Article in Aeptember 26, 2007 WSJ

What Happens in Detroit ...

Will Draw Conventioneers,
Or so MGM Mirage Hopes --
Despite Local Economic Woes

By TAMARA AUDI
September 26, 2007

DETROIT -- The 17th floor luxury corner suite of the MGM Grand Detroit, MGM Mirage's new casino hotel, features sleek decor in chocolate tones, a 15-inch plasma screen television embedded into the bathroom mirror and a panoramic view of a wounded city: deserted streets; an abandoned baseball stadium; a once-grand train station plainly rotting in the distance.

Much harder to see is why MGM Mirage would spend $800 million to build a one million-square-foot luxury hotel and casino smack in the middle of a region plagued by a continually struggling automotive industry and a collapsing economy.

The answer: Gambling companies have historically proven they can turn profits in sluggish economies like Atlantic City and the Gulf Coast -- and Detroit is no different. Since its opening here in 1999, the MGM Mirage's existing casino -- which will close as the other opens -- has made money. Even as the city's population dwindled and the state's unemployment rate climbed to 7.4%, the current MGM Grand's revenue rose to $489 million in 2006 from $366 million in 2001.

And the company hopes to draw additional revenue from another source: the conference-and-convention business.

For Las Vegas, conventions and conferences have become industry pillars, helping to fill casino hotels and restaurants midweek. Harrah's Entertainment Inc., for instance, saw its Vegas conference-and-convention business boom after a company initiative to woo conference planners with speedier and upgraded services.

MGM's Detroit property is an attempt to build on its conference business outside of Vegas, using its vast customer database to tap its clients closer to where they live, like the eastern seaboard, said MGM's president and chief operating officer, Jim Murren.

Still, in Detroit, some hurdles stand in MGM's way. As workers put finishing touches on the massive art deco-style complex -- set to open on Oct. 2 -- Michigan legislators continue to consider an Oct. 1 shut-down of all three of the city's casinos because of a $1.75 billion state budget deficit that could make it impossible to pay state employees, including gambling regulators. Without state regulators, city casinos cannot legally operate. Adding more possible reason for concern: Monday, General Motors workers walked off the job in a contract dispute with the auto maker.

Just days before the opening, however, MGM officials were oozing optimism, pointing out the wall-length fireplace in the hotel's art-filled hotel lounge, the bunches of fresh-cut lilies at the check-in desk and the no-expense-spared penthouse furnishings.

"You have to exceed expectations, and that's what we've wanted to do here," said MGM Grand Detroit's executive vice president Tony Brolick, sweeping his hand through a sleek Wolfgang Puck restaurant with blanched deer antlers suspended from a sky-high ceiling.

The new property is a striking departure from MGM Mirage's current Detroit property, a smoky gambling den filled with retirees parked on dingy furnishings, operating in a former Internal Revenue Service building. The existing casino, which doesn't maintain a hotel, will be closed two days before the new MGM Grand opens to allow officials time to transfer employees and operations to the new property.

The city of Detroit, for one, will be rooting for the MGM Grand. Casinos are a billion-dollar-a-year business in Detroit, steadily plowing tens of millions into state and city coffers. Casinos pay a 24% revenue tax, or about a million dollars a day, split evenly between the state and city.

But the city also stands to gain jobs, tourist dollars and a momentum with the addition of three 400-room hotels. Each of the city's three casinos agreed to build a hotel once Detroit worked out permanent location sites. After the hurdles were finally cleared, MGM began building its new property in 2005.

MotorCity Casino, owned locally by Marian Ilitch, 74 years old, who with her husband, Mike, owns the Detroit Red Wings hockey team and Little Caesar Enterprises Inc., is completing a $275 million expansion and hotel project. The hotel is expected to open this year. The Greektown Casino, owned by a tribe of Chippewa Indians in Michigan, will spend $200 million on its hotel-and-expansion project, scheduled to be complete in 2008.

Nearby Windsor, Ontario, a five-minute drive from Detroit, boasts a massive, brightly lit riverfront casino-hotel that markets heavily in the Detroit-area. More competition comes from American Indian casinos dotted across the state.

