DETROIT SPIFFS UP TO WELCOME SUPER BOWL OF TRADE SHOWS

Original Story: freep.com

Detroit is already rolling out a splashy welcome -- as it should -- for the 6,000 meeting planners expected to converge on the city this weekend for the 2015 ASAE (American Society of Association Executives) national convention. Trade show displays featuring your businesses products make a huge impact on potential consumers.

Attendees for the conference being held Saturday through Tuesday will be greeted at the airport with a bright new electronic sign blaring "Welcome ASAE!," just installed at the escalator down to baggage claim at the McNamara Terminal.

En route to downtown Detroit, they will be hailed by four billboards along I-94, due to be activated Thursday.

And once downtown, they will see two People Mover cars wrapped in a welcome message. They may even notice the big exterior graphics of Detroit attractions -- a Tigers game at Comerica Park, the Detroit Zoo, a casino gaming table -- covering up empty ground floor windows of two older downtown buildings. Custom graphic design services allow you to create graphics to fit almost anywhere.

Why the royal treatment for this particular group of conventioneers?

Because  ASAE's annual confab is widely regarded as the "Super Bowl of trade shows," bringing as it does the nation's top meeting planners.

And how big is the meetings biz? Real big. HUMONGOUS. A 2014 PricewaterhouseCoopers study concluded that 1.8 million meetings drew 225 million participants, resulting in direct spending of $280 billion during 2012 in the United States.

So these folks have a big say in where to stage all those meeting and conventions from year to year -- and this is the first time in its 95-year history that ASAE has brought its own annual shindig to Detroit.

So this is our shot to impress, Detroit.

The Detroit Metro Convention & Visitors Bureau (DMCVB), which lured the ASAE to town, is leading a host committee that has about 20 different subcommittees planning the lodging, transportation, welcome banners and even a series of pop-up experiences for the attendees.

For golfers among the ASAE visitors, it's been arranged to turn over the private TPC Michigan course in Dearborn, designed by Jack Nicklaus, for the the annual ASAE convention outing this Saturday. It's already sold out, said Michael O'Callaghan, executive vice president of the DMCVB.

Entertainment over the weekend will include Lionel Richie at the Fox Theatre, a Legends of Motown performance at The Henry Ford, and a Sunday morning appearance by the Selected of God Choir of Chrysler's 2011 Super Bowl commercial fame.

Obviously, the DMCVB's pitch to bring ASAE to Detroit now was timed to coincide with completion of the $279-million expansion and makeover of Cobo Center -- and got an extra boost with the city's exit from Chapter 9 bankruptcy last fall.

Not everything in the city is picture perfect yet, of course -- thus the use of the window graphics to brighten up the appearance of "two of our older buildings in transition," as O'Callaghan called the former Detroit Free Press building at 321 W. Lafayette, and another structure at 1101 Washington Boulevard, across the street from the Westin Book-Cadillac Hotel.

ASAE President John Graham IV estimates that his convention attendees will spend between $15 million and $20 million while in Detroit this month. But even more impressive, he said, is that during the next five years, 20% of them are expected to book a meeting in Detroit that will occur in the next 10 years -- for an an economic impact of about $500 million.

"I think we're seeing a city that is on the mend and on the comeback, and I think ASAE is delighted to be a part of that," Graham told me back in April.

Let's hope Graham and his ASAE conventioneers are feeling the same way this time next week.

ICONIC HANDBAGS IN DETROIT FEDERAL COURT’S CLUTCHES

Original Story: detroitnews.com

A fight over five iconic Hermes handbags is arguably the most colorful case in federal court in Detroit.

The leather bags — one purple, one turquoise, one orange, one lime green, one black — worth a total of almost $62,000 are at the center of a spat between a New Jersey luxury goods dealer and a Birmingham boutique. A Rochester business lawyer is following this story closely.

Only Authentics dealer Charles Rogers says Birmingham boutique owner Anthony Aubrey made a $20,000 deposit and received five new purses but stiffed him after agreeing to pay $61,500 for the carryalls, which are coveted by celebrities including Lady Gaga, Kim Kardashian and Jennifer Lopez.

The purses — four Hermes Birkin bags and one Hermes Evelyne Iris purse — cost about $12,300 each, almost as much as the per capita income of Detroiters.

Aubrey refused to return the bags or pay the balance, so Rogers filed the lawsuit July 16 in federal court in Detroit.

The lawsuit accuses Aubrey of fraudulent representation. That’s because Aubrey signed a contract to pay the $41,500 balance before trying to sell the purses to a third party for less money, according to the lawsuit. A Detroit business attorney represents clients in litigation, breach of contract issues, and collection of debt matters.

