Changes ahead for auto industry provide opportunity for region

The Future Is Cloudy and Bright 

By Sandy K. Baruah 

January is always an exciting time in the Detroit region. The promise of a new year, and of course, the arrival of the North American International Auto Show, one of the premier global events on the automotive calendar and an opportunity to not only showcase the world-leading mobility assets of our region, but also the incredible and real urban renaissance of the city of Detroit.

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2017, however, brings an unprecedented number of questions that could potentially impact our mobility industry.

  • Have we seen peak demand for vehicles?
  • How will the trend towards longer vehicle loan terms impact the market?
  • Will we see spiraling incentives if demand weakens?
  • Will fuel prices remain low and the demand for more pro table SUVs and CUVs continue unabated?
  • How will the Trump Administration’s pro-business, limited-regulation and potentially anti-trade policies impact the industry?
  • Will the supply chain be impacted by possible changes to the North American Free Trade Agreement?
  • And, of course, how will the continuing transformation of mobility as a product to mobility as a service – and the emergence of non-traditional players – impact our industry?

While nobody really knows for sure what the answer to these questions are, there seem to be some key principals that bode well for Michigan’s most important industry.

Michigan-based mobility companies, both at the original equipment and supplier levels, have not forgotten the hard lessons of the Great Recession. This is evident in their cautious deployment of capital and far more restrained use of debt. Break-even points have been lowered substantially and there is a far greater focus on profitability as opposed to market share. OEMs have been far from sentimental in axing unprofitable legacy nameplates and brands. Suppliers and OEMs alike have resisted major capital investments in production facilities for fear of having underutilized capacity even though they have struggled to meet historic levels of demand.

While no one saw the fuel price spike of 2007 coming, with ample yet dormant shale reserves in the United States, and a strongly pro-energy president coming into office, it seems unlikely that America will experience some kind of fuel crisis or price spike. This is good for consumers, good for the economy, and therefore, good for the automotive industry, which stand ready to meet the demand for high-riding, flexible yet fuel-efficient crossovers and utilities.

On the cautionary side, however, remains concerns over ever-lengthening loan terms. Also, the growing use of incentives is troubling several analysts. Fall 2016 vehicle sales were trending below 2015’s record levels, only to see an exceptionally strong November that was driven by a surprising growth in incentives.

But perhaps the best news of all for the immediate and long-term future is the posture of Michigan’s mobility companies regarding product. As recently as a decade ago criticism that U.S.-based companies were not always producing world-beating products was not far off the mark. But today, these companies have gone from “zero to hero” in record time. Just look at any automotive “best” list and you will see that American brands, and products produced in America, are earning more than their fair share of accolades.

Our Michigan-based companies have made this  region the most active and concentrated place for next-generation mobility research, testing and deployment. No place on the planet can compare. We have the advantage going into the future. Our friends in Silicon Valley have recognized this and have started to establish a presence in Michigan, just as our companies have done the same in the Valley.

It is certainly an exciting time in Michigan and for the industry we love. Michigan’s challenge is unique. We have to take the lead in creating world-beating products today and tomorrow, while preparing for the most revolutionary change in the industry since its creation over a century ago. Fundamental change is in the air, including a very different president. It is certainly a great time to be associated with Michigan and the automotive industry – and I am equally certain that all of us associated with the industry will indeed earn our paychecks.

Sandy K. Baruah is the president and CEO of the Detroit Regional Chamber.

Brooks Kushman Shareholder Discusses Joint Development Agreements In Crain’s Detroit Business

Brooks Kushman Shareholder Marc Malooley was featured in Crain’s Detroit Business’ March 21, 2016 article, “Joint development agreements smooth way for auto tech partnerships.”

In the article, Malooley discusses that automakers are partnering with smaller start-ups to advance technology at a faster pace.

“In some cases, it doesn’t matter if the company is bigger or smaller, because they have a technology the automakers can’t replicate in house or get elsewhere,” Malooley said in the article. “Now, the relationship is not so one-sided.”

Malooley has nearly 20 years of intellectual property (IP) experience, focusing on a variety of IP matters including patents, trade secrets and IP license agreements. He represents clients ranging from Fortune 100 companies to sole inventors, and assists them in all aspects of IP protection. He holds a Juris Doctor from Indiana University, Masters of Science in Mechanical Engineering from the University of Michigan and Bachelor of Science in Mechanical Engineering from Wayne State University.

