Lear Corp. plans to double down on its investment in Detroit by establishing a new manufacturing plant in the next two years, joining a city-led effort to create a hub with at least four other automotive suppliers.
The push, supported by the Detroit 3 automakers, seeks to restore manufacturing capacity -- and jobs -- at the I-94 Industrial Park near the junction of I-94 and I-75 near the American Axle & Manufacturing Holdings Inc. headquarters.
The city, working with Los Angeles-based advisory firm AECOM, has assembled 147 acres in and near the industrial park for the project, said F. Thomas Lewand, group executive for jobs and economic development for the city.
Lewand said the city is in active discussions with suppliers about establishing manufacturing operations at the park. He expects the first commitment to be announced by the second quarter of next year. Lewand declined to name the other suppliers in negotiations.
He did confirm that American Axle is in negotiations to contract space from its largely unused Detroit-Hamtramck plant near the industrial park to two other suppliers.
American Axle CEO David Dauch did not respond to calls on the topic.
Right time to expand
Lear CEO Matt Simoncini said now is the right time to expand the footprint in the city where the seating and electronics supplier was founded nearly 100 years ago.
"The way I see it, Lear has never been in a better position to expand here," Simoncini said. "We think we can create something bigger, like a supplier park with manufacturing space that supports the wishes of our customers while creating good jobs in the city."
Simoncini said General Motors, Fiat Chrysler Automobiles and Ford Motor Co. are asking for their large suppliers to at least consider opening manufacturing plants in the city.
The Detroit 3 are focused on creating more jobs for Detroiters, as several of their executives sit on the newly revived Detroit Workforce Development Board, which includes Simoncini and Dauch, Lewand said.
"We are continually discussing potential business opportunities with our supplier partners, and are always open to new ideas if they offer sustainable, mutual benefits," Mark Reuss, GM's executive vice president of global product development and a member of the workforce board, said in a statement. "Developing a local supply base results in better quality, true growth on an export/trade basis for the U.S. and, of course, the re-creation of Detroit's tax base."
The workforce board convened in October with a goal to create 100,000 new jobs in the city, with the majority of which targeted at city residents, In 2014, Detroit had 258,807 jobs and a population of 706,663, according to an April report by the Corporation for a Skilled Workforce and funded by J.P. Morgan Chase & Co.
"Our unemployment rate is down, but it's still 14 percent; that's still more than double the national average" of 5 percent, Lewand said. "Our board and major employers understand the importance of creating jobs for Detroiters."
Manufacturers are interested in the I-94 Industrial Park because of its proximity to highways and existing infrastructure.
"It's a great location that has access to every major freeway," Simoncini said. "The infrastructure is fantastic and the employees are available, and we could get components to every major plant in the region -- even as far away as Lansing."
Detroit has many acres of vacant land, but it's hard to find it in a concentrated chunk, said Dave MacDonald, executive vice president in the Royal Oak office of Jones Lang LaSalle.
He said amassing enough land for a supplier park would work only in spaces like the I-94 Industrial Park, land formerly owned by American Axle. Rehabbing of aging industrial space for modern manufacturing doesn't make sense because of cost and difficulty, MacDonald said.
Still, a substantial development is logical because none of the companies would be isolated in a remote portion of the city. "They like to be around one another," he said.
Lear made other investments in the city earlier this year. In July, Lear bought the 50,000-square-foot Hemmeter Building on Centre Street in Detroit for nearly $6 million. It will house employees from Lear's shared services, information technology and administrative operations.
Then in September, it acquired a building on State Street in Detroit's Capital Park to house an innovation and design center. The building will house a gallery, a seat design studio and a software design center.
Simoncini said the building's proximity to Wayne State University and the College for Creative Studies make it a prime location to attract top design talent.
"It's a win-win and, frankly, I'm shocked more companies haven't made moves (to Detroit)," Simoncini said. "Hell, yes, it's a competitive advantage. You should see the resumes that are coming to us from our competitors."
Crain's reporter Kirk Pinho contributed to this report.