But the market at issue, as MGM Mirage sees it, includes a 300-mile radius of potential overnight clients across the region, stretching into Ohio and Illinois.

"When analysts come in they look at the backyard and they don't look at the full market," says Mr. Brolick.

A decision was made early on, MGM Mirage officials say, to introduce a new property that would far outdo anything in the area and establish MGM Mirage dominant in the region.

Well-known designers were hired; alabaster was ordered. The MGM property is built in the style of the "new" Vegas, which has sought to remake itself in a less-cheesy image, dropping theme-park development and loud color schemes in favor of cutting-edge architecture and subdued luxury to attract a higher income business and leisure crowd. A swank nightspot attached to a poker room has a bar made of solid ice, taking its cues from a bar in Vegas's Mandalay Bay hotel, also owned by MGM Mirage. The three main restaurants -- one by Wolfgang Puck and two by Michael Mina -- boast private features like dining rooms with chilled glass walls that double as wine racks.

MGM Mirage officials hope all the amenities catch the attention of conference planners on the East Coast and across the Midwest. They are marketing the MGM Grand Detroit's 30,000 square-feet of meeting space as an affordable alternative to pricier cities. They plan to allay concerns about limited activities in the city by selling the property as an all-inclusive resort.

But MGM and city officials also note that Detroit, despite its problems, is in something of a development boom, with new luxury hotels and condos going up in the city's downtown area, and recent success as host of the 2006 Super Bowl and World Series.

To look at all the casino expansion in Detroit "you'd never know Detroit was in a recession," said Leon Paesani, a card dealer and union steward at MGM Grand, where dealers belong to the UAW. "This is a perfect industry. They do well when times are good, and they do well when times are bad."

Article in September 14, 2007 Detroit News

Downtown Detroit businesses open, expand
Restaurants, bars, independent shops capture creative spirit

Greg Tasker / The Detroit News

DETROIT -- From the outside, the faded brick and graffiti-sprayed building on Gratiot Avenue across from Eastern Market stands as another ghostly reminder of Detroit's once-bustling commercial past.

But inside, the same team that put Corktown on the culinary map with Slows Bar BQ has been busy renovating the old Detroit Candy Co. building into four upscale lofts. Brothers Ryan and Phil Cooley are taking the same great pains in design and decor that they did with Slows, creating a clean, modern feel with interesting elements such as Brazilian cherry wood from a sustainable farm and handrails crafted by local metal workers.

"Detroit is filling up with interesting, creative young people -- not all of them want to live in a hovel. It's probably time to start giving Detroiters more credit." Ryan Cooley said.

The Cooleys are not alone in either their outlook or their efforts.

They're among a small number of business owners in or near downtown who continue to show great faith in the city by opening or expanding businesses, despite the dismal economy.

It's visible at places like Park Bar and Bucharest Grill in the emerging tavern district along Park Avenue. It can be seen in Midtown with the opening of the Bureau of Urban Living, a home-goods boutique, and the planned expansion of Avalon International Breads bakery. Then there's Mezzanine, a contemporary design store on Broadway, and Asian Village, a food and entertainment venue on the riverfront just east of the Renaissance Center.

"It's clear there is a market for creative, thoughtful and quality stores, restaurants and products in downtown," said Eric Larson, president and CEO of Larson Realty Group in Bloomfield Hills and chairman of the Detroit District Council of the Urban Land Institute. "And that really is driven by resurgence in urban living. It is a very telling time in the city's life when people are willing to take a risk on things that are less mainstream, less common and, in effect, more trendy. It's a very good sign."

Attention to details

For the Cooleys, the loft project was a natural to follow Slows, which opened in September 2005. In the case of Slows, the pair and their partner Dean St. Souver, a Corktown woodworker, rehabbed two 1880s buildings on Michigan Avenue into one. They created an open, contemporary eatery with exposed brick walls and tables and floors made of sturdy wood salvaged from the original buildings and others in the neighborhood.

