GM's Bold Outlook: A Profit For 2010

The Wall Street Journal

General Motors Co. will make money in 2010, its chairman said Wednesday, a bold and surprising forecast for a business that exited bankruptcy proceedings just last summer and hasn't turned an annual profit since 2004.

"My prediction is we will be" profitable in 2010, Edward E. Whitacre Jr. told reporters at GM's Detroit headquarters, a sign of rising confidence that also sets a tough benchmark for the still-struggling car maker's employees. "Do we have obstacles in the way? Yes. But we have a good management team and a good plan in place."

Mr. Whitacre, who also took the chief executive title temporarily last month, said the company's new chief financial officer -- Chris Liddell, who is joining GM from Microsoft Corp. -- could "of course" be a candidate to become the company's CEO. But he added "that's up to the board" and noted the search for a permanent boss is still in its early stages.

Mr. Whitacre, who was named chairman by the Obama administration after the company's taxpayer-funded bankruptcy reorganization last summer, assumed the CEO job after Frederick "Fritz" Henderson quit the post under board pressure.

GM is also moving forward with plans to shut its Saab unit in Sweden since it is "not confident" it will find a buyer, Mr. Whitacre said. Saab is one of four weak brands GM is jettisoning.

Significant hurdles remain to repairing GM's bottom line, namely winning back tens of thousands of customers and improving the profitability of vehicles sold. But Mr. Whitacre's optimistic outlook is buoyed by an improving economy and rising U.S. vehicle sales in December. It also reflects a more aggressive tone for a company that had been renowned for its plodding bureaucracy and defensive posture.

When GM started piling up billions of dollars in losses in 2005, Rick Wagoner, its CEO at the time, stopped offering financial guidance. Mr. Henderson, who succeeded Mr. Wagoner last year, also offered few predictions on GM's financial performance.

GM has a good chance of making money this year as long as the economy stays on the mend, said Erich Merkle, an analyst at Autoconomy.com in Grand Rapids, Mich.

"GM's sales are going to rise, and the macroeconomy will provide the tailwind it needs to return to profitability," Mr. Merkle said. "GM has been in restructuring mode and you can't underestimate the overhead and cost structure that has been taken out."

Mr. Whitacre's profit prediction is based on a bet that consumer access to credit will improve and the job market will strengthen. All are factors that sent car sales to historic lows in 2009. GM's sales plunged almost 30% in 2009.

While the economy's course is uncertain and job-creation remains sluggish, auto makers are encouraged by improvements in home sales and pricing, two key drivers of auto sales. December saw the pace of auto sales hit their highest rate of any month in 2009 except for August, when the "cash for clunkers" rebates caused a spike in vehicle sales.

Other auto makers are also optimistic. Ford Motor Co. reported almost $1 billion in net income in the third quarter and now expects to be "solidly profitable" by 2011, although it hasn't given a specific forecast for 2010. Toyota Motor Corp. and Honda Motor Co. recently brightened their financial forecasts for their current fiscal years.

Chrysler Group LLC, which like GM was restructured in a government-financed bankruptcy, has forecast it will break even in 2010 and make money in 2011.

In recent months, GM's U.S. market share has held steady even as its sales to rental-car companies and other fleet customers have fallen. Its share among "retail" auto sales to individual customers through dealers has improved.

For taxpayers, Mr. Whitacre's optimism means the roughly $50 billion the U.S. loaned GM to keep it afloat stands a better chance of being repaid. The government converted most of that loan into a 60% equity stake. The U.S. can't cash out those shares until GM returns to the public stock markets, and it likely can't take that step unless it is on the road to profitabilty.

GM in addition owes the government $6.7 billion in cash. Mr. Whitacre reiterated his vow to pay that back by the middle of the year.

The new atmosphere is visible in a bold plan to gain market share in 2010 -- reversing many years of decline -- and recent personnel moves he has made.

