Detroit Free Press from Detroit, Michigan • Page 47

1 I YU. ri instate business and government leaders meet in Lansing today to tell a U.S. House subcommittee how the Reagan budget cuts have affected the state. Rep. Donald Albosta, D-Saginaw, says the hearing isn't just a gripe session but is aimed at producing an agenda for the Michigan congressional delegation to protect the state against further budget blows.

"The federal budget cuts have put us in worse shape than a lot of other states," says an Albosta spokesman. Witnesses Include state Commerce Department Director Norton Berman, V.J. Adducl, president of the Motor Vehicle Manufacturers Association, and Federal-Mogul Corp. vice-president Ernest Anderson. iUAW officials get the word today on how their rank-and-file feel about reopening contracts with Ford and General Motors.

If it's thumbs up, the international will announce Tuesday whether it will summon regional councils to talk more about conces sions to relieve what UAW president Douglas Fraser calls the "distressful" state of the domestic Industry. "It's final tally week for U.S. car and truck production, as plants wind up production Wednesday and Thursday. The car count will end up at its lowest level in 20 years 6.34 million, down from 6.42 million in 1980, according to Automotive News estimates. Truck production will come out a bit higher around 1.65 million, against 1.59 million in 1980.

"Area retailers are keeping their fingers crossed for a last-minute buying surge this week. Recession-battered consumers have been holding on to their wallets, but there have been some encouraging signs. One unofficial indicator: Art Nltzsche says reports from customers of his check-verification service including some major area retailers indicate a signficant increase in spending last week over the previous week. Last week's late snow may also help put people in a buying mood. Adroit 4frcc Vxcos It noo if Dec.

21t IC32 Editor: Kathy WarbelowCall 222-5392 Auto plants wind up production this week. :3 ft i 28 Branching out M4 1 numbers Auto problems sap the power from gas and electricity sales If there were any doubt about the sad state of the auto industry this year, the falling industrial sales of natural gas and electricity confirms the suspicion that hard times are here. November industrial power and natural gas sales fell eight percent and 24 percent, respectively, from the same month a year ago. The weather and the movements of large industrial customers switching from oil to gas and back again as prices fluctuate have some effect on the statistics. But essentially, Suppliers find ways to thwart auto slump By JAMES RISEN Free Press Automotive Writer When General Motors Corp.

can't sell cars, somebody else can't sell tires, fan belts or valves to GM. And as auto sales head toward the third year of the worst slump in a generation, the suppliers are taking a harder look at their automotive operations. When executives of those firms look at their income statements over the past few years, they see auto operations losing money or contributing less and less to profits. And when they peer into the future, they see an auto market unlikely to return to the robust levels of the 1960s and early 1970s. So, like consumers shifting savings from bank passbook accounts to high-yield money-market funds, those firms are investing in businesses that are expected to grow faster in the next decade than the auto industry.

THE SEVERITY AND LENGTH of the current recession has accelerated the pace of the diversification. For example: Last year the Budd a Troy-based conglomerate best known for supplying Detroit's Big Three with truck wheels and car frames, started making water skis. "That business has done well through the auto doldrums," says James McNeal, Budd's president. Meanwhile, a Budd casting plant in Wisconsin, acquired nearly a decade ago when the auto industry was growing, has been remodeled so half -of its capacity is devoted to making castings for table saws and other products. "Our customers range from Ace Hardware to Xerox," a Budd spokesman says.

Federal-Mogul Corp. made its reputation in roller bearings and other automotive components. But in August 1980, the Southfield-based firm spent $90 million to buy Huck Manufacturing, which makes fasteners for the high-growth aerospace industry. Federal Mogul says it wouldn't spend that kind of money these days to buy an auto supplier. "I doubt if we would acquire anything that is ied to the original equipment manufacturers in the auto industry," says Thomas Russell, Federal Mogul's chairman.

Two weeks ago, Toledo-based Dana one of the world's biggest makers of auto and truck axles and transmissions, bought two Ohio insurance agencies. "The agencies will fit well," a Dana spokesman says. JOHN THODIS, president of the Michigan Manufacturers Association, calls the growing diversification a "metamorphosis which will be very important to the future" of the industrial base of Michigan, by far the leading auto supplier state. According to a 1980 study by the U.S. Department of Transportation, Michigan has 26,400 of the estimated 50,000 supplier firms, and those companies provide 650,000 of the state's million-plus auto-related jobs.

In 1979, the Big Three spent $21.4 billion to buy parts and other products from those Michigan suppliers alone, according to the study. Seventy percent of the value of every Chrysler, for example, is parts bought from outside suppliers. The recession has slashed that spending considerably, and a study, released this month by the U.S. Commerce Department, signals a continued smaller market for suppliers. The study argues "there is no prospect for a sharp turnaround (in auto sales) in the immediate future.

Cyclical factors only partially account for the industry's difficulties a fundamental shift See SUPPUER, Page 4E industrial power sales move with the fortunes of the auto industry and its suppliers. The energy figures are among the most comprehensive in the Michigan Databank on Page 2. The three utilities whose sales are reported Consumers Power Michigan Consolidated Gas Co. and Detroit Edison together supply about 90 percent of the state natural gas and electricity. Their sales are generally viewed as a' "coincident" economic indicator, meaning they do not signal changes in the economy, but rather confirm that a recession or a turnaround is here.

But Ford wants closer ties hWl mi 1H1XI nm ii. i fft November Industrial power sales Electricity: 2,043.694 million kilowatt hours Natural gas: 14.710 billion cubic feet George Ball, Detroit Edison energy fore Japanese system, which some analysts say enables Japanese carmakers to produce cheaper, more reliable cars. "Part of what we are doing stems from what we have learned from the Japanese," says Ogden. "Certainly we think they have better relations with their suppliers than we do." U.S. AUTOMAKERS have traditional- -ly cultivated as many suppliers as possible to insure competition and a steady supply if trouble develops at one firm.