It's a pattern the Cooleys and partner Pat Deegan are following with the 1,500-square-foot lofts. They've created the same modern aesthetic and interesting design elements, including maple kitchen cabinets, hand-poured concrete countertops, and custom light fixtures, made from recycled wood. They are wrapping up the two-year project this week.

"We could go into these places and update them with the bare necessities, and it would definitely be a lot easier and a lot cheaper," said Ryan Cooley, who moved to Detroit from Chicago three years ago to open his own real estate office. "But we're committed to creating something more interesting than a cookie-cutter space."

Bustling Park Avenue scene

With its circular bar and 17-foot high windows, the Park Bar is the newest of the classy establishments on Park Avenue. The street --just west of Woodward in the shadow of the Fox Theatre -- also is home to Centaur, Town Pump and Cliff Bells.

Owner Jerry Belanger and a team of workers spent 16 months renovating the 1920s building, long vacant and a reminder of the city's decay. To create a distinctive, contemporary look, Belanger tapped the talents of Motor City artisans and purchased materials from Detroit companies.

"For people coming down here from the suburbs, I wanted them to feel like they were in someone else's city," Belanger said. "I wanted them to feel like they were in Detroit."

Home goods store fills void

Looking to fill a major void in the downtown retail scene, Claire Nelson and Francis Grunow opened the Bureau of Urban Living on Canfield in Midtown.

"We both studied architecture, design and planning and we wanted to come back to see what we could do to make Detroit a better place," said Nelson, who met husband Francis when both were architecture students in New York.

The 600-square-foot homes good store evokes the ambiance of a general store, with shelves stocked with modern, affordable items -- everything from dinnerware and coffee mugs to towels and kitchen gadgets.

Christopher Arvanites, a downtown resident who works in real estate, is among the Bureau's regular customers.

"Boy, things have changed," said Arvanites, who has lived in the city for six years. "I used to ride my bike only for exercise but now I ride it to the bank and other places that benefit my everyday life. There's this notion that people who live in Detroit don't have access to everyday things. That's no longer true. There's a lot of activity now and I have more choices."

Independent stores thriving

Across town, the city's changing vibe convinced Joe Posch to relocate his home decor shop from Ann Arbor to the Merchant's Apparel Building in Harmonie Park. The store sells moderately priced and upscale furniture, lights and ceramics by designers such as Marcel Wanders and Jonathan Adler.

"City officials are pushing for chain stores and national retailers, but what I'm seeing is the opening of these little independent stores," Posch said. "These are individuals who live in the area and see the potential. These are stores you'd expect to see in thriving neighborhoods in Chicago, San Francisco or New York. But you're seeing them here."

Next door, the Motor City Brewing Co. will soon open a small kitchen to serve organic pizza, a nod to an expanding and discerning customer base.

"What is taking place with some of these new businesses are the personalities behind them," observed John Linardos, owner of Motor City. "These people are passionate about their buildings and what they're doing."

Ann Perrault, who along with her partner, Jackie Victor, opened the Avalon bakery on Willis Street a decade ago, has noticed the new wave of businesses.

"It's starting to come into our city and it feels good. I live down here because I don't like the consumerism, but it's nice to have choices," Perrault said. "What we all have in common is that we are independent businesses."

Phil Cooley, a former model who moved to Detroit because he was impressed by the city's rich history and strong people, believes it's more than that.

"I think there is a younger generation coming up with different ideas on urbanism and ideas of being in the city," he said. "It's exciting to see. There's a different perception of the city. We're building a sense of togetherness."

Article in September 12, 2007 Detroit Free Press

Southwest Detroit businesses will pay to bring in shoppers
Tax increase for improvements is first approved in state

September 12, 2007

By JOHN GALLAGHER

FREE PRESS BUSINESS WRITER

In a first for Michigan, business property owners in southwest Detroit have approved the state’s first Business Improvement Zone, more commonly known as Business Improvement Districts.

In a BID, businesses approve a small tax increase to pay for such services as security, cleanup, marketing and parking in their district.

Kathy Wendler, president of the Southwest Detroit Business Association, said about 200 property owners controlling about 300 parcels will be included in the district. The owners voted over the past 30 days, and the BID passed with 67% of the vote, Wendler said.

