big deals on big buildings hisjustin 2 riverfront towers sold

RIVERFRONT TOWERS� Where: 100, 200 and 300 Riverfront Drive, off EastJefferson west of Joe Louis Arena.� What: Gated community on 24-acre site withlandscaped parkland, private marina, sand volleyballcourt, health club, bar and grill, market, hair salon, drycleaners and indoor walkway to Joe Louis Arena andPeople Mover. � Units: 555 apartments; 285 condos.� History: Two towers built in early 1980s, third in1991. Renovated 2005-2007.

http://www.crainsdetroit.com Vol. 23, No. 30 J U L Y 2 3 – 2 9 , 2 0 0 7 $2 a copy; $59 a year

THIS JUST INTHIS JUST INDeloitte names newmanaging partner

Tom Dekar, vice chairmanat Deloitte & Touche USAL.L.P., is turning over thereins of the Detroit office toa new managing partner.

Joseph Angileri has beennamed managing partner ofthe Detroit office of Deloitte,

replacingDekar.

Dekar hadbeen bothhead of theDetroit officeand manag-ing principalin charge ofthe 12 offices

in the seven-state, NorthCentral region. He will re-main in charge of the re-gion.

Angileri said it was de-cided that as the Detroit office, Deloitte’s eighth-largest nationwide, con-tinues to grow, it neededsomeone to act exclusivelyas a managing partner.The Detroit office grew bya combined 23 percent in2005 and 2006 to a total of1,010 employees. Plans areto add another 125 thisyear.

Angileri, 49, a member ofCrain’s 40 under 40 class of1997, was managing part-ner in charge of the taxpractice in Detroit beforetransferring to New YorkCity in 2002 to head the na-tional corporate-financeand mergers and acquisi-tions practice. Most recent-ly, he was national manag-ing partner for strategicrelationship managementfor nonaudit clients.

“It’s great to be backhere,” said Angileri, whohad retained a residence inFranklin while based inNew York City.

“Michigan’s transforma-tion provides great growthopportunities for us.”When you talk about thethings that are going onhere, whether it’s supplierconsolidation, low-costcountry sourcing, labor is-sues, health care and pen-sion issues, we’ve done alot of work in those areas.”

— Tom Henderson

NE

WS

PA

PE

R

©Entire contents copyright 2007 by Crain Communications Inc. All rights reserved

Fastest growing companies,Page 20

Report calls for morewomen in tech programs,Page 27

®

See This Just In, Page 2

CRAIN’S LISTCRAIN’S LIST

Big deals on big buildings

2 Riverfront Towers soldto New Jersey investor

State pursuesnetwork forsharing patientdata by 2010

BY SHERRI BEGINCRAIN’S DETROIT BUSINESS

Southeast Michigan health careproviders would be able to share in-formation on patients in order to co-ordinate their care as early as 2010under a new online patient informa-tion network.

The state has committed $658,356 ingrant funding to the Altarum Institutein Ann Arbor to lead planning for sev-eral regional health-information ex-changes. The grant is part of a $4.5million project the state is funding todevelop or expand online patient in-formation programs.

“We see this as a benefit for pa-tients whose records will be able tofollow them through technology,”said James McCurtis Jr., assistant tothe director of the Michigan Depart-ment of Community Health.

Within two to three years, the statewants to establish local access to pa-tient information, and, ultimately, toprovide statewide access, he said.

“The new exchange would help in-crease quality of care through re-duced errors, access to care, and ...more efficient (care),” said JeffMoore, Altarum senior vice presidentand chief development officer.

Other regions including Santa Bar-bara, Calif.; the border area betweenMichigan and Indiana near SouthBend; and the Research Triangle areain North Carolina have similar initia-tives, he said.

“Some have been successful andsome haven’t been, which is why theplanning process we are leading is socritically important. You have to lookat issues of governance and sustain-ability if these (exchanges) are reallyto take root.”

The institute will collaborate withabout 40 other organizations inpulling together a plan and looking atarchitecture, software to converge pa-tient data from various health careprovider systems, access and privacyissues, and how the system will befunded, Smith said. Governance isalso an issue; creating a nonprofit tooperate the exchange is one option.

Altarum expects to finish planningand request vendor bids for theSoutheast Michigan exchange by Sep-

Deal estimatedat about $50M

BY DANIEL DUGGANCRAIN’S DETROIT BUSINESS

Two of the three towers in Detroit’s luxuryresidential development, Riverfront Towers,have been sold to a New Jersey investor.

In a deal estimated at roughly $50 million,commercial real estate professionals say, thetowers are the only Detroit buildings thatcould command such a price.

“This is going to remain the primo rentalproperty in Detroit,” said Mark Rohr, a part-ner in the Birmingham office of Phoenix-basedHendricks & Partners, which brokered the deal.“The feeling was that this is a real bargain, andwill be a great long-term investment as Detroitimproves.”

The 100 and 200 towers on Riverfront Drivenear Joe Louis Arena were sold by Florida-based Ram Development Co. to New Jersey-based Empirian Acquisitions July 13.

Eric Taylor, senior investment advisor with


Investors holding on to industrial real estate are seeingopportunities to cash out as selling prices have been on therise since the second quarter of 2006.

Driving up prices and demand are risk-tolerant nationalinvestors eager to buy at prices lower than in other nationalmarkets, betting that the market will stabilize and net a highreturn.

Industrial property in the Detroit market sold for an aver-age of $50.61 per square foot in the second quarter of 2007, ac-cording to Rosemont, Ill.-based Grubb & Ellis, up from a 2006average of $45.32 and a 2005 average of $48.50.

Dealmakers are keeping an eye on capitalization rates forproperties — net operating income divided by property val-ue — and finding indicators of high rates of return in the fu-

National buyers heat uplocal industrial real estate

Auto talks. Housing. The U.S.economy. Fuel prices. Private-equity and hedge funds. Theimpact of those trends andmore are covered in Crain’sMidyear Economic Report

beginning on 1.

See Riverfront, Page 29

See Altarum, Page 28See Industrial, Page 29

Towers 100 and 200 (far right and center) have beensold.

Angileri

DETROIT BUSINESS MAIN 07-23-07 A 1 CDB 7/20/2007 7:28 PM Page 1

Former clothier gets prisonOne-time clothier and fashion

maven Ilene Ruth Moses was sen-tenced Friday by U.S. DistrictJudge Patrick Duggan to a 17 ½-year prison term on her Feb. 1conviction by a federal court juryin Detroit on 52 counts of bank,mail and wire fraud, bankruptcyfraud, money laundering, falsestatements and perjury.

The charges arose from allega-tions that Moses, now 70 and liv-ing in Las Vegas, defrauded Michi-gan National Bank and SwissCantobank International of about$26 million from 1983 to 1988.Judge Duggan also ordered her topay more than $15 million inrestitution.

Moses was president and CEOof Detroit-based SMS Inc., a cloth-ing manufacturer that filed forChapter 11 in 1990. She was in-dicted by a federal grand jury inDetroit in 1996 and again in 2002,charged with using shell compa-nies and phony paperwork todupe auditors and bankers.

— Robert Ankeny

Tribes appeal court rulingA dispute between two Ameri-

can Indian tribes and the Michi-gan Economic Development Corp. is

heading to a new level, with thetribes last week appealing anApril U.S. District Court ruling thatfavored the state.

The Little River Band of Ottawa In-dians and the Little Traverse BayBands of Odawa Indians last weekfiled notice of an appeal to the 6thU.S. Circuit Court of Appeals inCincinnati. The case involves thetribes’ obligation to pay the statea share of their casino revenue —money that supports state eco-nomic-development efforts.

The state sued the tribes inJune 2005 over their withholdingof payments, and U.S. DistrictJudge Wendell Miles recentlyruled that the tribes were in viola-tion of their obligations to make 8percent payments to the state.The court’s judgment wouldaward the state nearly $44.8 mil-lion in payments and interest.

The tribes have contended thatthe Bureau of State Lottery’s kenogame, launched in October 2003and played in bars and restau-rants, ended any requirementthey share revenue with the state.

— Amy Lane

WSU biz school get interim deanWayne State University has

named business professor DavidWilliams interim dean of theSchool of Business Administra-tion. Williams replaces formerDeloitte & Touche L.L.P. executiveRichard Gabrys, who had served

as interim dean since December2005, when Harvey Kahalasstepped down to return to theWSU faculty.

— Sherri Begin

Southfield authority mulls planfor Stouffer’s Northland Inn site

Southfield’s Cornerstone Devel-opment Authority plans to considera proposal later this week formedical offices on the site of theformer Stouffer’s Northland Innnear Northland Mall, housing apossible dialysis treatment cen-ter and other services as a jointventure of Henry Ford Health Sys-tem, Detroit Medical Center andseveral assorted doctors in pri-vate practice.

A formal development plan isexpected at the authority’s Fri-day meeting. The 3.47-acre, city-owned site has stood vacant in re-cent years since the building wasrazed. When Southfield last field-ed proposals for redevelopmentat the site in early 2006, its mini-mum bid on the property was$500,000. Brokerage Grubb & Ellisis working on the proposal.

— Chad Halcom

Grocer decides not to buyFarmer Jack Detroit store

An independent grocer thatwas slated to buy the Farmer Jacklocation at 11300 E. Jefferson Ave.

in Detroit has pulled out of thedeal, according to Jane Shallal,president of the Associated Foodand Petroleum Dealers of Michigan.

Shallal did not name the grocer,and said the grocer did not discusswhy they cancelled the deal.

The Jefferson Avenue storeopened in 2003 and was one of thechain’s largest at 63,892 squarefeet. The store closed July 7.

— Sheena Harrison

Henry Ford Health leases office building in Novi

Detroit-based Henry Ford HealthSystem has leased the 130,000-square-foot Columbus Corporate Of-fice Centre at 39450 12 Mile Roadin Novi to provide offices for doc-tors near the health system’ssoon-to-be-completed hospital inWest Bloomfield Township.

Farmington Hills-based North-ern Equities developed the build-ing as part of the Haggerty CorridorCorporate Park. The Farbman Groupwas the broker on the deal.

— Daniel Duggan

THIS JUST INTHIS JUST IN

CORRECTIONS

� A photo caption in the Rumblings column on Page 42 of the July 16issue misspelled the name of Tommy Brunswick, co-owner of Milford-based movie studio The Skeleton Factory.� A quotation on 3 of the July 16 issue misstated the last nameof the architect of the Renaissance Center, John Portman.� A “This Just In” item in the July 16 issue about the acquisition ofTroy Technology Park should have said the park is 65 percent occupied,not 65 percent vacant.

■ From Page 1

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Unlimited destinations for one low fare.

July 23, 2007CRAIN’S DETROIT BUSINESSPage 2

Crain’s hires staff memberMark Thompson-Kolar, 39, has

joined Crain’s Detroit Businessas assistant managingeditor/production overseeing

the design,headlinewriting andfinal editingof the news-paper.

Thompson-Kolar previ-ously was as-sistant newseditor/editor-ial design di-

rector with The Ann ArborNews, where he had been since2000. Previously, he had workedfor the Detroit Free Press and forthe Ft. Wayne News-Sentinel inIndiana.

Thompson-Kolar has both abachelor’s and a master’s degreefrom the University of Michigan.

He can be reached at (313) 446-0357 or at [email protected].

Thompson-Kolar


BY APRIL WORTHAMCRAIN NEWS SERVICE

If you’re a major North Americanautomotive supplier that has avoid-ed bankruptcy, Wall Street has tak-en a shine to you this year.

