Auto Bankruptcies Could Weaken Defense “So That’S a Big Increase,” the Plant Employs Nearly Temkin Said

20090608-NEWS--0001-NAT-CCI-CD_-- 6/5/2009 6:40 PM Page 1 ® www.crainsdetroit.com Vol. 25, No. 23 JUNE 8 – 14, 2009 $2 a copy; $59 a year ©Entire contents copyright 2009 by Crain Communications Inc. All rights reserved Page 3 MORE SMALL-BIZ LOANS The number of U.S. Small Google’s growth in Ann Arbor Business Administration 7(a) dips; few see it as sign of loans is on the rise again in Toolmakers’ new tack Michigan, although still trailing trouble numbers from one year ago: Inside Firms’ goal: Advance wind-turbine technology Troy law firm launches 168 177 173 188 162 BY RYAN BEENE rent-free tech incubator, AND AMY LANE BIG CHALLENGE TO BUILD Page 4 CRAIN’S DETROIT BUSINESS Two Michigan firms are work- 2008 70 43 82 102 102 Ex-Boyden players help DHR ing to launch a new wind-turbine component manufacturing ven- 2009 Jan. Feb. Mar. Apr. May expand into Michigan, ture that is a high priority for the Source: SBA state and could advance the indus- Page 5 try’s technology. The venture, spearheaded by Career Quarterly Sterling Heights-based MAG Indus- SBA lending trial Automation Systems L.L.C. and Recruiting via social media, Dowding Machining Inc. from Eaton Rapids, would have two main func- Page 12 tions: design and manufacture A wind-turbine rotor (above) with 49-meter blades dwarfs workers near its jumps in May state-of-the-art machine tools to hub. A joint venture between two Michigan companies — one in Sterling make massive wind-turbine com- Heights — aims to make blades like this out of carbon fiber. A few details: ponents with reduced time and A basic machine tool used to make dies has between three and five Loan guarantee cost, and build a new generation of axes (or angles of contact) and can be as big as a small bedroom. A machine to build turbine blades would essentially be a current machine wind turbine blades out of carbon 1 tool on steroids: the length of 1 /2 football fields and with 55 axes. fiber. raised, fee axed “The strategic goal is to drive The fully automated machine — not yet built — would lay carbon fiber strands around a mold, apply resins for rigidity and adhesives to make the BY NANCY KAFFER the cost of wind energy down to finished product lighter and stronger than current blades, but likely more CRAIN’S DETROIT BUSINESS the same level as carbon (based expensive. fuel),” said Roger Cope, president After a dismal six months, of MAG’s strategic business devel- the number of U.S. Small Busi- opment group and one of the ven- But there are obstacles. So far, specially designed machine tool- ness Administration-backed loans ture’s principals. “And right now, the principals have been unable to ing. is moving up — and SBA Dis- they’re very far apart.” secure financing. And the machine But after pursuing venture capi- trict Director Richard Temkin The endgame? To be the first to that would produce the blades, al- tal, bank and mezzanine funding, is hopeful the trend will contin- This Just In apply advanced, automotive-style though designed, has not been Cope says no one is willing to pony ue. manufacturing processes and ad- built to scale and tested. up. In May, the Sterling Heights gets help vanced materials to wind-turbine “We feel like we have the an- “It’s just a complete disaster,” SBA backed in effort to save auto plant components manufacturing. swers, and it’s an American an- he said. 102 loans The hope is that the venture, if swer and it’s a Michigan answer,” Still, state and company officials through its The city of Sterling successful, would attract original- said Jeff Metts, president of Dowd- are exploring financing for the 7(a) program, Heights, the Michigan Eco- equipment manufacturers in the ing Machining. ventures from a variety of sources. a marked nomic Development Corp. and wind industry and suppliers to set Cope says about $135 million is change from the Center for Automotive Re- up operations in Michigan. needed to fund a first plant and See Wind, Page 18 the first six search will collaborate on an months of its effort to save the Sterling fiscal year, Temkin Heights Assembly Plant after when the the successor company to SBA backed an average of 65 Chrysler L.L.C. emerges from such loans a month. Chapter 11 bankruptcy. Auto bankruptcies could weaken defense “So that’s a big increase,” The plant employs nearly Temkin said. 1,400 workers near Van Dyke National Defense Industrial Associa- contracts carry over to the new April’s numbers mirrored Avenue and Metropolitan Suppliers serve tion Michigan chapter could be au- companies that emerge from bank- May’s, with 102 loans made Parkway and produces the tomotive