Mr. Whitacre, a former chairman and CEO of AT&T Inc., told reporters that he and his management team worked out a business plan in December that calls for increased U.S. market share in 2010, and set targets for share, profit per vehicle and other measurements for all regions around the world. He promised to hold executives accountable for meeting their goals.

"We're in business to make a profit," he said. "We're in business to pay back the taxpayer."

The GM CEO also said the company needs to improve its government relations, and has moved quickly to shake up its Washington, D.C., operation.

Last month, Mr. Whitacre replaced GM's top lobbyist with two outsiders who had worked with him at AT&T. He said he was concerned GM wasn't viewed favorably by some in Washington. GM's bankruptcy proceeding "had left not a good taste in some people's mouths," he said.

GM executives will meet Thursday to discuss another unresolved issue: restructuring the company's Opel unit in Europe, Mr. Whitacre said.

During GM's search for a new finance chief, the auto maker considered only "people who could do more than finance,'' according to someone familiar with the situation. Several former CEOs of the auto giant held the top finance job before they entered the corner office.

Mr. Liddell "aspires to do more than finance,'' the individual said. But at no point during GM's courtship did Mr. Whitacre promise Mr. Liddell that he might be a candidate to replace him as CEO, this person added.

Wednesday afternoon, Mr. Whitacre called GM's search firm, Spencer Stuart, and said he saw Mr. Liddell only as a potential CEO someday, "but not now,'' said someone familiar with the situation. As a result, GM will continue to seek other candidates. But "there is no rush" to complete the CEO search quickly, this person added.

A Spencer Stuart spokesman declined to comment Wednesday. Mr. Whitacre has said he may hold the acting CEO title for as long as a year.

Fire At Detroit's Huntington Hotel

The Detroit News

Five people were injured when a fire engulfed the Huntington Hotel in Midtown on Thursday night.

Fire officials said three tenants were critically injured, two firefighters were injured and one person is missing. Multiple fire trucks were at the scene, west of Woodward Avenue.

Fire officials said at 9 p.m. that there are still people unaccounted for inside the building and there may be deaths.

Cheri Rice Murray, 58, said she smelled smoke in her fourth-floor apartment and was unable to make her way down the hallway because of the thick smoke.

"We broke the glass out of my window there," she said pointing up at the flaming building. "The Fire Department, they took us out of there on their ladder. If they hadn't, we'd still be in there."

Murray said she is one of 24 residents renting rooms on her floor. She pays $280 a month for her room with a bathroom.

Lawrence Walker, 55, who lives in the building, said his girlfriend, Ann Louise Roder, 67, is missing and presumed dead.

Walker said their room got real cloudy, and he stepped in the hallway and the smoke rushed in. "My woman yelled 'Help me!' I couldn’t even get back there. I couldn’t get back to her. I heard her say 'Help me, baby. Something went boom and I feel over. It was bad. It was so bad. I couldn’t get back to her."

A block away, residents said they heard an exploding sound that shook their apartment building.

Terence Simmons, 56, was wearing a gold party hat that said "Happy New Year" as he watched the fire. "We were decorating for a party, and now I want to go home and put it all away. Something tragic like this always seems to happen on the holiday."

The hotel, 109 W. Alexandrine St., is a five-story structure. Residents rent the rooms by the month . Fire officials said it is a two-alarm blaze. The building is nestled between buildings belonging to Detroit Medical Center and the Childrens DMC.

December Auto Sales: Up For Ford, Down For GM, Chrysler

The Washington Post

The U.S. auto market continued its slow crawl out of the recession in December as more consumers bought cars, but shoppers' enthusiasm remained well below pre-crisis days.

In December, the annualized rate of auto sales in the United States climbed to 11.2 million, according to Edmunds.com. That's up from 9.1 million at the nadir earlier last year but far from the halcyon days when auto sales ran over 16 million annually.