Supplier stocks have hit newhighs in recent weeks, buoyed by in-vestors following the lead of privateequity and encouraged by stabiliz-ing raw-material prices and coopera-tive labor unions.

It’s a stark change from a yearago, when the domestic supply chainwas buried beneath an avalanche ofbankruptcies. Many are still diggingtheir way out — among them Delphi

Corp., Dana Corp.,Dura Automotive Inc.,Tower AutomotiveInc., Collins & AikmanCorp. and Federal-Mogul Corp.

Despite the bank-ruptcies — even be-cause of them —suppliers left stand-

ing suddenly are attractive to in-vestors again. And with the second-quarter earnings season hitting fullsteam this week, many analysts ex-pect major suppliers to meet or beatearnings estimates.

“What has happened is you’ve hadprivate equity come in and buy those

assets on the cheap and reorganizethe business,” says Jack Lake, a re-search analyst with the investmentadvisory firm Victory Capital Manage-ment Inc. in Cleveland.

“So now you have a little more ra-tional competition, you don’t have asmuch incremental pressure fromrising raw-material prices, and youhave the unions seeming to be a littlemore conciliatory.”

Signals from the United Auto Work-ers that it is ready to cooperate on la-bor and health care issues is one ofthe major reasons auto analyst BrettHoselton at Cleveland-based KeyBancCapital Markets says he is “cautiouslyoptimistic” about the outlook for

both automakers and suppliers.In a note to investors last month,

Hoselton also highlighted 2006 pro-duction cuts made by automakers in2006 that he says have returned in-ventories to a healthy level. The in-dustry’s overall supplier pricingstructure appears to be improving,too.

“Numerous suppliers noted thatthey are pushing back on pricingwith automaker customers by re-questing smaller annual price con-cessions,” Hoselton wrote.

These and other factors have con-tributed to a consensus on WallStreet that the worst of the storm haspassed. But investors aren’t ready toput away their umbrellas yet.

“No one thinks that’s it — that’s

CRAIN’SINDEX

Development: Retail,residential planned forWSU pharmacy building(above). Page 25.

Supplier: Bosch-Rexrothconsolidates two offices.Page 25.

Budget: Oakland Countyseeks pay, health careconcessions. Page 26.

CRAIN’SINDEX

BANKRUPTCIES . . . . . . . . . 6BRIEFLY . . . . . . . . . . . . . 28BUSINESS DIARY . . . . . . . 23CALENDAR . . . . . . . . . . . . 24CAPITOL BRIEFINGS . . . . . . 6CLASSIFIED ADS. . . . . . . . 22DIVIDENDS. . . . . . . . . . . . . 4EARNINGS . . . . . . . . . . . . . 4KEITH CRAIN . . . . . . . . . . . 8LETTERS . . . . . . . . . . . . . . 8MARY KRAMER. . . . . . . . . . 9OPINION . . . . . . . . . . . . . . 8PEOPLE . . . . . . . . . . . . . . 24RUMBLINGS . . . . . . . . . . . 30WEEK IN REVIEW . . . . . . . 30

These organizations appear in thisweek’s Crain’s Detroit Business:

AlixPartners L.L.P. . . . . . . . 18, 19, 29Altarum Institute . . . . . . . . . . . . . . . 1American Axle . . . . . . . . . . . . . . . . 19American Society of Employers . . . . . 7Amerigon Inc.. . . . . . . . . . . . . . . . . 19Amherst Partners . . . . . . . . . . . . . . 29APCP-ARCON L.L.C. . . . . . . . . . . . . 27Arab American/Chaldean Council . . 27ArvinMeritor Inc. . . . . . . . . . . . . . . 19Beringea L.L.C. . . . . . . . . . . . . . . . 15BlackEagle Partners L.L.C. . . . . . . . 13Board Committee Reporters . . . . . . 26BorgWarner Inc. . . . . . . . . . . . . . . . 19Bosch-Rexroth Corp.. . . . . . . . . . . . 25Boydell Development Co. . . . . . . . . 25Busch’s Inc. . . . . . . . . . . . . . . . . . . . 3Camp Brighton . . . . . . . . . . . . . . . . 14CDPA Architects Inc. . . . . . . . . . . . 27Center for Automotive Research . . . 12Champion Enterprises Inc. . . . . . . . 12Chrysler Financial. . . . . . . . . . . . . . 19Citizens Republic Bancorp Inc. . . . . 15Collins & Aikman Corp.. . . . . . . . . . . 3Comerica Inc.. . . . . . . . . . . . . . . . . 15CSM Worldwide Inc. . . . . . . . . . . . . 19Dana Corp.. . . . . . . . . . . . . . . . . . . . 3Delphi Corp. . . . . . . . . . . . . . 3, 18, 19Detroit/Windsor Tunnel . . . . . . . . . 14Dickinson Wright P.L.L.C. . . . . . . . . . 7Dura Automotive Inc. . . . . . . . . . . . . 3eBuy Media Inc. . . . . . . . . . . . . . . . 17EDF Ventures . . . . . . . . . . . . . . . . . 15Engineering Society of Detroit. . . . . 27Entrepreneurs Organization . . . . . . . 7Federal-Mogul Corp. . . . . . . . 3, 18, 19Fifth Third, Eastern Michigan . . . . . 15First Spirit Bank . . . . . . . . . . . . . . . 15First Tech Direct L.L.C. . . . . . . . . . . . 7Fishbone’s . . . . . . . . . . . . . . . . . . . 14Friedman Real Estate Group . . . . . . 25Guidance Center . . . . . . . . . . . . . . 16Hayes Lemmerz International Inc. . . 19Hiller’s Markets Inc.. . . . . . . . . . . . . 3IJM Realty . . . . . . . . . . . . . . . . . . . 25Income Property Organization . . . . . 29Johnson Controls Inc. . . . . . . . . . . 19Kenneth J. Dalto & Associates . . . . . 3Lear Corp. . . . . . . . . . . . . . . . . 18, 26Loomis, Sayles & Co. L.P. . . . . . . . . 12Masco Corp. . . . . . . . . . . . . . . . . . 12Michigan Dept. of Community Health 1MSX International . . . . . . . . . . . . . 25National City Bank, Michigan . . . . . 15Oakland County Employees Union . . 26Old Wayne County Building L.P.. . . . . 3Paper Plas Inc.. . . . . . . . . . . . . . . . 15Pulte Homes . . . . . . . . . . . . . . . . . 12Quicken Loans/Rock Financial . 12, 15Ram Development Co. . . . . . . . . . . . 1Republic Bancorp Inc. . . . . . . . . . . 15Robert Bosch Corp. . . . . . . . . . . . . 25Soc. of Manufacturing Engineers . . 27Tower Automotive Inc.. . . . . . . . . 3, 18University of Michigan . . . . 11, 12, 27VG’s Food & Pharmacy . . . . . . . . . . . 3Wayne State University . . . . . . . . . . 25WDIV-Channel 4 . . . . . . . . . . . . . . . 17WJBK-Channel 2. . . . . . . . . . . . . . . 17WMYD-Channel 20 . . . . . . . . . . . . . 17WXYZ-Channel 7. . . . . . . . . . . . . . . 17

July 23, 2007 CRAIN’S DETROIT BUSINESS

Suppliers beating The Street?INSIDEChange isconstant inworld ofsuppliers. Seesupplieroutlook story,Page 18.

See Suppliers, Page 29

OWNERSHIP OF THE OLD COUNTY BUILDINGThe Old County Building at 600 Randolph St. is owned by Old Wayne CountyBuilding L.P.Southfield attorney Henry Wineman II is the generalpartner of the partnership, said the group’sspokesman Michael Layne of Marx Layne & Co.Holding a 5 percent stake in the ownership is BurtFarbman, chairman of the Southfield-based NAIFarbman Group. Also in the group: Jack Martin, a Detroit CPAand owner of Jack Martin & Co. P.C.; Lou Glazierof Franklin Advisors L.L.C., Farmington Hills; andJanice Frazer. There are also 48 limitedpartners. The building is managed by Warner FayeManagement, which uses employees of NAIFarbman Group, Layne said. The CoStar Group lists NAIFarbman as the owner ofthe property.

Added stores make Kroger bigger targetMarket-share battlecould be ahead

BY SHEENA HARRISONCRAIN’S DETROIT BUSINESS

The Kroger Co. stands to benefit from its recentacquisition of 20 Farmer Jack stores. But the pur-chases also will make Cincinnati-based Krogerthe target of several grocery chains that will fightthe company for market share.

That’s according to restaurant and grocery con-sultant Kenneth Dalto of Farmington Hills-basedKenneth J. Dalto & Associates. Dalto said Krogerchose Farmer Jack locations that will increase thecompany’s sales and make the chain a leader in lo-cal market share.

The 20 stores that Kroger acquired likely made

the company No. 1 in metro De-troit, according to the Februaryissue of Market Scope, a semian-nual publication of Westport,Conn.-based Trade Dimensions In-ternational Inc.

Kroger controlled about 23.1percent of the metro Detroitmarket in that report. Thechain was a close second toWalker-based Meijer Inc., whichhad 24.3 percent. Farmer Jack

was in third with 15.9 percent.Taking the bulk of Farmer Jack’s business

would put Kroger on top and put the company inMeijer’s line of fire, Dalto said. But smaller com-petitors also will be gunning for Kroger’s busi-ness, particularly chains that have gourmet goodsand loyal customers, he said.

That includes Southfield-based Hiller’s Markets

Inc., which bought a Farmer Jack store in Com-merce Township; Ann Arbor-based Busch’s Inc.,which bought two stores in South Lyon and Novi;and Fenton-based VG’s Food & Pharmacy, whichbought three stores in Fenton and Shelby Town-ship.

Kroger also will need to be wary of chains suchas Trader Joe’s, Whole Foods Market and Papa Joe’sGourmet Market, which opened its new 48,000-square-foot “gourmetrion” store in Rochester inApril.

“If they (Kroger) just look at Meijer, they’re go-ing to make mistakes,” Dalto said. “They have tolook at every community now that they serve.”

Kroger will have to differentiate itself from itscompetitors by providing fresh food and cheapprices, and catering to customers looking forgourmet goods and healthy foods, such as low-fatand organic items, Dalto said.

Dalto

See Kroger, Page 28

They suddenly are attracting investors again

County pays $45 per squarefoot — or $16; who’s right?

AAR

ON

HAR

RIS


Depending on who’s asked,Wayne County was either gettingone of the better deals in town — or

one of the worst— on its lease atthe Old CountyBuilding at 600Randolph St.

The price of$45 per squarefoot for the leasewound up plas-tered on a poster

board next to Wayne County Execu-tive Robert Ficano during a Wednes-day news conference to announcethe county’s plans to purchase theGuardian Building for $14.5 million.

“I think the last 25 years havebeen a total fleecing of the people ofWayne County,” said Wayne CountyCommissioner Burton Leland dur-ing the press conference.

Later that day, another price of$16 per square foot for the county’slease was given by Michael Layne, apartner with Farmington Hills-based Marx Layne & Co., acting asspokesman for Old Wayne CountyBuilding L.P., the partnership thatowns the building.

And both sides were equallyforceful about the accuracy of theirnumbers.

Of the $45-per-square-foot figure,Layne said: “That is a total fabrica-tion.”

So who’s right?

