Putting a smile on a banker's face

Away from the revelry on the National Mall in Washington, auto industry executives and insiders have spent much of January in Detroit at the North American International Auto Show, an annual event that, for obvious reasons, has been toned down significantly. One of the few areas not in such a funk, though, is the industry"s continued push for hybrid and electric vehicles. Toyota unveiled its new Prius® and GM its plug-in Volt®, set for production in 2010.

That"s something managers at Ultimate Hydroforming I"m sure are glad to hear.

The New York Times recently covered the operation as one of the few examples of the government"s TARPthe Troubled Asset Relief Programactually doing what politicians thought it would do: spur more loans and get the wheels of commerce turning again. That hasn"t happened, at least not yet. What TARP has done is prevent more significant bank failures. As our soon-to-be president put it, Part of what we have to measure against is what didn't happen and not just what has happened.

That"s not very politically satisfying, which is why politicians are asking for the regulation of how banks use TARP money. Whether politicians should stick their hand so far into the banking business is a subject for another debate.

Regardless of TARP"s shortcomings, though, how the program has helped Ultimate Hydroforming may give some solace. The company has worked with GM on the battery casings for the Volt, and it"s also diversified outside the car business, so its business is still growing, even as the automotive industry goes into a deep slump, according to the Times.

The Times reporters visited Ultimate Hydroforming"s Sterling Heights, Mich., plant with Stefanie Kimball, chief lending officer of Independent Bank in Iona, Mich. During the tour, Plant Operations Manager Shane Klyn showed off the company"s new hydraulic presses, bought with loans from Independent, which received a dose of TARP money. The new presses, he told the reporters, will give the company ammunition to expand into such sectors as solar power. As the article put it:

This will allow us to move into new projects and markets," Mr. Klyn said as he walked through the plant with Ms. Kimball, who by then had a big smile on her face, despite the freezing winds and piles of snow just outside. The bank is giving us the opportunity to expand."

Just imagine putting a smile on a banker"s face in this economy. Ultimate Hydroforming has strong prospects in diversified industries. So in this case, Independent is lending money to a company that"s likely to pay the loan back. What a crazy concept.

Trouble is, too many companies don't have such solid prospects because, with the economy how it is, just about everything is in a slump. It"s a vicious cycle: Companies cut back because of falling consumer demand; unemployment rises; demand falls moreand banks often aren"t coming to the rescue.

Some companies seem to be bucking the trend, and they"re worth watching. They"ve identified markets with a solid future and invested in technology to serve those markets efficiently. Judging by what I"ve read and whom I"ve talked with in recent months, some of these companies, such as Ultimate Hydroforming, just happen to be in the metal forming and fabricating business.

For this industry, that"s good news.