Similar efforts are under way in Detroit to foster innovation and entrepreneurism. These include the Obama administration's manufacturing innovation institute, called Lightweight Innovations for Tomorrow (LIFT), launched in January, and the philanthropic New Economy Initiative (NEI), an economic development initiative working to build a network of support for entrepreneurs and small businesses. "We don't support entrepreneurs directly, but the ecosystem that does," explained David Egner, executive director of NEI, which has raised $135 million to fund entrepreneurs and programs like LIFT.
Egner said that about 20 percent of its recipients are budding manufacturers, making things like heated motorcycle jackets, wooden pallets and carbon dioxide-based coolants for machinery. Many are former autoworkers who have hooked up with TechTown, a nonprofit innovation hub and incubator situated in a 135,000-square-foot downtown facility provided by General Motors. "In 2009 we went to TechTown as the auto bust was happening," Egner recalled, "and said, 'There are folks in the auto industry who would be entrepreneurs if they had a path.'" TechTown initially took in 1,200 potential entrepreneurs, he claimed, and from there 1,400 businesses were started and 14,000 jobs were created.
NEI also sponsors NEIdeas, a program that will reward a total of $500,000 in cash awards to more than 30 existing businesses in 2015 through the "$10K Challenge" and the "$100K Challenge," contests that invite fledgling entrepreneurs to pitch their ideas for new businesses that need funding. One of the applicants is Mike Sheppard, a lifelong Detroiter, son of a former GM worker and a city firefighter for 16 years. A die-hard bicyclist as well, he started building handmade bikes four years ago under the moniker 313 Bicycle Works. He's a one-man player in Detroit's burgeoning bike-building community, highlighted by much larger and well-heeled operations, such as Shinola and Detroit Bikes.
In between 48-hour firehouse shifts, Sheppard, 42, learned how to weld steel frames and add various components—handlebars, wheels, brakes, gears—to fabricate custom road and mountain bikes in a makeshift shop in his house on Detroit's north-central end. The frame alone starts at about $1,500, and with components, prices can easily reach $5,000, making hard-core and affluent, cyclists his ideal customer. He's made less than 100 over four years in business, but his ultimate dream is to retire someday and build bikes full-time.
Meanwhile, Sheppard is proud to be among those working to revive Detroit's manufacturing heritage. "If you want to own a handmade bike from Detroit," he said, "it doesn't get any realer than me."
—By Bob Woods, special to CNBC.com
Correction: This story has been updated to reflect that it was GM and Chrysler that received a U.S. government bailout in 2009.