NEW

OFFEROwners ofCounty buildingissue counter-proposal, Page 28.

Ficano, landlord dispute lease rate

See County, Page 28


TAKING STOCK

BY AMY LANECAPITOL CORRESPONDENT

LANSING — Publicly tradedcompanies are facing an unexpect-ed consequence of Michigan’s newbusiness tax — a potential hit tothird-quarter earnings.

That’s because a deduction tooffset some higher tax liabilitiesunder the new Michigan BusinessTax evaporated in June’s final leg-islative action. As a result, compa-nies may need to take a third-quar-ter accounting charge that could,for the largest companies, amountto more than $100 million, by someestimates.

At the heart of the issue is an ac-counting rule that requires publiccompanies to recognize, in their fi-nancial reporting, the income taxliabilities that they book to futureyears. Companies now must reval-ue, based on the new tax rate inthe MBT, those deferred tax liabil-ities. They must make the adjust-ment in the quarter in which anew tax is enacted, which with theMBT’s July 12 signing is the cur-rent quarter.

A legislative fix is in the works,in the form of a 10-year deductionthat would reduce future taxableincome. If enacted as originallyproposed, the deduction would notbe available until 2013 and thenwould phase in 10 percent a year, aschedule that would cushion thefiscal impact on the state.

The deduction would protectcompanies from the MBT-relatedearnings charges now and in thefuture. It would not immediatelyaffect the actual taxes companieswill pay under the MBT but wouldlower tax liability for a 10-year fu-ture period.

Companies are pressing law-makers for quick action as theymove toward the Sept. 30 close oftheir third-quarter reporting peri-ods and a charge that could beviewed negatively by analysts andinvestors.

“We see this as an immediateproblem, and it really is a technicalfix that’s needed, but it’s somethingthat’s urgent,” said Tricia Kinley,director of tax policy and economicdevelopment for the Michigan Cham-ber of Commerce. “To penalize acompany in the eyes of Wall Street,when they’ve actually had nochange in their financial standing,simply because we have this tech-nicality in the law, is unfair.”

Business groups and some law-makers thought they had the issueaddressed. But the final bill thatemerged from a conference com-mittee and rapidly passed theHouse and Senate lacked a provi-sion for the deduction present inprevious drafts.

“It wasn’t until after the bill hadbeen already passed that we had achance to receive the enrolled bill”and see that the provision hadbeen deleted, said Greg Nowak,partner in the state and local tax

TAKING STOCKNEWS ABOUT DETROIT AREA PUBLIC COMPANIES

Companies bracing for hitfrom Michigan Biz Tax in 3Q

practice at PricewaterhouseCoopersL.L.P. and board member of theMichigan Association of Certified Pub-lic Accountants, which is activelyinvolved in the issue.

“That was why it was such a sur-prise. … There’s extreme concernon the part of companies in a de-ferred liability position. It’s criti-cally important that this issue getresolved quickly, to provide cer-tainty and help them evaluate theearnings impact of the new tax,”Nowak said.

Sarah Hubbard, vice presidentof government relations for the De-troit Regional Chamber, said manynon-Michigan public companiesthat have significant activity inthe state could be affected as well.

Steve Bieda, the Warren Democ-

rat who chairs the House Tax Poli-cy Committee, said the issue is thebiggest one that’s emerged with thenew MBT, and he is having a billdrafted to reinstate the deduction.

He said eliminating the deduc-tion was a mistake that should becorrected. He said it could be lateAugust or early September beforethe bill sees action.

Lynn Gandhi, principal at Miller,Canfield, Paddock and Stone plc, saidlawmakers have a limited numberof session days scheduled betweennow and Sept. 30, but if Bieda “hasa bill ready to go the end of August… it can happen in 30 days,” evenwith the legislative schedule.

Amy Lane: (517) 371-5355, [email protected]

STREET TALKTHIS WEEK’S STOCK TOTALS: 19 GAINERS, 52 LOSERS, 9 UNCHANGED

Champion Enterprises Inc. $12.43 $9.69 28.28North Pointe Holdings Corp. 11.63 10.63 9.41Syntel Inc. 35.06 32.53 7.78Origen Financial Inc. 7.02 6.58 6.69Meadowbrook Insurance Group 10.30 9.77 5.43Lear Corp. 38.75 36.90 5.01Compuware Corp. 10.61 10.24 3.61Ramco-Gershenson Properties 37.35 36.47 2.41Agree Realty Corp. 32.11 31.55 1.78First Mercury Financial Corp. 20.61 20.29 1.58

Asset Acceptance Capital Corp. $14.90 $17.46 -14.66Energy Conversion Devices Inc. 28.86 32.87 -12.20Visteon Corp. 7.31 8.01 -8.74Universal Truckload Services Inc. 18.61 20.18 -7.78Caraco Pharmaceutical Labs Ltd. 15.76 16.95 -7.02Comerica Inc. 56.28 60.26 -6.61Ford Motor Co. 8.40 8.97 -6.36Somanetics Corp. 17.58 18.76 -6.29Dearborn Bancorp Inc. 15.62 16.63 -6.07Credit Acceptance Corp. 24.52 26.03 -5.80

Source: Bloomberg News. From a list of publicly owned companies with headquartersin Wayne, Oakland, Macomb, Washtenaw or Livingston counties. Note: Stocks tradingat less than $5 are not included.

CDB’S TOP PERFORMERS

CDB’S LOW PERFORMERS

7/20 7/13 PERCENTCLOSE CLOSE CHANGE

7/20 7/13 PERCENTCLOSE CLOSE CHANGE

1.2.3.4.5.6.7.8.9.

10.

1.2.3.4.5.6.7.8.9.

10.

July 23, 2007CRAIN’S DETROIT BUSINESS

Comerica Inc. NYSE: CMA2nd Quarter June 30 2007 2006

Revenue …………….$1,158,000,000 $1,048,000,000Net income ..............$196,000,000 $200,000,000Earnings per share ................$1.25 $1.22

6 monthsRevenue ..................$2,262,000,000 $2,015,000,000Net income ..............$386,000,000 $394,000,000Earnings per share ................$2.45 $2.40

Champion Enterprises Inc. NYSE: CHB2nd Quarter June 30 2007 2006

Revenue ..................$330,360,000 $370,717,000 Net income ..................$7,465,000 $112,082,000Earnings per share ..................$.10 $.1.44

6 monthsRevenue ..................$590,157,000 $717,246,000 Net income ......................$219,000 $125,729,000†Earnings per share ....................— $1.62

†- After a loss in the first quarter, earnings pershare were less than 1 cent for the first six months of2007.

Citizens Republic Bancorp Nasdaq: CRBC2nd Quarter June 30 2007 2006

Revenue ..................$233,631,000 $140,161,000 Net income ..................$9,619,000 $20,907,000Earnings per share ..................$.13 $.49

6 monthsRevenue ..................$469,737,000 $278,122,000 Net income ................$41,111,000 $41,663,000Earnings per share ..................$.54 $.97

2006 figures reflect Citizens’ activity only. 2007figures include totals for merged Republic Bank op-erations.

Company Amount Payable Recorddate date2007 2007

Citizens Republic Bancorp $0.29 8-16 8-02CMS Energy Corp. $0.05 8-31 8-10

EARNINGSEARNINGS

DIVIDENDSDIVIDENDS


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Management Buyouts | Recapitalizations | Corporate Spin-Offs | Buy & Build Platforms | Family Succession Transactions

H U R O N C A P I T A L P A R T N E R S L L C

www.huroncapital.com500 Griswold, Suite 2700Detroit, Michigan 48226

Tel: 313.962.5800

225 Ross Street, 4th FloorPittsburgh, Pennsylvania 15219

Tel: 412.201.7040

has partnered with management to recapitalize

DetroitPittsburgh

July 2007

Headquartered in Georgetown, Ontario, Canada, The Olon Group, Inc. designs, manufactures and

distributes woodworking component products for the North American furniture and cabinet-making

industries, including drawer components, wrapped moldings, edge treatments and decorative laminates.

With manufacturing facilities in Ontario, Indiana and Illinois, the Company sells its products primarily

to office furniture and cabinetry OEMs, wholesalers and distributors in Canada and the United States.

Biz hangs up on proposed phone taxLANSING – Businesses

are calling on lawmakersto hang up on a proposalthat would add a $1.35-a-month fee on all phones.

They say House Bill4852 would have a broadimpact on business opera-tions, increasing the costsof cell phones, land linesand Internet-based call-ing.

Mike Lesich, presidentand CEO of Oak Park computerservices company Excellis Inc. saidthe charges would add an extra $35a month for his dozen phone lines

and multiple cell phones.“It’s going to add an ex-

tra layer of cost onto myphone bill that really does-n’t have anything to dowith my telephone ser-vice,” Lesich said.

The bill, sponsored byHouse AppropriationsCommittee ChairmanGeorge Cushingberry, D-Detroit, would raise about$198.3 million annually,

according to a House Fiscal Agencyanalysis. Another state analysisshows a figure of $132.8 million.

The money would go into a new

state public-safety fund and be dis-tributed to a host of programs, in-cluding the statewide radio com-munications system used bypolice, fire and EMS.

Kurt Weiss, public-informationofficer for the Michigan Departmentof Information Technology, whichoversees the communications sys-tem, said the funding would eradi-cate the need for Michigan State Po-lice budgetary support andalleviate fees local governmentspay to join the system.

Shanon Akans, public affairssection manager for the state po-lice, said the bill would benefit

“the entire criminal justice com-munity,” including state parolesystems, fire services and forensicscience activities such as State Po-lice crime labs.

Akans also said the proposalwould enable the State Police tohire more officers. She said theproposal is connected to phone ser-vice because that is how residentscall for public-safety assistance.

The Michigan Fraternal Order ofPolice last week said the legislationwill result in “better communica-tions, better-trained police officersand fire fighters, upgraded tech-nology to fight crime and protect

the citizens of Michigan.”However, in a news release last

week, Oakland County SheriffMichael Bouchard called it a“back-door attempt to solve thestate’s budget problems with amonthly tax on every phone inMichigan. These programs are im-portant but should get priorityfunding in the existing generalfund.”

Joe Steele, spokesman for AT&TInc.’s Michigan operations, saidthe fees may cause phone cus-tomers to evaluate whether tohave a land line along with a cellphone and drop some telecommu-nications services.

The Telecommunications Associa-tion of Michigan launched an adcampaign to combat the tax and isjoined in its opposition by organi-zations that include the MichiganChamber of Commerce, the SmallBusiness Association of Michigan andthe Detroit Regional Chamber.

Sarah Hubbard, vice presidentof government relations at the De-troit Regional Chamber, said “it’sjust another hidden tax on busi-ness. We’re talking about anotherway to nickel and dime them.”

Granholm plans foreign tripGov. Jennifer Granholm is plan-

ning an August trip to Sweden andGermany to encourage companiesto invest in Michigan. The Aug. 19-25 trip will include meetings withexecutives and government offi-cials in automotive and alterna-tive-energy. Michigan Economic De-velopment Corp. President and CEOJim Epolito also will take the trip.

Comings & goings■■ Steven Transeth, former assis-

tant director and legal counsel forthe Michigan Legislative Service Bu-reau, has been appointed to theMichigan Public Service Commission.He fills a slot on the three-membercommission vacated July 13 byChairman Peter Lark, now generalmanager of Lansing Board of Water& Light. Transeth’s appointment issubject to Senate approval. A newchairman has not been named.