The district covered includes West Vernor from Clark on the east to Woodmere on the west, and Springwells between Vernor and the I-75 service drive.

”It’s not rocket science, “ Wendler said. “Keep it clean and safe and comfortable and people shop there.”

The extra tax amounts to 2% on top of the normal business property tax bill.

BIDS are widely accepted elsewhere, but antitax advocates and other critics in Michigan have managed to stymie approval of BIDs here. Windsor has nine separate BID districts, and New York and Los Angeles have approved about 50 each.

Advocates of BIDS hope the approval in southwest Detroit will encourage the creation of BIDS elsewhere in the city.

“Everyone is very interested in how we did it, are we successful,” said Theresa Zajac, program director for the new district.

Article in September 14, 2007 Detroti Free Press

Region's economy gets cash infusion
$100 million to ease transition from autos

September 14, 2007

BY JOHN GALLAGHER

FREE PRESS BUSINESS WRITER

The massive effort to turn around metro Detroit's ailing economy is getting a big boost.

Civic leaders announced Thursday the creation of a $100-million fund that will support metro Detroit's transition to an economy less dependent on auto manufacturing.

Known as the New Economy Initiative, the fund has drawn support from 10 foundations in varying amounts, including the Ford Foundation, W.K. Kellogg Foundation and the Kresge Foundation, each of which donated $25 million, and several others donating $1.5 million to $10 million each.

One of the few such locally targeted initiatives in the nation, the goal will be to support metro Detroit's shift to a knowledge-based economy that relies more on entrepreneurial activity than on manufacturing.

"We've got to help turn this economy around," Mariam Noland, president of the Community Foundation for Southeast Michigan and one of the leaders of the effort, said Thursday.

"Philanthropy all together can't make up the losses and the needs that we have here," she added. "We can't replace the public dollars. What we can try to do is help move this economy forward."

Steve Hamp, brother-in-law and former chief of staff to Ford Motor Co. Chairman Bill Ford, will chair the new effort.

The new fund is the latest of several efforts by civic and corporate leaders to help in metro Detroit's revival. Others include the One D initiative headed by the Detroit Regional Chamber and the Road to Renaissance headed by the corporate leadership group Detroit Renaissance.

All these efforts come in reaction to the serious long-term challenges facing the regional economy. After depending on the major automotive companies for jobs and civic leadership for nearly 100 years, the local economy now faces the reality of a permanently smaller automotive base with less money and clout.

"Part of what philanthropy can do is provide some leadership," Noland said. "There are good things happening, good plans in place. ... Those and other activities need money. Money's tight. We can bring some flexible dollars, which will help those move faster."

Among other things, the initiative would support workforce training, individual entrepreneurial start-up firms and programs to translate promising new technologies into profitable companies. Hamp said more specific goals and programs would be announced in coming months.

An 18-member governing board will oversee the new organization. Ten members will come from the foundations contributing money. Among the other eight will be Hamp, businessman Jim Nicholson and Ahmad Chebbani, former chairman of the American Arab Chamber of Commerce.

Article in September 12, 2007 Detroit Free Press

Suburban firms to move in downtown
Compuware, Ilitch welcome neighbors to Campus Martius

September 12, 2007

BY TOM WALSH
FREE PRESS COLUMNIST

In a boost for downtown Detroit, two growing suburb-based companies are planning to move their headquarters and more than 100 employees each into the new 10-story One Kennedy Square office building at Campus Martius.

Marketing Associates LLC of Bloomfield Township, whose majority owner is Edsel Ford II, and Health Plan of Michigan, the state's third-largest Medicaid HMO, each will occupy two floors of the lime green tinted-glass building. By the end of this year when the moves are expected to be complete, the building's office space will be fully leased.

A news briefing is planned for Thursday to announce details of the Marketing Associates move, which is expected to take place in the last week of October. Mayor Kwame Kilpatrick, Edsel Ford and Mark Petroff, president and CEO of the 140-person firm, are expected to attend.

