Jeep deal promises Detroit 5,000 jobs. But will they go to Detroiters?

Detroit Mayor Mike Duggan hailed a $2.5 billion deal to expand Jeep auto plants in Detroit as a rebirth of the city’s middle class, but some City Council members are upset the agreement doesn’t guarantee jobs to city residents.

The approval of a $2.5 billion deal to expand a Jeep auto plant in a Detroit neighborhood is raising concerns because there’s no guarantee city residents will get any of the 4,950 jobs created by the project.

The City Council voted on Tuesday to approve a complicated land deal for a Fiat Chrysler Automobiles (FCA) factory that is billed as the largest auto assembly plant to be built in the United States in the past 10 years.

Some council members and residents are upset the deal had no set number of jobs for Detroiters. Council members said they felt rushed to support a proposal that came together in two months involving land swaps with developers with checkered relationships with the city.

“There’s some things that still need to be addressed,” said Michelle V. Jackson, vice president of the Chandler Park Neighborhood Association. “How many jobs are we really getting?”

If city data is any indication, the FCA could have a hard time hiring Detroiters –  at least for the construction of the facilities – because of a shortage of skilled workers in the city.

Since 2016, a city executive order stipulates that 51 percent of construction jobs in publicly-funded projects budgeted over $3 million  – such as those that get tax breaks – should go to Detroiters or face fines.

But over the past two years, 20 of 25 projects the city has monitored haven’t met that threshold, leading to $6.7 million in fines that go to workforce training programs.

FCA will invest $1.6 billion to expand its Mack Avenue plant and another $900 million to modernize its Jefferson North Plant in Detroit. The new manufacturing jobs are expected to pay an average of $58,000 per year.

“This investment enables us to deliver on this promise in the state and city we call home,” Mark Stewart, FCA’s chief operating officer for North America, said in a written statement.   

FCA will get $140 million in state incentives for the deal and the city offered  a 50 percent tax abatement. In exchange, FCA is promising Detroiters will get priority in applying for factory jobs after about 1,000 United Auto Workers members who were laid off or work at temporary positions.

Ron Stallworth, manager of external affairs for FCA, said the city workforce has a talent and skills gap, but eligible city workers will get jobs.

“There’s a difference between where we are and where we need to be. People recognize that,” he said.

“Those folks that are eligible, who are seeking employment who want a job, they should be able to - with everything working out properly - they should be able to walk into the plant.”

FCA couldn’t estimate how many construction workers will be required to expand the site, jobs that also would be subject to Detroit’s 51 percent resident rule.

Jodi Tinson, an FCA spokeswoman who attended Tuesday’s council meeting, said the work is expected to require 4 million work hours over the next year to build out the plant.  

The factory is expected to open next year, and Detroit Mayor Mike Duggan said city residents should be able to begin applying for jobs in August. Applicants from outside the city would be able to apply after the 30-day application period for Detroiters.

Tom Lewand, the city’s group executive for jobs and economic growth, said the number of Detroiters who are hired will be determined by whether the city can provide a talent pool that is trained and qualified.

“It’s up to us to do that,” Lewand said.

Councilmembers Raquel Castaneda-Lopez, Brenda Jones, Roy McCalister and James Tate, who sponsored the resolution to support the FCA deal, grilled officials Tuesday about how the city will ensure the company makes good-faith efforts to hire Detroiters.

Amid the debate, Castaneda-Lopez said she could not support parts of deal because it did not quantify a firm number of factory jobs for Detroiters.

“I cannot commit to something that does not guarantee you 100 percent or any percent of jobs,” she said.

“I appreciate the prioritization and opportunity but so often it becomes a racialized and a class issue and we are told over and over again, there just weren’t enough qualified Detroiters.”

The council approved the FCA deal by way of about a dozen resolutions that dealt with different issues from a community benefits agreement to a complicated, 215-acre land deal.

The land deal involved swapping land near the site to a firm owned by Manuel “Matty” Moroun, who owns the Ambassador Bridge, in exchange for  $43 million and 117 acres of city property in southwest Detroit. The city also sold its parking garage across the street from City Hall for $18 milion.

Soave Enterprises, founded in 1961 by Anthony Soave who testified in 2012 that former Mayor Kwame Kilpatrick extorted bribes from him, bought properties around the FCA site last year and will swap them for about 100 city-owned parcels, according to the Detroit Free Press.

Duggan said the council vote to approve the FCA deal will help rebuild Detroit’s middle class that currently stands at 25 percent of the population or last among 50 cities in the U.S.. He directed Detroiters to go to www.detroitatwork.com and enter their cell phone numbers to get an alert when the FCA application window opens.

“It’s going to be my goal to have several thousand Detroiters on the list by the time FCA opens that window in late August. And I want to give them 5,000 or 10,000 names,”  Duggan said. “If you live in the suburbs you’re going to be at the back of the line.”

Broken promises to date

Duggan mentioned on Tuesday that when the auto supplier Flex-N-Gate built its new facility in Detroit last year, it got 16,000 applications for 500 jobs.

When the $160 million factory, which got a $5.9 million tax abatement from the city opened last year to build parts for the Ford Ranger, the company announced that half its employees were Detroiters.

Records show Flex-N-Gate fell short of its commitment to hire Detroiters to construct the facility. The firm had to pay $353,171 in fines to the city as a result.

Flex-N-Gate paid the second highest noncompliance fees behind Little Caesars Arena, which paid $5.5 million.

Other fines were paid by developers on projects including:

  • $244,579 for the Orleans Landing apartments near the Detroit Riverfront.

  • $67,518 for the remodeling of the former Detroit Free Press Building by Bedrock, the real-estate arm of downtown developer Dan Gilbert.

