Special Report

July 28, 2015

Fast globalization leads to fast flow of capacity

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Written by: Suhail Nasir

Exclusive Interview with Mr. Matthew Gibb, Deputy Oakland County Executive

Guest Profile: Mr. Matthew Gibb is Deputy Oakland County Executive. He is directly responsible for Economic Development and Community Affairs. He oversees all aspects of the EDCA for Oakland County including the County’s role in planning, business recruiting and retention, access to services & information, marketing, grant funding, home assistance programming, workforce development, and a variety of related issues and divisions. His position involves international business attraction requiring heavy travel, as well as, government relations, local planning coordination, and direction of Main Street Oakland County.

A Different Detroit

Two years ago, Detroit’s bankruptcy made the headlines around the world, the story of its downfall is known to every household. And now, we are not going to renew the discussion of that old story.

Deputy Oakland County Executive Matthew Gibb brought us a new story. On the first day of 2015 Shanghai Auto Show, organized by China Council for the Promotion of International Trade, Automotive Committee, Matthew Gibb had an exclusive midnight interview. In the interview, he described a different version of Detroit that was purposefully neglected by the media. But before we met him, the only Oakland we knew was the one in New Zealand. Where is America’s Oakland? And what does it have to do with Detroit?

To answer these questions, let’s start with a famous road. In 2002, the famous rapper Eminem’s semi-autobiographical movie 8 Mile was released in America. This movie that later won the Oscar for the best original song, tells the story of a young musician from the bottom of society. The movie was named after the 8 miles road located in Detroit, to the south of which is the bankrupted Detroit and to the north is the rich Oakland County. It’s said that this 8 miles road is the dividing line between the rich and the poor.

Heaven and Hell Separated by Road

Luckily, Matthew Gibb came from the Oakland County in the north and he is the deputy executive there. There are two places named “Detroit”. One is the Greater Detroit, the business district comprising the Detroit City and peripheral counties, the other is downtown Detroit. It’s the latter that went bankrupt. But it’s the former we are referring to when we talk about the center of America’s auto industry.

Now two of the three major American auto companies, namely Ford and Chrysler, are based in those counties. Only General Motor is headquartered in downtown. Many auto parts manufacturers and R&D centers are also densely concentrated in the peripheral areas.

By different definitions and statistics, the Greater Detroit also includes counties like Oakland, Macomb, Wayne and Lapeer. And by whatever standards, Oakland County is definitely part of the Greater Detroit, not to mention that Chrysler is based here. That’s why knowing about Oakland County is essential to understand the Greater Detroit.

“Many Chinese people don’t know that counties in America are very large administrative units, Oakland County consists of 61 county-level cities, occupying a total area of 2349 square kilometers, much bigger than the 370 square kilometers Detroit City.”

Matthew Gibb said that Oakland has been one of the richest counties in America for the past 19 years. Meanwhile, its neighbor, downtown Detroit is suffering from mounting debt. Regardless of the economic fluctuations, the unemployment rate in Greater Detroit is always far lower than in downtown Detroit.

Over the past three years, America’s auto industry has witnessed substantial recovery, driving up the economy of the Greater Detroit. But Matthew also admitted that things have changed. Fast globalization lead to fast flow of capacity, spreading momentums globally. Nevertheless, Detroit still boasts its own advantages. “Detroit remains the largest R&D center for auto technology.”

He said that Oakland is home to 60% of the top 100 auto parts suppliers and over 1700 manufacturers in auto industry with a total of 107,000 employees. The world’s top 10 manufacturers of lightweight material for automobiles are all located in Oakland.

Never judge America with Chinese Standards

Influenced by media, many Chinese see government bankruptcy as a total disaster. “Unlike China where the governments are either closely connected to companies, or are shareholders themselves, American governments are independent from the business community. Government going bankrupt in downtown Detroit does not mean that companies there are doing as bad. Many companies remain robust. Some are now even developing very fast.

Matthew Gibb suggested that we should separate government from business world. He also suggested that one should look at Detroit bankruptcy in the longer term and in an objective way. “Throughout this bankruptcy, Detroit has sorted out problems accumulated over the past 40 years. Detroit has reduced her burdens, tackled corruption and has recognized management failures. These are beneficial to the future development, not only to her own but also to the whole areas” he said.