Dr. David Cotton, president and CEO of Health Plan of Michigan, told me Tuesday that he expects to move his 110 employees from Southfield to their Detroit offices by Dec. 20.

Two ground-floor retail spots, on either side of the building's entrance, have yet to be leased, although developers are said to be close to a deal with a high-end restaurant for one.

When construction began in April 2005 on the office tower across Campus Martius Park from the Compuware Corp. headquarters, automotive supplier Visteon Corp. was slated to be the building's primary tenant. It had planned to put its contract information technology workers there. But as Visteon's financial problems mounted, the firm decided to sublet its space in the building.

Accounting and consulting firm Ernst & Young now occupies the top three floors, while construction firm Walbridge Aldinger moved its headquarters staff into the second and third floors in July. Marketing Associates will occupy floors four and five, and Health Plan of Michigan will move into the sixth and seventh floors.

Petroff is full of praise for his soon-to-be neighbors, especially Compuware CEO Peter Karmanos Jr. and Christopher Ilitch, president and CEO of Ilitch Holdings, the umbrella firm for Little Caesars Pizza, the Fox Theatre, and Detroit Tigers and Detroit Red Wings sports teams owned by the Ilitch family.

Compuware has offered Marketing Associates workers access to the fitness center and child care facilities in Compuware's building. And on July 20, Petroff said, Chris Ilitch provided 300 tickets to a Tigers game for the company's workers and family members. Compuware hosted a reception for them before the game.

When Petroff first told his employees about the decision to move to Detroit, he said "it went over like a lead balloon among some of our people, especially the ones with long commutes from northern Oakland County." But the outreach and support from other downtown businesses "created a real shift in attitude," he said.

"It's a real community taking shape down here. We'll be part of the new creative corridor," said Petroff, a U.S. Naval Academy graduate who was a nuclear submarine officer before he earned his MBA from the University of Michigan.

Marketing Associates, until recently, was primarily focused on helping automotive companies with direct-mail and other traditional marketing campaigns. But after an investor group led by Edsel Ford bought the company out of bankruptcy from Lason Inc., the firm expanded into a range of interactive marketing services, ranging from e-mail blasts to archiving digital video assets and helping manage online contests and rewards programs.

Petroff, who joined the firm in early 2006, said he expects the staff to grow to 225 people by 2010.

Cotton, former chief of obstetrics and gynecology at the Detroit Medical Center and Wayne State University, formed Health Plan of Michigan by buying and merging several managed care plans in the late 1990s.

The company has been growing at a rate of 31% annually since 2000, he said.

He, too, was full of praise for Compuware's good-neighbor efforts. "They took time to walk our people all through their building and answer questions about working downtown."

Petroff said he looked at other locations in Southfield and Troy for Marketing Associates but decided that moving downtown fit the rapidly changing nature of his business.

Even though office space was plentiful and lease rates attractive in the suburbs, Petroff said the new office tower's location in a Renaissance Zone provided a tax abatement that helped offset the costs of parking and the City of Detroit income tax. Marketing Associates is paying for parking and giving employees a raise to cover the tax bite, he said.

"One Kennedy Square is now filled to capacity, which is further proof that the business community has confidence in our ongoing efforts," Kilpatrick said of the firms.

Detroit development officials, with help from Karmanos, Ilitch and downtown business leaders, are still trying to persuade Livonia-based Quicken Loans and Rock Financial, along with other companies, to move into the city.

Article in September 12, 2007 Detroit Free Press

Detroit-area job market may grow
Quarter of firms to hire employees

September 12, 2007

BY MARGARITA BAUZA
FREE PRESS BUSINESS WRITER

Two surveys released on Tuesday suggest that the job market in metro Detroit is likely to improve in the last three months of the year.

A Manpower Inc. survey showed a favorable job market is expected for Wayne County during the fourth quarter. From October to December, 25% of the companies interviewed plan to hire more employees, while 13% of the firms expect to cut payrolls.

Another 42% expect to maintain staff levels and 20% are uncertain of their hiring plans.

Employer confidence about hiring is stronger than a year ago, said Manpower spokeswoman Laura Reed.