■■ Dana Debel, policy director forGranholm, is joining Northwest Air-lines Corp. as director of state andlocal affairs, based in Detroit. Shestarts July 30.

■■ Mitch Irwin, director of theMichigan Department of Agriculture,is retiring. He plans to rekindle op-portunities in business develop-ment, investment and real estate,and restructure a company to becalled The Irwin Group L.L.C.

Amy Lane: (517) 371-5355, [email protected]

CAPITOL BRIEFINGSAmy Lane

The following businesses filedfor Chapter 11 protection in U.S.Bankruptcy Court in Detroit July 13-19. Under Chapter 11, a companyfiles a reorganization plan.

Ben’s Discount Drugs Inc., 5412 W.Warren, Detroit, voluntary Chap-ter 11. Assets and liabilities notavailable.

— Compiled by Aaron Harris

BANKRUPTCIESBANKRUPTCIES


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July 23, 2007 CRAIN’S DETROIT BUSINESS

Employee reviews are important for workers, companiesEmployee performance reviews

can be a crucial tool for small busi-nesses that want to develop work-ers and safeguard themselvesagainst potential lawsuits.

Professionals say reviews pro-vide employees with an analysis oftheir professional strengths andweaknesses. They also provide em-ployers with a record of an employ-ee’s performance if the company issued by a worker who was fired orpassed over for a promotion.

“A good evalu-ation system canmake (for) amuch betterplace to work, aslong as it’s donecorrectly,” saidTimothyHowlett, directorof the labor andemploymentpractice at Dickin-son Wright P.L.L.C.in Detroit.

Many small businesses avoid giv-ing reviews because it can be te-dious, even nerve wracking, saidJoe DeSantis, director of communi-cations for the Southfield-basedAmerican Society of Employers.

Many executives or managersalso are concerned about deliveringnegative reviews to employees whomight not handle the news well.

“Fundamentally, this is not aneasy thing to do,” DeSantis said.

The key is committing to an or-ganized, fair review process thatemployees can count on and train-ing managers to give reviews.

Both Howlett and DeSantis saycompanies should set a regulartime frame for evaluating employ-ees and stick with it. That canmean giving reviews on an em-ployee’s anniversary at the compa-ny, or reviewing all employees atthe same time of year.

“You need to make sure thatthere’s a commitment from every-one that you’re going to do it,”Howlett said. “The worst thing is tosay there’s going to be annual eval-uations and they don’t get done.”

It’s something First Tech DirectL.L.C. is improving upon. The RoyalOak-based information-technologyservices company has 26 workers.

President John Silvani said thefirm used to do reviews “haphaz-ardly” but now is formalizing itsprocess to provide more consistentreviews. Under the new policy, em-ployees will receive an evaluationafter 90 days at the company andevery year after that.

“Without a regular time frame,evaluations weren’t being done ac-tively for employees,” said Silvani,whose company reported 2006sales of $5.4 million. “And that’snot fair to them.”

It’s important to develop a set ofobjective criteria by which em-ployees can be judged, Howlettsaid. For instance, salespeople canbe evaluated by whether they metsales goals.

Companies should discuss posi-tive and negative feedback in theirreviews, and provide ways the em-ployee can improve performance.

“It limits the amount of argu-ment about fairness in theprocess,” Howlett said.

Howlett and DeSantis said re-views should be consistently docu-

mented and kept on file. It is alsowise to have someone review the re-

views before they’re given to em-ployees.

This helps ensure that the re-views are fair and don’t make as-sessments based on illegal factors,such as age or family status,Howlett said.

Businesses can appoint a coupleof executives to review evalua-tions, such as the CEO and the hu-man-resources manager. At small-er companies, an attorney can lookat reviews and help the firm staywithin legal boundaries.

“We really recommend thatthere be somebody who basicallylooks at all of the reviews to make

sure that they’re meeting the crite-ria that the organization has setout,” DeSantis said.

Training to give reviews canmake the process go more smooth-ly, DeSantis said. For example, theASE provides educational sessionson evaluating employees.

Silvani said his company’s re-view process came largely from hisexperience at previous businesses.But First Tech also received advicefrom the Entrepreneurs Organization,a peer-advisory group comprisingentrepreneurs with businesses thatgenerate revenue of more than $1million. Members must join before

age 50 but can remain members af-ter that age.

“Many companies have donethis already and have done it well,so there’s no reason to reinventthe wheel,” Silvani said.

Sheena Harrison: (313) 446-0325,[email protected]

SMALL BIZ SOLUTIONSSheena Harrison

SOLUTIONS ON THE WEBRead Sheena Harrison’s previousSmall Biz Solutions columns atwww.crainsdetroit.com. Click onher name in the list of columnistson the left-hand side of the Webpage.

EVALUATING EMPLOYEES� Set a schedule for reviewingemployees and stick with it.� Evaluate performance onobjective criteria. Provide positiveand negative feedback, as well asconcrete suggestions for how theemployee can improve.� Have a team of executives or anattorney review evaluations tomake sure they’re fair and legal.� Document employee reviewsand keep them on file.

DETROIT BUSINESS MAIN 07-23-07 A 7 CDB 7/19/2007 8:59 AM Page 1

Editor:I read the July 16 Opinion titled,

“Microsoft move tells much,” andhave to take exception.

Microsoft, and much of the in-formation-technology industry,continues to propagate the myththat there is a shortage of talent inthe U.S. They continue to press forunregulated immigration policiesin the U.S. as the “answer.” Theirtelling of a half-truth is still a lie.

When position postings are list-ed at one-half, or less, of the U.S.salary range for a position, theywill not get many U.S. citizens ap-plying. I have worked on and man-aged multimillion-dollar IT pro-jects awarded to Indian- andChinese-owned companies wheremost, if not all, of the workerswere brought over under immi-grant worker policies.

I have managed IT departmentswhere a $28-per-hour employeehad to be laid off, and the same jobposting was issued the followingweek with a salary cap of $20 per

hour. Corporate IT also selectedthe résumés forwarded to me forconsideration. Almost every onewas an H1B immigrant.

In many cases, immigrant work-er expenses are subsidized to fur-ther lower their short-term salaryrates. Immigration policies makeit attractive for foreign workers tocome to the U.S. and work for halfthe going salary for a short time toget their green card. The ever-growing number of displaced U.S.IT workers that are now working

in other industries since they can-not live on half or less of what theyused to earn in IT is proof enough.

It’s long past time for the truth tobe told: There’s no shortage of tal-ent in the U.S., just corporate greed.

James AielloPresident

JRA Systems L.L.C.St. Clair Shores

The view looks goodEditor:

Keith Crain’s July 2 column,“We still have lots of things to cele-brate,” should have been printedin bold letters on the front page.

It is really refreshing to see thatsomeone around here at a “mile-high level” has good things to sayabout Michigan and Detroit. Mysister, who grew up in St. ClairShores with me, was up here fromher home in Florida along with hertwo sons — one just graduated fromlaw school and the other will gradu-ate from law school next June.

KEITH CRAIN:

OPINION

A&P forgot to serveDetroit community

he grocery business is notoriously unforgiving. With ra-zor-thin profit margins and intense competition, the in-dustry demands flawless execution of the right retail

strategies.Which brings us to the case study of Farmer Jack and its

parent company, Great Atlantic & Pacific Tea Co. Inc. After itpurchased the locally owned Farmer Jack chain in 1989, A&Pproduced a veritable encyclopedia of bad strategies and terri-ble execution. Its graceless exit this month from the Detroitmarket was just the final chapter.

At the time of the purchase in 1989, the combined marketshare for A&P and Farmer Jack stores in metro Detroit wasabout 33 percent.

Earlier this year, Crain’s reported its market share for the66 stores in the region had dropped to about 16 percent.

There are many reasons for the decline, including fiercecompetition. Service was also an issue in many stores; one ana-lyst told Crain’s at the time of a major store opening about threeyears ago that it was just a matter of time before the shiningstore stumbled with service, appearance and stocking issues.

But a modest, yet parochial view held within Crain’s news-room is that local management was disconnected from thecommunity.

In recent years, one local president, Mike Carter, tried tobecome more active and visible, but it appeared he got littlesupport from the New Jersey headquarters to do so.

The entire store-closing process was shrouded in secrecy,confounding employees, customers and the communities wherethe stores were located. All media calls routinely were referredto New Jersey headquarters, which rarely returned a call.

We can understand that the bidding process and sale of thestores required some degree of confidentiality, but the lengthyprocess seemed to be taken to an extreme.

It wasn’t just here that A&P fumbled; its clumsy exits arehappening all over the country. The company, once the largestgrocery chain in the country, now has a strategy to concen-trate on Northeast states and is in the process of buying Path-mark, another New Jersey-based grocery chain.

If A&P had allowed the Farmer Jack division more autono-my to connect and communicate locally, its ties to customersand communities would have been stronger. Market sharemay even have risen.

Meanwhile, customers of old Farmer Jack stores that soldbeer, wine and liquor now suffer because, as The Detroit Newsreported last week, requests for license transfers by new own-ers face the same state scrutiny as new applications. That’s astate problem, not the fault of Farmer Jack. So, here’s a note tothe state: The delays are ridiculous, especially when buyers in-clude longtime liquor license holders like Kroger Co.

KEITH CRAIN:

Greed behind worker ‘shortage’LETTERS

OPINION

LETTERS

Last week, the shareholders ofSouthfield-based Lear Corp. sum-marily rejected an offer by Carl Icahn to buy the company forsomething less than $3 billion.

The offer was put together bymanagement, and it was supportedby Lear’s board. Although wedon’t know the actual vote, it ap-pears that it lost by a wide margin.

If the offer had been approved, itwould have meant substantial pay-outs for the top managers of Lear.

If the deal didn’t go through, Icahn was to receive more than $12million and more than 335,000

shares in the companyfor his trouble.

Most shareholdersthought the companywas worth $10 to $20 ashare more than Icahnoffered.

It wasn’t an isolatedinstance of the proposedsale of a company inwhich the managers ne-gotiated the transaction— along with huge pay-outs for themselves —and then the board rubber-stampedthe decision. It happens all too of-

ten, so it was remark-able that the owners ofLear, the shareholders,rejected the idea.

Corporate boardshave nominating com-mittees, but in practice,directors are picked bythe management teamor CEO. It’s no wondercorporate governancecan get lost when direc-tors then vote on salesor takeovers that create

large payments to management.There must be a better way for

shareholders to be represented in-dependently in a transaction. If acompany is trying to do the best forits owners, there must be an arm’slength between seller and buyer.

The most notable and question-able recent transaction in Detroitwas when Daimler-Benz boughtChrysler in 1998. Many Chryslermanagers received huge bonuses.

A local banker, now retired, toldme that the going price for the sup-port of a chairman of a bank thatwas being bought was a nice bonusof $100 million. What chairmanwould object to such a windfall? It

would make him an enthusiasticproponent of any such deal.

Now it’s back to work for themanagers of Lear. If they are tootainted by their support of thattransaction, the not-so-indepen-dent board might have to makesome other hard decisions.

Perhaps it’s time for Lear execu-tives to go back to the basics of do-ing what they have been very goodat for a long time.

Maybe it’s time for everyone togo back to running companies forthe benefit of shareholders, cus-tomers and employees.


