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Why Put a Software Company in Detroit?

November 21, 2013

One of the fun things about my job as VP of Strategy is that I get to brag about what we are doing at Plex to friends and acquaintances and occasionally total strangers.  But inevitably they will always get around to asking the question – “Why would you put a software company in Detroit?”  It’s not just Detroit’s well-publicized economic decline or the city’s recent bankruptcy.  They just really can’t imagine building a serious enterprise software business – especially one based on cloud technology – anywhere but Silicon Valley.  After all, that’s where all the experience is, that’s where all the others are, and that’s where all the money is…

The simple answer is manufacturing.  Plex is all about manufacturing.  It isn’t “one of our verticals” or “an interesting opportunity” or “an underserved market” – It is our passion.  If all you do is build and deliver the world’s best manufacturing software it makes much more sense to live in the heart of the manufacturing economy than in the heart of the software economy.  We are located in Detroit because we want to be right in the middle of manufacturing innovation.  And today, that innovation is running at full throttle as U.S. manufacturing surges forward, passing pre-recession capacity and productivity to become more competitive than ever.

So while our friends in Silicon Valley may refer to the Midwest as “The Rust Belt” we know that Southeast Michigan is serious about its claim to be “Automation Alley.” And as to our cloud credentials, we learned how to build high performance, multi-tenant SaaS applications by doing it for more than a decade.  We built Plex in the cloud because it enables us to deliver solutions that help our customers innovate daily.  And we were doing it long before the cloud was a trend or a buzzword.

There aren’t a lot of other ERP companies in our neighborhood but we are surrounded by thousands of the most sophisticated manufacturing companies on earth.  No one knows more about applying technology to drive quality, productivity, and agility.  The world of manufacturing is constantly changing and we need access to engineers that understand it and have been exposed to the latest thinking and the newest techniques.

It also helps to have employees who really care about revitalizing American manufacturing.  They have grown up around it, their friends and relatives work in manufacturing companies, and in their towns manufacturing jobs pay the taxes and support the local economy.  When we hire a new employee in Michigan we don’t have to explain what manufacturing is or why it’s important.

Unfortunately this just isn’t the case any more in the Silicon Valley.  I remember when it used to be a hotbed of manufacturing and there were once hundreds of plants stretched along Highway 101 from South San Francisco to San Jose.  Now there are still lots of talented software engineers in the Valley but few companies make things there anymore.  There are lots of companies that call themselves manufacturers but what they really do is design things and sell things — but very few really make things.  They may have a prototype shop in Foster City to build the initial pilot run but when they want a lot of products they order them from overseas.

We built Plex to serve a different kind of company.  We build software for companies that manufacture products “at scale.”  Our customers make hundreds, thousands, or millions of things.  And that capability – making things – is where they focus their constant push for innovation.  They are experts in managing global supply chains, designing high volume production lines, and carefully monitoring the efficient production of high quality goods.  These companies understand that a cloud-based solution gives them unprecedented flexibility and access from anywhere in the world; that it enables them to collaborate more closely with customers and suppliers.  They also require an ERP system that doesn’t stop once it calculates how many parts or products you need, but instead extends right down into the manufacturing operation – to the materials, people and machines that make it run.  A system that captures costs and status and quality measurements and can interact with a machine operator or integrate directly with automated equipment and sensors.

One of the reasons that it is so important for Plex to be located in the geographic center of U.S. and Canadian manufacturing is that we have an insatiable appetite for new ideas.  Our business is based on a “continuous innovation model” where our very active customer community drives most new product functionality.  The close proximity of hundreds of Plex customers gives us the ability to interact directly with the users, see the applications in use, and get immediate feedback on how to refine or improve them.  While we have customers scattered from Texas to New Jersey and from Guangzhou to Stuttgart, they all appreciate and benefit from Plex’ decision to base itself in a manufacturing environment.

There are certainly days when the technology press or the software analysts get more excited by the latest Valley darling or funding round. However, when I stand in our office in Troy, Michigan I can literally see hundreds of manufacturing companies.  I think about the fact that the Midwest states have added more than 250,000 manufacturing jobs since 2010.  Plex is an increasingly important part of the resurgence of American manufacturing and Detroit is a huge asset for us, for the U.S. and for the world.  We’re betting on it.

About the Author

Jim Shepherd GVP of Corporate Strategy, Plex Systems