Crain's Detroit Business Holiday Edition - (Page 4)

Page 4 CRAIN’S DETROIT BUSINESS December 21, 2009 Missions: Summit work continues ■ From Page 3 Econ Club climbs out of ‘quicksand’ BY NANCY KAFFER CRAIN’S DETROIT BUSINESS Chappell said. Chappell said that while in Washington, Ford met briefly with Obama on another matter. The event focused on the areas of energy, the environment, manufacturing and technology, but in processing the output, it became apparent that no area was isolated, Chappell said. “No matter what industry you’re in, there must be common priorities we share that would help us all,” she said. Chappell emphasized the to-do list represents a consensus among the summit’s speakers and attendees. It’s still difficult to gauge what the material outcome of the summit’s output will be, said Phil Power, president of the nonprofit Center for Michigan, an Ann Arborbased think tank. “I think the important thing is to find a way to distinguish and differentiate Michigan from a whole bunch of other states,” Power said. “Not many states have had summits of this sort, so that helps. But the proposals that arose from the summit in themselves are fairly straightforward, AMERICA’S TO-DO LIST Highlights of the plan presented to U.S. Commerce Secretary Gary Locke in Washington, D.C., last week: Develop a national energy strategy that includes a clear carbon policy. Develop a national manufacturing strategy. Support and encourage R&D and innovation as catalysts for jobs, growth and environmental improvement. Encourage sustainability in business, including conservation and efficiency from producers to consumers. Improve and promote science, technology, engineering and math education. Focus on skill-building and workforce retraining to provide justin-time talent to meet changing business needs. Shift perception of national celebrities to include engineers, scientists and thinkers. Upgrade infrastructure to support 21st century business needs. Expand smart-grid activities to balance energy needs and connect new energy sources. Create transportation infrastructure to support electric vehicles and alternative fuels. Source: The Detroit Economic Club/The National Summit and if we want the feds to deal in a vigorous way with them, we’re going to have to find some way to show that Michigan itself is prepared to do the heavy lifting that is required to set the stage for these things, and frankly that has to do with a whole lot of reforms the governor and the Legislature have so far been unwilling to contemplate.” Power said Michigan’s current and projected budget deficit make it difficult to credibly suggest an economic path for the nation to follow. “It’s very stupid for a state in the kind of trouble we’re in to tell the rest of the nation what to do,” he said. Nancy Kaffer: (313) 446-0412, nkaffer@crain.com After months of economic uncertainty, the Detroit Economic Club is on its way to solid financial ground. “The not-so-great news is that we did go through a very, very difficult time in the late summer and during the fall,” said Economic Club President and CEO Beth Chappell. “Things are still very, very tight right now, but we are rebuilding, and we are doing some great programming, and things are coming back. We felt like we were in quicksand for a while. Now the ground is a little mushy, but we are on the way to terra firma.” The Economic Club announced plans to convene The National Summit, an ambitious three-day event held this summer in Detroit, about a week before the economic crash. “We still walked into the eye of the storm, and that’s because we believe that this is the time for that process,” Chappell said. “If not now, when better?” The plans for the summit were affected by the economic crisis. The event, originally planned for Ford Field, was moved to the Detroit Marriott Renaissance Center. Ticket prices dropped. Chappell sent out multiple appeals for additional donations to the club’s board of directors. Chappell said the board was kept aware of the club’s event-related money troubles at each step. “We did go to our board twice before we proceeded with The National Summit, and they understood clearly the storm we were walking into,” she said. “They got behind us and they stayed behind us.” Chappell said that much credit goes to the event’s co-chairmen, Bill Ford, executive chairman of Ford Motor Co., and Andrew Liveris, chairman and CEO of the The Dow Chemical Co. The price tag for the summit was about $3.1 million, Chappell said, or $3.4 million including the post-summit work and in-kind support. The club has beefed up its programming, attracting speakers on high-interest topics in an effort to boost attendance. Next year, the club celebrates its 75th anniversary. “We’re going to celebrate the richness that is the past 75 years of the Detroit Economic Club, and along the way we hope our members and stakeholders will help us with this one year raising a little money, we will be on firm financial ground,” she said. Nancy Kaffer: (313) 446-0412, nkaffer@crain.com Visioneering: