Detroit Lender in Danger of Bankruptcy

Story first appeared in The Detroit News.

Detroit-based auto and mortgage lender Ally Financial Inc. said Thursday that it swung to a $310 million net profit in the first quarter this year after a net loss of $206 million in the prior quarter and net income of $146 million in first quarter 2011.

Ally is the nation's largest new car lender and underwrites the inventories of thousands of dealers. It also writes mortgages, and said Thursday first-quarter results were improving in that end of the business.

The troubled mortgage unit, Residential Capital, lost $792 million in the three previous quarters. ResCap failed to make a $20 million interest payment this month, and it has until next month to pay it or it will be in default. Last month, the Federal Reserve said Ally was one of four banks that failed its "stress tests" and may need more capital to weather downturns.

Ally and the U.S. Treasury, which owns 74 percent of Ally as part of a $17.2 billion bailout, are considering bankruptcy for ResCap and have held talks to sell it to Fortress Investment Group LLC -- a move that could include putting the mortgage unit into a bankruptcy restructuring.

Ally and the government are trying to choose between the lesser of two evils in deciding whether to put the mortgage unit in bankruptcy. But a representative said that Ally has a tremendous amount of strategic value and he expects the government will recoup a significant portion of its investment.

Late Wednesday, Chrysler Group LLC said it will end its preferred lending relationship with Ally next April. Chrysler accounted for about 5 percent of Ally's U.S. consumer automotive loans in the first three months of the year and about 3 percent of its earning asset base as of March 31.

Though Chrysler intends to end its preferred relationship, the lender said itexpects to continue to play a significant role with Chrysler dealers in the future, as the dealer is Ally's direct customer for the majority of business that is conducted.


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Somerset Mall Doing Well

Story first appeared in The Detroit News.

The Somerset Collection Thursday celebrated the first of many spring and summer store additions and renovations, which a retail analyst said will help keep its reputation as Metro Detroit's "foremost mall."

The upscale Troy mall added two new women's clothiers Thursday.

Columbus, Ohio-based The Limited reopened its renovated space in Somerset and included the national store launching of its full-figured fashion line eloquii. Aritzia, a women's apparel retailer, also debuted its first Michigan store at Somerset.

During the next six months, Somerset will open or reopen 11 stores.

It is a way to maintain their brand against competition.

The additions of eloquii is a welcome sign because the brand was originally launched online only, but demand for the clothing enticed The Limited to create a brick-and-mortar outlet.

Three other fashion retailers -- Hugo Boss, Emporio Armani and Giorgio Armani -- will open during the summer or fall, said Somerset spokesman.

Overall, Somerset's additions don't exactly follow the Metro Detroit trend.

The region's mall vacancy rate is 12.2 percent, according to CoStar Group, a commercial real estate information service.

Somerset does not release vacancy rates, but Dalto estimated the mall is probably at about 95 percent capacity.

Somerset is not solely banking on the success of new stores. Six existing retailers, including Express, Victoria's Secret and Bath & Body Works, have been remodeled or renovated and will reopen between now and July 25.

In fact, the Retail Store Fixture Dealers industry, which deals with retail renovations and expansions, said 2011 was the first year since the recession when the industry began to rebound.

Retail revenue is expected to rise 2.1 percent this year to $10.6 billion, according to a report this week from IBISWorld, an industry researcher, and should continue to drive retail renovations and expansions like those at Somerset.

The report, however, expects upgrades to lag behind prerecession levels.


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New Business Taking Root in Detroit

Story first appeared in The Detroit News.
They didn't come because of major tax breaks. They aren't looking to move even as city leaders attempt to stave off bankruptcy. Many entrepreneurs have staked their ground in Detroit because they see business opportunities and social needs.

There are countless examples that showcase Detroit's real spirit. There is a spirit of urban innovation that's advancing economic opportunity, quality of life and civic engagement across Detroit. A Dearborn Business Lawyer states that the number of new start-ups needing guidance has really jumped recently.

Here are four examples of companies that are enthused about Detroit, and hope to capitalize on its emerging trends and unmet needs. 

Detroit Bikes

A Calgary native who first visited Detroit two years ago, has now setup shop and feels more welcome in Detroit than he has anywhere else.

This year, the Canadian started Detroit Bikes, his vision to create an accessible, well-built three-speed commuter bike for the masses. The 31-year-old loves the fact that his small production crew of four is working on the prototype in the carriage house of his Boston Edison home. Henry Ford once lived in the Boston Edison neighborhood.  His goal is to create affordable, reliable transportation.

He eventually he wants to build 100 bikes a day.

If he ends up buying a building in Detroit, he could end up investing up to $400,000 to get Detroit Bikes in motion. He believes the market is there: A 2012 report by the Alliance for Biking & Walking found the number of bicycle commuters in Detroit rose 258 percent over the past two decades.  The Canadian says that it is very important to him that he be able to hire Detroit workers. Many people have inspired and encouraged him during the business startup.

En Garde! Detroit and Sword Dreams

A 28-year-old Jamaican immigrant has been fencing almost half his life, and founded a social entrepreneurial company dedicated to fencing, called En Garde! Detroit three years ago.