Under Japan's "dedicated supplier" system, automakers bring firms in on the ground floor as they design a new product. The firm contributes to the design, and then gets to be the main supplier on a long-term basis. See FORD, Page 6E While diversification will move some suppliers away from a dependence on the auto industry, one automaker is working out a closer relationship with the companies that make its parts and components. This spring, Ford Motor Co. announced a new program that dramatically alters the way it deals with its 2,000 suppliers.

The new system gives preferential treatment to firms with which Ford has had the best experience. Ford has also started bringing suppliers in on the early stages of product design and development so they can satisfy Ford's demands when production begins. John Ogden, Ford's director of supplier policy and planning, acknowledges Ford's program is an adaptation of the caster, said he expected about a two percent increase in the utility's industrial electric sales this year a forecast that looked pretty good until around August, when sales began falling sharply. "Although it hasn't officially been named, it looks like we are going into a new recession," he said. Because the recession is arriving late in the year, the utility will record a slight overall annual gain in industrial power sales, about half a percent, compared with last year, which was the worst year since 1975.

Free Press Illustration by MOSES HARRIS During Michigan's last two profile: Sidney Rubin, Circus TJorld Toy Stores Ball says, overall power sales which are expected to be down about half a percent this year tended to show a more depressed pattern than the state of the economy alone would suggest. "There seems to be a hardship effect at work," he said. "During recessions, people tend to pull back (on power consumption) and conserve on any cost they can. This is true not only of indiviudals, but of busi nesses and even local units of government." Consumers Power energy management services manager Thomas Goulish says con servation measures undertaken by Indus-; tries in response to rising energy prices are also reflected in the statistics in recent MM C' fMJifxmm The fiiitlnnk; ''Snles are down, which we1 He works six or seven days a week; 6 a.m. to 6 p.m., with no break for lunch.

"I'd rather finish earlier," he says, "and 'spend the time with my family." RUBIN DESCRIBES himself as "tough but fair" In his business dealings. Troy insurance executive David Hermelin, a long-time friend and business associate, says "firm" is a more appropriate word. "It's impossible to build that kind of business without being firm," he says. "But he's about the non-toughest guy I know a really a charitable guy who supports every-, thing." Rubin and his wife, Marilyn, have three sons, from 13 to 17, and an 11 -year-old daughter. Marilyn Rubin is working on a sociology degree at Oakland County Community College.

Long-time friend James Bannon, executive deputy chief for the Detroit police, describes the Rubins as "the ail-American family, very much into sports." The two families met after the Rubins moved to Beverly Hills, near Birmingham. Bannon, whose in-laws live nearby, said the neighbors could hardly wait to meet the Rubins: The very first item moved into the otherwise unfurnished home a huge stuffed dog, visible from the street had created a stir. "That dog must have been about 10 feet and plans ahead," he says. "I believe if it works on paper, it will work in the field, and if it doesn't work, you make it work." A careful study of retail trends convinced him that contrary to the then-popular belief toy? could be sold successfully the year round, especially in a regional shopping center, drawing a heavy family trade. "I was open to any possibility toys just happened to be the best opportunity," he said.

STARTING FROM scratch, with the help of suppliers who gave him credit, Rubin opened his first store in 1964 at Universal City Mall in Warren. He has been expanding his chain along with shopping-center developers ever since. In recent years the company has been growing by about 27 new stores a year. Rubin runs his toy empire out of a cheerful, though windowless, office in a cavernous foot warehouse, swarming with semitrailer trucks, In a bleak Taylor industrial park. It's an aesthetic disappointment to someone expecting perhaps a Santa's workshop, but convenient to Detroit Metro Airport, which is something like Rubin's second home.

Rubin figures he travels more than 200 days a year, primarily in search of new sites for stores. 1 During a typical day, he fields about 200 jphone calls, "mostly from sales people with a know is related to the auto Industry," Goulish savs. "All nf nc nrpttv well assume that lie doesn't play around when his toys are involved By BARRY ROHAN Free Press Business Writer Sidney Rubin knew many a lean holiday growing up in Dorchester, a tough, working-class suburb of Boston. "My parents weren't able to afford many toys," he recalled. "Most of them were of the self-made type." As owner-president of Circus World Toy: Stores of Taylor, the 44-year-old Rubin hardly lacks for toys anymore: The retail chain he launched here 17 years ago has grown to 135 stores in 22 states, including 18 in Michigan.

The stores, typically 3,500 square feet, carry 6,000 different items. Rubin describes it as the largest privately owned toy-specialty chain in the country. RUBIN CAME to Detroit in the late 1 950s as a soldier assigned to a Nike missile site at' iSelfridge Air Force Base near Mt. Clemens. He liked the area, stayed, and after working briefly in the mid-1 960s as a systems analyst for Sperry Rand Univac division in Detroit, decided to go into business for himself.

What he lacked in experience he made up for In the determined confidence that is an entre-, preneurial trademark. "I'm the type of person who sets his goals trend will continue for the next several months." Inside Year-end tax tips for small businesses how you can make the most out of the new tax changes. See Small Business, Page 3. Also inside Retailing: Automakers start taking women seriously. Page 3 Free Press Photo by RICHARD LEE Sidney Rubin launched his first store in Taylor 17 years ago.

He now has 135 stores in 22 states, including 18 in Michigan. i Michigan databank: Page I Michigan stocks: Page 5 I Investments: Page 4 See RUBIN, Page 3E iproduct to sell or leasing agents with property..