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Franchising Olga's, watchbands
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<0lIlIIII7-Eleven precautions decrease robberies PAGE 22
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Medical Center unites to stop red ink PAGE 14
WEEK OF FEBRUARY 18 -
FEBRUARY 24, 1985 VOLUME 1 0 NO.3
Auto suppliers' margins are slim BY JANE WHITE CRAIN'S DETROIT BUSINPSS
Automotive suppliers may have to wait two years to benefit from the trickle-down effect of the Big Three automakers' record 1984 earnings. Suppliers say their volume was up in 1984, but their profit margins were narrow because they have had to invest heavily in modernization and to absorb cost increases "We're feeling the positive benefits in the volume area, but not the same bottom line," said Richard Doyle, vice president of sales and marketing for ITT Thompson automotive trim division ofITT Corp. of New York. "We don't have the same ability to move our prices, and we're still being asked to offset labor increases with improvements i n product ivity ," Doyle said. Southfield-based ITT Thompson makes decorative trim. The Big Three last week announced record earnings in 1984 totaling $10 billion. Ford Motor Co. and Chrysler Corp. made the biggest percentage improvements, with earnings in both cases up 55 percent, to $2.9 billion and $2.4 billion re-
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Enzymes of America President Earl Braxton with a case of urine-derived protein and collection filter. Inset: Protein sold to drug companies. PHOTOS BY JOE WILSSENS
Public stock sale set by Utica biotech fInD BY BRADFORD WERNLE CRAIN'S DETROIT BUSINESS
Enzymes of America Inc., a Utica-based biotechnology company which developed from a portable toilet company, is prepared to file for a $5 million public stock offering this spring, an attorney who is overseeing the deal said. Enzymes of America President Earl Braxton hopes earnings from his biotechnology company will eventually dwarf those of Porta-John Inc., his portable toilet operation. Enzymes of America, which sells proteins derived from human urine to drug companies, plans to raise capital for new laboratory space by selling common stock and warrants. Warrants give the holder the right to purchase common stock at a stipu-
lated price within a specified time. The urine is collected by a patented filtration process in urinals of Porta-John's toilets. Porta-John is now a wholly-owned subsidiary of Enzymes of America. Dan Brecher, head of the securities department of the Wiener, Zuckerbrot, Weiss & Brecher law firm, said an underwriter has been selected, but the structure of the offering is still subject to change. He said Enzymes of America will file a registration statement with the Securities and Exchange Commission (SEC) soon. "This company has got the high-tech sizzle of the biotechnical frontier," Brecher said. "It's a unique source of rare products used in the medical field. And at the same See BIOTECH Page 26
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spectively, from 1983. General Motors Corp.'s profits were up 20.6 percent to $4.5 billion. Roger Cadaret, associate director of the Automotive Industry Action Group, an auto supply trade group, thinks the ripple of auto profits won't reach the suppliers for at least two years. "The suppliers have had to lean on technology pretty heavily to make productivity improvements, which means turning over a very large investment for them," said Cadaret. "Some of them have had to spend anywhere from $10,000 to $100,000 on computers, for example. They've had to train people in statistical process control, and so on. No, it'll be a couple of years before they start getting on the bandwagon." Rod McLachlan, sales and marketing vice president for the Bundy Tubing division of Bundy Corp. of Warren, agrees that while sales are up, profit margins are narrow. "We're making profits, but not record," said MacLachlan of his division, which assembles brake and fuel lines. Automakers can pass along their own See SUPPLIERS, Page 25
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!he Solomon .Investment Group's aggressive real estate development strategy Includes breaking ground for this 44,000-square-foot office building at Big Beaver and Spencer roads in June. Story, Page 3 ~
Small-town S&L builds big portfolio BY CHARLES CHILD CRAIN'S DETROIT BUSINES S
Dennis Pearsall
Great Lakes Federal Savings, based in Ann Arbor, believes it has the secret of beating the bigcity banks: the small-town touch. Despite local competition from the five biggest bank holding companies in Michigan, in just two years Great Lakes has built a major commercial loan portfolio in the lucrative Ann Arbor market. Federal deregulation gave savings and loan associations the power to make commercial loans
in 1982. At the end of 1984, Great Lakes' portfolio with businesses in Ann Arbor stood at $40 million. With assets of $2.1 billion, Great Lakes is Michigan's third largest S&L. Jan Hansen, an analyst in the Detroit office of Thomson McKinnon Securities Inc., believes Great Lakes filled a vacuum created when the local banks were purchased by the major Detroit banks. Starting in 1978, Michigan's five largest bank holding companies either absorbed or
opened banks in the Ann Arbor area. Great Lakes could carve out a successful niche by lending money to customers - particularly small business people - unhappy wit h the "centralization" of the competing banks, Hansen said, adding: "There are good loans, if you can service them correctly." Said James Scala, president of Pezzani & Reid Equipment Co. Inc. of Detroit: "My loan was made a lot on (my) character. I doubt whether the big Detroit banks
would have gone for it." Pezzani & Reid , which sells and repairs truck trailers, has a $500,000 line of credit and an $800,000 note from Great Lakes. The architect of Great Lakes' commercial loan policy is Dennis Pearsall, executive vice president and director of lending. Hired away from NBD Ann Arbor, formerly National Bank & Trust Co. , he took with him other local bankers - and customers. For example, James Fox, presiSee S&L Page 25 ~