BBDO Detroit Closing

[Beatsworking]

Sad day here in Troy. Another 500 people likely out of jobs...

http://adage.com/agencynews/article?article_id=140392

[Detroitnerd]

I suppose that was because of a) high taxes or b) intransigent labor?

[bailey]

I suppose that was because of a) high taxes or b) intransigent labor?

One could also wonder if there would be replacement client here for the Chrysler account were it not for Michigan's issues with a & b.

[Detroitnerd]

It's all the unions' fault!

[crawford]

Actually, it is [[largely) because of high taxes and intrasigent labor, and it is [[indirectly) the Union's fault, but I doubt most on DYes will admit it.

Why are so many Detroit-area advertising firms downsizing or shutting down? Lack of automotive-related demand. A high school friend of mine just got transferred from Birmingham to Suburban St. Louis. None of the Detroit-area automotive/engineering/design firms have marketing needs right now.

[Detroitnerd]

DetroitYES! = UnionsNO!

[Det_ard]

It's all the unions' fault!

If the question is "Why have no foreign automakers located any of their several dozen plants in the state of Michigan, despite being willing to locate in states adjacent to Michigan like Indiana and Ohio, as well as in the South?", you have answered correctly.

Michigan is home to the largest collective of automotive brainpower in the world. It's the logical place for a foreign company that's looking to expand in the US. They based their technical operations here [[traditionally a non-union field). SE Michigan is the Silicon Valley of the automotive world. Yet every foreign auto company has chosen to avoid the state when choosing plant locations, despite the offer of huge tax incentives.

Our strong union reputation has killed our chances of diversifying our automotive manufacturing base. If we'd been able to get even a third of the foreign plants that other states now enjoy our economic situation would be far better. So, yeah, Michigan's strong union reputation is a big problem.

[iheartthed]

If the question is "Why have no foreign automakers located any of their several dozen plants in the state of Michigan, despite being willing to locate in states adjacent to Michigan like Indiana and Ohio, as well as in the South?", you have answered correctly.

Michigan is home to the largest collective of automotive brainpower in the world. It's the logical place for a foreign company that's looking to expand in the US. They based their technical operations here [[traditionally a non-union field). SE Michigan is the Silicon Valley of the automotive world. Yet every foreign auto company has chosen to avoid the state when choosing plant locations, despite the offer of huge tax incentives.

Our strong union reputation has killed our chances of diversifying our automotive manufacturing base. If we'd been able to get even a third of the foreign plants that other states now enjoy our economic situation would be far better. So, yeah, Michigan's strong union reputation is a big problem.

FYI, the skilled automotive related jobs [[which is what matters when talking about things like "brainpower") aren't going to places like Alabama or Mississippi. Those jobs are still going to places like the Detroit area.

Unionization is virtually synonymous with a matured economy. If you look at all of the major industrial cities of the 20th century, virtually all of them have a history of heavy unionization. By comparison, virtually all of these new plants being built by the foreign auto companies are going into places that were virtually corn or cotton fields when Detroit was a city of 2 million people.

[Ray1936]

I'm truly saddened that DY has so many fervent anti-unionists posting.

[BShea]

This office was here solely to work on the Chrysler account.

Chrysler has decided to use other agencies, although BBDO and the carmaker remain in talks.

But it's closing -- without a new deal -- because the work is going to other companies, regardless of taxes and labor issues.

[Detroitnerd]

Pardon my trolling, but they're always ready to take the bait. I'm sure if we had a hurricane sweep through town, some posters here would find a way to point the finger at labor and taxes.

[bailey]

This office was here solely to work on the Chrysler account.

Chrysler has decided to use other agencies, although BBDO and the carmaker remain in talks.

But it's closing -- without a new deal -- because the work is going to other companies, regardless of taxes and labor issues.

Which means that BBDO finds Cincinnati a better place to do business than Detroit...er um...Troy. and again raises the question- why does BBDO have only ONE client in Detroit?

In seven years and in going from 2000 to 500 to now 0 employees, BBDO never thought that anything else was worth being in Detroit for? Apparenlty Detroit is just THAT irrelevant.

Oh, and obviously it's not all the union's fault. This is DYES after all. It is always and forever Engler's, Nafta, and/or L brooks pattersons fault......oh and suburbanites....

[Detroitnerd]

Oh, yes, we all know what's in the time-honored Reaganomics toolbox: Cut taxes and stick it to labor.

Only thing is, when all you have is a hammer, every problem looks like a nail.

[gnome]

plz tell me what unions have to do with BBDO?

[Detroitnerd]

Oh, it's simple. Unions are the cause of everything bad. Something bad happened [[BBDO closes a local office). Therefore, the unions are to blame. Simple.

[crawford]

plz tell me what unions have to do with BBDO?

