Could a 'crash' of the auto world be in the offing

February 16, 2009
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In early February, Sean McAlinden, executive vice president and director of research at the Center for Automotive Research in Ann Arbor, told a group of bankruptcy lawyers and auto industry suppliers in Grand Rapids that the auto industry was in danger of a "crash" due to the radical decline in sales in the last couple of months, and the failure of the banking industry to support suppliers with loans in the interim. It is a just-in-time manufacturing industry where every supplier in the chain, on up to the Big Three and the Japanese companies, has to perform as scheduled or the system breaks down.

Last week the Business Journal contacted McAlinden and asked if we had heard him correctly.

He replied that the odds right now of a crash involving Tier 1 companies are "fifty-fifty," and that the industry is now only producing at 50 to 55 percent capacity, "which may cause enough suppliers to crash," sending auto production "to zero, unless the government steps in to do what the banks won't — lend to suppliers."

The we asked Jim Zawacki of Grand Rapids Spring & Stamping — an auto industry supplier — what he thought of the potential scenario sketched by McAlinden.

"I agree," replied Zawacki. He noted that last week, two West Michigan suppliers ("smaller companies") revealed they were going out of business. Zawacki said, "look at Delphi, in Chapter 11 since October 2005. GM might have to buy Delphi back and that could put them under. There are several Tier 1's that are in deep financial trouble."

Erich Merkle, an independent auto industry analyst, spoke about the future of the auto industry at the Grand Rapids Economic Club last week. He sounded a little more on the positive side.

Merkle noted that the drop in new car sales in the recession of 1980-1983 was "brutal," and he added that "we are there" now.

"It looks really bad right now, but people will buy cars again," he predicted.

Hillman honorees selected

The annual gala fundraiser benefiting the Alliance for Health takes place March 12 at the Public Museum of Grand Rapids. “Once In a Blue Moon” features a strolling dinner and opportunities to socialize with members of the West Michigan health care community.

The highlight of the evening will be the fifth annual presentation of the Alliance for Health Hillman Award, named after the late former Senior U.S. District Judge Douglas W. Hillman, a life-long community health care advocate. The award recognizes those in the community who exhibit exemplary dedication and commitment to continually improving the area’s health care system.

This year’s recipients are Roger Spoelman, president, Mercy Health Partners, Muskegon, and George Vande Woude, Ph.D., founding research director of the Van Andel Research Institute. Vande Woude was just named head of the Laboratory of Molecular Oncology at VARI.

Twenty-five years and out

Judy Barnes has announces her retirement as Executive Vice President/CEO of the Home & Building Association of Greater Grand Rapids (HBAGGR) effective June 30, 2009.

Barnes began her career with the HBAGGR on Feb. 6, 1984, after having spent a number of years as marketing director of Eastbrook Mall.  At that time, the association was housed at 700 36th St., SW.  The HBAGGR had a membership of 290 members and a staff of 2.5, including Barnes, a full-time receptionist/bookkeeper and a part-time Home Owners Warranty (HOW) secretary.  Barnes also ran that organization and traveled the western half of the state, visiting associations in the program.

Tuning in to leadership

The people who bring you Big Daddy’s Doo Wop Sh’ Bop, namely the cool cats and kitten on the Convention and Arena Authority, will honor the biggest daddio of them all at the third Sh’ Bop. (A 50’s drum roll, maestro.)

“After careful deliberation, the Doo Wop Planning Committee has selected Grand Action for the Community Leadership Award. Grand Action was instrumental in the development of the Van Andel Arena and DeVos Place and is a fitting recipient of the award,” said Susan Waddell, administrative manager for the CAA.

The Grand Action Committee directed the private sector fund drives for both buildings and also headed the renovation of the Civic Theater. It should be interesting to see the group’s three vice chairs — David Frey, Dick DeVos and John Canapa — with their hair slicked back into ducktails and their T-shirt sleeves rolled up. Finally, we’ll see their tattoos.

The music, dancing and eating event is set for the arena on March 19 and proceeds will go to Gilda’s Club, Hospice of Michigan and St. John’s Home.

We might as well move along

After the Downtown Development Authority provided financial support for three proposed projects at what turned out to be almost a two-hour meeting last week, DDA member Jim Dunlap suggested that the board’s agenda needed to be shortened a tad.

To do that, he recommended that staff take a deeper look at the construction projects that come before the panel. “Two of these three projects are not financeable. They won’t get financing,” he said.

Although Dunlap didn’t name which two, he should know. He is regional group president of Huntington Bank.

Let’s face it; banks don’t want to own real estate right now.

At least that’s what former DDA member and Fifth Third Bank President Michelle Van Dyke told the Business Journal after last month’s board meeting, which, by the way, wasn’t quite as long as this month’s. But last month’s meeting also featured three projects, including a new hotel proposed for Ionia Avenue and right next door to The Bank of Holland.

Working the plan

While we’re on the DDA, it was just about one year ago that the board expanded its district and promised a 5-percent rebate to the public bodies that it captures property taxes and millages from, if they agreed to let the DDA capture their taxes in the new area.

Well, DDA Executive Director Jay Fowler announced last week the city will be getting a rebate check for $106,000 that will go to the library, the general operating, the refuse and the capital reserve budgets. Fowler also said the ITP budget would get $14,300.

So what rebate do Kent County and Grand Rapids Community College get? Zero and zero, respectively. But both decided not to let the DDA capture any tax or millage revenue in the expanded area, so both kept 100 percent of their tax revenues in the new district.

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