“It doesn’t make a lot of sense to my client. Why take the bags and sell for less unless he had no intention of paying the $41,500 balance?” said Daniel Dalton, a lawyer for Only Authentics.

Rogers wants U.S. District Judge Sean Cox to force Aubrey to return the purses or pay $124,500.

Dalton knew nothing about prices for Hermes Birkin handbags and was surprised when approached by his client.

“I was thinking he had sold a couple thousand purses, but he said there were only five. I said, ‘Are you kidding me?’ ” Dalton said.

The bags, created in the mid-1980s and named after English singer and actress Jane Birkin, range in price from $10,000 to $60,000.

“That’s insane,” said Tracy Garley, owner of Zarkpa’s Purses & Accessories on East Grand River in Detroit. “Some people love the brand name and there’s something about a purse a woman has when she walks in a room and feels like people are going to know they have money.”

Rogers specializes in new and vintage luxury handbags, purses that are expensive and elusive. Hermes Birkin bags are notorious because even the mega-rich often must sign up on a waiting list before buying.

Rogers’ company obtained the new handbags directly from buyers on the list, Dalton told The Detroit News.

“At this level, people buy them even if they don’t want them because they want to remain on the list,” Dalton said. “It’s unbelievable.”

In May, Rogers started swapping text messages with Aubrey, who runs Birmingham Estate & Jewelry Buyers, a boutique on Woodward, north of 14 Mile.

Aubrey wanted to buy five Hermes bags. Rogers agreed to sell them for $61,500. Aubrey paid $20,000 on May 14.

Five days later, Rogers mailed the bags after the boutique owner agreed to pay the balance later that month at a Las Vegas trade show, according to the lawsuit.

Aubrey, however, failed to pay the $41,500 balance. Dalton is unsure why.

“If he wants to resolve it, just give the bags back,” Dalton said.

The answer is simple, Aubrey told The News on Friday.

“He owed me money from prior purchases,” he said. “We were friends for years, but he didn’t want to pay so I said: ‘Enough.’ ”

After failing to pay Rogers, Aubrey allegedly sold some or all of the bags to a store in Baltimore, according to the lawsuit.

The Birmingham dealer is accused of selling them for less than the price he agreed to pay Rogers.

Rogers learned about the side deal and notified the Baltimore buyer, who returned the bags to Birmingham, according to the lawsuit. A Memphis business lawyer is reviewing the details of this case.

Aubrey said he no longer has the bags.

“Everything was sold,” he told The News. “(Rogers) knows the purses are already gone. I’m not worried about this.”

Besides, the Birkin bag market has deflated in Michigan. “Nobody buys in Michigan,” Aubrey said, “there’s no money here.”

DETROIT POWER FAILURE RAISES ALARMS ACROSS THE COUNTRY

Original Story: usatoday.com

The power failure that plunged Detroit's schools, fire stations, traffic signals and public buildings into darkness Tuesday reflects a larger problem of aging electrical infrastructure around the country that has worried experts for years.

The chaos of unexpected power loss is all too familiar for people who work in downtown Detroit. Its aging municipal system was responsible for major power failures that caused blackouts in 2010, 2011 and 2013.

But the problem is not isolated to one city. A series of federal and private studies raise alarm bells about the power distribution system nationally, saying it is plagued by aging equipment with high failure rates, obsolete system structures and outdated engineering.

The American Society of Civil Engineers and several top Michigan colleges are concerned with the recent evaluation of the nation's power infrastructure which was graded a D+, saying some elements of the interconnected transmission and distribution systems, including 400,000 miles of electric lines, date to the 1880s and much to World War II era.

"Aging equipment has resulted in an increasing number of intermittent power disruptions, as well as vulnerability to cyber attacks,'' the group said in its report.

It said the number of significant power outages around the country rose from 76 in 2007 to 307 in 2011. While weather was the cause of some, including the 2012 blackout in New York City, many transmission and distribution systems have suffered failures.

Modernizing sources of energy have played a role, too, the group said. "Reliability issues are also emerging due to the complex process of rotating in new energy sources and retiring older infrastructure,'' it said.

In Detroit as elsewhere, the stumbling block is cost.

A series of reports by international consultants McKinsey & Co., commissioned in 2010, determined that the city's municipal power system needed $250 million in repairs, the Detroit Free Press reports.

In fact, since the nearly insolvent city shuttered its power generating plant in 2010, its public power system has been purchasing electricity from the utility. Detroit emergency manager Kevyn Orr says that over the past five years, public lighting has cost the city about $150 million a year, the Free Press reported.