  • $44,568 for work done over the past year at One Campus Martius  the Compuware World Headquarters.

Charity Dean, director of the city’s Office of Civil Rights, Inclusion and Opportunity, monitors to ensure that city-funded developments hire 51 percent Detroiters as required.

Dean said city officials have long suspected that developers factor the fees into bids because they don’t anticipate finding enough Detroiters, especially for skilled trades jobs such as plumbing and electrical work.

“Most of the companies we deal with are really honest and want to be able to hire Detroiters and it’s our job to make sure Detroiters are prepared and ready for those construction jobs ... It takes time. It takes five years to train to be an electrician,” she said.

Detroiters will likely have a better shot at the longer-term factory jobs at FCA than construction, since they don’t involve skilled trades, Dean said.

“I think it’s going to be easier to fill the manufacturing jobs.”

Are Detroiters qualified?

Two years after the city started requiring publicly-funded projects to hire 51 percent Detroiters during construction, 3,580 people completed training  and received skilled trades certificates because of the $6.7 million in fees paid by non-compliant companies.

The training and credentials in fields such as healthcare, information technology, manufacturing, construction and hospitality, rose from 632 people in 2016 to 2,562 in 2018, according to data from the Detroit Employment Solutions Corp. a publicly funded workforce development program. 
 
Robin Johnston, a spokesman for the DESC, said job seekers who completed training through the city's Detroit at Work program obtained jobs that pay higher wages compared to those who did not complete training. 
 
"Our analysis of that 18 month period between July 1, 2017 to December 31,2018 found that training results in 27 percent higher average wages," he said.

Sherard-Freeman said DESC will continue to train workers while also reaching out to recruit Detroit’s existing skilled laborers to the new FCA jobs.

“There’s certainly a shortage of skilled labor, that’s no secret,” she said.

“We’re going to get Detroiters prepared for these jobs. Some Detroiters are (prepared), some Detroiters need more work.”

Union members and community activists this week urged the council to approve the FCA deal to secure jobs for Detroiters. With a 9 percent unemployment rate, the city cannot afford to turn away from the prospect of getting a cut of 5,000 new jobs, they said.

Toney Stewart,  executive director for the Michigan Regional Council of Carpenters and Millwrights Local 687, said training more skilled workers will take years.

Currently, the union is planning to build a $30 million training facility in Detroit.

In the meantime, Detroiters need to apply for the FCA jobs and watch to see if the hiring process works out as promised.

“I’m from that neighborhood. I’m not going to say we don’t need those jobs because they won’t really bring them. If we stop these jobs (from coming), what will happen to Detroiters?” he said.

“If the door opens to get it, you can walk in.”

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Comments

Mark
Thu, 05/23/2019 - 8:00am

Size of the Detroit Qualified Candidates Pool and as the Ole phrase goes, you can lead a horse to water, but you cant make them drink.

Arjay
Thu, 05/23/2019 - 9:10am

What right does government have to tell private business that it can't hire the most qualified?

David Waymire
Thu, 05/23/2019 - 11:12am

a. In the past "most qualified" meant "white." So there's reason to be concerned. A noted study by Devah Pager (you can look it up) showed a young white man with a prison record was more likely to get an entry level job than an African American man with identical resume.
b. When the business wants local tax dollars/rebates/avoidance/property purchase for the benefit of its owners, those owners must agree to something that benefits the community. If they didn't want the tax reduction, they probably could skip it.

Matt
Fri, 05/24/2019 - 9:57am

You are right in theory, if the funds used to attract a business came from that community, they should be able to name their requirements as part of any negotiation. Whether this is a good idea or not! Courts I believe don't agree as many communities tried to require their employees to live in that community and this was disallowed. In reality, given the many programs giving state monies to local communities for everything under the sun, not to mention the glaring situation of Detroit, this is impossible to ascertain.

Kevin Grand
Fri, 05/24/2019 - 6:11am

"“It’s going to be my goal to have several thousand Detroiters on the list by the time FCA opens that window in late August. And I want to give them 5,000 or 10,000 names,” Duggan said. “If you live in the suburbs you’re going to be at the back of the line.” "

And when FCA's HR Dept screens those applicants, they'll most likely go from the "front of the line" right into the garbage can.

It's barely a decade out from when what once was know as the B3 needed a government bailout. The companies have learned a thing or two since then.

https://www.detroitnews.com/story/business/autos/ford/2019/05/21/ford-be...

https://www.mlive.com/auto/2018/11/gm_says_it_will_close_3_assemb.html

If you don't have any skills (or reliable work history) to bring to the table, don't expect a handout.

john chastain
Sun, 05/26/2019 - 8:21am

Fascinating, you take a business decision based on G.M’s desire to enhance profits by shifting labor costs to low wage countries like Mexico and use it as justification for your reference to Detroit residents as garbage because their perceived lack of skills. Because its a given that the undeserving poor (ie: African Americans) don’t have skills or reliable work histories. That goes well with the republican staffers who wanted to make sure all that ”Dem garbage” was kept together where they belonged. I’d point out that the systemic lack of qualified workers in skilled trades is a national challenge or that segregation and poverty are poor building blocks for skills and reliable work histories but I’ve lived in Southeast Michigan too long not to know a racist trope when I encounter it.

Kevin Grand
Thu, 05/30/2019 - 6:45pm

Still hearing dog whistles again, John?

Reality Check
Fri, 05/24/2019 - 9:12am

The real question is how many of the "promised" jobs will go to robots? The tax payers will no doubt be duped again.

paul wiener
Sun, 05/26/2019 - 11:56am

How about a law making it criminal to be a Republican in the State of Michigan? Experience across the nation has shown that they are cowards, hate women, children, education, non-whites, health, change, law, and people generally, are stupid and uneducable, and are a threat to civilization.