Brendan Cahill Named Director Of Dykema’s Automotive Industry Group

Dykema, a leading national law firm, today announced that Brendan J. Cahill has been named Director of the Firm’s Automotive Industry Group.

Based in the firm’s Bloomfield Hills office, Cahill joined Dykema more than two decades ago and has worked extensively with automotive companies throughout his career. He focuses his practice on business planning, acquisition and financing transactions, with special emphasis on mergers and acquisitions and joint venture transactions involving both public and private companies.

“Brendan’s highly specialized automotive expertise and finely cultivated client relationships make him an excellent fit as director of the firm’s Automotive Industry Group,” said Peter Kellett, Chairman and CEO of Dykema. “He will grow Dykema’s legacy as one of the dominant automotive legal practices in the country with a global clientele.”

In his automotive practice, Brendan has represented U.S.- and non-U.S.-based automotive-related companies and private equity investors in a wide variety of assignments which have involved every practice group in the firm — including acquisitions and dispositions, joint ventures, capital raising, customer and supplier relationships, and restructurings.

“I eagerly look forward to assuming this leadership position, and in doing so, supporting and upholding the successful work of the Automotive Industry Group on behalf of clients worldwide,” Cahill said. “We have established ourselves as the premiere legal counsel to global automotive suppliers and OEMs, and I plan to lead the charge in continuing our excellent track record of client service.”

Prior to joining Dykema, Cahill worked in the financial derivative products trading industry. He received his B.A. with honors from the University of Notre Dame and his J.D. from the University of Michigan Law School.

Cahill succeeds Aleks Miziolek, who leaves Dykema on Jan. 31 to become vice president, general counsel and secretary of Cooper-Standard Holdings, Inc., a major supplier to the automotive industry.

About the Automotive Industry Group

With more than 75 years of experience representing companies in the automotive industry, Dykema has one of the most extensive automotive legal practices in the U.S. Dykema lawyers regularly represent automotive companies headquartered throughout the world. The attorneys counsel suppliers and OEMs in multi-million-dollar mergers and acquisitions, in a broad array of automobile product liability, commercial and supply chain management litigation, in class action litigation in the most challenging jurisdictions, and before the U.S. Department of Transportation and other federal and state departments and agencies. For more information on Dykema’s Automotive Industry Group, please visit http://www.dykema.com/services-industries-automotive-industry-group.html.

About Dykema

Dykema serves business entities worldwide on a wide range of complex legal issues. Dykema lawyers and other professionals in 13 U.S. offices work in close partnership with clients – from start-ups to Fortune 100 companies – to deliver outstanding results, unparalleled service and exceptional value in every engagement. To learn more, visit www.dykema.com and follow Dykema on Twitter http://twitter.com/Dykema.

2013 DYKEMA AUTOMOTIVE INSTITUTE SURVEY: INDUSTRY CHALLENGES

Detroit – November 14, 2013 – As the automotive industry continues to move towards globalization, original equipment manufacturers (OEMs) and automotive suppliers face a number of complex legal issues across the world that may affect the productivity of their organizations and their bottom line, according to the 2013 Dykema Automotive Institute Survey: Industry Challenges.

Measuring the attitudes and perspectives of executives at OEMs and suppliers, the survey reveals that data privacy was chosen as the top legal challenge that U.S. automotive executives face when doing business overseas. With that in mind, the survey found that only about a quarter of respondents report their companies employ in-house experts who concentrate on privacy and security changes, while the majority of them do not. Indeed, 74 percent of respondents said their companies do not employ a chief privacy officer or other senior manager with “privacy” in his or her job title.

Navigating the complicated corporate bribery laws when doing business overseas was another notable challenge referenced by survey respondents, particularly as it relates to doing business in China. While U.S. OEMs and suppliers continue to expand into China to take advantage of its growing automotive marketplace, the country’s reputation for corruption in both the private sector and government business has not gone unnoticed. A wide majority of respondents chose China as posing the greatest compliance risk when doing business overseas.

“Following the financial crisis and recession, the automotive industry has taken strides over the last five years to reinvent itself,” said Aleks Miziolek, director of Dykema’s Automotive Industry Group. “The survey shows that while this transformation has put automotive companies in a strong position to compete globally, there are several key legal and compliance challenges—by data privacy, corporate bribery and international tax laws, to name just a few—that leave them at risk of liability.”