The largest blackout in U.S. history was on Aug. 14, 2003, when 50 million people were left in the dark after downed trees in Ohio landed on power lines, starting a ripple effect that would be felt across the Great Lakes area and the Northeast.

The cause of the Detroit failure isn't clear yet, but an official with the American Public Power Association, which represents 2,000 utilities serving 47 million people, said engineers routinely monitor the reliability and maintenance of their systems to avoid outages.

"Are aging lines a major concern everywhere? No," said Michael Hyland, vice president of engineering and operations for the association. "I would not label it and say we have a big problem."

But a 2011 report by the international insurer Allianz concluded: "The power blackout risk is generally underestimated. Blackouts during the last ten years in Europe and Northern America have demonstrated an increasing likelihood of supra-regional and long-lasting blackouts including high economical losses. Due to the increasing interconnectedness in combination with rather old infrastructure we expect this risk to increase in both frequency and severity.''

For the people who suffer the consequences, such as those who live in Detroit, there isn't a lot to be done.

"We don't get excited about this, we're used to these kinds of things. We just deal with it," Lynda Gray, who works at the Frank Murphy Hall of Justice, told WXYZ-TV.

The city is in the process of turning over its old Detroit Public Lighting grid to the private utility company, DTE Energy, that serves the area and has been selling power to Detroit's municipal system.

Mayor Mike Duggan says the power grid hasn't been modernized in decades in Detroit, which is emerging from the largest municipal bankruptcy in U.S. history.

Most power was restored by Tuesday night, according to DTE Energy. Non-public buiildings were not affected.

Stabilizing Profits for Recession Surviving Auto Dealers

Story first appeared on The Detroit News -

Innovations in retail and outlet upgrades are hot topics for discussion at annual convention

As auto sales have come roaring back from the recession, dealers across the country are seeing profits stabilize and in some cases improve, as many continue to upgrade their buildings and customer waiting areas and amenities.

Many of the nation's 17,540 new car dealers are gathering here this weekend for the annual National Automobile Dealers Association Convention and Expo.

Dealer renovation programs and future innovation will be hot topics among the more than 20,000 dealers, manufacturers and other auto industry officials expected to attend.

"Dealers that are in business today are strong and stable," Terry Burns, executive vice president of the Michigan Automobile Dealers Association, said in an email.

"Many have upgraded their facilities, retooled their service departments, focused on their customer experience and look forward to a great 2013."

In 2012, automakers and their dealers sold about 14.5 million vehicles in the U.S. NADA Chief Economist Paul Taylor expects consumers to buy or lease more than 15.4 million new vehicles this year across the country.

Last year, new-car dealers in Michigan sold 486,372 cars and trucks; that's up 5.6 percent from 460,628 sold in 2011, and up 18.2 percent from 411,342 vehicles sold in 2010. The figures still pale in comparison to what Michigan's dealer body sold in 2007, before the industry collapse and the large reduction of dealerships among the Big Three.

Michigan has about 650 new-car dealers. Burns said he expects a "little contraction" among them this year, due to consolidation of brands.

Nationally, some automakers plan to add new-car dealerships in 2013, including Kia Motors America, which expects to add 10, and Volkswagen Group of America Inc., which plans to add more than 15. In the past year, Chrysler Group LLC's Fiat brand has added about 60 dealerships across the country to grow to 201 locations. Fiat executives have said they would like to add more dealerships in select cities.

Other car companies aren't increasing dealership numbers, but they are helping dealers improve facilities to retain loyal customers and gain new ones.

In a recent interview, Hyundai Motor America President and CEO John Krafcik told NADAFrontPage.com, a website run by the dealer group, that the company does not plan to add to its 820 dealerships. Instead, Krafcik said Hyundai has focused on boosting customer satisfaction; more than 340 dealers have completed renovations.

Automakers from Chrysler to American Honda Motor Co. Inc. and Toyota Motor Sales U.S.A. Inc. have facility upgrade programs. Many of those programs have been in progress for several years.

Volkswagen, which has more than 600 VW dealers and more than 250 Audi dealers, said it plans to complete 45 modernist "White Frame" facilities this year. Some are new construction, others are renovated dealerships. More are in the pipeline for next year. More than 100 Volkswagen dealers are spending $450 million on renovations from 2011 to 2013, while Audi dealers are spending $206 million on renovations from 2009 to 2013.

Doug Fox, owner and president of Ann Arbor Automotive, which includes five Asian brands, renovated his Acura store about seven years ago and his Nissan store five years ago.