The unions helped killed the domestic auto industry, and supporting concerns like BBDO Detroit suffer the consequences.

[iheartthed]

In seven years and in going from 2000 to 500 to now 0 employees, BBDO never thought that anything else was worth being in Detroit for? Apparenlty Detroit is just THAT irrelevant.

Let's take a gander at where BBDO has offices located in North America:

Atlanta
Detroit
Miami
Minneapolis
New York
Los Angeles
San Francisco
Chicago
Cincinnati

Now... I really don't see the connection between Michigan being a unionized state and BBDO closing it's Detroit office. Miami and Atlanta are the only two cities on this list that are located in right-to-work states. But continue to grasp at straws if that helps you to sleep better at night.

Oh yeah...

"We have our challenges with Chrysler which for 2009 will contribute about 1% of our revenue, so that I believe is at risk," Mr. Wren said. "The Detroit office of BBDO is still under contract with Chrysler and therefore it's not available to be pitching other business at the moment. ... We're honoring the contract and will see what the outcome is."

That careful wording suggests only the Detroit office is under contract, and that all other offices of BBDO are now free to pursue other auto accounts.

This quote is probably more relevant to figuring out why BBDO is leaving. In layman's terms, they aren't allowed to solicit the business of other automakers until the contract expires.

Now, it is one thing to argue that the unions caused the domestic automakers to tank [[which is bullshit), but quite another to suggest that unions are keeping the Detroit area from diversifying its economy [[which is a bigger pile of bullshit). As I pointed out above, only 2 of the 9 BBDO cities listed above are located in right-to-work states.

[BShea]

The major ad agencies have offices in Detroit because of the auto industry. It's as simple as that.

BBDO's local office is a very small fish within a massive company's corporate structure. This is an office of BBDO, nothing more. It's a NYC ad agency interested in mega clients with millions and billions to spend, not Happy's Pizza and Varsity Ford.

[Detroitnerd]

Bill: I worked for a very small advertising agency in New York, but we still did our media buys through BBDO. I mean, our buys were a pittance compared to a company that buys scads of ads. So they do deal with little guys. But I agree that this is more a case of the satellite office needing a certain amount of buy-through to justify it being there.

[gnome]

Does anybody think the closing of the office had something to do with the 9 million+ in billings that Chysler stiffed BBDO on during the bankrupcy?

[ghettopalmetto]

Yeah, it's all the fault of the Unions. Because the UAW sure-as-shit doesn't have any presence in Ohio.

Ass clowns.

[Johnlodge]

Chrysler owed BBDO millions of dollars they'll never see because of the bankruptcy, and as such it was difficult for them to resume their relationship, as gnome said.

Now back to your regularly scheduled bullshitting and speculating.

[crawford]

Yeah, it's all the fault of the Unions. Because the UAW sure-as-shit doesn't have any presence in Ohio.

Ass clowns.

BBDO doesn't have an automotive marketing presence in Ohio, so pretty silly example.

[digitalvision]

This is much more about BBDO getting the short end of the bankruptcy stick than anything else - and there's quite a few other agencies that may be leaving/closing but it's hearsay so I shan't repeat.

To give you an idea of why the area agency market is in shambles - as BShea says, it's almost all automotive [[yes, there are other accounts, but in general, almost none are as big as carmakers) - and there's been a big problem with both domestic manufacturers going through bankruptcy. The numbers I've edited for easy math.

Car company X makes agreement to hire Acme agency for $10 million dollars. Fine.

Car company X tells acme agency to do work. Fine. Acme uses let's say $5 million. Great.

Car company X, four to six months in, tells Acme agency that the $5 million in billing they've already used? Yah, they're only going to pay half the rate, oh and by the way, for the work Acme has already done? Car company X will only pay for half of that rate too.

So the the work going back - Acme agency gets stiffed for $2.5 million. You may think that the $2.5m is a lot of money, but not when you've spent more than that to do the work, leaving you in the red. You've expended a ton of effort for nothing, if not owing your people money and having to stiff/slow pay them, causing a horrid chain reaction.

This is even before bankruptcy, where in some cases, it's completely wiped out, leaving the agency with the bag. And there's way more than $9m in this single case - try $58m Chrysler owed BBDO on April 30.

So, it makes perfect sense BBDO will leave. Others will be closing/moving their auto accounts going to more reliable pastures [[i.e. hunting for foreign work, or Chinese upstarts). More implosion is coming [[not like the hits already haven't been apocalyptic) which means moving to California or New York.

It has absolutely nothing to do with labor or taxes.

[crawford]

It has absolutely nothing to do with labor or taxes.

It has everything to do with labor and taxes; not for BBDO, but for their local clients.

Nobody is arguing that BBDO directly suffers from either issue, but they are dependant on local employers that have particular labor and [[to a lesser extent) tax issues.