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“ is bill in our mind needs more discussion and more work and probably needs to be more narrowly crafted towards what you’re hoping to accomplish,” Block said. “I would just encourage you to engage all stakeholders in that discussion because this has huge rami cations for Michigan’s economy, for Michigan workers and for Michigan businesses.” e measure would prohibit the misclassi cation of employees as independent contractors and put the onus on employers facing complaints to prove they did not do so. It also would allow for $10,000 nes and orders that violators pay workers three times the wages and bene ts they are owed. son-Chalmers Historic Business District, in accordance with the Michigan Local Historic Districts Act, the city’s attorneys said in the lawsuit. e properties in Detroit are also subject to permitting and other approval processes set forth in the Detroit City Code, they said, asking the court to declare that Urban Renewal is required to le an application for permits with the Detroit Buildings, Safety Engineering, and Environmental Department to commence and complete demolition and/or construction. ment is not unusual. e pro le of the company, which had an estimated revenue of $136 million last year, mirrors many other small and midsize suppliers. But its publicly traded status in a space dominated by private companies o ers a glimpse into the nancial turmoil that turnaround experts have said is prevalent in this part of the supply chain. e elevated debt service level, it warned investors, is burning cash that could otherwise be used for working capital, capital expenditures or research and development. e same dynamic is at play with Novi-based Stoneridge Inc. e supplier’s interest expenses increased

Wybo said he has a couple dozen nancially distressed clients, and most of them have pointed to rising interest rates as a major factor. While bankruptcy is the result only in the most severe cases, daunting debt service levels are impacting nearly all companies with variable debt on the books.

Northville-based Cooper-Standard Automotive Inc.’s debt increased just slightly year over year to about $1 billion in 2022, as detailed in its annual earnings report in February. At the same time, its net interest expense jumped $6 million due to higher interest rates.

Ongoing issues

PCI One Source, the general contractor on the project, sought and secured a permit from Grosse Pointe Park for the DPW building with an address in that city, Turnbull told Crain’s last week.

It submitted its plans for the property to the Detroit Historic District Commission in September 2021 but withdrew its proposal the next month after sta for the commission recommended denying the proposal.

In the commission report, sta about $2 million from 2021 to 2022 primarily because of higher credit facility interest rates, it said in its annual nancial report led last month.

“It can be a major hurdle for suppliers,” said Sean Pattison, principal at Plante Moran who specializes in restructuring. “When you have less cash, then every decision becomes that much more important.” e interest rate on its $400 million term loan facility jumped more than 8 points to 12.3 percent, amounting to an annual interest expense of $46.3 million, or $4.5 million more than what it paid the previous year.

At South eld-based Superior Industries International Inc., most of its $647 million of debt was at a oating rate at the end of 2022, though it did execute a swap for xed rate debt to hedge against volatility in the future, the company said in its annual report led last month.

“A signi cant portion of our cash ow from operations will be used to pay our interest expense and will not be available for other business purposes,” the company said in the ling.

Auto suppliers are starting to look to customers for recoveries related to elevated interest expenses, Pattison said. But those negotiations differ from the price increases many customers have reluctantly given to said the proposed demolition of buildings on the property and plan to turn it into parking and loading areas failed to adhere to the historic nature of the surrounding Je erson-Chalmers neighborhood, would negatively impact pre-war apartment buildings on Alter Street and locate parking, pedestrian/vehicle con icts and truck loading “facing toward” the city of Detroit, a design that was incompatible with the pedestrian and historic context of the neighborhood.

“Here defendant opted to withdraw its application to the HDC and proceed with the demolition of the structures on 14927 East Je erson and its plans to construct on 14901, 14917, and 14927 East Je erson without following the appropriate procedures to obtain demolition and/or building permits issued by the City of Detroit, in stark derogation of the law,” the city’s attorneys said in the lawsuit.

Contact: swelch@crain.com; (313) 446-1694; @SherriWelch help suppliers weather rising costs for material and labor, as well as production shutdowns.

“ e OEMs view that separately from operational challenges,” Pattison said of rising interest rates. “ ey would view it as outside of their control or outside of their effect on the suppliers, so I think they’re trying to avoid having to compensate or reimburse suppliers for that increase in cost.”

However, for many companies, the turbulent nancial situation has only worsened.

“Suppliers, more so now than even 24 months ago or 12 months ago, are trying to include any cost increase they can that’s making their contribution and pro t margin erode away,” Pattison said.

Suppliers have only two options to mitigate losses: cut costs and improve e ciencies, Wybo added. After that, they fall back on their customers for help.

“For a lot of these distressed companies, it’s been a buildup of three years of depressed volumes, volatility in releases, increased labor, et cetera,” he said. “ is massive rise in interest rates hit these borrowers quickly.”

Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

John Bodary, president and owner of Woods Construction, a Sterling Heights-based company that renovates stores, urged passage of the legislation. He told of how his rm unsuccessfully bid to remodel a Target in Brighton only to ultimately take over the project after the out-of-state contractor did poor work and did not use appropriate barricades or safety measures to protect shoppers.

“Fortunately, this scenario doesn’t happen all the time in our industry. But it does happen. And when it does, it’s very di cult to compete with contractors that employ illegal and unsafe practices for their eld forces,” Bodary said. “Enacting legislation that helps to regulate this work will help keep the playing eld level for good Michigan businesses that follow the rules.”

Amanda Fisher, director of NFIB Michigan, a group representing small businesses, said it has “grave concerns” with the package. e misclassi cation of workers, she said, may not be intentional.

“We need to take care of bad actors, and bad actors do hurt current employers that are following the law,” Fisher said. “However, House Bill 4390 doesn’t address that. It just changes what an independent contractor is. If you’re a bad actor, I don’t see how that’s going to help hold other bad actors accountable. All it’s going to do is hurt the people, especially small business owners who many times are independent contractors.”

Other bills would sti en penalties for the nonpayment of wages, revise whistleblower protections, fund marketing for state Attorney General Dana Nessel’s payroll fraud unit, establish an ombudsman to investigate complaints of state government employees, punish false claims for payment from the state and local governments and prohibit employers from requiring noncompete clauses unless certain conditions are met.

Nessel, a Democrat, has established a payroll fraud enforcement unit but has said laws should be updated with “actual teeth.” She has said payroll fraud is most prevalent in the construction, landscaping, janitorial services, child care, beauty and personal care services, retail, food service, car wash and home health care industries.

Another bill would require employers to, within 30 days of an employee asking, disclose wage information about workers who are within the same job classi cation or whose duties are comparable.

Block said such disclosure “may not be a bad thing,” but employers should not face felony penalties for denying a request.

Contact: david.eggert@crain.com; (313) 446-1654; @DavidEggert00