For the fourth quarter of 2006, 17% of companies surveyed planned to boost staff levels and 19% expected to reduce payrolls.

Also, the Robert Half Technology IT Hiring Index and Skills Report showed that 14% of information technology firms in the Detroit area expected to hire IT professionals in the fourth quarter.

"It's been cyclical in IT," said Christine Lucy, senior regional vice president of Robert Half International. "There's been attrition of talent. When an economic struggle appears, people go elsewhere for opportunities.

"But there is a continuing surge for new technologies, and it's impossible for one person to be an expert for all types of technologies."

The results are based on interviews with 200 information technology officers from a random sample of companies in the Detroit area with 100 or more employees. The survey also queried 1,400 executives nationally.

The surveys were conducted by an independent research firm and developed by Robert Half Technology, a provider of IT professionals on a project and full-time basis.

Robert Half Technology has been tracking IT hiring activity in the United States since 1995.

Because competition for candidates has intensified, organizations are accelerating hiring, increasing salaries and offering work-life balance benefits, said Katherine Spencer Lee, executive director of Robert Half Technology.

Article in September 11, 2007 WSJ

Auto Makers Pile On Buyer Incentives

Many Are Offering Generous Rebates and Below-Market Rates
To Clear Crowded Lots; 2.9% Financing on a Honda Odyssey

By JONATHAN WELSH
September 11, 2007

The home-mortgage mess is hitting the auto business, as interest rates on car loans creep upward and many people find it hard to qualify for credit to buy a new vehicle. But for consumers with good credit, it's deal time.

Auto dealers are eager to clear out a growing number of leftovers as 2008 models arrive. Some have more unsold current-year models than usual in stock, reflecting an industrywide sales picture that worsened through the year. Total U.S. auto sales could fall below 16 million vehicles this year, according to analysts -- the lowest in a decade. To clear up the glut, some car makers -- especially the Big Three U.S. companies -- are using perks like rebates and low financing rates to attract interest.

Buyers can get $500 cash back on Ford Motor Co.'s new-for-2007 Lincoln MKX, and Chrysler LLC is offering a $4,500 rebate on its 2007 minivans. Even the notoriously incentive-stingy Honda Motor Co. is offering below-market 2.9% financing on its popular Odyssey minivan. All told, the percentage of transactions involving rebates grew to 49% this summer from 42% a year ago, according to Power Information Network, a unit of researcher J.D. Power & Associates. In certain cases, buyers don't even have to settle for the outgoing model: Some 2008 models also carry surprising incentives. Chrysler's Jeep Commander, for example, offers a $3,000 rebate.

Difficulties in the subprime-mortgage business and the broader decline of home prices in many markets have hurt other parts of the economy, but car makers, dealers and others in the auto industry are still assessing their effect. The housing market has a big impact on consumers' ability to afford a new vehicle, and many are buying less-expensive cars with fewer luxury features or putting off purchases altogether.

The result has contributed to the retail auto sales slowdown. The National Automobile Dealers Association had predicted earlier this year that 2007 sales of cars and light trucks in the U.S. would total about 16.5 million, roughly the same as last year. Now the trade group says sales could fall as low as 16.1 million.

At the same time, 24% of auto financing and leasing transactions in July and August had interest rates lower than 5%, compared with 33% in the year-earlier period, according to J.D. Power. In August, the average rate was 7.3%. Fuel prices also remain high, and a weak dollar continues to make certain European models expensive.

The National Automobile Finance Association, a trade group that represents subprime lenders, says the mortgage crisis and changes to federal law that make it more difficult for consumers to file for bankruptcy protection have driven up the number of car-loan delinquencies. The group says nearly 12% of subprime vehicle loans reported by its members were delinquent last year, up from 6.5% a year earlier.

Savvy consumers have known for years that autumn is the best time to shop for a car. The pending flood of new models in October and November drives dealers to more aggressively market vehicles from the outgoing model year in the fall.

In the past 20 years or so, however, manufacturers have increasingly sought to set their new cars apart by bringing them to market at other times of the year. The practice has blurred the lines somewhat between this year's and next year's models. Manufacturers favor the approach because their vehicles tend to get more attention from consumers who aren't distracted by the regular introduction of several competing models. For dealers, it's a way to bring people into their showrooms during what would otherwise be slow periods.

