Pray for Rain

Unless it rains for the next 40 days and 40 nights, visitors attending next month's automotive management conference in the northern Michigan resort town of Traverse City should spot something they've probably never seen before: a sand bar.

Sand bars aren't supposed to be seen. On Great Lakes beaches, you swim out 50 yards or so through deeper water, then stand on the narrow sand bar, usually up to your waist in water.

But in touristy Traverse City you can stand on a sand bar and remain perfectly dry. That's assuming that you're willing to wade through the stagnant, sometimes hazardous water that gets trapped between the beach and sand bar.

A surreal experience, to be sure, but one that is becoming common on the Great Lakes, which are reaching historic low levels due to mild winters and a lack of rain.

Lakes Huron and Michigan have dropped 40 ins. (102 cm) over the past three years. No one can recall a time when levels have fallen faster. Rain showers in mid-June barely helped.

Why should the auto industry care? Because the steel industry relies heavily on Great Lakes shipping to move iron ore and coal from Minnesota and Michigan's Upper Peninsula to steel mills near Detroit and Chicago, and lake levels are so low that freighters have to reduce their cargo by 10% to avoid running aground.

This all comes during a time when the auto industry needs a whole lotta steel to meet record demand for new vehicles.

The Great Lakes Div. of National Steel Corp. will have to make five additional trips from Duluth to steel mills in Michigan and Indiana to meet automotive demands, says company spokesman Clarence Ehlers.

But a freighter can make that trip (it takes about a week) only so many times during the shipping season, from March to December.

So National Steel is contracting a second freighter from American Steamship Co. to pick up the slack for its primary workhorse, the George Stinson. The Stinson normally carries 55,000 tons of iron ore, and now its capacity is only 51,000 tons because of the lake levels.

National Steel will pay more than $1 million for the additional five trips - without the hope of passing along higher prices to customers. "We have to get creative and offset the cost some other place," Mr. Ehlers shrugs.

By the way, these freighters are powered by enormous diesel engines that guzzle fuel by the barrel. Noticed fuel prices lately?

Without serious rainfall, the prospects are dim for a major improvement in lake levels. It all stems from a lack of snow and rain, says Corps of Engineers hydrologist Adam Fox.

The National Weather Service predicts these dry conditions could stay through the fall, causing levels to drop another 6 ins. (15 cm) on Lakes Michigan and Huron by the end of October. Lake St. Clair, a small lake between Lakes Huron and Erie, could fall by nearly a foot (30 cm) by the end of October. Lake Erie could fall by another 15 ins. (38 cm) by early November, Mr. Fox says.

It's possible that freighters could have to cut cargo by even more than 10%, which would require more vessels to handle steel shipments.

Mr. Ehlers of National Steel remains buoyant. "The levels will come back up," he says.

Start building the ark, Noah. National Steel could use it to ship iron ore.

Some of the grandiose projections about e-commerce cost savings of $3,700 per vehicle need to be dialed back a bit, a new study says. The impact of business-to-business e-commerce should be more like $1,200 per vehicle in North America and about half that in Europe and Japan, based on a study from consulting firm Roland Berger and Deutsche Bank. The estimates are based on 150 interviews with affected companies and analysis of other industries. The biggest components of the North American savings are $196 for product development, $201 for maintenance, repair and operations and $189 for raw materials. E-commerce could save consumers on average $878 on the price of a new car, the study says.

Magna International Inc. says it is unlikely to re-enter the sunroof business after it sells its 50% stake in Webasto Sunroofs Inc. of North America to its joint venture partner, Webasto AG. It seems odd for Magna to bail out of a lucrative market, but Webasto made an offer Magna couldn't refuse. ... ArvinMeritor Inc. gets a $3.2 million state tax credit to build sunroofs and roof components in southwest Detroit after relocating 200 employees from the company's Brighton, MI, roof facility, which closes next year. ... Behr Group chooses Troy, MI, for a $30 million corporate headquarters and tech center, to be completed next spring. A $6.5 million state tax credit over 18 years sealed the deal. Behr also opens a plant in Webberville, MI, to manufacture engine cooling components. ... Motorola will build a three-story facility in Farmington Hills, MI, to supply electronic components to the auto industry beginning next year. The company has a 50-50 venture with Lear Corp. to design Ford Motor Co. interior systems that incorporate advanced electronics from Motorola.