Historically Opposites, Business Alike

By Elipsis on January 5, 2018 7:37 pm

0 CommentsMarket, News, Real Estate, Redevelopment

Historically, the economies of Detroit and Silicon Valley couldn’t appear more divergent: the Motor City has long maintained a reputation for being the major manufacturing hub, while Silicon Valley has dominated as the master of technology innovation. Despite their differences, these cities are actually more similar than most of us would think.

Increasingly, Detroit is drifting towards a high-tech pull, while the Silicon Valley/San Jose region has seen a small upsurge in manufacturing.

It would surprise no one that San Jose and Silicon Valley have the highest concentration of advanced industries workers in the country. In turn, manufacturing actually employs nearly half (46.1%) of workers. These 134,000 workers produce everything from semiconductors to computer equipment to aerospace parts and pharmaceuticals.

The reverse dynamic is at play in Detroit. While the automotive industry accounts for over one-third of all advanced industry employment, services still employ almost half. Over 32,000 professionals in the Detroit metro area are employed in the computer systems design sector alone—many of which feed into the larger automotive supply chain.

General Motors (GM, +2.63%) remains one of the largest employers in Detroit, mostly within automotive manufacturing. But increasingly, the automaker has also been getting into the software space, according to patenting data, which shows that GM filed 592 software patents over the past five years, accounting for over 15% of their patenting activity.

Similarly, Google (GOOG, +0.39%), a software company, is rapidly moving into manufacturing. Thirty-nine percent of its patents from 2007-2012 have been in hardware — computer hardware, yes, but also power and energy devices, as well as mechanical hardware—many originating from their ambitious autonomous car project. The very fact that the world’s leading software giant is moving into the automotive sphere (and that one of Detroit’s Big Three automakers invests so much in software R&D) shows just how integrated these two industries have become.

Private, public and civic leaders would be wise to embrace the convergence underway and retool economic development—workforce training, community college programs, applied research investments—to this new reality.

Quoted: Bruce Katz

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