British off-road vehicle maker Land Rover, a unit of Ford, rolled out its LR2 compact luxury SUV in April as a 2008 model. The early introduction placed it ahead of similar models expected from rivals. The car maker's finance arm, Land Rover Capital Group, offers a 3.9% finance rate—on the low side for a new model. But consumers can often find attractive rates through banks and credit unions, so a car company's so-called captive finance businesses often use lower rates as a way to draw more customers who would otherwise arrange loans elsewhere.

Christopher Marchand, Land Rover's vice president of retail operations, says the 3.9% finance rate on the LR2 is "middle of the road" when compared with what buyers might find at a bank. Still, consumers who have watched finance rates increase lately are likely to find the rates attractive, says Paul Taylor, chief economist for the National Automobile Dealers Association.

"In an increasingly more difficult credit environment, a range of 3.9% to 7.9% is looking pretty good," Mr. Taylor says.

The well-reviewed Kia Sedona minivan, a product of Hyundai Motor Co., is offering buyers $3,000 cash back on 2007 models. General Motors Corp. is dangling a huge rebate -- as much as $7,500 -- on its high-end Cadillac XLR, which lists for $78,335, and is offering 5.9% financing on the just-released 2008 Buick Enclave.

Chrysler's Sebring, a midsize sedan that competes with top-selling models like Toyota Motor Corp.'s Camry and Honda's Accord, was redesigned about a year ago and is now available with 0% financing or a $1,500 rebate. Such deals are often advertised and relatively easy to find when researching cars on the Internet. However, there are other incentives that manufacturers dole out locally for dealers to use at their discretion.

Toyota rarely offers incentives on its best-selling Camry sedan or most of its other models, but a Toyota spokesman says the company does use so-called dealer incentives "for tactical purposes," or on a case-by-case basis to attract customers.

And they do attract customers, even to vehicles that might seem unappealing. Though sales of gas-guzzling large pickup trucks like the Ford F-150 and Dodge Ram are down 2.2% for the year, Mr. Taylor says, there was an upswing of 9.1% in August sales thanks to "vigorous incentive competition" among makers like GM, Ford and Toyota that included rebates in some cases of several thousand dollars.

Article in September 7, 2007 Detroit Free Press

Another daring move at Chrysler

New order: LaSorda to build vehicles; Press to sell them

September 7, 2007

BY TIM HIGGINS
FREE PRESS BUSINESS WRITER

In a move that shocked the auto industry, Jim Press, Toyota Motor Corp.'s North American president, on Thursday was named president and vice chairman of Chrysler LLC -- titles he will share with onetime Chrysler Chief Executive Officer Tom LaSorda.

It is the second time in the past month that Chrysler, under new ownership, has lured a senior executive from Toyota. The Japanese company has sold more cars in the United States this year than Ford Motor Co. and is on its way to surpassing General Motors Corp. as the world's biggest automaker.

Once called Toyota's secret weapon, Press was most often the American face of the world's most profitable automaker: the man who unveiled the Tundra pickup in Detroit (and stuck a hybrid tag on it), and the one who calmed the storm after a sexual harassment incident rocked the New York headquarters.

"I relish this new opportunity with the Chrysler team to be a part of the resurgence of a true American icon here and around the world," Press said in a statement.

Under the new arrangement, LaSorda will basically be responsible for building the vehicles and Press will be responsible for selling them.

"Our top team now consists of a world-class 'supply' leader in Tom and an equally world-class 'demand' leader in Jim," Chrysler Chairman and Chief Executive Officer Bob Nardelli said in a statement.

Delphi Corp. Executive Chairman Steve Miller, a former Chrysler Corp. vice chairman, was among those who praised the move.

"I am impressed with Press. I think he's one hell of a good, strong executive, and I think it's a great coup for Nardelli and Chrysler," Miller said.

Analysts said Chrysler is moving stunningly fast.