Of course, it takes time for a heavily indebted government to fully recover. In America, governments at county level get their revenue mainly from property tax. For a while, houses were reported to be worth as little as one dollar in Detroit. Low house price means low tax revenue. So the government needs more income to improve public environment and attract skilled workers and investments in order to raise house price, which would in turn increase tax revenue, thus forming a virtuous cycle.

House price in Oakland is much higher than that in Detroit City, but still more competitive than that in many other American business districts. “Relatively low living cost, high-quality education and geographic advantages ensure a very high living standard,” he added. Matthew believes that Oakland is economically well-positioned to help Detroit with its economic recovery, while Detroit’s bankruptcy has very limited negative effect on Oakland.

Do in China as the Chinese do

This is Matthew’s 11th trip to China in 3 years as Oakland County’s deputy executive in charge of economic affairs.

This time, his main task is to build a close tie with China Council for the Promotion of International Trade, Automotive Committee. From June 9th to 10th, he was leading a team of 20 to attend the Sixth Annual Meeting of Global Automotive Forum in Chongqing, creating opportunities for cooperation between China’s auto industry and the Greater Detroit.

Global Automotive Forum is by far the largest and highest-level global event held in China in auto industry. It focuses on the discussion of new technologies and developing trends. This time, the forum was themed “Mega Change: Reshaping an Industry “.

Matthew feels that his work have a lot in common with China Council for the Promotion of International Trade, Automotive Committee, the organizer of this forum. “I came to China for two things: the first was to meet government officials, mostly deputy mayors in charge of economic affairs. We have similar tasks and we can better understand each other; the second is to look for companies interested in investment or cooperation. We already have a lot of successful cases.”

He said bluntly that it would be foolish to go about seeking partnership without forging connection with the government. He seems to know a lot about China’s interpersonal relations and the role of government.

“I love China a lot. She is unique. Building trust and goodwill between governments and businesses goes a long way in creating opportunities for cooperation.” For that reason, he believes that his frequent visits as Oakland government deputy executive is very effective. On one hand, Oakland has sufficient financial support; on the other, officials’ personal visits will have bigger influence and are more flexibility. They can efficiently build up understandings and trust between the two countries.

“To build partnership with its American counterparts, China’s auto companies also need to have closer social connection in America. And the majority of policy makers in auto industry live in Oakland.” Thanks to his long term ties with China, Matthew can help China’s auto companies to access Oakland’s resources and facilitate business cooperation between the two sides.

2-Years’ Window of Opportunity

Oakland government’s scope is not limited to China. 81 employees led by Matthew are now focusing on different parts of the world. They are especially active in Europe and Japan on international auto shows and forums.

“China is our focus in recent years.” He explained, “The next two years will be the best window of opportunity.”

He believes that, on one hand, US federal and local governments face the political risks in the coming election. The new governments’ stance on trade cooperation can hardly be predicted. On the other hand, China’s economic transformation brings about uncertainties both in macro-economic development and auto industry.

“We must seize the opportunities and achieve more with the favorable business environment. In the next few years, I will have visits to China.”

Places visited or to be visited this year by Matthew Gibb include Ninghai, Taizhou, Changzhou, Pujiang, Shenzhen and Chongqing. He has also been to some small places that are rarely heard about even by Chinese. But he never thinks that these visits were meaningless. Because now over 100 China companies including Shanghai Automotive Industry Corp. have set up branches in Greater Detroit, over 60% of which are in Oakland County.

His new partner, China Council for the Promotion of International Trade, Automotive Committee is trying to do the same thing. On January, 11, 2005, the committee hosted the third Sino-US Automotive Forum midst Detroit Auto Show. Three years ago, most participants of the forum were Chinese engineers. But this year’s, on the third Sino-US Automotive Elites Salon, we saw faces including Chinese Consul General in Chicago, governor of Michigan, Wayne County Executive, CAR CEO, Deputy Managing Director of Guangzhou Automobile Group as well as the vice presidents of Ford, Shanghai General Motor, Delphi, Magna and BorgWarner.

Downtown Detroit hopes to regain its glory; Oakland wishes to continue its prosperity; China’s auto industry wants to change its old pattern of large in size but weak in strength. We hope that future cooperation can bring China’s auto industry some tangible benefits.

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