Crain’s Detroit Businesswelcomes letters to the editor.All letters will be considered forpublication, provided they aresigned and do not defameindividuals or organizations.Letters may be edited for lengthand clarity.Write: Editor, Crain’s DetroitBusiness, 1155 Gratiot Ave.,Detroit, MI 48207-2997.E-mail: [email protected]

See Letters, Page 8

T

Shareholders spoke, so Lear must listen


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July 23, 2007 CRAIN’S DETROIT BUSINESS Page 25

Bosch-Rexroth consolidating 2 offices

WSU pharmacybuilding buyerhas plans forretail, residential


A former Wayne State Universitypharmacy school building, vacantfor five years, was set to be demol-ished by January if a buyer could-n’t be found.

Rescuing the building from thewrecking ball was part of the ap-peal for developer Dennis Kefalli-nos, who has purchased the eight-story building for $2.3 million andis considering a mixed-use devel-opment for it.

“This is a really unique build-ing, I didn’t want to see it demol-ished,” he said.

Kefallinos, who has developedother aging Detroit buildings forresidential use, plans to make afirm decision on the fate of the160,000 square-foot building at 1401Rivard St. in the next 90 days.

He is considering a mixed-use de-velopment with residential on theupper floors and retail and com-mercial on the ground floor. Ahigh-end steak house could fill theretail space, said Kefallinos, whoowns Niki’s Pizza, Coach’s Corner andLoco Bar & Grill, all in Detroit.

Selling the building has been afive-year endeavor for HowardPerlman, a senior vice presidentwith Farmington Hills-based Fried-man Real Estate Group who bro-kered the sale on behalf of WSUalong with Steve Eisenshtadt, avice president with Friedman. Ke-fallinos was represented by De-troit-based IJM Realty.

“That building was a white ele-phant,” Perlman said. “There wasa lot of activity but potential buy-ers couldn’t make it work; it wascost-prohibitive to tear it downand start from scratch.”

This wouldn’t be the first rede-velopment for Kefallinos, owner ofBoydell Development Co. He has con-verted the River Park Lofts at 227Iron St. and the Lafayette Lofts at1301 W. Lafayette Blvd.

The price for a building this sizemade the deal very attractive, hesaid.

“At that price, you’d only bestanding across the street lookingat the building in other parts of thecity,” Kefallinos said.

Two other former WSU proper-ties have been sold to private devel-opers for redevelopment in recentyears. The loft-style residences at55 W. Canfield St. and Willys Over-land Lofts, 444 W. Willis St., wereredeveloped WSU properties.

Daniel Duggan: (313) 446-04120,[email protected]

BY CHAD HALCOMCRAIN’S DETROIT BUSINESS

Global parts supplier and engi-neering firm Bosch-Rexroth Corp. isconsolidating two SoutheastMichigan operations and 120 em-ployees into one new location inRochester Hills after leasing theformer offices of MSX InternationalInc. in the Rochester Hills Execu-tive Park near Auburn Road.

Representatives for the U.S. di-vision of Bosch-Rexroth, based inLohr am Main, Germany, willjoin Rochester Hills city officialstoday in a formal announcementof the move.

The facility, tentatively namedthe Rexroth Technical Center,will house 22 employees in Bosch-Rexroth’s Intelligent HydraulicDrives unit, a hybrid engine com-ponent project the company ac-quired from Dana Corp. last year.The IHD unit employees beganmoving in earlier this month andthe company expects another 98employees based in its AuburnHills offices will follow during thelast quarter of the year.

The company and its U.S. sub-sidiary comprise the technologi-cal sector of Robert Bosch Corp. inFarmington Hills, Bosch-Rexroth

marketing specialist Negin Neg-habat said.

Robert Bosch is the U.S. divi-sion of Robert Bosch GbmH, basedin Stuttgart, Germany, the largestsingle auto-supplier companyworldwide with $26.9 billion inoriginal equipment automotivesales for 2006.

“We had acquired IHD and themanagement wanted to be in onebuilding for both divisions, andthe needs of that unit were com-patible with this facility inRochester Hills,” Neghabat said.“And at the same time, the leaseon our facility in Auburn Hills

was about to expire, so it was goodtiming (to move).”

The 57,000-square-foot facilityon Research Drive, which War-ren-based MSX Internationalleased until 2002, has been vacantmost of the past five years,Rochester Hills Mayor Bryan Bar-nett said last week.

Neghabat said the Auburn Hillsemployees will begin vacatingtheir offices on Harmon Road be-tween October and December.

Auburn Hills has an industrialbuilding vacancy of 10.6 percent.

Chad Halcom: (313) 446-6796,[email protected]

AARON HARRIS

The former WSU pharmacy buildingwas set to be demolished in January.


586-443-5880 www.tecdetroit.com

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Oakland County seeks pay, health care concessionsBY CHAD HALCOM

CRAIN’S DETROIT BUSINESS

Faced with flat property valuesand soaring employee health carecosts, Oakland County is seekingconcessions in pay and benefits

from its work-force to balanceits budget overthe next twoyears.

County Exec-utive L. BrooksPatterson andcounty Manage-ment and Bud-get Director

Laurie Van Pelt said the next sev-eral years mean some hard reali-ties as the county faces a projectedincrease of less than 1.5 percent in

property tax revenue next fiscalyear and just 1 percent for 2009.

Property taxes account for 62percent of county budget revenue.

“We’re seeing in some neighbor-hoods in a 2007 equalization re-port, some communities have actu-ally gone down in their (taxable)values,” Van Pelt said. “And inthis market we’re expecting therevenues countywide will increaseby only 1 percent or so (per year)right through 2012.”

At the same time, Pattersonsaid, soaring costs for existinghealth care plans for county em-ployees would mean a 4 percent in-crease in total compensation costsstarting next year. With that inmind, the county is seeking con-cessions from its staff in pay andhealth benefits to keep the budget

balanced.The total bud-

get — $708.9 mil-lion in fiscal year2008 and $715.3million in fiscal2009 — accountsfor just a 1 per-cent increase inwages for each ofthose years, de-spite the fact thatsome unions hadbeen anticipating3 percent pay in-creases duringthe same period.

Wages for two of the unions —the Oakland County Employees Unionand the Board of Commissioners’Committee Reporters — will be mod-ified automatically for 2008 be-cause contract language ties theircompensation with othernonunion staff.

Five other unions will need toconcede the pay and health carecosts in new contracts, county hu-man-resources director NancyScarlet said.

“We don’thave to acceptthe 1 percentand the healthcare (contri-bution) bumpfor ’09, andthe waythings are go-ing I don’tknow how wecould acceptit,” said SteveSchell, OCEUunion presi-dent, addingthat the union

will reopen wage and benefit nego-tiations for that year. “The 1 per-cent doesn’t cover our healthbump. It doesn’t cover the in-creased gas prices for our drive towork.”

Oakland County has 3,672 em-ployees, most of whom are repre-sented in nine labor unions. Schellsaid the OCEU accepted a tie-inwith nonunion staff because Pat-terson’s office had given some as-surances late last year that their

2008 pay raise would be 3 percent. Along with the wages, the coun-

ty will ask all employees for highercontributions to their health careplan at a rate that currently ap-plies only to the employees hiredafter May 2003.

Last year the county also beganoffering its new employees aHealth Savings Account plan inlieu of more traditional lifetime re-tiree health benefits to save onhealth care costs.

The county anticipates a sav-ings of $1.1 million the first yearand another $1.1 million in 2009 ifit obtains the 1 percent wage caps.

“That’s unfortunate to have todo that (to employees), but it’s thereality we’re facing,” said Com-missioner Bill Bullard Jr., chair-man of the county board. Bullardsaid he is not taking part in thediscussions on the budget but ex-pects to weigh in when the fullboard votes on a finalized budgetat its Sept. 20 meeting.

Chad Halcom: (313) 446-6796,[email protected]

Stock price climbs after Learshareholders reject Icahn bid

BY PHIL NUSSEL

AND BRENT SNAVELY

CRAIN’S DETROIT BUSINESS

It’s back to business as usual atLear Corp. (NYSE: LEA) after thesupplier’s shareholders — in ararely seen rebuff of management

— rejected investor Carl Icahn’s$2.9 billion, $37.25-a-share buyoutoffer last Monday.

Lear’s board, including Chair-man and CEO Robert Rossiter, hadurged shareholders to approve thedeal.

“We had a business plan that wewere executing before the offer.Now that the offer has been turneddown, we plan to continue to exe-cute the business plan we have,”said Mel Stephens, Lear’s vicepresident of communications andinvestor relations.

After the vote, the Southfield-based automotive supplier’s stockquickly moved from $37 per shareto more than $40 per share. For the52-week period that ended Wednes-day, Lear’s stock price increased97.6 percent. On Friday, Lear’sstock closed at $38.72.

Some analysts are cautiously op-timistic about the company’s fu-ture.

“Lear is not a turnaround situa-tion and didn’t need a knight inshining armor to rescue it,” ShellyLombard, corporate credit analystfor New York-based Gimme CreditL.L.C., wrote last week in a researchreport. “The company has a com-manding market share in NorthAmerica and a growing presence inAsia.”

“Although Lear is doing well,this is an industry that is stillstruggling, at least in North Amer-ica,” she said.

Standard & Poor’s Ratings Servicessaid it may boost Lear’s credit rat-ing. The agency said it placed theseating and electronics supplier onCreditWatch with “positive impli-cations.” CreditWatch is a process

S&P uses to evaluate credit ratings.“While its operating perfor-

mance has been challenged by se-vere industry pressures in NorthAmerica that caused credit protec-tion measures to weaken in recentyears, Lear has reported improvedresults during 2007 and twiceraised its guidance for the year,”S&P said in its statement.

“The CreditWatch resolutionwill focus on expectations forLear’s financial profile absent theproposed acquisition debt as wellas prospects for any shifts in busi-ness or financial strategy now thatLear will remain an independentcompany,” S&P analyst RobertSchulz said in a statement.

Standard & Poor’s said a modestupgrade that returns Lear’s corpo-rate credit rating to its Februarylevel is possible.

Lear’s corporate credit rating isB, five levels below investmentgrade. Before Icahn’s buyout offerwas announced in February, Lear’scorporate credit rating was B+, fourlevels below investment grade.

In February, New York City-based American Real Estate PartnersL.P., an Icahn affiliate, offered tobuy Lear for $36 per share, or $2.3billion, and to assume $2.5 billionin debt. Icahn later increased hisoffer to $37.25 a share, but share-holders rejected the deal last Mon-day. Icahn owns or controls about20 percent of Lear’s stock.

The company is not looking foradditional buyout offers, Stephenssaid.

Phil Nussel is a reporter for Auto-motive News.

Brent Snavely: (313) 446-0405;[email protected]

The county will ask allemployees for highercontributions to theirhealth care plan at arate that currently

applies only toemployees hired after

May 2003.

INTERVIEWL. BrooksPatterson talksabout OaklandCounty’s effortto recruitemerging-sectorcompanies.Page 11.


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Artisan center coming to 7 Mile neighborhoodBY ROBERT ANKENYCRAIN’S DETROIT BUSINESS

Plans for a $2.2 million Artisanand Adult Learning Center, to beunveiled Thursday, are the latesteffort by the nonprofit Arab Ameri-can and Chaldean Council tostrengthen and stabilize Detroit’sSeven Mile Road neighborhoodwhile addressing human serviceneeds.

The new Learning Center willbe built alongside the council’s De-troit headquarters at 111 W. SevenMile Road, and across from thecouncil’s Youth Recreation &Leadership Center, which openedin January 2005.