"The recession shook the foundations of consumer confidence," said Ken Czubay, Ford's vice president of U.S. sales and marketing.

"Everything is improving, but the recovery is really slow," said Jessica Caldwell, senior analyst at Edmunds.com. "It's not even growth, really -- it's more like stabilization." While nearly every major automaker is struggling in the United States, General Motors and Chrysler, the two U.S. automakers bailed out with billions of dollars in government funds, remain particularly troubled.

Chrysler's December sales fell to 86,523, down 4 percent from December 2008, according to Autodata. Sales were down 36 percent for the full year.

General Motors, which is now largely owned by the U.S. government, saw sales drop to 207,538 in December, a 6 percent decrease. Its sales were down 30 percent in 2009, compared with 2008.

Susan Docherty, GM's vice president of U.S. sales, attributed the sales drop to a reduction in fleet sales, a drop in spending for consumer incentives, and the decision to close the Pontiac and Saturn brands.

One bright spot for the U.S. industry was Ford, which experienced a drop in annual sales but outperformed December 2008's sales by 33 percent last month.

The economy's recessionary plunge put the auto industry under intense pressure in 2009, one of the most transformative years ever for the industry.

After the bailouts of GM and Chrysler, the government initiated a $3 billion "cash for clunkers" program to revive sales with government-backed rebates; eventually, 700,000 cars were traded in under the program.

As the U.S. market collapsed, meanwhile, China's surged, and it has begun to rival the United States as the largest auto market.

Many in the industry see the wreckage as pure catastrophe. But some environmentalists think the drop in the market reflects not just economic forces but changing consumer tastes.

Lester Brown, founder and president of the Earth Policy Institute, projects that there were more cars scrapped last year in the United States than sold.

"America's century-old love affair with the automobile may be coming to an end," he said.

"That's pretty preposterous," said John DeCicco, a University of Michigan lecturer and former senior fellow at the Environmental Defense Fund. "We're far from that."

In Detroit -- It's Showtime

Wall Street Journal

Detroit in January isn't an exotic destination, with wind chills in the teens and snowplows scraping streets in their annual battle with winter. But more than 5,000 journalists, many from overseas, will flock there next week for the preview of the 103rd annual auto show.

When the North American International Auto Show opens Jan. 16 an expected 700,000 visitors will see more than 700 new cars on display, including more than 30 global debuts. They'll also see an industry transformed. The stakes at this year's auto show are enormous because the focus won't be only on the cars but also on the companies themselves.

Since last year's show, General Motors and Chrysler have gone in and out of bankruptcy. GM is mostly owned by the government, and Chrysler is being run by Fiat. Toyota has announced its first loss in nearly 60 years and the largest car recall ever.

GM's once-venerable Pontiac, Saturn and Saab brands will be absent from this year's show. Pontiac and Saturn are dead, victims of downsizing that has slashed GM to four brands from eight. Only a flicker of hope remains for Saab. The efforts of two tiny European car companies to buy it have fallen through, although GM says it's open to further negotiations. China's Beijing Automotive, meanwhile, has bought engineering rights to a couple Saab models. Will they live on as Sino-Saabs?

In the wake of last year's upheaval, auto makers will be trying to show that they have not just new cars but also promising futures. It's a critical message because the next chapters in automotive history will be radically different from the past.

Car companies are getting hit with multiple simultaneous revolutions, the fallout from the GM and Chrysler bankruptcies being just one. Others include the fragile economic recoveries in major economies worldwide and the endemic weakness of the U.S. dollar, which makes all imported goods, including cars, more expensive. Excess global auto-manufacturing capacity remains an issue. New technologies are changing the vocabulary of automotive engineers from "pound feet of torque" to "lithium-ion battery" and "plug-in hybrid." Pass the tofu, please.

On top of all this comes new competition from auto makers in emerging countries, with China leading the way. Besides Beijing Automotive's deal for Saab assets, China's Geely Automobile is the leading candidate to buy Volvo from Ford.

