By JEFF KAROUB
AP Business Writer
DETROIT (AP) - It's a 21st century paradox: Detroit enters 2014 in bankruptcy, the largest public case in U.S. history and facing $18 billion or more in debt. Yet the Motor City's resurgent auto industry is strong enough to host a show that by one estimate will generate nearly $400 million for the area's economy.
Detroit's downtown is shown behind an abandoned home in this file photo. Detroit filed the largest municipal bankruptcy case in American history in 2013, yet the Motor City's resurgent auto industry is strong enough to host a show that by one estimate will generate nearly $400 million for the area's economy. (AP photo)
The industrial city is looking to climb out from under decades of financial decline as its longtime industry revs ahead four years after two of its major players, General Motors and Chrysler, emerged from bankruptcies of their own. The comeback can be measured in the North American International Auto Show's economic impact, which is projected to increase 8 percent over last year's event, says David Sowerby, a portfolio manager and chief market analyst for Loomis Sayles & Co., who authored a study of the show's effect on the regional economy.
Sowerby says several factors favor increased spending tied to this show.
"Economic activity is strong, the industry itself is stronger, there's a modest increase in new models and if you talk to hotel or lodging industry, the number of conferences is growing as is business activity and travel."
To be sure, business at area hotels for the show is strong: Downtown hotels reported Friday that occupancy is at 85 percent during the press days Monday and Tuesday and about 70 percent from Jan. 18 through Jan 26, when the show is open to the public. Local restaurants and bars should be packed with an estimated 5,000 journalists and 800,000 visitors expected at the show. Overall, the show provides a pick-me-up for the area, illustrated by amped-up coverage from local television stations and highway billboards welcoming visitors and industry types.
All three Detroit automakers have made billions in the recovery following the Great Recession. Ford expects to post an $8.5 billion profit before taxes for 2013, while GM made $4.8 billion pretax through the first nine months. Chrysler, the smallest and least-profitable of the three, made $1.4 billion pretax through September.