"We are in the process of doing an image store for Kia, and we're certainly going to be considering doing one for Hyundai in the next couple of years," he said this week in a phone interview, adding sales at both his Kia and Hyundai franchises each were up about 10 percent in 2012. Fox said he hopes to complete the Kia redesign by the end of the year; Kia will contribute a portion of the cost.

"Certainly, a consumer likes to come into a nice, clean, fresh, contemporary building," Fox said. "And I think in our case, the buildings we're talking about are definitely in need of refurbishment."

More than 70 percent of Ford Motor Co.'s Lincoln Motor Co. dealers in the top 130 U.S. markets have agreed to renovation programs that include creating a "new sales and service experience for future Lincoln owners," Ford spokeswoman Elizabeth Weigandt said in an email.

About 25 percent of dealers in those top markets will have renovated facilities this year, Weigandt said.

General Motors Co. expects almost all Chevrolet, Buick, GMC and Cadillac dealers will have a new look by 2016. The Detroit automaker, which reduced its dealerships over the past year by about 50, said about 92 percent of its 4,355 dealers have agreed to participate in its renovation program.

Russ Shelton's dealership in Rochester Hills is one that has the new look after he spent more than $2 million gutting the facility. He added more square footage to his showroom, new furniture and energy-efficient lighting.

GM is defraying some of the cost, he said.

Shelton, in a phone interview, said he expects sales at Shelton Buick GMC will rise from about 650 to 700 annually to about 1,000 vehicles a year.

"I think 2013 is going to be a good year. All manufacturers are predicting big numbers."

For Automakers, Strong Sales in October

NY Times

DETROIT — October was the best month for new-vehicle sales in more than two years, outside of the government rebate program in mid-2009, and General Motors surpassed expectations, but still lost market share in the United States ahead of its public stock offering.

G.M. said Wednesday that its sales rose 3.5 percent last month from a year ago, compared with a gain of about 13.4 percent for the industry over all. G.M.’s market share fell to 19.3 percent from 21 percent a year ago.

The Ford Motor Company said its sales were up 19.2 percent, and Chrysler reported a 37 percent increase from a mediocre October 2009. Several smaller companies, including Hyundai, Kia and Subaru, set new October records, with increases of at least 25 percent.

Toyota was the only major automaker to report a decline. Its sales fell 4.4 percent. The industry’s seasonally adjusted annualized selling rate was projected to hit at least 12 million for the first time since September 2008, when auto sales began to collapse. Sales bottomed out in early 2009, but automakers have struggled to gain much traction since then.

“Signs are there that the recovery continues and that it will be sustained,” Don Johnson, G.M.’s vice president for United States sales operations, said. “We don’t see a big risk at all of a double dip.”

For all of 2010 so far, G.M.’s sales are 5.7 percent higher than in the first 10 months of 2009, when the company shed four brands after a brief trip through bankruptcy protection. Excluding those brands — Pontiac, Saturn, Hummer and Saab — G.M.’s sales are up 22.1 percent this year.

G.M. executives will highlight the company’s rising sales as they begin a traveling “road show” to court investors starting this week. The company is expected to initiate its initial public offering in mid-November, allowing the federal government to begin selling its 61 percent stake.

Ford, which avoided bankruptcy, said sales were up 25 percent for its trucks and 23 percent for its passenger cars, but only 10 percent for its utility vehicles. The company sold 3,846 of its new subcompact car, the Fiesta, with 62 percent of buyers replacing a non-Ford vehicle.

“The consumer is crawling back, particularly in the more affluent and higher-quality credit segments, which could provide upside to our 2011 outlook,” Brian A. Johnson, an analyst with Barclays Capital, wrote in a recent note to clients.

Jesse Toprak, vice president for industry trends and insight at TrueCar.com, which tracks vehicle sales and pricing, said the improving performance of automakers showed that “a recovery is under way,” even though the growth had been slower than anticipated.

“If the trajectory continues in the same path, we could have a strong finish to the year,” Mr. Toprak said.

UAW Sues GM over Retiree Health Care Payment

 

DETROIT (AP) - The United Auto Workers union has sued General Motors Corp., saying the automaker owes it $450 million for retiree health care.

In the lawsuit filed Tuesday in federal court in Detroit, the UAW said that in 2007, GM agreed to pay $450 million to settle a UAW claim against auto supplier Delphi Corp. as part of Delphi's emergence from bankruptcy protection. Delphi is GM's former parts division.