Registrations for summer pro-grams at the center were limited to300 this year because of lack ofspace, said Isa Hasan, director of

the council’s community andneighborhood development initia-tive.

“This shows there is a thirst fora center to keep kids busy and offthe streets,” Hasan said.

The 13,000-square-foot centerwill house workspace for Arab,Arab-American, African-Ameri-can, Hispanic, Eastern Europeanand Native American artists, hesaid. The first floor will feature anart gallery and an indoor-outdoorMiddle Eastern-themed cafe.

On the second floor will be acomputer lab, conference room, of-fices and an adult learning center.

The Michigan Strategic Fund ishelping finance the Artisan Centerwith a nontaxable bond issuebacked by a letter of credit fromComerica Bank. Construction is set

to start in September and expectedto be completed by April, Hasansaid.

Architect for the project isSouthfield-based CDPA ArchitectsInc. Heading the construction teamis APCO-ARCON L.L.C. in Dearborn,Hasan said.

A $900,000 streetscape project toinclude new sidewalks, paving,decorative lighting, trees, benches,cement trash receptacles andcrosswalk pavers awaits finalMichigan Department of Transporta-tion approval and should be under-way in September, Hasan said.Funding will include $750,000 fromMDOT and $150,000 from WayneCounty.

Robert Ankeny: (313) 446-0404;[email protected]

State needs more women intechnical programs, study says

BY SHERRI BEGINCRAIN’S DETROIT BUSINESS

The already low percentage of computer science de-grees earned by women at Michigan’s public univer-sities and colleges dropped by nearly a third between2000 and 2005 to 14.5 percent.

That statistic is troubling, as are similar declines inother technical areas, given that Michigan is trying toincrease its pool of technically educated employees tohelp diversify its economy, according to a study re-leased today by the University of Michigan Center for theEducation of Women.

Additionally, the state and nation will face a short-fall of engineers by 2010, according to the Society ofManufacturing Engineers in Dearborn.

The quickest way to meet demand for new high-tech workers in Michigan and to address expectedshortages of engineers is to reverse that trend and at-tract more women into those fields, according to thestudy.

State government, higher education institutionsand K-12 districts, among others, need to remove bar-riers and heighten interest for women pursuing de-grees in physical sciences, computer sciences, engi-neering and mathematics, in spite of the limitingeffects of Proposal 2, said Susan Kaufmann, associatedirector at the UM Center for the Education ofWomen and author of the report, “Michigan Womenand the High-Tech Knowledge Economy.”

Known as the Michigan Civil Rights Ballot Initiative,Proposal 2 passed last fall banning affirmative actionin public education in Michigan except for federallyfunded programs.

Among the study’s recommendations: � School boards should educate parents and stu-

dents about the importance of taking eighth-grade al-gebra to increase chances of success with advancedhigh school math; create math and science magnetschools and ensure equitable enrollment by girls; andplay up the history of women’s success in technicalfields.

� State government should encourage residents topursue education throughout their working lives andprovide opportunities for women and men to moveinto technical fields.

� Colleges and universities should factor the costof caring for dependents into stipends or fellowshipsto increase retention of female graduate students; ifnecessary, offer options for part-time study followingchildbirth or other urgent circumstances or as part ofa program designed for adult learners with full-timejobs; demonstrate the social utility of technical de-grees to better appeal to women; and train facultymembers to identify and avoid gender bias.

According to the report, available atwww.cew.umich.edu, Michigan historically has hadfew women seeking degrees in math- and science-based programs.

Female participation in physical science degreeprograms is slowly trending up but still low, with 40percent of bachelor’s degrees in the fields from Michi-gan public universities and colleges going to womenin 2005, up from 37.8 percent in 2000, according to theU.S. Department of Education National Center for Educa-tion Statistics.

In engineering, that number was 22.5 percent in2005, down from 24 percent in 2000, but the percentageof degrees earned by women in computer sciencesdropped by nearly a third, from 22.8 percent in 2000 to14.5 percent in 2005.

By comparison nationally, in 2004 women earned 26percent of computer science bachelor’s degrees, 42.1percent of physical sciences degrees, and just 20.5 per-cent of engineering degrees.

Baby boomers are expected to begin retiring by2010, Kaufmann said. The Washington-based BusinessRoundtable is predicting that science- and math-basedcareers will see national decreases of more than 50percent in the available workforce due to retirements.

Part of the mission of the Engineering Society of De-troit is to encourage young people toconsider technical professions, butthe group doesn’t specifically targetwomen or girls, said board presi-dent Richard Haller, COO of Wal-bridge Aldinger Co. in Detroit.

“But I think it’s a valid concept.There’s great opportunity forwomen to be in technical fields, andI can’t speak to why there are notmore of them in the field,” he said.

Research shows that women who leave science andengineering while pursuing a degree have as good orbetter grades as the men who stay but are attracted toother fields or turned off by a bad teacher, said SueRosser, dean of the Ivan Allen College at the Georgia In-stitute of Technology in Atlanta. Rosser is the author ofseveral books and research papers on attractingwomen to technical fields.

Changes must occur at all levels, from parents toschoolteachers to colleges, to motivate more girls andwomen to pursue technical degrees and careers, Ross-er said.

“Every level has to have some input into it in orderto make sure the pipeline stays full,” she said.

Sherri Begin: (313) 446-1694, [email protected]

Haller


Wayne County, in a memo written to the build-ing’s owners, said it spends an average of $5.5 mil-lion per year to occupy the building. It reached the$45-per-square-foot figure by dividing the $5.5 mil-lion by the 199,770 square feet it uses in the 252,000-square-foot building.

In addition to rent, the county included in its cal-culations money spent on operating expenses, rang-ing from $943,000 to $2.2 million annually since 1988,and capital expenditures, such as repairs on thetower on the building, totaling $4.8 million in thatsame period.

Layne said his $16 figure is based on the entiresquare footage of the building and includes operat-ing costs. He declined to elaborate further.

Real estate brokers typically slice figures in dif-ferent ways based on who asks for them.

A price per square foot is based on the number ofsquare feet in a lease, said Ray Husband, senior vicepresident in the Southfield office of Illinois-basedGrubb & Ellis.

If a company leases 500,000 square feet but onlyuses 300,000 square feet, a tenant is effectively pay-ing more per square foot, but the lease rate is calcu-lated according to the total number of square feetcontained in the lease, not just what the tenant isoccupying.

“In the next lease negotiations, I’d advise them tolease the amount of space they’re going to use, notthe whole building, or to sublease the surplus,”Husband said.

County officials and building owners left a widespread on the cost of renting the building.

For between $16 and $45 per square foot, a Detroitoffice tenant could find space in just about everymajor office building in the city.

The average asking rental rate, excluding taxesand operational costs, which vary from building tobuilding, is $23.08 per square foot for Class A space,$17.61 for Class B and $15.21 for Class C, accordingto the Maryland-based CoStar Group.

However $45 is beyond the top of the market, saidJeffrey Bell, first vice president in the Southfield of-fice of California-based CB Richard Ellis.

“With one exception, you can get anything youwant in the market for $30 per square foot, all-in,”he said.

The office component of the 325 North Old Wood-ward Ave. development in Birmingham has set ahigh end for the office market and would likely costroughly $40 per square foot including all costs oftaxes and operations, he said.

Daniel Duggan: (313) 446-0144, [email protected]

tember 2008, said President and CEOLinc Smith.

By 2010, patient information wouldbe available to local health careproviders granted access by the pa-tient, he said.

The grant to Altarum caps morethan a year of conversations aboutthe need for such an exchange amongthe nonprofit, the state and others in-cluding Blue Cross Blue Shield of Michi-gan, Henry Ford Health System, OakwoodHealth System, Trinity Health, and St.John Health System, the Wayne andOakland county medical societies, theGreater Detroit Area Health Council andthe Detroit 3 automakers.

“Our mission statement is to pro-vide high-quality care to the patientsand community we serve. There’s areal belief that by participating inthese types of exchanges, that we canimprove the quality of care we areproviding to the patients,” said PaulaSmith, chief information officer atOakwood.

Development of the exchangecomes several years after PresidentBush called for electronic medicalrecords to provide better care andlower health care costs, she said,adding that federal legislation ispending to incentivize the systems.

The exchanges provide the abilityto streamline processes and eliminateredundant tests, she said.

All of the major stakeholders in theregion “have a belief that with the ex-changes, ultimately we’ll be able tosee a reduction in health care costs,”Paula Smith said.

Sherri Begin: (313) 446-1694, [email protected]


County: What is actual lease rate?■ From Page 3

Altarum:Leads effort■ From Page 1

Independent grocers are in negotia-tions to buy about 15 Farmer Jackstores from Great Atlantic & Pacific TeaCo. Inc. Montvale, N.J.-based A&P put66 Farmer Jack stores up for sale ear-lier this year because of “unsatisfac-tory operating trends.”

Jane Shallal, president of the Farm-ington Hills-based Associated Food andPetroleum Dealers of Michigan, expectsthe acquisitions will bolster the visi-bility and reputation of independentgrocers in the metro Detroit.

“Our independents, when they gointo the larger supermarkets, theyrenovate them, remodel and upgradethem,” Shallal said.

Dalto predicted some independentgrocers could have trouble makingthe transition from operating smallerstores into running larger FarmerJack locations. It’s difficult to “makeevery square foot productive” withlarger stores, he said.

“I’m concerned about their prof-itability,” Dalto said.

Sheena Harrison: (313) 446-0325,[email protected]

Kroger: Newstores put on pressure■ From Page 3

DOWNTOWN LEASE RATESWayne County has been paying either$16 or $45 a square foot, depending onwhether you talk to the building’s ownersor the county. The difference in pricedepends on whether the entire squarefootage of the building or just the spaceWayne County is using is counted.Here are lease rates for three otherdowntown buildings, including taxes andoperating expenses.

150 W. Jefferson Ave.: $16.50

One DetroitCenter:

$16 to $30

One Kennedy Square: $17.50 to $25Source: CoStar Group, Crain’s research

A LATE PROPOSALOld Wayne County Building L.P., owner of600 Randolph St., issued a proposal lateFriday with the hopes of resolving ongoingtension with its tenant, Wayne County. Public-relations firm Marx Layne & Co. ofFarmington Hills issued the proposal tomedia outlets at 4 p.m., before thedocument was sent to its intended recipient,Deputy County Executive Azzam Elder. The building’s owners offered a deal inwhich the county would pay $1 per squarefoot per year, assume responsibility for the$7.75 million mortgage and be responsiblefor maintaining the building. Elder responded to the owners’ proposal bye-mail.“We have not received any new offer fromthe owners. As of Monday, they wanted $52million to purchase the building, or $5million a year to lease it. Judging by theletter (from the partnership) Crain’s hasforwarded to the county for our review, theirapparent new offer would save taxpayersmillions of dollars. However, many issuesremain outstanding, including the $31million balance the owners owe to thecounty for the purchase of the building in1986 and over billing discrepancies that canonly be resolved by full disclosure of theirbooks and records,” Elder said. “Hopefullywe can resolve these issues for ourtaxpayers.” Wayne County Executive Robert Ficanohedged his bets on remaining at 600Randolph by announcing a plan onWednesday to buy the Guardian Buildingfrom Detroit-based Sterling Group for $14.5million, plus the four-story Detroit Savingsand Loan Building at 511 Woodward for $2million and the 1,450-space First StreetParking Garage for $17 million.The county’s current lease at 600 RandolphSt. expires Oct. 31, and Ficano said heneeds to be ready to move some 250administrative workers if a deal can’t bereached.Even if the county ultimately chooses toremain at 600 Randolph, vacant space inthe Guardian Building could be leased toother tenants, generating revenue for spacenot being used. The purchases would need Wayne CountyCommission approval.