The survey also revealed legal issues not yet on automotive executives’ radars. Although automotive collaborations often raise legal and operational questions ranging from antitrust issues to the challenges that arise when collaborating with competitors, automakers are increasingly teaming up with competitors to share costs and brainpower as fuel efficiency and environmental requirements get tougher. Specifically, 44 percent of OEMs and 49 percent of suppliers plan to enter into a collaboration in the next 12 months. The desire to fund technological advancements was the top reason given for inspiring OEMs to collaborate, while the desire to expand into foreign markets was the top reason chosen by suppliers.

“Only automotive companies that are ahead of the game in addressing legal risks will truly remain competitive and prosper in the future,” added Miziolek. “We believe the findings of our survey present important opportunities for OEMs and suppliers to gain a better understanding of the top legal challenges facing their companies. Chief among these are matters regarding environmental compliance, intellectual property, corporate bribery laws, litigation, data privacy, international tax, regulatory issues and mergers and acquisitions (M&A). It’s only by understanding these realms—and developing proactive solutions to them—that t automotive companies can ensure that their organizations remain at the forefront of this global industry moving forward.”

According to Dykema, the survey yielded a number of other prominent conclusions, including:

  • Court disputes. Litigation remains a top legal concern for automotive companies with some areas of litigation seeing more activity than others. Supply chain litigation (52 percent), IP litigation (46 percent) and warranty litigation (39 percent) were the top three types of litigation faced by respondents’ companies over the last year.
  • Counterfeit goods. Although the U.S. automotive industry witnesses an estimated $12 billion per year in trade of counterfeit automotive parts, only half of respondents have taken specific steps against counterfeiting, including customs enforcement and litigation, to protect their brand, and only a few plan to do so in the next year. While there are a number of steps a company can implement to fight against counterfeiting, this is an area of concern that is not getting needed industry attention.
  • Compliance deadlines. Respondents ranked conflict minerals lowest in terms of global compliance concerns. However, automotive manufacturers are seriously addressing near-term compliance deadlines to meet the standards of the Conflict Minerals Act (a rule that requires public companies to publicly disclose whether the sourcing of conflict minerals in their products benefited armed groups responsible for human rights violations). Sixty-eight percent of respondents would consider not sourcing a supplier if it indicated products contained or likely contained conflict minerals, and 64 percent would consider not sourcing a supplier if it did not comply with a conflict minerals request. At the same time, the response to the survey question regarding the percentage of their Conflict Mineral Act compliant suppliers reveals many suppliers are still not compliant and/or the OEMs do not yet know whether their suppliers are compliant.

In July 2013, Dykema distributed the survey via e-mail to a group of senior executives and advisors in the automotive industry including CEOs, CFOs and other company officers.

With more than 75 years of experience representing companies in the automotive industry, Dykema has one of the most extensive automotive legal practices in the U.S. Dykema lawyers regularly represent automotive companies headquartered throughout the world. The attorneys counsel suppliers and OEMs in multi-million-dollar mergers and acquisitions, in a broad array of automobile product liability, commercial and supply chain management litigation, in class action litigation in the most challenging jurisdictions, and before the U.S. Department of Transportation and other federal and state departments and agencies. For more information on Dykema’s Automotive Industry Group, please visit http://www.dykema.com/services-industries-automotive-industry-group.html.

About Dykema

Dykema serves business entities worldwide on a wide range of complex legal issues. Dykema lawyers and other professionals in 13 U.S. offices work in close partnership with clients – from start-ups to Fortune 100 companies – to deliver outstanding results, unparalleled service and exceptional value in every engagement. To learn more, visit www.dykema.com and follow Dykema on Twitter http://twitter.com/Dykema.

Welcome to Detroit

Business Attraction welcomes Midwest German American Chamber to Detroit
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The Detroit Regional Chamber’s Business Attraction team officially welcomed the German American Chamber of Commerce of the Midwest (GACC Midwest) as it opened a new office in Detroit in early September. The Business Attraction team worked closely with GACC Midwest in bringing them to Detroit as they pursued an additional office in the region in response to strong investment and increased interest by German-American companies, particularly in the automotive industry.