The UAW said the agreement should still be in effect even though GM went through its own bankruptcy reorganization last year. The UAW said it demanded the payment from GM on Oct. 29.

According to court documents, GM responded with a letter rejecting the union's demand.

The UAW says the money should go to a union-run retiree health care fund.

Life After Death In Detroit Is No Heaven

The Wall Street Journal

Last year's North American International Auto Show in Detroit was something of a danse macabre. The specter of recession haunted the displays. General Motors and Chrysler were weeks away from bankruptcy.

This week's show promises a bit more cheer. U.S. vehicle sales, while back to 1982 levels, appear to be stabilizing. Yet jubilation should be tempered. The industry's near-death experience didn't lead to the profound changes needed.

For car companies, and the investors buying into their recovery, this lost opportunity will shape the next decade. As was demonstrated by the salvation of General Motors and Chrysler, and the tussle over Opel, politicians still love their cars and the job-providing factories that make them.

In North America, there has been some progress, with capacity down from 18.3 million units in 2006 to about 16 million, says IHS Global Insight. That still is 17% more than forecast 2010 sales. Meanwhile, in Europe, political unwillingness to close factories is "more entrenched than ever," says Tim Urquhart, senior analyst at IHS. Globally, capacity to make 90 million vehicles compares with expected sales of 62 million this year, estimates Goldman Sachs.

As in the airline industry, chronic overcapacity resulting from high barriers to exit has made for a dismal long-term investment. Shareholder returns for the global auto sector have lagged behind the market and have been on a downward trajectory for three decades. U.S. firms have struggled to adapt to deteriorating conditions in their home market, historically attractive because of a "unique" combination of size, wealth and low fuel prices, says John Casesa, managing partner at consultancy Casesa Shapiro Group.

One strategy has been to globalize. But few car companies are truly global. Ford Motor and GM have sizable positions in North America and Europe, but these are low-growth markets.

Emerging markets are the next big thing, with China alone expected to account for almost half of incremental vehicle sales by 2024, according to Casesa Shapiro. But turning a profit won't be easy, given China's fragmented industry and price-conscious consumers. Only the emerging Porsche-Volkswagen group enjoys a double-digit-percentage market share in China. Indeed, of the major global auto companies, it looks the best positioned in terms of geographic spread, particularly if it can win market share in North America.

As a whole, however, low returns mean the industry needs to take capital out of the production process. That should mean mergers, particularly cross-border ones. But few will want to risk repeating Daimler's disastrous experience with Chrysler. Technology-sharing joint ventures are more likely, with Toyota Motor and Hyundai Motor particularly attractive partners for others, according to Goldman.

Meanwhile, Ford, under Chief Executive Alan Mulally, has made a shift away from the old model of regional engineering fiefdoms to cost-saving, unified vehicle platforms sold around the world.

That sort of self-help will be critical to sorting winners from losers. Despite structural weaknesses, the industry will have to somehow accommodate the demands of climate-change legislation, changing vehicle tastes and new entrants, particularly exporters from China and India. Detroit 2020 promises to be a very different show, perhaps with fewer exhibitors. Hopefully for Detroit, that would result from consolidation, rather than merely the real action having moved elsewhere in the world.

Detroit Papers Set to Curtail Print

As posted by: Wall Street Journal

Detroit Media Partnership L.P., which operates the Detroit Free Press and the Detroit News, is expected to announce next week that it will cease home delivery of the papers' print editions on most days of the week, according to people familiar with the company's thinking.

Detroit Media has not made a final decision, these people said. But the leading scenario set to be unveiled Tuesday calls for the Free Press, the 20th largest U.S. newspaper by weekday circulation, and the News to end home delivery on all but the most lucrative days -- Thursday, Friday and Sunday. On the other days, the company would sell single copies of abbreviated print editions at newsstands and direct readers to the papers' expanded digital editions.

The Free Press, owned by Gannett Co., and the News, owned by MediaNews Group, are operated by Detroit Media under a so-called joint operating agreement.

Weekday circulation for Detroit's two major newspapers has plunged.

The Free Press and the News would be the first dailies in a major metropolitan market to curtail home delivery and drastically scale back their print editions. Other newspapers are contemplating similar moves in response to the erosion of advertising and the rising costs of printing and delivery. In October the Christian Science Monitor said it will stop printing a daily newspaper in April and move instead to an online version with a weekly print product.

Newspaper groups have taken drastic steps lately to align costs with shrinking revenue, including massive staff cuts and efforts to consolidate functions through partnerships like the JOA in Detroit. As many of those measures have proved insufficient, publishers have taken a harder look at shifting away from print or abandoning it altogether to save on printing and distribution.