His prowess led to an athletic scholarship to join Wayne State University's world-class fencing team.

He wants to offer that kind of opportunity to inner-city youths by teaching about his sport. He loves to tell students that fencing originated in Egypt, and it sharpens the mind as much as the body. There are too many public schools with no arts program, no cultural programs. Fencing can offer them something they can feel, touch, breathe — be totally connected to.

Last year, his programs reached more than 1,000 students.

This year, he started the nonprofit Sword Dreams, whose goal is to buy fencing equipment for students. He also opened a studio on the edge of Corktown to offer free classes.

On Thursday, he will deliver the keynote speech at the 2012 Governor's Fitness Awards at Ford Field.

Detroit Farm and Garden

The store opened April 2 in what used to be the parking garage and lot of a former Detroit Police precinct in southwest Detroit.

Detroit Farm and Garden's goal is to provide high-quality gardening, farming and landscape resources to Detroit. Nearly everything in the store is organic, and much of it is locally made.

Already, there has been a run on 50-pound bags of chicken feed, Klein said. And at the request of several customers, the store now carries pig feed. The bales of hay and straw are selling pretty well, too.

There were 1,351 vegetable gardens in Detroit, Highland Park and Hamtramck in 2011, according to the coalition groupcalled the Garden Resource Program Collaborative. That includes 800 family gardens, 300 community gardens, 60 school gardens and 40 market gardens.

The owners of the business feel that they are really servicing a local need.

Pluto

Pluto, a Birmingham-based "creative content" firm is setting up an office in a warehouse on the southwestern edge of downtown Detroit. Pluto plans to create 10 jobs from the get-go, and aims to become a hub for visiting New York and Los Angeles-based advertising and marketing professionals. Pluto was inspired by the decisions of Compuware Corp., Quicken Loans Inc. and General Motors Co. to relocate as many employees downtown as possible.

GM has tried to convince its new marketing partners to commit to Detroit. New ad agency Commonwealth — a 50/50 partnership between Chevrolet's U.S. agency, San Francisco-based Goodby Silverstein & Partners and New York-based McCann Erickson Worldwide — is bringing 280 jobs into the city. Social media company Twitter and at least two public relations firms also are setting up shop in the city.

Pluto specializes in broadcast and online marketing. Its workers include motion designers, Web designers, computer graphic artists and sound designers.

Next month, the company plans to open a 5,000-square-foot space in a West Fort Street warehouse.

Pluto has converted it into a sleek, playful area with state of-the-art editing, Web-serving programs and design facilities.


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Natural Gas Drilling in Michigan Up for Debate

Story first appeared in The Detroit News.

Michigan legislators are considering tightening the state's regulations on a controversial natural gas extraction technique.

A bill introduced this week by House Democrats would require companies producing natural gas in Michigan through hydraulic fracturing to fully disclose the chemical solution used in their processes — a level of openness the industry has long opposed.

Hydraulic fracturing, or "fracking," has been used to harvest natural gas in Michigan for decades. To release gas trapped deep in the earth, companies pump a water/chemical mix, or "fracking fluid," into the shale formations below the surface. That causes the rock structures to fracture, releasing the natural gas there to be pumped back up to the surface.

In recent years, producers have utilized new technologies to drill vertically and then several thousand meters horizontally, opening up far more area for harvesting than was before possible.

But concerns over the impacts of fracking have made the process the target of criticism from environmental groups. In other states, fracking fluid is believed to have contaminated groundwater supplies.  The involvement of Fracking Experts is extremely important to make sure that proper procedures are followed to avoid additional environmental contamination.

In the past, companies in Michigan have only been required to disclose 99.5 percent of their fracking formula. The rest has been considered proprietary information that gas companies could keep to themselves.

This week, Democrats in Michigan are introducing a bill that would require companies seeking permits for hydraulic fracturing to disclose their complete recipe for fracking fluid. This would require a full disclosure before a permit can be given. Michigan residents just want to know what's being put into the ground and, probably, the water.

Deep below the top third of Michigan's Lower Peninsula lies the Collingwood shale formation — a natural gas deposit that has drawn great interest in recent years from exploration companies. Calgary, Alberta-based Encana Corp. has dug three test wells over the last two years to judge the viability of hydraulic fracturing there.

A spokesman for Encana has said the company already voluntarily participates in a database that provides the communities where it drills with the baseline 99.5 percent of information. And in cases where questions arise over possible groundwater contamination from fracking, the company has provided local officials with the full content of its fluid. Encana feels that their approach has been a good balance between providing the proprietary cover companies want and at the same time, providing access that the public feels is warranted.

Without having seen the reporting requirements of the new bill, Hock declined to discuss what impact it might have on Encana's future plans for exploration in Michigan.

A policy director for the Michigan Environmental Council, said there has been a shift in the political climate on full disclosure for hydraulic fracturing in recent years. Natural Gas Experts have made it clear that they feel that the full chemical solution should be provided to avoid environmental contamination.


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Dow Develops New Weed Killer

Story first appeared in Yahoo News.