Orders rise ■ From Page 3 Earnings: Auto sector pulls weight ■ From Page 3 lending crisis and shifting priorities in federal defense spending. “It’s someone’s intellectual three-beer lunch discussion as to what affected us most. Was it the credit market, the change of presidential administrations, or the delay in (Congress) approving the defense appropriations bill? Clearly there were issues,” he said. “We seem to be getting a handle on them. Right now the market feels like an engine beginning to catch when you start it. But it isn’t quite revving yet.” Strandquist and Brian Becker, Visioneering’s continual improvement manager, said some of the latest resurgence is from preproduction orders connected with France-based Airbus SAS’ development of the A350 commercial airliner, as well as Chicago-based The Boeing Co. performing refits and upgrades on the military’s fleet of A-10 twin engine aircraft. The company also expects preproduction equipment orders soon on the 787 Dreamliner aircraft, after its successful test flight last week by Chicagobased Boeing. “A group of us were gathered around one of the computers, watching that test flight closely,” Becker said. “Because a success could mean the company will need equipment to ramp up production within a matter of months.” Visioneering makes specialty tools, assembly fixtures and some molds or casts for military and civilian aerospace OEMs. Strandquist estimates commercial aircraft comprises 45 percent of company sales, while defense is also 45 percent and the space program another 10 percent. Visioneering provides some equipment for Bethesda, Md.-based Lockheed Martin Corp. on the Orion Project, a proposed replacement vessel for NASA’s aging fleet of space shuttles. Strandquist came to Visioneering as CEO from Wurth Service Supply in Indiana, after Indianapolis-based private-equity firm Hammond Kennedy Whitney & Co. Inc. bought Visioneering in May 2007. Hammond Kennedy then invested an additional $10 million after the purchase toward new equipment and improvements. The company went that year to gain certification under the AS 9100 aerospace quality standards published by the Society of Automotive Engineers. Jeffry Cunningham, CEO of competitor Models & Tools Inc. in Shelby Township, said Visioneering is among a group of local tooling and assembly fixture makers that moved away from automotive customers to the aerospace and defense market and compete for bids on production equipment. Many of those firms saw some growth and new orders late in the year, he said. Models & Tools now has about 100 employees, up from about 85 when the company moved from Troy to Shelby Township in March with the aid of tax incentives through the Michigan Economic Growth Authority. Cunningham said commercial aerospace shows signs of new life, but still lags behind defense-related work, which is largely dominated by ongoing work on the $300 billion-plus Joint Strike Fighter project. He estimated 70 percent of Models & Tools’ revenue was in defense projects this year and 30 percent commercial aerospace, compared with a split of 57 percent to 43 percent in 2008. “Much of the new activity in commercial aerospace is projects like A350 and the 787 (Dreamliner) as they’re moving toward production,” he said. “But other segments like the small business jet are still pretty much dead for now. It’s pretty selective growth, if you can be a part of it.” Chad Halcom: (313) 446-6796, chalcom@crain.com dian earnings were flat, compared with the average company on the Standard & Poor’s 500 being off 5 percent. “Consumer cyclicals, both auto and non-auto, were up, which is an early sign of a comeback in the state economy,” said Sowerby. “You had big gains by Ford, by BorgWarner, by Amerigon” — which cut its quarterly loss from $153 million to $12 million — “and then you had Valassis, whose stock has been on a tear, and Domino’s Pizza, whose stock price is up 80 percent and whose earnings were up in the quarter by 31 percent.” “The first thing you notice is the performance by auto suppliers,” said Dana Johnson, chief economist at Comerica Bank. “It says to me that the structural changes in the sector that have been hitting Michigan so hard are finally paying off. You can see from the results that they’ve rightsized themselves. And in 2010, we’re going to see the first increase in auto production in 10 years, so the suppliers are going to have an even better 2010.” But not all is rosy in the rest of Michigan’s publicly traded sectors. “You look down the rest of the list and almost everything else is disappointing,” said Johnson. Disappointing is hardly a strong enough word for the bank sector, which continued to be hit hard by commercial loans in default. All nine reporting public banks headquartered here lost money in the quarter, with aggregate losses of $405.5 million, up from total losses of $86.3 million in the same quarter last year. Flagstar Bancorp Inc. lost $298.2 million,

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Crain's Detroit Business Holiday Edition