city budget deficit is likely to hit $450 million by the end of this year, and there are nearly 50 square miles of vacant, abandoned land within the city limits. The area would be lucky to regain a position of leadership in the Midwest, much less top rank on the global stage.

But if you were the type to let the difficulties get you down, you’d never even get started on solving them. And David Egner, the New Economy Initiative’s executive director, is not easily discouraged.

“The uncertainty will eat you alive if you let it,” says Egner, who is also president of the Hudson-Webber Foundation, a legacy of the family that founded Hudson’s department stores. In Detroit, he says, “We have to strike a balance between the comfortable certainty of going in a known direction, even if it is wrong—which is what Detroit has been doing for the last couple of decades—and the fear and uncertainty of limitless possibilities.”

David EgnerOf course, optimism and a tolerance for uncertainty are practically a job requirement for people in Michigan’s non-profit sector. (Before taking the reins at the Hudson-Webber Foundation in 1997, Egner was an executive at Junior Achievement and the W.K. Kellogg Foundation and CEO of the Michigan Nonprofit Association.) In a long conversation with Xconomy, the first part of which is included below, Egner emphasized all the things Detroit has going for it, such as its manufacturing infrastructure and its strategic location as an international port and a hub for rail, truck, and water traffic. Even the city’s empty land can be seen as an opportunity, Egner argues. That’s because it makes business expansion cheaper and creates room for experiments like Hantz Farms, planned to become the world’s largest urban farm.

Egner is realistic, too. He acknowledges that the city is still paying for its history of political discord and the complacency of its anchor employers, the big three automakers. Egner says the regional economy probably hasn’t hit bottom yet, with a new wave of business failures likely among auto suppliers who are slow to adapt to the new patterns of manufacturing. But he thinks the money the New Economy Initiative is committed to spending in Detroit—$100 million over eight years—will go a long way toward accomplishing the group’s three major goals. The initiative is seeking to create a stronger entrepreneurial ecosystem, make better use of the region’s existing industrial assets, and build up a better-educated better-trained workforce.

For the record, the members of the New Economy Initiative are the Community Foundation for Southeast Michigan (based in Detroit), the Max M. and Marjorie S. Fisher Foundation (Southfield, MI), the Ford Foundation (New York), the Hudson-Webber Foundation (Detroit), the W.K. Kellogg Foundation (Battle Creek, MI), the John S. and James L. Knight Foundation (Miami), the Kresge Foundation (Troy, MI), the McGregor Fund (Detroit), the Charles Stewart Mott Foundation (Flint, MI), and the Skillman Foundation (Detroit).

While Egner still runs the Hudson-Webber Foundation, he puts half of his time toward overseeing the New Economy Initiative, which has downtown offices just blocks from Detroit’s landmark Renaissance Center. The coalition has to work fast; barring an extension of the understanding that binds its members together, Egner says, the initiative will run out of money in 2012 and disband by 2015.

Part 1 of my interview with Egner is below. We’ll publish Part 2 later this week.

Xconomy: This question may sound mean or inappropriate, but I mean it in a constructive way. Why is Detroit worth saving?

David Egner: That’s not an inappropriate question at all. Let’s start with the historical aspects. Seventy to 80 years ago, this was Silicon Valley. It was where people came if they wanted to make something and create a business. Today, it’s largely driven by autos.But before that it was stoves, and before that it was lumber. Detroit has always been a town of hard-working innovators.

It really was the institutionalization of the auto industry that led to us becoming complacent, and in some respects, entitled. Whether that was through how union contracts were drawn up, or how executives got compensated, there was this entitlement mentality that because of what Detroit had built, it didn’t matter how we got it, we were entitled to have it.

But all of that DNA, or hard work and creative spirit, is still here in a major way. And we’re seeing it now at TechTown, where Randal Charlton is running the largest accelerator in the world, and receiving 100 inquiries a day from people trying to figure out how to start businesses.

Look at the comparative advantage points of Detroit versus the rest of the world, or the rest of North America. You’ve got the most cross-border international traffic in all of North America. You’ve got more goods coming over the Ambassador Bridge from Windsor than … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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