Still another Chinese company, BYD Auto, will display its plug-in hybrid vehicles in Detroit. BYD has attracted investment from a guy named Warren Buffet. Meanwhile, India's Tata has purchased Jaguar and Land Rover, the unofficial brands of Britain's landed gentry.

As the aftershocks continue it's clear GM, Chrysler and Ford—the only Detroit car company to avoid bankruptcy—will be America's Big Three no more. America instead will have a Medium Six: GM, Ford, Toyota, Honda, Nissan and one more, perhaps Fiat-Chrysler or Volkswagen or Hyundai. Each of the six will have between 8% and 20% of the U.S. market. It's an industry structure that will mirror what Europe has had for decades.

For car buyers, this means more competition on everything from styling to technology. In the "Big Three" world, one company would have set the trend for others to follow. But in the "Medium Six" world, GM and Toyota are pushing hybrids while Nissan is taking a different road: developing all-electric cars that won't use gasoline at all.

Ford, meanwhile, is marketing its electronic technology, ranging from its "Sync" system that allows voice-activated audio controls to forward-looking radar that keeps your car a preset distance from the car in front. Gentlemen, start your iPhones.

The Tata Nano, being sold in India for $2,000, doesn't meet U.S safety regulations. But some car company could well launch a U.S. model that will sell for $10,000, half the average price of cars today—or even less.

It might be Korea's Hyundai, which has tapped the back-to-basics move in recession-wracked America and become the hottest car company on earth. Hyundai's offer a year ago to let buyers hand back their cars if they lost their jobs was a marketing coup, even though fewer than 100 cars were returned. The company's U.S. sales rose 7% last year while most others posted double-digit declines.

A decade ago Hyundai was a near disaster. Its unlikely success since then shows that improved quality and nifty new models can improve a company's fortunes quickly. GM should take note.

For all the hype heaped on the Chevy Volt plug-in hybrid, GM's critical car at this year's show will be the new Chevrolet Cruze. It's powered by a conventional gasoline engine (rated up to 40 miles a gallon) and billed as a five-passenger compact, a segment led by the Honda Civic and Toyota Corolla. GM has had ho-hum compacts for years, most recently the harsh and noisy Chevy Cobalt. If the Cruze can boost GM's credibility in small cars, the company will take a giant step toward recovery.

Chrysler must halt a frightening sales plunge, down 38% last year. The company is pushing discounts, its only realistic short-term strategy because most of its cars are lackluster or dated. Chrysler's survival will depend on cars derived from Fiat models such as the 500, a cute high-mileage subcompact. While a prototype electric version might debut at the Detroit show, Chrysler's new Fiat-derived models actually won't be launched until 2011 and 2012. They'll be make-or-break cars.

Ford now has quality equal to Honda and Toyota, according to Consumer Reports. Ford's new subcompact Fiesta, engineered in Europe, will be displayed at the Detroit show, offering lines more stylish than the competing Toyota Yaris and Honda Fit. To promote the Fiesta, Ford gave early prototypes to people active on social networking sites such as Facebook, and asked them to chronicle their experiences.

Toyota, meanwhile, has inherited the mantle of "world's largest car company" from GM, along with that title's seemingly attendant ills. Besides last year's $4 billion loss, Toyota recently recalled 4 million cars to fix gas pedals that stick to the floor mats and send the cars accelerating out of control. Toyota's image, clearly, has taken a hit.

Now the company is reversing its recent breakneck expansion pace and refocusing on basics. Its leaders are worried (which is a good sign), but when the auto industry's tectonic plates settle Toyota likely will emerge a winner. So will Honda, which has come through the crisis with minimal damage. Honda's opening of a new assembly plant in Indiana in late 2008 had seemed ill-timed, but the recent rout of the U.S. dollar makes it look smart.