“We’re thrilled to welcome our friends at GACC Midwest to Detroit,” said Maureen Krauss, the Detroit Regional Chamber’s vice president of economic development-business attraction. “The Detroit region has everything global companies need to grow and expand. With the synergies between the economies of Germany and Michigan, particularly in the auto industry, this partnership will increase business and investment by German companies in our region.”

The new office will be located within the Chamber’s facilities at One Woodward, and will provide services to companies that are in the process of expanding their transatlantic trade and investment in Michigan and the region. The Detroiter caught up with Simone Pohl, president and CEO of GACC Midwest, to discuss the opening of the new office.

Why did you select Detroit for your new office?
The state has long been a target for German investment – more than 360 German companies already have operations in the state – and German companies are highly interested in doing business here, especially with the resurgent U.S. automotive industry. There is increasing investment by German-American companies in the Michigan area, and we have received an increasing number of inquiries from German companies interested in the U.S. and Midwest in general, and also in Michigan.

All the recent news, for example, Michigan topping the list of states that are creating the most manufacturing jobs according to the Bureau of Labor Statistics, just reinforces that we are doing the right thing to expand now and expand here. We are thrilled to become even more active in Michigan. Sharing the new office space with the Detroit Regional Chamber is a great opportunity, as there are a number of synergies between our respective missions. We look forward to fostering growth in Michigan and the entire region.

How will your office in Detroit be utilized?
The primary role of the new office will be to provide services to companies that are in the process of expanding their transatlantic trade and investment in Michigan and the region. This includes market research, business partner identification, providing virtual offices in early stages of market entry, site selection for production facilities, and other services that have been traditionally supported from our
headquarters in Chicago.

What type of industries in Germany are expressing interest in doing business here in Michigan and the U.S.?
We see a lot of inquiries from companies from all industries. As our German American Business Outlook 2013 identified, German companies are very optimistic when it comes to investing further. We receive many inquiries in the areas that are traditionally strong in the Midwest, such as machinery and automation, automotive, and food companies as well as food processing technology. Many of our inquiries and projects in Michigan are auto-related; however, we have the privilege of working with companies in a wide range of industries. For example, we’re proud to have worked with Hark Orchids on their search for their new orchid-propagation facility in Kalamazoo.

What perception do investors and site selectors in Germany have of Detroit?
There’s still a lot of work to be done, but the good news is that companies involved in automotive engineering, research and development often already know about the region’s importance and its recovery over the past years. The headlines in the U.S. are slowly starting to catch up with all the great things happening in Southeast Michigan, and now we’re working on the German headlines as well.

Did Detroit’s bankruptcy impact your view of the opportunities here in Michigan and the Midwest?
We are really looking at the big picture and all the great things happening in Michigan and throughout the Midwest. The entire region has really seen a resurgence in the past few years – four of the top five states creating new manufacturing jobs are located in the region. That really speaks to the strength of our region and makes it even more attractive for German companies that traditionally invest in regions with strong manufacturing fundamentals. In short, our assumption is that the outcome will be a more dynamic, vibrant region, which attracts even more international companies.

For more information on the German American Chamber of Commerce Midwest Detroit office, contact Dieter Lehnert 313.596.0399.

The Quell Group Promotes Max Muncey to Senior Account Executive

TROY, Mich., Feb. 19 — The Quell Group promoted Max Muncey to the position of senior account executive, according to Mike Niederquell, president and CEO. Muncey joined The Quell Group in April 2011 as account executive.

“Max is a true car buff and takes great pride in understanding all there is to know about the industry,” said Niederquell. “Our clients have truly benefited from his extensive industry knowledge and his relationships with key automotive media and organizations. As a member of Quell’s Automotive Practice Group, Max will continue to help us grow our agency’s automotive sector and provide quality marketing and public relations expertise. ”

He previously served as an associate at a Detroit public relations firm, where he provided public relations strategy, media relations management, event planning support and account management for several of the firm’s automotive clients.

Muncey earned a bachelor’s degree in public relations from Western Michigan University and is a member of the Automotive Press Association, Automotive Public Relations Council and the Washington Automotive Press Association. He currently resides in Rochester Hills, Mich.

As Michigan’s leading integrated brand communications firm, The Quell Group integrates strategic branding and positioning counsel with marketing and public relations services. Founded in 1994, the firm provides proprietary diagnostic tools to help companies unknot, align and market® their value proposition.

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