Turnaround Expert Talks About Plan for Detroit
More than 700,000 people think of Detroit as home. But people in the financial world also see it as a business.
Van Conway is a business turnaround specialist. He says if Detroit is to come back, we need to get beyond the politics. “It’s going to take city and state officials to work together, not on the agreement, but on fixing the city.”
Time is of the essence. Conway says we cannot let the city run out of cash, “Because if that happens you have a deep crisis.”
Working to gain union concessions has been key, but Conway says unions are just one piece of the puzzle, “It’s your pension costs, it’s your health and welfare costs for your retirees and your present employees. It’s your sources of income that you take in as a city. And you have to look at the debt.”
In our own families, if we get too deeply in debt, we can call our creditors and ask for better terms. The city might consider a similar option. “In my view the debt has to be evaluated for some type of concession.”
Families also have the option of bankruptcy. Legally, that may not be possible for the City of Detroit. Conway says that may be too bad, “Because in a bankruptcy you can get a lot of things done.”
But even without bankruptcy, there is hope.
Conway said, “I believe if we work together the city’s absolutely fixable. It will be different. Probably smaller, might not offer all the services, but it will be a vibrant city who may have hit the bottom and has a chance to grow and prosper again someday.”
Why is it when theres a city or company that is in financial trouble its automatically the unions fault? What about the people running the city or company pulling in 6 figures a year and demand the union give up pay and insurance. Do they not remember its cuz of the union workers that made it possible for them to get that fansy salary and other perks to begin with? Whats their thinking that the best way to save money is to lay off fire and police? When they do that they wonder why their city is so unsafe and no one wants to go to that city so therefore losing money from potential tourism. Look at detroit. Good example to learn from. But, who cares as long as these idiots get their 6 figure incomes and vehicles and gas they dont have to pay for.
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“Business-Side-Of-Business.” Does anyone on the Detroit City Council know what that means?
As a Business Analyst / Consultant, Michigan residence, and an outside objective observer, I see this city and the most other municipalities (Pontiac Schools, for example) being run by the seat of their pants. The people on the board and at the decision table had probably never run a business in their lives before. This is a typical business problem that Analysts and Consultants like me see all the time…the board needs people that understand the business-side-of -business, for change to root itself.
Remember one thing about all these financial experts and state officials looking forward to taking over – Change will never root by the hand of outsiders, telling them what to do…however, teach the people the way to run a business and hold accountability on each department head (as a cost center) for profitability. I can assure you this is currently not being done at the moment, and I speak from witnessing this first hand in one of the Michigan municipalities.
Furthermore, hearing the Governor mention a NEW PAYROLL SYSTEM is typical, of the lack of business mentality, but a way to listen to complaints without metrics of measurement to back the claim. Before entertaining such things like this…tell me what the current system is costing the city, as a problem. If the problem cost is not at the top of the list – shelf it for now. Look at the books and find the cost of the problems in the city and what type of costs we can recoup. The situation is a mess. However, if the “Business” decisions that need to be made are made, change will go a long way. This situation will at no time see change as I see it currently. (It will happen just like when our federal government bailed out the banks), change will not at any time occur. The city will just spend the finances because there is poor, if any, business-minded individuals at the table.
In closing…I would welcome the opportunity to perform a financial analysis of the city’s books, along with each cost center – and the person accountable for each of the cost centers. My bet is that the root of the problem will become crystal clear very quickly. STOP addressing the symptoms of the problem and get to the ROOT of the problem. I will bet that I could find how poorly the finances have been managed. I can also assure you that “Profit Leaks” as we call them, will be in the multi-million(s) dollar range, over the years. I bet the city could do a lot with that money.
If you like what I propose, or agree with my challenges about the lack of business-side-of-business in council. Please comment, and spread the word.
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I think we absolutely should do an analysis of the city’s books. This is the kind of thing this city needs. I’m sure we’d find millions of dollars being wasted that could go to better things that the city needs. Government isn’t a business but sometimes it could use some business-minded solutions.
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