The most remarkable aspect of last year's bailouts and bankruptcies is how auto-industry neophytes cut through craziness that had existed for decades. GM didn't know its cash balance within half a billion dollars on any given day.

What's more, senior auto workers regularly invoked a practice called "inverse layoffs" to volunteer for the Jobs Bank, an industry program that paid laid-off workers 95% of their wages indefinitely. The Jobs Bank proved so attractive, for obvious reasons, that it upended the traditional practice of junior workers getting laid off first.

Dealing with inverse layoffs and other perversities fell to the 15 or so members of President Barack Obama's automotive task force, mostly young Wall Street types. They used "diligence" as a verb, as in: "We've got to diligence that business plan." (Translation: evaluate the plan and its assumptions.) Their work came to a climax on June 1, 2009, when General Motors filed for bankruptcy.

At 6 a.m. that day 36-year-old David Markowitz, a junior task-force member, boarded an Amtrak train in New York for Washington. Over the prior two months Mr. Markowitz and his colleagues had been "diligencing" thousands of GM documents. On June 1 he hadn't slept in three days and was exhausted. But he was invited to attend Mr. Obama's speech that day, and wasn't about to miss meeting the president.

At 6:03 a.m., a small army of lawyers began hauling documents into U.S. Bankruptcy Court in lower Manhattan. The main filing, at 7:57 a.m., stated that GM's $172 billion of liabilities overwhelmed its $82 billion of assets. And that the company's $59.5 billion in stock-market value in April 2000 had been wiped out.

"There are no realistic alternatives" to bankruptcy, the filing added. "There are no merger partners, acquirers or investors willing and able to acquire GM's business...The transaction [bankruptcy] is the only realistic alternative for the company to avoid liquidation..."

At 11:30, Mr. Markowitz was walking into the White House when he suddenly felt faint, his legs started to wobble and he realized he wasn't going to make it. His boss propped him up and walked him over to the White House doctor's office. It looked like he wouldn't meet the president after all.

Nine minutes before noon Mr. Obama began his speech with some good news. In the wee hours of the morning the bankruptcy court had approved Chrysler's restructuring plan; Chrysler had sped through bankruptcy court like a hot rod. "Keep in mind," Mr. Obama said, "many experts said that a quick, surgical bankruptcy was impossible. They were wrong."

He went on: "Earlier today, GM did what Chrysler has successfully done and filed for Chapter 11 bankruptcy with the support of its key stakeholders and the United States government.... Chrysler's extraordinary success reaffirms my confidence that GM will emerge from its bankruptcy process quickly, and as a stronger and more competitive company."

After he finished, Mr. Obama happened to walk down to his doctor's office to get a couple of Tylenol pills. Young Mr. Markowitz, still in a blur, sensed a sudden commotion around him, but he wasn't sure what was happening. A couple minutes later he found himself shaking hands, groggily, with the president of the United States. The handshake, though happenstance, was well deserved.

Shortly after Mr. Obama spoke, Fritz Henderson, then GM's CEO, convened a press conference in New York with contrition that would have shocked his predecessors from GM's glory years. "Give us another chance," he implored. "The GM that many of you knew, the GM that in fact had let too many of you down, is history."

General Motors had virtually invented the modern corporation—with professional managers, as opposed to family founders, presiding over decentralized operations that were governed by central financial control. It had pioneered modern marketing, public relations and the hierarchy of brands that made automobiles vehicles for social mobility as well as physical mobility. It had set standards for everything from style and design to corporate health-care plans.

Many Americans bristled at the bailout. It signaled an "America poised to transform into Euro-Flop Social-Marxism, as we juggle open-ended bankruptcy," said one letter-writer to the Patriot Ledger in Quincy, Mass.