Even by industry standards, the Detroit papers have been hit particularly hard, a result of the troubled auto industry's impact on Michigan SEO. Dave Hunke, Detroit Media's chief executive, said in October, "It's time for us to look at some radical departures from our business model."

Weekday circulation has declined 15% at the Free Press and 22% at the News over the past five years, according to the Audit Bureau of Circulations. As of September, the Free Press had a weekday circulation of 298,243, including 200,110 home and mail subscribers. The comparable numbers at the News were 178,280 and 97,483.

To address the mounting problems, Detroit Media has been working with IDEO Inc., a design firm based in Palo Alto, Calif., for the past six months to help reinvent the papers. The results of their work are scheduled to be unveiled to employees on Tuesday.

The changes are likely to result in significant job cuts. Gannett, which owns 85 daily newspapers, recently said it was eliminating 2,000 positions as part of a 10% staff reduction. Two of its papers, USA Today and the Free Press, were not part of those reductions.

"The Detroit Media Partnership is looking at everything right now just like everyone else in the country," said Leland K. Bassett, a spokesman.

Because the Detroit papers will continue to publish daily electronic versions, the cuts are expected to come mostly, if not entirely, from outside the newsroom, according to people close to the situation.

Curtailing home delivery would bring the Detroit papers much needed savings, but would also carry considerable risk. At a time when newspapers are fighting to retain readers, steering those readers online instead of delivering their paper to the door could cause them to lose the habit of reading a paper daily.

Rumors about Detroit Media's plans have surfaced in recent days on the "Gannett Blog" run by former USA Today reporter Jim Hopkins.

How Detroit Drove Into a Ditch

With little fanfare, a new car factory opened in America earlier this month. The new Honda assembly plant in Greensburg, Ind., will produce 200,000 compact Civic models annually after reaching full capacity late next year. The contrast couldn't be starker between Detroit's woes and the continuing U.S. expansion of Japanese, German and Korean car companies -- in both market share and manufacturing capacity. There are two American auto industries, one generally thriving and the other drastically shrinking.

The shrinking is accelerating dramatically. Just yesterday Chrysler said it would ax 25% of its white-collar employees, about 5,000 people, next month. General Motors is cutting thousands more jobs and a variety of management benefits, including matching contributions to retirement savings plans. The two ailing car companies are exploring a possible merger in hopes of reaping the synergies that so infamously eluded the DaimlerChrysler union a decade ago. Last summer GM sought to merge with Ford, only to be rebuffed. Billionaire investor Kirk Kerkorian started selling his stake in Ford last week after the value of his investment plunged by two-thirds since he bought the stock last spring. All this indicates the extent of Detroit's desperation. The Detroit Three (no longer the Big Three) are adamantly denying bankruptcy rumors, but there's no denying that their very survival hangs in the balance.

This situation doesn't stem from the recent meltdown in banking and the markets. GM, Ford and Chrysler have been losing billions since 2005, when the U.S. economy was still healthy. The financial crisis does, however, greatly exacerbate Detroit's woes. As car sales plunge -- both in the U.S. and in Detroit's once-booming overseas markets -- it's becoming nearly impossible for the companies to cut costs fast enough to keep pace with the evaporation of their revenue. All three companies, once the very symbol of American economic might, need new capital, but their options for raising it are limited.

Domestic carmakers have produced a long line of memorable vehicles, but not all have been winners. Enlarge the image to see a chart of some of Detroit's design successes and failures from the past 50 years.

In all this lies a tale of hubris, missed opportunities, disastrous decisions and flawed leadership of almost biblical proportions. In fact, for the last 30 years Detroit has gone astray, repented, gone astray and repented again in a cycle not unlike the Israelites in the Book of Exodus.

It wasn't that American auto executives were always malicious and stupid while the Japanese were always enlightened and smart. Japanese car companies have made plenty of mistakes, most recently Toyota's ill-timed move into full-sized pickup trucks and SUVs. But just as America didn't understand the depth of ethnic and religious divisions in Iraq, Detroit failed to grasp -- or at least to address -- the fundamental nature of its Japanese competition. Japan's car companies, and more recently the Germans and Koreans, gained a competitive advantage largely by forging an alliance with American workers.

Detroit, meanwhile, has remained mired in mutual mistrust with the United Auto Workers union. While the suspicion has abated somewhat in recent years, it never has disappeared -- which is why Detroit's factories remain vastly more cumbersome to manage than the factories of foreign car companies in the U.S.