A new biotech corn developed by Dow AgroSciences could answer the prayers of U.S. farmers plagued by a fierce epidemic of super-weeds. Or it could trigger a flood of dangerous chemicals that may make weeds even more resistant and damage other important U.S. crops.

Or, it could do both.

"Enlist," entering the final stages of regulatory approval, has become the latest flashpoint in the debate about the risks and rewards about farm technology. With a deadline to submit public comments on Dow's proposal at the end of this week, more than 5,000 individuals and groups have already weighed in. Dow Agrosciences, a unit of Dow Chemical Co, hopes to have the product approved this year and released by the 2013 crop.

The corn itself is not the issue -- rather it is the potent herbicide chemical component 2,4-D that is the center of debate.

The new corn is engineered to withstand liberal dousings of a Dow-developed herbicide containing the compound, commonly used in lawn treatments of broadleaf weeds and for clearing fields of weeds before crops like wheat and barley are planted.

Enlist is the first in a planned series of new herbicide-tolerant crops aimed at addressing a resurgence of crop-choking weeds that have developed resistance to rival Monsanto's popular Roundup herbicide. It is part of an expanding agricultural arsenal advocates say is key to growing enough food to feed a growing global population.

But while 2,4-D has a long history of effective use, the chemical's volatile nature also worries environmentalists because winds, high temperatures, humidity can cause traditional forms of the herbicide to migrate from farm fields where it is sprayed to wreak havoc on far-off crops, gardens, and trees that are unprotected from the invisible agent.

Environmentalists are pushing the government to pause before opening the door to what they say could be a destructive turn.

Opponents include some specialty crop farmers who fear 2,4-D herbicide use could cause widespread damage to crops that are not engineered with a tolerance to it. It is so potent that its use is tightly restricted in some areas and at certain times of the year in some U.S. states.

It is a major issue for farm country. Massive amounts of 2,4-D can cause major changes, threatening specialty crops miles away.

The financial stakes are high as well. Dow projects a "billion dollar value" in a product line that is its biggest challenge yet to the dominance of top seed company Monsanto's revolutionary Roundup herbicide and its genetically modified "Roundup Ready" seeds. Dow hopes to expand Enlist into soybeans and cotton.

Where Roundup once killed weeds easily, experts say that now, even heavy use of the herbicide using the key chemical glyphosate often fails to kill "super weeds."

NEW HERBICIDE TEMPERS 'DRIFT'

Some weed scientists are supportive of Enlist. In the southern third of Illinois, prime corn-belt country, infestations of the invasive water hemp weed have doubled each year over the past three years, according to Bryan Young, weed scientist at Southern Illinois University.

The de-regulation of Enlist herbicide-tolerant corn will expand grower options for controlling problematic weeds and has proven in my research to be effective as such.

Dow officials say they are aware of the problems with 2,4-D "drift" and volatility, and that the new herbicide has been formulated to reduce those factors dramatically.

Dow says that if farmers use the new Dow version of 2,4-D properly, drift is reduced about 90 percent, and tests show the new product has "ultra-low volatility."

Even many opponents of Dow's new herbicide say it is an improvement of generic rivals using 2,4-D. But they say Dow's version will be expensive enough that many farmers will probably buy cheaper generics to spray on the 2,4-D-tolerant corn.

Dow acknowledges that lure, but says it will work to steer farmers to its brand.

An Indiana farmer who grows corn and soybeans but also runs a vineyard and winery, says his young grapevines have suffered significant damage from drifting 2,4-D applications at neighboring farms, forcing him to fight to recover damage claims from fellow farmers' insurance carriers.

Due to the already-known effects from "drift," opponents have requested that some form of an indemnity fund be established to pay loss claims from farms damaged by inadvertent 2,4-D applications. Dow has opposed that safeguard.

HIGH STAKES

Opponents have flooded the U.S. Department of Agriculture with petitions and pleas for either rejection of Dow's new corn, or strict regulation before use of 2,4-D is expanded into millions of acres in the U.S. agricultural heartland. More than 90 million acres of corn alone will be planted in 2012.

Last week, the Save Our Crops coalition representing more than 2,000 U.S. farmers filed legal petitions with the USDA and the Environmental Protection Agency demanding the government scrutinize Dow's plans more closely. The group has said it could file a lawsuit to try to stop the new type of corn.

The director of agriculture at Indiana-based Red Gold, the world's largest processor of canned tomatoes, calls the 2,4-D issue a "ticking time bomb."

Others fear Enlist and 2,4-D may only be only the beginning of a new wave of dangerous farm chemicals. Chemical giant BASF and Monsanto plan to unveil by the middle of this decade crops tolerant to a mix of the chemicals dicamba and glyphosate.

This increasing use of chemicals will only spell worse weed resistance in years to come, warn weed scientists and environmentalists.

Instead of using more chemicals in order to plant corn on the same field year after year, U.S. farmers should be rotating crops more, a technique proven to challenge weed resistance, many weed scientists say.

Dow says that while Enlist farmers' best option for now, it will not be the only long-term solution for weed resistance.


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