Such sentiments were understandable from a bailout-weary nation, especially because of the contrast with Ford. After careening from one disastrous decision to another between 1999 and 2006, Ford had come to grips with its fundamental need to change. The company changed CEOs and is now shedding debt, dealers and brands without federal funding. Ford isn't home free, but its progress provides proof that GM and Chrysler could have avoided bankruptcy too with better leadership, and the willingness to act decisively before it was too late.

Right after entering bankruptcy, GM started airing a television commercial that pretty much said it all. "Let's be completely honest, no company wants to go through this," the commercial began. "There was a time when eight different brands made sense. Not any more. There was a time when our cost structure could compete world-wide. Not any more. Reinvention is the only way we can fix this." Those were the very same arguments that GM's critics had been making, and that the company had been denying, for years.

Spartans Compete In 'Red Carpet Green Design'

Mercury News

Design students at Michigan State University will be part of a national "Red Carpet Green Dress" competition to develop a high-fashion Hollywood runway outfit that also promotes sustainability.

The contest is sponsored by actress Suzy Amis Cameron, wife of "Avatar" director James Cameron. She'll pick the winning dress design and wear it "at one of Hollywood's largest film award celebrations, between February and March 2010," according to the contest Web site.

The event is a fundraiser for Muse, an educational organization in Topanga Canyon, Calif., founded by Suzy Amis Cameron and her sister Rebecca Amis.

"Dresses or gowns must only be made of sustainable material, such as natural, organic or recycled fabric," Michigan State spokeswoman Kristen Parker wrote on the school's Web site.

Michigan State's participants are enrolled in the spring class "Special Topics: Innovative Approaches in Apparel Design."

The competition offers "an excellent opportunity to revisit sustainable design and explore current options and opportunities in apparel design," said assistant professor Theresa Winge, the course's instructor.

"This competition is also an exceptional way to motivate students to think about design in ways that challenge the status quo," Winge said.

While working on the designs, students will examine the differences among various ideas of environmentally friendly design and investigate ways of measuring their carbon footprints.

Karin Wurst, dean of the College of Arts and Letters, said the contest participation complements Michigan State's new film studies major, which has gotten a boost from the state's movie business growth, a result of Michigan's generous tax credits for that industry.

Northwest Airlines Logo Fading Away

Detroit Free Press

After 84 years, the Northwest Airlines brand will fade into history sometime during the first three months of 2010.

That's when the airline's Web site, www.nwa.com, will stop accepting reservations and redirect people to Delta Air Lines' Web site, www.delta.com. The Northwest name will disappear from boarding passes, airport monitors and airplanes.

The changes will occur because the Federal Aviation Administration gave Northwest and Delta the green light on Thursday to finish integrating their operations and approved their request to fly under a single operating certificate. Though the carriers announced plans to merge in April 2008, until now they have had to maintain separate flight operations.

"For the first time, pre-merger Northwest operations will be combined into Delta's operations," Stephen Gorman, Delta's executive vice president and chief operating officer, told Delta employees in a memo Thursday.

The merger creates the world's largest airline, carrying more than 170 million passengers a year to 368 destinations around the globe.

Delta already took a number of steps to integrate its operations with Northwest in 2009. Delta signs replaced Northwest ones at all but one of the 240 airports where both carriers operate, including Detroit Metro Airport.

Nearly 200 of Northwest's 260 mainline planes were repainted in Delta's colors. And in October, Northwest customers' frequent flier miles were transferred to Delta's SkyMiles reward program.

Merging two major carriers is no easy feat. To get the single operating certificate, teams of Delta and Northwest employees had to complete more than 10,000 individual tasks and integrate 385 manuals and 100 operating specifications, programs and processes.

But the combined airlines' employees aren't celebrating yet. More work lies ahead, including completing critical information technology projects, creating a single dispatch system and resolving labor representation issues for flight attendants and ground workers.

"The single operating certificate is an important milestone," Delta spokesman Kent Landers said. "But there is still a lot to be done."