The result of this burden, and of other failures, has been catastrophic. Because of it, Detroit remains saddled with a cost structure that prevents making profits on any vehicles besides gas-guzzling trucks and SUVs. That was fine during the SUV boom, just as owning Enron stock was terrific until that infamous company crashed. But then Enron stockholders who hadn't diversified their portfolios were wiped out. Now Detroit lacks a diversified source of profits -- i.e. small cars, midsize sedans, etc. -- and is scrambling to avoid a similar fate. It's highly unlikely that all three companies will survive.

Two incidents in 1936 and 1937 formed this lasting labor-management divide: the sit-down strike at GM's factories in Flint, Mich., and the Battle of the Overpass in Detroit, in which Ford goons beat up union organizers. But the United Auto Workers prevailed, and as the GM-Ford-Chrysler oligopoly emerged in the 1940s, the union gained a labor monopoly in American auto factories. As costs increased, the companies routinely passed them on to U.S. consumers, who had virtually no alternatives in buying cars.

That's how things stood entering the 1970s, a decade that brought America Watergate, defeat in Vietnam, two oil crises, inflation, stagflation, the Iran hostage crisis and malaise. (Not to mention "The Brady Bunch" and bell-bottom pants.) In Detroit, amid worker alienation and the "blue-collar blues," Chevies, Fords and Plymouths rattled, rusted and rolled over -- and those were the good ones. The Ford Pinto's gas tank was prone to explode into flames when the car was hit from the rear, making the Pinto the poster product for corporate callousness. In 1978, after three Indiana girls burned to death when their Pinto got rear-ended, Ford became the first company to be indicted for reckless homicide. The company later was acquitted, but public opinion judged the Pinto guilty.

For all the Pinto's infamy, perhaps no car better captured America's decade-long haplessness than the pug-ugly AMC Gremlin, which debuted in 1970 and died -- mercifully -- in 1980. The Gremlin's shape, fittingly, was first sketched out by an American Motors designer on the back of a Northwest Airlines air-sickness bag. On Aug. 20, 1979, 18-year-old Brad Alty, fresh out of high school in Mechanicsburg, Ohio, was driving his Gremlin to work when the car broke down. He was two-and-a-half hours late to his first day on the job at a new motorcycle factory that Honda Motor was opening in central Ohio.

For the next few weeks, Mr. Alty and his 63 co-workers did little but sweep floors and paint them with yellow lines. Then they started building three to five motorcycles a day. And at the end of each day they would disassemble each bike, piece by piece, to evaluate the workmanship. Mr. Alty hated it, and he kept getting grief from his older brother for working for a Japanese company. "I thought I had made a mistake by going to work there," he recalled recently. "It was like, 'What the heck am I doing here?' "

But Mr. Alty stuck with it, and Honda stuck with him. Honda's real goal was to build cars in America, but the motorcycle plant allowed it to test the mettle of American workers for a modest investment. The workers passed the test. Honda started building Accords in Ohio in November 1982. Ironically, some U.S. Honda dealers actually protested that they wanted to sell only Accords made in Japan. But the quality of the Ohio-made cars was soon confirmed.

Nissan, Toyota and other Japanese car companies soon started building factories in America, followed by German and Korean auto makers. There are now 16 foreign-owned assembly plants in the U.S., and many more that build engines, transmissions and other components. The UAW hasn't organized many of them, the main exceptions being plants that began as partnerships between a U.S. and Japanese auto maker, where the union was "grandfathered" in. As Detroit's oligopoly was broken, so was the UAW's labor monopoly in the auto industry. The big winner was the car-buying public.

Meanwhile, in the same year that Honda started building cars in Ohio, General Motors asked the UAW for wage concessions to help ease the company's financial straits. But on the same day that UAW members voted approval, GM Chairman Roger B. Smith unveiled a new formula that made it easier for him and other executives to earn bonuses. It was a historic blunder.

In 1987, when I was this newspaper's Detroit bureau chief, Mr. Smith asked me to tour several GM factories to view first-hand how the company's relationship with its workers had improved. At the GM engine plant in Tonawanda, N.Y., near Buffalo, I got glowing reports about the dawn of a new spirit of cooperation. Then I asked to visit the men's room, and was stunned to see that there were two: one for hourly workers, and a separate one for management. I used the hourly men's loo.

Meanwhile, Mr. Smith was trying to transform GM with a high-tech spending splurge. At GM's factory in Hamtramck, Mich., the automated guided vehicles that were supposed to replaced old-fashioned fork lifts sat as still as stones, because the programming algorithms were too complicated. The spray-painting robots turned their nozzles on each other instead of the cars.

