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DETROIT-On the surface, Ford Motor Co.'s recent announcement of a restructuring plan, complete with 30,000 layoffs and possibly 10 assembly plant closures, couldn't have come at a worse time. Following on the heels of GM's late November announcement of its own layoffs and plant closures, Ford's plan gives the dire impression of a region that is destined to suffer from a continued sluggish economy.

From the real estate standpoint, layoffs mean plants closing down, and plants closing down can only mean higher vacancy rates and slower absorption. That's the bad news.

The better news is that the Southeast Michigan economy, which had been, for years, dependent on the automotive manufacturing area, is undergoing growing pains, but once the area has gone through it, better times are likely to come. Real estate experts in the area tell GlobeSt.com about the more positive macro view of the Ford announcement; namely, that the area eventually will bounce back, with hi-tech, engineering and R&D taking the place of a manufacturing industry that is turning soft.

"I don't think Ford's news is necessarily bad news," says Jack Williams, senior vice president of Colliers International's Southfield office. Such news simply confirms that the Southeast Michigan area is moving from blue-collar manufacturing to white-collar high-tech and research and development. Additionally, "every time we lose an automotive plant, we seem to gain a technology center," Williams says.

And speaking of automotive plants, Mitchell Lipton points out that no one is sure, at this time, where plant closures might take place. "We don't know how many of them are going to be in the Detroit area," comments Lipton, executive vice president with Friedman Real Estate Group Inc. out of Farmington Hills. There has been talk about Ford's Wixon Plant possibly being impacted by the restructuring, he points out, but at this point, it's all rumor.

"One thing people keep forgetting is that all these jobs aren't necessary in Michigan, though many of them would be," comments Paul Kerber, senior investment associate with Marcus & Millichap Real Estate Brokerage Co.'s Southfield office. Just because the Big Three are impacted, Kerber continues, doesn't mean that the auto industry is going away any time soon. Toyota, Isuzu and Hyundai have put R&D centers in the area, Kerber points out, adding "there are new engineering jobs coming here as well."

This is not to say, however, that everything is roses and that Ford's news is being greeted with joy. Kerber acknowledges that the announcement is simply part of a trend in the area; one in which industry and manufacturing are going away, mainly to other markets and overseas, with those jobs likely not to come back once the southeast Michigan economy rebounds. As a result, "as far as industrial product for sale and lease, we'll lose a percentage of the manufacturing sector," Kerber says. "And we already have an oversupply in the area."

What about investment opportunities among potentially closed down plants from Ford and GM? The experts are cautious in seeing potential investment opportunities in shuttered assembly plants, as those opportunities would come at a cost. "I can't see that investors would purchase those buildings without serious modifications to turn them around," Kerber says.

Williams agrees with the assessment, adding that the much older plants would likely need to be demolished, with money being thrown into the newer ones to turn them into viable distribution centers.

Overall, Ford's announcement has come as a glum reminder that there is still some way to go before the area moves onto recovery. But the real estate experts take heart in Ford's willingness to restructure. "They're not producing bolts or metal panels, but they are still assembling," Williams says. "In addition, none of those companies are going to get killed, but they'll reorganize, which is a good thing."

"We all know that the structure of the company had to change," Lipton adds. "The best case scenario is that such initiatives lead to healthy, profitable companies down the road."

Instant Insights /

GlobeSt.com EXCLUSIVE: Experts See Potential in Ford's Revamp Despite Several Plant Closures

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