Auto-Job Cuts Spread Pain to Suburban Detroit

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Art and Judy Jacobsen

Art and Judy Jacobsen have been trying to sell their home in the Detroit suburb of Dearborn for the past six months. So far, there have been no takers. Frank Langfitt, NPR hide caption

itoggle caption Frank Langfitt, NPR
Kent Colpaert i

Detroit's reeling economy has led to a boom in at least one business: real-estate foreclosures. Kent Colpaert is owner of the Bearing Group, a real-estate company in Grosse Pointe focusing exclusively on foreclosures. He's pricing this castle-like home for a potential client at about $650,000. Frank Langfitt, NPR hide caption

itoggle caption Frank Langfitt, NPR
Kent Colpaert

Detroit's reeling economy has led to a boom in at least one business: real-estate foreclosures. Kent Colpaert is owner of the Bearing Group, a real-estate company in Grosse Pointe focusing exclusively on foreclosures. He's pricing this castle-like home for a potential client at about $650,000.

Frank Langfitt, NPR
Rick Halberg

Last month, Rick Halberg closed Emily's, a French restaurant where a dish of wild Alaskan Halibut went for $38. The high-end customers that kept the business going just weren't coming in anymore, he says. Frank Langfitt, NPR hide caption

itoggle caption Frank Langfitt, NPR

Detroit By the Numbers

Total Population

2000: 951,270

2005: 836,056 (-12 percent)

Unemployed Residents

2000: 53,259

2005: 71,775

Families Living Below the Poverty Level

2000: 21.7 percent (national average: 9.2 percent)

2005: 27 percent (national average: 10.2 percent)

Individuals Living Below the Poverty Level

2000: 26.1 percent (national average: 12.4 percent)

2005: 31.4 (national average: 13.3 percent)

Median Household Income

1999: $29,526 (national average: $41,994)

2005: $28,069 (national average: 46,242)

Per Capita Income

1999: $14,717 (national average: $21,587)

2005: $15,042 (national average: $25,035)

Median Home Values

2000: $71,188 (national average: $126,733)

2005: $88,300 (national average: $167,500)

Source: U.S. Census Bureau

Downtown Detroit is synonymous with poverty and bombed-out buildings. But its suburbs have been islands of affluence for many auto-company employees, especially in the 1990s, when the SUV was king.

Things are different now. Recent job cuts at General Motors, and looming ones at Ford, are taking a toll in some of the more exclusive neighborhoods.

One of them is Dearborn, a Detroit suburb that houses Ford headquarters. Art Jacobsen has a lovely home in a gated community there, but he can't sell it. The problem: There are so many houses on the market in Dearborn, it would take at least a year to sell them all. And when Ford cuts 10,000 white-collar jobs in the coming months, more "for sale'" signs are sure to go up. Jacobsen left Ford a few years ago, in an earlier round of cutbacks.

Jacobsen's house sits on a golf course, which hosts Ford's Senior Players' Championship. The house, which has been on the market for six months, has other selling points. The foyer boasts marble floors and an 18-foot ceiling.

But Jacobsen says people are so anxious about the economy, it's hard to get anyone interested in a luxury home. He first listed the home at $549,000, then dropped it to $524,000 when it failed to bring any bids. Recently, the list price dropped again, to $497,500.

"Hopefully, we're going to attract some buyers," Jacobsen says.

Disappearing Diners

The economic problems of suburban Detroit go well beyond housing. Some country clubs have lost members. Restaurants report fewer customers, and some have even shut down.

Last month, Rick Halberg closed Emily's, a French restaurant where a dish of wild Alaskan Halibut went for $38. Sitting in the empty dining room, Halberg traces the slide in revenue that began last year.

"It started dipping and really, this year, it was frightening," Halberg says.

Customers from nearby auto-parts companies came in less often. So did people who celebrated birthdays and anniversaries at the restaurant.

"Saturday nights weren't as busy. Friday nights weren't as busy," Halberg says, recalling how his customer base slowly trickled away. "The businessmen on expense accounts — those guys weren't coming in as much, weren't ordering a $150, $200 bottles of wine as frequently."

A Trickle-Down Effect

White-tablecloth restaurants aren't the only ones suffering. Peter Buscemi runs a pizza and sub shop across town in Grosse Pointe, a wealthy suburb of million-dollar lakeside mansions. He says some people here are choosing to forgo yard maintenance to save money. And that means fewer jobs for the lawn crews who usually buy his subs.

"The guys that do landscaping and painting and stuff like that, obviously, the job load has become much, much lighter," Buscemi says. "Their crews are getting smaller. I'm not getting as many crews."

Jeff Zielinski comes in for a sub. He's a self-employed builder. Zielinski says the real-estate slump has left him with less work.

"What I'm finding is my phone is not ringing at all," he says.

Like the auto companies, Zielinski has handled the drop in his own business by cutting back.

"I've downsized everything," Zielinski says. "I went from a five-bedroom house to now a one-bedroom apartment, from a fleet of trucks and 10 employees, to no employees and an old 1995 Ford pickup truck."

One thing Zielinski can't downsize is college tuition for his daughter, Sarah. So, he's thinking about moving — perhaps somewhere in the South or West, where people are building more houses.

Grim Forecast for the Future

But even a bad economy creates new business. The Bearing Group is a real-estate company in Grosse Pointe that focuses exclusively on foreclosures. The firm sells the houses for banks and takes a small commission.

Business is booming. Owner Kent Colpaert says that as the economy has declined, his stock of foreclosed properties has quadrupled. He needs more staff.

"I've got more homes than I have people to sell them," he says. "I need other assistants to help market the properties for me. I have more homes than I can get to with five inspectors. So, we need to hire more inspectors."

But the hiring at Colpaert's business is the exception. Michigan keeps losing jobs, even as most states add them. Researchers at the University of Michigan expect an additional 23,000 jobs to disappear next year, and they say problems in the auto industry will keep the economy down until fall 2008.

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