suppli- ruptcy, the question now becomes through the 7(a) program. The Chrysler Sebring and Dodge ers or how many defense contractors’ SBA backed 13 loans through Avenger. The bankrupt au- both industries manufacturers POWER MOVE suppliers may be lost. its 504 program in April and 19 tomaker recently invested in other industry Kenneth Dalto, president of in May, the largest number of BY CHAD HALCOM Up to $20M: more than $300 million in up- segments that re- Farmington Hills-based Kenneth J. loans made in a month since CRAIN’S DETROIT BUSINESS State utilities grades at the production site. cently diversi- to pursue Dalto Associates and consultant to July 2008. It is one of at least eight Bankruptcy restructuring and fied into the de- payments from the automotive supplier industry, While those numbers are up, plants companywide that supplier consolidation for General fense industry, GM, Page 4 said he expects to see significant lending is still down year over Chrysler attorneys have said Motors Corp. and Chrysler L.L.C. said Paul Curtis, defense fallout from the GM and year. In May 2008, the SBA will not transfer as assets to could disrupt the supply chains of NDIA-Michigan president. Chrysler restructuring. backed 162 7(a) loans, Temkin the new company, under the some defense contractors — par- As of this spring, NDIA-Michi- “Within a year or two after this said. terms of a sale approved last ticularly makers of trucks and gan has 2,016 individual members (restructuring) is complete, proba- SBA-backed lending ground week at U.S. Bankruptcy Court smaller vehicles, local industry from at least 70 different compa- bly a third or more of all compa- to a halt at the beginning of its in New York. leaders and analysts said. nies. That’s compared with around nies in the manufacturing supply fiscal year in October, with a 66 See This Just In, Page 2 Up to half of the companies rep- 1,600 people from 35-40 different chain are either going to be gone percent drop in the number of resented in the membership of the companies two years ago, Curtis — as in out of business — or loans made, just 81 that month, estimated. they’re going to be severely under- compared to 240 in October Most of the new members are capitalized,” he said. “That would 2007. suppliers, manufacturers, service have to affect the defense industry Temkin said he sees signs the industries and specialty compa- to some degree, because there are upward trend will continue. nies that recently branched out serious crossovers.” “The provisions of the Amer- into defense work, he said. For their part, Sterling Heights- ican Recovery and Reinvest- But since at least a portion of the based General Dynamics Land Sys- ment Act that SBA implement- 1,400-plus GM suppliers and hun- tems and BAE Systems, which is ed in the middle of March, I dreds more doing business with think, have made a significant NEWSPAPER Chrysler likely won’t see their See Defense, Page 19 See SBA, Page 21 20090608-NEWS--0002-NAT-CCI-CD_-- 6/5/2009 5:59 PM Page 1 Page 2 CRAIN’S DETROIT BUSINESS June 8, 2009 Scout, a small unmanned ground with established metro Detroit CORRECTIONS May 25 issue. THIS JUST IN vehicle, at the Camp Grayling Na- entrepreneurs. Attendees also According to sales figures from tional Guard base in Grayling. will have the opportunity to reg- Ⅲ There were several inaccura- General Motors Corp., the volume ■ From Page 1 The Scout finished a 64-kilome- ister in one of the many entrepre- cies in an article on the No of vehicles sold in 2008 at Jeffer- ter (40-mile), 12-hour test of Adap- neurial support programs offered Worker Left Behind program on son Chevrolet Co. was 353; Dick Luke Bonner, economic develop- tive Materials’ 150-watt fuel cell, through TechTown. Page M31 of the June 1 issue. Morris Chevrolet Inc., 451; Michael ment manager for Sterling which was powered by standard TechTown received a grant The article stated that the pro- Chevrolet Inc., 519; John Bowman Heights, said the three agencies propane. The Scout held a consis- from the New Economy Initiative for gram would be a casualty of state Chevrolet, 620; Holiday Chevrolet, and the governor’s office will tent pace of just more than five Southeast Michigan for up to $5 budget cuts. The program has, in- 573; and LaFontaine Chevrolet, 859. make a proposal for the plant to kilometers an hour. million over the next three years deed, lost $7.8 million in state Representatives from Dalgleish find a buyer after the Center for The fuel cell consumed three 8- to launch the Kauffman Founda- funds, but state funding accounts Cadillac Inc., Lunghamer GMC and Automotive Research completes ounce canisters of propane.

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