— Daniel Duggan

Feds change visa deadlinesThousands of skilled workers

from overseas and their employ-ers, who were dumfounded by re-cent federal government visadeadline switches, have finallywon out, Carol Friend, immigra-tion lawyer at Honigman MillerSchwartz and Cohn L.L.P., said.

In June, the U.S. Department ofState announced July 2 as thedeadline to file I-485 adjustmentof status petitions for workers, alast step before securing the“green card” that means perma-nent resident alien status.

“Thousands probably arrivedon July 2, the first business dayin the month, and then the U.S.Homeland Security Department’sCitizenship and ImmigrationServices said they weren’t ac-cepting any more petitions,”Friend said.

Outcries by the American Immi-gration Lawyers Association andU.S. Rep. Zoe Lofgren, D-SanJose, drew White House attentionto the problem, and on July 17,

CIS agreed to accept applicationsthrough Aug. 17, Friend said.

Meanwhile, on July 30, fees forfiling such petitions jump from$395 to $1,010, while fees for ini-tial immigrant petitions (Form I-140) go from $195 to $475.

— Robert Ankeny

UM Hospitals makes profitThe University of Michigan Hospi-

tals and Health Centers finishedfiscal year 2007 in the black,marking the 11th consecutiveyear the nonprofit health systemhas done so.

The system reported an operat-ing margin of $61.7 million onrevenue of $1.57 billion. Thatcompares with an operating mar-gin of $79.4 million on revenue ofabout $1.44 billion for fiscal 2006.The health system’s fiscal yearends June 30.

The health system reported thefinancial results to the University ofMichigan Board of Regents Friday.

In addition to receiving the re-port for fiscal 2007, the regents

approved the budget for fiscalyear 2008. The budget includes anoperating margin goal of 3 per-cent, or $52 million, on revenueof $1.7 billion.

— Andrew Dietderich

Borders hires 2 vice presidentsAnn Arbor-based Borders

Group Inc. has named two newvice presidents.

Teresa Wright has been namedvice president of merchandisingfor the company’s PaperchaseU.S. Division. Paperchase is astationery retailer acquired byBorders in 2004.

Wright, who starts at Borderson Monday, was previously oper-ating vice president of planningfor women’s ready-to-wear cloth-ing at Macy’s Inc.

Myles Romero has been namedvice president of strategic mar-keting and entertainment al-liances, starting July 31. He pre-viously worked as Ford MotorCo.’s director of Ford globalbranded entertainment.

Both are new positions withinBorders Group.

— Sheena Harrison

Wilson closes PR firm, takes job Shaun Wilson has closed his

public-relations firm to becomevice president/marketing man-ager for Southeast Michigan forTroy-based National City, Michigan.

Wilson had been managingpartner of De-troit-based Wil-son PR, whoseclients includ-ed The BingGroup, The Bar-tech Group, Mu-sic Hall Centerfor the Perform-ing Arts and theDetroit branch

of the NAACP. Previously he waswith Troy-based John Bailey & As-sociates. He was named to Crain’s40 under 40 in 2002.

— Tom Henderson

BRIEFLYBRIEFLY

Wilson


ture based on the leasing ratesand current property values.

“People are looking at cap ratesof 6 or 7 percent in other markets,but here they’re finding some at 10

or even 11 per-cent cap rates,”said LaurenScarpace, a se-nior associatespecializing inindustrial bro-kerage serviceswith the South-field office of ElSegundo, Calif.-based CB

Richard Ellis. “So local investors areseeing a chance to get a higherprice for their property.”

At the end of the second quar-ter, Bethesda, Md.-based CoStarGroup reports an average cap ratefor the market at 8.67 percent,compared with a national aver-age of 7.48 percent. That gap, pro-fessionals say, has drawn greaterinterest from companies not typi-cally involved in the Detroit-areamarket.

“We buy and sell a lot of real es-tate in Michigan, but lately we’vebeen doing more selling than buy-ing,” said Larry Emmons, regionaldirector in the Southfield office ofChicago-based REIT First Industrial.

The REIT, which has ownedproperty in Michigan since 1994,sold 400,000 square feet of space in2007 — all to companies new tothe market, he said.

A property at 27651 Hilde-brandt Road in Romulus is an ex-ample. First Industrial was thedeveloper and owner of the302,000-square-foot property andsold it to Houston-based Pinchal &Co. in April for $17.6 million.

Brokers also point to the ongo-ing sale of properties owned byPhiladelphia-based Liberty Proper-ty Trust, which has been in Michi-gan since 1998. Company officialspreviously announced plans tosell all of the roughly 4 millionsquare feet in the area.

In May, Bloomington, Minn.-based WelschCo, through Welsch US

Real Estate Fund L.L.C. bought 1.4million square feet of propertyfrom Liberty, marking Welsch’sfirst entry into Michigan. (Crain’s,June 4)

Scarpace said companies sell-ing properties in Michigan havebeen buying property in growthmarkets such as Louisville, theCarolinas and Florida.

Dan Labes, a senior vice presi-dent with Grubb & Ellis, expectsthe second half of the year to showcontinued out-of-town interest.

He also expects leasing and salesto pick up later in the year. Somecompanies have yet to executelease expansions or sales becausethey are waiting for signs the mar-ket has bottomed out, for example.

“Once the labor negotiationsare completed and the dust hassettled on the acquisition ofChrysler, I think you’re going tosee more momentum in the mar-ket,” he said.


the end of the bankruptcies.Everybody agrees that the num-ber of domestic suppliers is goingto get smaller, not bigger,” saidScott Eisenberg, managing part-ner at Birmingham-based AmherstPartners, an investment-bankingand turnaround-managementfirm.

Eisenberg cautioned againstputting too much stock in suppli-ers’ second-quarter earnings. Hesuggested that the strong perfor-mances could be the result of anindustry that was rolling up itssleeves for a summer of UAW con-tract talks and the now passingthreat of a strike at Delphi.

“My guess is people were slow-ly building some inventory intotheir systems, so you might havehad a little bit higher unit vol-umes at some of the suppliers,”Eisenberg said. “There might

have been some better plant uti-lization. And everybody has been

focusing on cost-cutting lately.” A recent study by the South-

field-based consulting firm Alix-Partners L.L.C. also provides a wordof caution. The survey of 51 au-tomakers, 25 heavy-vehicle pro-ducers and 297 auto suppliers con-cluded that 27 percent of NorthAmerican suppliers face possibleinsolvency within the next twoyears.

Who will survive? Suppliers with strong balance

sheets, not just the lowest costs,says John Hoffecker, an AlixPart-ners managing director.

Says Hoffecker in a statement:“The auto industry can still be agrowth industry, no matter whata company’s geographical loca-tion happens to be or even itsproduct segment.”

April Wortham is a reporter forAutomotive News.

SUPPLIER STOCKSHere are the stock marketperformances of selectedSoutheast Michigan autosuppliers for the 52 weeks thatended July 18, compared withthe Standard & Poor’s 500index.

American Axle +80.1%

ArvinMeritor +58.5%

BorgWarner +58.5%

Johnson Controls Inc. +60.3%

Lear Corp. +97.6%

TRW Automotive +51.0%

Visteon Corp. -15.7%

S&P 500 +18.9%

Source: Yahoo! Finance

■■ 30540 Beck Road, NoviSale price: $6.2 million ($91.67per square foot).Date: July 4.Size: 67,636 square feet. Buyer: Beck Road L.L.C.Seller: DAP investments.

■■ 1260-1270 James HartParkway, YpsilantiSale price: $3.3 million ($47.05per square foot).Date: May 30.Size: 70,138 square feet.Buyer: D&G Building Co.Seller: Varmal Properties L.L.C.

■■ 30150 Wixom, WixomSale price: $3.2 million ($48.05per square foot).Date: May 16.Size: 65,552 square feet.Buyer: Tyco Titanium.Seller: Fifty Eight L.L.C., a group ofFlint-based investors.

■■ 12141 Charlevoix St., DetroitSale price: $7.5 million ($3.75 persquare foot).Date: April 25.Size: 2 million square feet.Buyer: Crown Enterprises Inc.Seller: ThyssenKrupp Budd Co.

SIGNIFICANT SECOND-QUARTER INDUSTRIAL SALES


www.crainsdetroit.com

EDITOR-IN-CHIEF Keith E. CrainPUBLISHER Mary Kramer, (313) 446-0399 [email protected] PUBLISHER Christopher Crain, (313)446-1645 or [email protected] EDITOR Cindy Goodaker, (313) 446-0460 or [email protected] EDITOR Andy Chapelle, (313) 446-0402 or [email protected] GENERAL MANAGER Michael Lee, (313)446-0416 or [email protected] MANAGING EDITOR/PRODUCTIONMark Thompson-Kolar, (313) 446-0357 [email protected] MANAGING EDITOR/FOCUS JennetteSmith, (313) 446-1622 or [email protected] LIVES EDITOR Shawn Selby, (313)446-1654 or [email protected] EDITOR Nancy Clark, (313) 446-1608or [email protected] EDITOR Vic Doucette, (313) 446-0410 or [email protected] EDITOR Anne Marks, (313) 446-0418 [email protected] DESIGNER/PRODUCER Ai-Ting Huang,(313) 446-0403, [email protected] SUPPORT Anita Duncan, (313) 446-0329; Joanne Scharich, (313) 446-0419NEWSROOM (313) 446-0329, FAX (313) 446-1687 TIP LINE (313) 446-6766

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REPORTERS

Hendricks & Partners who alsoworked on the deal, said there were10 proposals from buyers during afive-week period.

“In metro Detroit, you don’t typ-ically see that level of interest,” hesaid. “But this is a very uniqueproperty.”

The 100 Tower was built in 1992and the 200 Tower in 1983. A thirdtower was not included in the saleand is being converted to condos.

The two towers have 555 unitson 24 acres of riverfront property.The complex includes a health cen-ter, the Signature Grille and Bar,the Signature Market and a mari-na.

Taylor and Rohr would not com-ment on the sale price, citing aconfidentiality agreement signedwith the buyer and seller.

Jason Gardner, a partner withBloomfield Hills-based Income Prop-erty Organization who specializes inapartment sales, estimates the dealto be at or near $50 million.

“Right now national marketfunds see Detroit as a dollar store,”he said. “They see the prices andcan’t believe it. In this case, if you’retalking $90,000 a unit, on the river,in the (Central Business District),that’s a great deal.”


OTHER SALES ANNOUNCED

LAST WEEKThe Fairlane Club� Ford Motor Land DevelopmentCorp. plans to sell The FairlaneClub in Dearborn to local investorswho plan a complete overhaul ofthe 32-year-old complex. Termswere not disclosed.Ford Land, which bought the facilityin 1984, will sell the 114,500-square-foot social and athletic clubto Fairlane Club Holdings L.L.C. in atransaction expected to close inthe fourth quarter. The deal is by aprivate group of investors led byNasser Beydoun, chairman of theDearborn-based American ArabChamber of Commerce.