"Cerberus is obviously deploying the tactic of using 'shock and awe' to make a statement about where they want to take Chrysler," Dennis DesRosiers, industry analyst with DesRosiers Automotive Consultants Inc., said in a note.

Press, 60, spent 37 years at Toyota, most recently as the president and chief operating officer of Toyota Motor North America, the holding company responsible for Toyota's North American sales, engineering and manufacturing units.

He was also the first non-Japanese executive to serve on the board of directors, which is a management board, not a U.S.-style shareholder board.

Press' career blossomed along with the success of Toyota. He is beloved by dealers and considered a car guy who knows winning products.

But in his new role at Chrysler, he will face issues that he has not had at Toyota for a long time, if ever -- high incentives, stagnating sales and poor scores on major quality studies.

"Jim's got a tremendous amount of sales background, and Chrysler sorely needed to build a better relationship with its dealer network," Michelle Krebs, senior editor for Edmunds' AutoObserver.com, said in a note Thursday.

"But the problem is still with their products, and we'll see if these moves will help bring Chrysler back to profitability."

Tom Libby, senior director of industry analysis at J.D. Power and Associates, echoed those thoughts.

"From a PR standpoint, at a minimum, it's a huge step," Libby said. "I will say, though, that Toyota's success -- even though Mr. Press played a huge role in it -- Toyota's success has come from having very, very competitive products in the showroom, and Chrysler has to have that. And the products that are in the Jeep, Chrysler and Dodge showrooms are going to be the same today as they were yesterday."

Execs to share power, split duties

Nardelli and Chrysler's new owner, Cerberus Capital Management, are working quickly to remake the Auburn Hills automaker as a private company. Press' hiring comes one month into Cerberus' ownership. His final day at Toyota is to be Sept. 14. He will be replaced by Shigeru Hayakawa, Toyota Motor North America's executive vice president.

Press will hold the title of president and vice chairman and be responsible for all sales, marketing, product strategy, and service and parts around the world when he begins at Chrysler on Sept. 17. His compensation was not disclosed.

LaSorda was made president and vice chairman in August when Nardelli took the top job. He had been CEO and president since 2005. Now he will oversee manufacturing, procurement and supply, employee relations and global business development and alliances.

"I've known Jim for many years and know that he will hit the ground sprinting. I look forward to partnering with him," LaSorda said in a statement.

Both will report to Nardelli.

In a statement, Press said he looks forward to working with Chrysler dealers: "Part of my new responsibilities will be strengthening and energizing the dealer body. This is something I was passionate about at Toyota and will be passionate about at Chrysler."

Nardelli said Press' skills complement LaSorda's.

"Tom LaSorda and I are thrilled that one of the most successful executives in the history of the auto industry has joined our leadership team at the new Chrysler," Nardelli said in a statement.

Last month, Chrysler announced it had picked up another high-ranking Toyota exec -- Lexus marketing vice president Deborah Wahl Meyer. She now is Chrysler's chief marketing officer and vice president.

Working on change

Press comes to Chrysler at rocky time. The automaker's relationship with dealers came under stress last year after Chrysler came up with more than 100,000 vehicles in the company's so-called sales bank -- vehicles that no dealer had ordered -- then strong-armed dealers to buy the surplus cars and trucks.

Joe Eberhardt, Chrysler executive vice president of global sales, marketing and service, stepped down over the mess last winter.

LaSorda and his team have been working ever since to repair the company's relationship with its 3,700 dealers.

The company also is working to turn around its bottom-line results, after losing $680 million last year and nearly $2 billion in the first three months of this year. Former parent DaimlerChrysler AG said Chrysler lost money on operations in the second quarter, but as a private company, Chrysler no longer makes public its finances.

Chrysler, which has a truck-heavy lineup, is working to invest $3 billion into making more fuel-efficient vehicles.

Chrysler dealer Carl Galeana of Galeana Automotive Group in Warren welcomed the news about Press.

"He listens to people. There are not a lot of people in this business that really want to listen and hear what people have to say, especially dealers, but he is one of them," he said.

With all of the changes at Chrysler, Galeana said, "You just wonder what's next."