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LAWSUIT AGAINST DETROIT BANK SUGGESTS SURVIVAL OF U.S. CAR SUPPLIERS REQUIRES COOPERATION OF U.S. BANKS AGAINST JAPANESE COMPETITION

 LAWSUIT AGAINST DETROIT BANK SUGGESTS SURVIVAL OF U.S. CAR SUPPLIERS
 REQUIRES COOPERATION OF U.S. BANKS AGAINST JAPANESE COMPETITION
 DETROIT, Jan. 24 /PRNewswire/ -- The following was released today by attorney James Leonard Elsman:
 The shareholders of a once-healthy, but now bankrupt, Formative Products Co. have sued First of America Bank (FOA) for over $25 million in Wayne Circuit Court, alleging that their auto-design business went bankrupt because FOA did not understand the cyclical auto supplier business.
 "This would never happen in Japan," said the Steigerwald family attorney, James Leonard Elsman of Birmingham. "That's what Iacocca and others are yelling about. The Japs are good, but, given a level playing field, U.S. auto suppliers can more than compete and survive. Here, a bank killed a company and all its dreams when that supplier had more business on the books than it could handle. In Japan, the banks and government help suppliers over the peaks and valleys, not hurt them.
 "Formative, a large and independent maker of auto tooling aids that was started in 1955 by Lou Steigerwald and lasted until 1988, employed as many as
130 and achieved sales of $20 million or more. It had $5 million of new business written when the bank closed it, and was closing on another $5 million. It has been the biggest of its field to be caused to fail in the auto capital. Japanese companies are beginning to move into such areas, as witnessed by the recent move of C. Itoh company to acquire Pioneer Engineering," said Elsman.
 Steigerwald commented: "It has been sad to see what has happened to the vendors and skilled trades in Detroit. Because our government and banks don't help out like the Japanese do it, we Americans are quickly losing (if we haven't already lost such) our skill base of technical advice. This is taught hands-on in several small shops, i.e. how to design and build by computer-based and non-computer methods."
 Steigerwald continued: "This is a precious resource -- the technical skill base. It is especially effective in those small shops we associate with, 8 Mile and Groesbeck, etc., because such shops can, without layers of management, make decisions and progress literally overnight. Such can't be done by the Big 3, not even the Japanese companies which actually move with great bureaucracy. And, it is extremely efficient. A 'self-starter' like me who owns a small shop doesn't waste a dime, and can be there to nurse it seven days a week. Our conglomerates are learning the value of small-scale and are getting rid of many divisions and acquisitions they acquired, assuming incorrectly that size equals economy. Not so."
 Elsman added: "Simply put, there is optimum size in economics. McDonald's, for example, knows this. It doesn't build a store two blocks long. The U.S. better discover this before it is too late. Don't kill off the little entrepreneurs. It will cost you more in the long run -- possibly whole industries that are often defense-related when a war comes. We don't want that."
 The specific lawsuit by Steigerwald seeks $25 million, alleging that FOA solicited Formative's business, but was so new to Detroit Metro banking that it neither knew the auto business, nor was it organized well to handle the account. Then, the suit charges, after lending Formative large amounts of money and doing publicity photos of Formative's new-plant groundbreaking to promote FOA's own advertising and public relations, it prematurely called all of its loans due and badmouthed Formative's attempts at merger and other bank relationships.
 The suit actually alleges a change in FOA internal policy to avoid and cut off credit to "cyclical auto-related" business, which brings sharp focus on Steigerwald's and Elsman's comparison to the Japanese banks' challenge.
 The suit also alleges that FOA was a disorganized mess, as it came quickly into the Detroit market from the much smaller market of Kalamazoo, and suffered through many "reorganizations," all to the detriment of customers like Formative, who depended on stability in bank personnel.
 One allegation asserts that FOA personnel wanted to foreclose on Formative's real estate so that FOA itself could use the very building for a new computer center.
 Another allegation says FOA acted more like a high-interest, asset- seizing lender than a respectable banker friend, and alleges that many personnel of FOA came from places like Commercial Credit and/or Walter Heller, and similar lenders.
 "Such suits are part of a growing field of law called 'lender liability,' where customers are questioning whether their banks treated them with 'good faith and fair dealing,' as required by Michigan law," said Elsman.
 The suit was assigned to Judge Marvin Stempien in Wayne Circuit Court. A jury trial was demanded.
 Elsman added: "Banking isn't what it used to be. You used to stay with a loan officer for years and he knew you and loaned to you upon character and prior history. Now, the Michigan banks and S&L's are merging and cutting personnel and using the 'MBA approach.' Besides 'character,' they have added as many C words as they can find to say 'No, and Go Elsewhere,' like 'Capital,' 'Capacity,' 'Condition,' and 'Collateral.' Businesses are dying because of such.
 "By the time we figure out what we're doing to the good old U.S., the Japanese and others will be feasting on our corpses in several vital industries. Don't rely on the politicians to see the future. Don Riegle was supposed to supervise the banks and the S&L's, and he's so busy taking money from guys like Keating, history passes him by and he's dead meat in Washington, respect-wise."
 Elsman continued, "We need someone the likes of Iacocca, Stempel and Poling to sit down with Michigan banks and say: 'Listen, you eat off our plate, and if you don't take better care of our needed suppliers, we'll all be killing each other. And, if the suppliers are dead, you banks will have no customers, and that is called bank-death. Got it? We're all in this together trying to survive and compete worldwide against the clever Japs. And, by the way, Detroit banks, did you notice that nine out of the top 10 world banks come from the Land of the Rising Sun, and our sun might be setting unless we all change?"
 -0- 1/24/92
 /NOTE: A photo of Elsman and/or Steigerwald is available. CONTACT: James Leonard Elsman, 313-645-0750/
 (FOA) CO: Formative Products Co.; First of America Bank ST: Michigan IN: FIN AUT SU:


ML -- DE002 -- 3123 01/24/92 08:26 EST
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Date:Jan 24, 1992
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