While GM was going astray, Ford and Chrysler were in repentance mode in the 1980s. Chrysler staged a historic comeback from near-death under its charismatic CEO, Lee Iacocca. In 1984 the company launched a new product called the mini-van, which supplanted family station wagons almost overnight. With the Taurus, Ford re-established Detroit's lead over the import brands in styling, evoking the days when Americans rushed down to a dealer to see the latest automotive designs, and the company forged better relations with the UAW. All three companies suffered in the Gulf War recession, especially GM, which posted a then-record $4.5 billion loss in 1991. The company's board ousted CEO Robert Stempel. But by the mid-1990s all three companies were posting record profits thanks to the boom in SUVs, which the Japanese didn't make at the time. The profit surge prompted Germany's Daimler-Benz to buy Chrysler, which owns the iconic Jeep brand, for some $36 billion in 1998.

As the new millennium began, Detroit envisioned a prosperous second century. In June 2000, GM's confident new CEO, Rick Wagoner, invited journalists to a resort in Italy's Alpine lakes to describe a corporate future of "fewer cars, more trucks," as the Detroit Free Press wrote. Ford's CEO Jacques Nasser upgraded the décor on the corporate jets and removed the company's blue-oval logo from the outside of corporate headquarters while the Ford Taurus -- once the best-selling car in America -- was falling further behind the Toyota Camry and the Honda Accord. It was going-astray time again. These days, Detroit's styling advantage has largely disappeared, and excitement over new designs is reserved for iPhones.

The debilitating management-union relationship largely remains, however. In 1998, after GM moved some equipment at factories in Flint against the UAW's wishes, workers went on strike for 54 days, costing GM $3 billion. While such headline-making confrontations have become rare, small-scale impasses occur regularly.

Not terribly long ago, says a Ford manager who must remain unnamed, Ford dispatched a team of welding experts to a factory to explore efficiency moves. The plant's union leaders, fearing layoffs might result, refused to meet with the team, and the effort came to naught. UAW leaders aren't bad people; far from it. But when everything is a negotiation, many things don't get done. (Just ask any parent.)

Several years ago Ford even considered dropping cars altogether because they weren't profitable, and focusing entirely on trucks. Then in 2005, Hurricane Katrina and growing oil demand from China and India sent gasoline prices soaring and SUV sales plunging. GM lost $10.6 billion that year. Ford topped that by losing $12.7 billion in 2006. Last summer Daimler gave up on Chrysler, selling it to private-equity powerhouse Cerberus for about one-fourth of what it had paid to buy Chrysler. Last fall the UAW approved significant wage and benefit concessions, but they won't kick in until 2010. That might be too late. GM lost $15.5 billion in this year's second quarter, Ford lost $8.7 billion, and further losses are coming. (Closely held Chrysler, of course, doesn't report financial results.)

What now? Cerberus is trying to sell Chrysler. The most logical buyer would be Nissan, India's Tata or some other profitable foreign car company seeking to expand in the U.S. But desperation doesn't breed logic, which is why General Motors might become the buyer. It's difficult to see how this deal would make any sense for GM, which already has too many brands (eight) and must cut billions from its cost base. Adding more brands (Chrysler has three) and more costs would be charging headlong in the wrong direction, and distract GM's management from putting its own house in order.

GM is bleeding cash so quickly that it likely will run out next summer without a sizeable transfusion. Selling assets, selling stock or adding debt will be enormously difficult for the company. But unless one of those things happens it's either a government bailout or bankruptcy for General Motors.

Ford's cash position is somewhat better than GM's, and the company seems to have more options. Its Volvo subsidiary and its 33% stake in Mazda are valuable assets that could be sold. But Mr. Kerkorian's apparent about-face on Ford is unsettling. It's possible that the blue-blooded Ford family is just as happy to see the Las Vegas billionaire cash in his chips, but his move could shut off a potential source of additional investment that Ford might need in its quest to survive.

But to thrive, instead of just survive, Detroit will have to use the brains of its workers instead of just their bodies, and the UAW will have to allow it. Two weeks ago some automation equipment broke down at the Honda factory in Marysville, Ohio, but employees rushed to the scene and devised a temporary solution. There were no negotiations with shop stewards, no parsing of job descriptions. Instead of losing an entire shift of production, Honda lost just 150 cars. The person overseeing Marysville's assembly operations is Brad Alty, still with Honda after nearly 30 years. These days, instead of a Gremlin, he's driving a Honda Pilot -- made at a Honda factory in Alabama.