How To Keep Business In Michigan

The Detroit Blog

TIME / CNN

While Michigan is in the throes of its upside-down economy, it has been scrambling to find creative solutions. Gov. Jennifer Granholm has been (smartly) promoting green jobs. Meanwhile, we offer generous tax breaks to the film industry, which arguably provides some economic help and boosts local morale.

Meanwhile, community leaders have come up with their own smart solutions, including one that, as someone who works in advertising, I see as having a lot of value. A team led by Campbell-Ludwig CEO-designate, Bill Ludwig, has been pushing to extend those film industry incentives to commercial production. This sense since auto companies put over a billion dollars a year into the filming and editing of car ads, and the lion's share of that money winds up in the pockets of production companies in New York and California. Given the right incentives, a greater portion of that work could stay here in Michigan. I don't know the current status of this particular legislation, but it would add jobs to our economy and deserves serious support in Lansing.

Still, despite these best efforts, things keep slipping downhill. Next month, as everyone in the industry knows, Detroit's BBDO office will close. An estimated 485 employees will lose their jobs. This is an incredibly sad thing. Over many decades, BBDO has done good, great, and even world-famous work for the Chrysler's brands, most notably the ads they did for Jeep, but in the end they were too reliant on one big car client, and when that client looked elsewhere, they were out of luck.

So clearly, just as with the rest of Michigan's economy, one thing that would help local advertising agencies here is greater diversification. Yes, to a large degree, it's up to the agencies themselves. Doner Advertising has thrived for years without a domestic auto account. Campbell Ewald has done an admirable job of attracting a range of clients outside the industry, including award-winning work for the U.S. Postal Service and the Navy. My own agency, Team Detroit, has also recently added Scott's Miracle Grow, Ohio Art and Warrior Sports to its roster.

But in extreme times like these, extra efforts are perhaps necessary and there is additional leverage that a smart, proactive state government could provide if it decided to act. It occurs to me that a notion similar to Ludwig's could bring additional help to the region. Despite its myriad of woes, Michigan is still home to many large, thriving, successful businesses, including Kellogg's, Whirlpool, Domino's, and Herman Miller. These are multi-million dollar brands whose collective advertising budgets add up to billions of dollars. But Kellogg's advertising agency is based in Illinois, Domino's is based in Colorado.

If Granholm and the state government could find a way to entice these companies - through tax incentives and other means - to hire advertising agencies located within their own home state, it would immediately put millions of dollars annually back into the state's economy. Now, perhaps these companies are perfectly happy with their current advertising, though it would be hard for them to argue that these ad agencies are serving them in a demonstrably better way than what they could get right here at home (I, for one, cannot remember seeing one single great Kellogg's ad nor one memorable Domino's ad in the past three years. Can you?) But obviously this isn't about coercion; the companies would still be perfectly free to choose. This is all about the carrot, not the stick. Perhaps they will say that Michigan agencies can't sell as well as agencies elsewhere, though, given the chance, I'm sure we could convince them otherwise (we are in the art of persuasion after all.)

All the state would do is develop and promote incentives to encourage these large, global companies to begin a conversation with some of these agencies. Even if just one of these giants moves their marketing here, the incomes generated will end up supporting local economies (the restaurants, the dry cleaners, etc), while the additional tax base would support education and local infrastructure.

So the companies would win, and not only because they would get equal - and probably superior - service from local agencies, but also because their standard of living would be positively impacted as well. Their own schools would be stronger, their own roads would have fewer potholes, their neighbors would be happier, and life would be better. Who knows, maybe their homes would even be worth more.

There would be at least one added benefit. After firing BBDO, Chrysler has split the account, hiring new agencies in Texas and Minneapolis. Meanwhile, GM is considering agencies for Cadillac that are based in New York. By creating the right sort of incentives, Michigan could even encourage the auto manufacturers to keep their marketing dollars—and jobs—here in Michigan too. That wouldn't be a bad thing, would it? After all, we do still love our car companies.