Liberty Techne Center� A 193,000-square-foot industrialbuilding at the Liberty TechneCenter was sold July 17 to MREICMichigan L.L.C., managed byMissouri-based Monmouth RealEstate Investment Corp. The property, at 1601 Brown Roadin Orion Township, sold for $17million. It was sold by Jones OrionL.L.C., a subsidiary of Missouri-based Jones Development Co.

Suppliers: Attractive to investors■ From Page 3

Industrial: Outsiders help market■ From Page 1

Riverfront:Towers sold■ From Page 1

Scarpace

REAL ESTATE EXPO IS THIS WEEKEND IN DEARBORNCrain’s Detroit Business will sponsor the “Greater Detroit Real EstateExpo” in Dearborn this Saturday and Sunday as a forum for Realtors andindustry professionals to meet with home owners and prospective buyers.“The goal is to marry those people who are considering buying or sellingtheir homes with those industry experts who can answer their questionsin a given field — whether a home auction is right for you, financingquestions, or insurance,” said Darla Bowen, marketing and sponsorshipdirector for Fairlane Town Center, which is hosting the event.Highlighting the expo guest appearances will be Taniya Nayak, a designeron the popular TV program, “Designed to Sell.”Nayak, a graduate of Boston Architectural College and founder andpresident of design firm Design Digs, will appear both days of the expo.“Designed to Sell” airs Monday-Sunday at 8 p.m. on HGTV.The two-day event will feature guest booths and tables with real estateagents, mortgage brokers, auctioneers, insurance specialists and otherindustry professionals in the real estate business, Bowen said.The expo runs 10 a.m.-6 p.m. Saturday and 12-5 p.m. Sunday in thecenter court of Fairlane Town Center in Dearborn.

— Chad Halcom

Source: CoStar Group

AARON HARRIS



WEEK IN REVIEWRUMBLINGS

More than $1Bin retail set for5-county region

ore than 40 retaildevelopmentsworth more than $1

billion are being developedin the five-county metro De-troit area, according to a re-lease issued Thursday bythe International Council ofShopping Centers.

Among the largest are the800,000-square-foot AdamsMarketplace at M-59 andAdams Road in RochesterHills, scheduled to beginopening in the fall; the640,000-square-foot The Mallat Partridge Creek in ClintonTownship on M-59 betweenRomeo Plank and Garfieldroads, with some storesscheduled to open Oct. 18;and the $90 million, 335,000-square-foot The Shoppes atGateway Park, at Eight MileRoad and Woodward Av-enue in Detroit, scheduled toopen in fall 2009.

Karmanos to build $47Mhospital at DMC campus

The Barbara Ann KarmanosCancer Institute will con-struct a $47 million buildingwith six operating rooms onthe campus it shares withThe Detroit Medical Center, theDetroit Free Press reported.The project comes in thewake of a court ruling thatthe institute couldn’t moveto Detroit Riverview Hospital.Detroit-based Turner Con-struction Co. is to begin theproject by Jan. 1.

EMU fires presidentThe Eastern Michigan Uni-

versity Board of Regents hasfired its president and twoother university officialsafter the cover-up of a stu-dent murder in December.

In a release, EMU saidthe regents voted unani-mously Sunday to fire uni-versity President John Fal-lon III and on Monday “toaccept the separations” ofJim Vick, vice president ofstudent affairs, and CindyHall, director of EMU’s De-partment of Public Safety,for their part in the contro-versy.

The board named DonLoppnow, provost and vicepresident for academic af-fairs, to head up an execu-tive council that will leadEMU until a new presidentis named and report direct-ly to the board of regents,said Ward Mullens, associatedirector for university com-munications.

The three terminated em-ployees will receive a com-bined $550,000 from a settle-ment with the school, The

Associated Press reported.

Casinos’ revenue upMotorCity Casino L.L.C.

brought in $241 million forthe first six months of 2007,up from $230 million in thesame period last year, ac-cording to figures releasedlast Monday by the Michi-gan Gaming Control Board.

MGM Grand Detroit CasinoL.L.C. brought in $245.7 mil-lion, up from $242 million.Greektown Casino brought in$176.8 million, up from $174million.

NWA applies for twononstop China routes

Northwest Airlines Corp.,based in Eagan, Minn., hasapplied to the U.S. Depart-ment of Transportation forrights to nonstop flightsfrom Detroit to Shanghaiand Beijing, the airline saidlast Monday.

It also said that it re-ceived more than 100,000letters of support in thefirst three days after thecompany announced its ap-plication, which were filedwith the U.S. Department ofTransportation on Thursday.

Delphi gets $2.55B dealwith investors group

Delphi Corp. (OTC:DPHIQ.PK) said Wednes-day that it has reached a$2.55 billion financingagreement with a group ofinvestors led by Chatham,N.J.-based Appaloosa Man-agement L.P. that is de-signed to bring the compa-ny out of bankruptcyprotection.

The other investors areHarbinger Capital PartnersMaster Fund I Ltd.; MerrillLynch, Pierce, Fenner & SmithInc.; UBS Securities L.L.C.;Goldman Sachs & Co.; and Par-dus Capital Management L.P.

In other news, the Interna-tional Union of Electronic,Electrical, Salaried, Machineand Furniture Workers-Com-munications Workers of Amer-ica, which represents about2,000 Delphi Corp. workers atsix plants, said Friday itwould terminate its localand national contracts withthe supplier, allowing it tobegin a strike Oct. 13.

ON THE MOVE

� Former U.S. Secretaryof Energy Hazel O’Leary isjoining the board of direc-tors of Novi-based ITC Hold-ings Corp.

� Community Central BankCorp. announced Wednes-day that President RonaldReed has left to pursue oth-er opportunities. David Wid-lak, president and CEO ofthe holding company andCEO of the bank, will as-sume Reed’s position.

TRANSACTIONS

� Bristol, Tenn.-basedKing Pharmaceuticals Inc.plans to sell its Rochestermanufacturing plant, 12products made there andrelated contract business toJHP Pharmaceuticals L.L.C. ofAustralia for $90 million.The deal is expected toclose in the third quarter.

OTHER NEWS

� Kroger Co. planned toopen six former Farmer Jackstores last Friday, the De-troit Free Press reported: inDearborn, DearbornHeights, Hazel Park, West-land and two in Troy.

Also, Detroit City Coun-cilwoman Monica Conyersmet with Kroger executivesFriday to discuss whetherthe grocer would consideropening a Detroit store.

Conyers asked for themeeting after Krogerbought 20 Farmer Jackstores last month but didnot buy two Detroit stores.

� Nordstrom Inc. plans tohire 300 for its newest storescheduled to open Sept. 28at Twelve Oaks Mall in Novi.

� McLaren Health CareCorp. and Clarkston MedicalGroup are scheduled tobreak ground Wednesdayon McLaren Health Care Vil-lage in Clarkston.

Cambridge, Mass.-basedMascoma Corp. and Gov. Jen-nifer Granholm announcedplans Thursday for a morethan $100 million plant thatwill produce ethanol fromwood at a site to be selectedin northern Michigan. Mas-coma CEO Bruce Jamerson isa Troy native and Universityof Michigan alum.

� Siemens VDO AutomotiveCorp., whose North Ameri-can headquarters is inAuburn Hills, is being pur-sued by Livonia-based TRWAutomotive Holdings Corp.(NYSE: TRW) and its near-ly 50 percent owner, Black-stone Group, as well asHanover-based ContinentalAG, Automotive News Eu-rope reported. The biddingprocess was set to expire atthe end of the business dayFriday in Munich, Ger-many, where SiemensVDO’s parent company,Siemens AG, is based.

OBITUARIES

� Paul Brancheau, formersuperintendent of manufac-turing for the Cadillacplant on Clark Street in De-troit, died after a long ill-ness June 15. He was 84.

� Irvin Yackness, executivevice president and generalcounsel for the FarmingtonHills-based Building IndustryAssociation of SoutheasternMichigan, died of a pneumo-nia-related illness July 15.He was 91.

ichigan loves HarryPotter.

Six of the state’scommunities were rankedin the top 100in per capitaorders forHarry Potterand the Death-ly Hallowsfrom onlinebook retailerAmazon.com.The book wasreleased atmidnight Fri-day.

Northvillecame in at No.31, followedby Plymouth(43), GrandBlanc (46),Brighton (55), Howell (69)and Saline (96).

Amazon.com, which saidit pre-sold more than 1.3million copies of the sev-enth book in the Pottercanon, used the most recentU.S. Census data and in-cluded all U.S. towns andcities with a population atleast 5,000 to assemble thelist.

Michigan as a wholeranked 29th out of the 50states and Washington.

Cerberus starting outwith a bang

Maybe no one’s breakingout tricornered hats or abuckskin drum, but an au-tomaker immersed inAmerican culture and sepa-rating from its Old Worldholders at least rates a fewfireworks.

Auburn Hills city offi-cials said last week that

New York City-based Cer-berus Capital ManagementL.P. has hired a Texas py-rotechnics company that

pulled per-mits for adaytimefireworksdisplay tomark thetransitionto new own-ership andindepen-dence fromDaimler-Chryler AG.

“It’s aneventthey’repreparing(to) be likea kind of In-

dependence Day, from whatwe gather,” City ManagerMichael Culpepper said.“And they want fireworks.”

The event is tentativelyset for the “early after-noon” Aug. 1 on thegrounds of Chrysler Group’scorporate offices, but cityofficials said the date andtime is still subject tochange.

The $7.4 billion Cerberusacquisition for 80.1 percentof Chrysler Group is expect-ed to close this week.

Potential in paperworkA Pontiac-based busi-

ness-support service admin-istrator sees a growth strat-egy in handling all thatpaperwork your own com-pany HR director probablyloathes.

Edcor Data Services Corp.president and CEO StevenCorso hinted his company is

in the market to acquireother outsourced business-support services after re-cently buying Monroe-based BenefitSource Inc. Thecompany has kept on for-mer BenefitSource presi-dent Steven Friend as a vicepresident in charge of Ed-cor “growth initiatives,”with duties that includeseeking other opportunitieslike the recent acquisitionof Friend’s own company.

BenefitSource is a third-party administrator of CO-BRA, flexible-spending ac-counts, disability and otherbenefits for its clients’ em-ployees.

“We want to handle allthe mundane programs of ahuman resources depart-ment so that HR can focuson what it’s intended to do— strategic management ofhuman capital,” Corso said.

Edcor completed the ac-quisition of BenefitSourceon June 1 by buyingFriend’s stock in his owncompany, adding on his 40employees for a total of 150.Terms of the sale were notdisclosed. Edcor and BSIwill retain separate brandnames and offices.

BITS AND PIECES

� Cars aren’t the onlyconnection between Detroitand Japan.

A Japanese judge will bein residence for the fall andwinter terms 2007-2008 atthe Wayne State UniversityLaw School and Wayne CountyCircuit Court to research andstudy the American judicialsystem.

The Supreme Court ofJapan is to select one judgethrough a competitiveprocess.

� Troy based staffing ser-vices company Kelly ServicesInc. ranks No. 8 on the firstTop 10 Military Spouse-Friendly Employers listpublished in the July-Au-gust 2007 issue of MilitarySpouse Magazine — theonly Michigan-based com-pany to make the list.

RUMBLINGS WEEK IN REVIEW

Potter peoplein state pile upbook orders

F R O M W W W . C R A I N S D E T R O I T . C O M , W E E K O F J U L Y 1 4 - 2 0

M

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big deals on big buildings hisjustin 2 riverfront towers sold

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