Cobo Center Battles Underscores Difficulty In Keeping NAIAS In Detroit

I caught wind of in the news late last week that some Detroit residents and politicians were upset with the plans proposed in renovating and managing the Cobo Center. That convention center is at the heart of a battle to transfer its control from the city to a three county region, a move which would immediately inject funds into the cash strapped city’s budget while allowing the suburbs to get in on the benefits of managing the convention center.

Not Everything Is Black Versus White

Unfortunately, race was injected into the conversation with predominately black Detroit fuming that the predominately white suburbs would gain control of their beloved facility. The Cobo Center’s main attraction is its annual January auto show, affectionately known as the North American International Auto Show or NAIAS. The NAIAS has been bursting at its seams for years and is in major need of additional room. That lack of room has forced some automakers to display their cars in the lobby or basement, not exactly what a world-class event should have to do.

As it stands, Michigan has high unemployment and has been suffering immensely even before the current global economic downturn kicked in last fall. Its three hometown automakers — General Motors, Ford and Chrysler — are in bad shape financially with GM and Chrysler on the verge of bankruptcy. Thus, future shows may be without one or more automakers or at least several of its brands:  GM is expected to divest itself of Saturn, Hummer and Saab this year, freeing up space at the Cobo Center.

No Shows Could Be A Problem

Nissan, Porsche and a handful of other automakers passed on the NAIAS in 2009 and others might do the same. The NAIAS begins construction for the January show in September as it is by far and away the most important event of the year for that venue. If for some reason the show is moved to another city, then Detroit, the three counties and the state of Michigan could be left holding the bag.

The renovations needed to bring the Cobo Center up to par will cost $288 million, while also giving Detroit $20 million to transfer authority of the center to the three counties. In addition, the $15 million annual expense to maintain the Cobo Center would be removed from the city’s books, one less expense that Detroit would have to handle.

If the Cobo Center renovation doesn’t take place as planned then the city could find itself no longer hosting one of the most important events of the year. Larger cities including Chicago, Los Angeles and New York would love to host the NAIAS and will ready their own plans if Detroit stumbles when it needs to move swiftly and without the political rancor.

Suzuki Plans To Skip 2009 NAIAS

They’re one of the smallest automakers in terms of sales in the US automotive market, but Suzuki has managed to attract some attention of late especially through its zero percent financing and its US sales increase for May 2008. While other automakers struggle to ratchet up production of their fuel efficient cars, Suzuki doesn’t have that problem. Every vehicle they sell is fuel efficient, just the kind of wheels American drivers are flocking to these days.

One thing that Suzuki won’t be doing in 2009 is attending the NAIAS, commonly known as the Detroit Auto Show. The Detroit show is one of the top events on the auto show calendar every year, but it won’t be a priority for Suzuki.

According to The Detroit News, Suzuki will bow out of the upcoming show, citing an inability to secure enough space to launch display their vehicles. With three new models set to come out over an eighteen month period, Suzuki’s show floor needs have increased. Unfortunately, the Cobo Center, where the show is held, is maxed out.

Porsche also chose not to appear at the show beginning in 2008 citing that the Detroit area isn’t where many of their customers are. Suzuki is saying the same thing, but there is another problem that very much needs to be addressed: the Cobo Center must be expanded.

At the 2008 show, space was very tight with a few manufacturers assigned to the basement or lobby areas. Though these were Chinese manufacturers who don’t yet have a toehold in the North American market, it is clear that more space is needed or the unthinkable may happen — Detroit could lose its status as the NAIAS (North American International Auto Show) host, a title New York, Los Angeles, Chicago, or some other city wouldn’t mind wresting from the Motor City.

Crain’s Detroit Business reported in May that a $287 million, 120,000 square foot expansion of the Cobo Center is being hashed out with participants of regional governments who are needed to support the project. At issue was a proposal to accept no-bid contracts for the project, something opposed by several government leaders.

The NAIAS has an estimated annual economic impact of $500 million and produces some 13,000 jobs. The annual show boasts the most unveilings of new models and concepts of any other show in North America.