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Pete Bigelow · Midwest Memo: UAW Contract With GM Nears Approval, SB5 Opponents Link Ohio Law to Jim Crow
September 28th, 2011
Three stories making news across the Midwest today:
1. UAW contract with GM nears approval. Late Tuesday night, it appeared members of the United Auto Workers had inched closer to ratifying a four-year contract agreement with General Motors. As voting neared a close, at least 18 major locals supported the deal while three had opposed it, according to the Detroit News. GM CEO Dan Akerson will host a conference call with Wall Street analysts to discuss the deal this afternoon. Talks at Ford continue, while discussions with Chrysler “continue to lag,” according to the newspaper.
2. SB5 opponents link law to Jim Crow. We Are Ohio, the organized labor coalition seeking to repeal Senate Bill 5, is airing a radio ad in six urban markets that says Gov. John Kasich has led Ohio back to America’s Jim Crow past. A portion of the ad states, that Kasich and other politicians “have passed two laws to take us back to the days of Jim Crow,” passing laws that make it more difficult for minorities to vote. In addition to SB5, a law that weakens collective-bargaining rights of public employees, the ad targets House Bill 194. Republican leaders tell The Columbus Dispatch the ad is race baiting. Democrats disagree. “It’s harsh wording, but it’s not necessarily inaccurate,” an Ohio State professor tells the newspaper.
3. Rahm rejects key budget-trimming ideas. Chicago Mayor Rahm Emanuel responded to a watchdog report that offered ideas on how to trim the city’s budget deficit by saying that suggestions to raise income, sales and property taxes are “off the table.” He also rejected the possibility of turning Lake Shore Drive into toll road. Emanuel said some of the other of 63 suggestions are “promising” and will receive “serious consideration,” according to our partner station WBEZ. This is the second year in which the inspector general has produced a budget options report.
September 28th, 2011
This winter, President Obama took the unusual step of naming Ron Bloom his assistant for manufacturing. But Bloom stepped down in August to return to his family in Pittsburgh. He hasn’t been replaced. This comes as manufacturers in our region are clamoring for attention. Many want a sign that manufacturing policy is a priority.
They say it’s time for a national manufacturing policy.
Germany has one. So do Japan and China. And, many manufacturers in the US think we need one too: one document that puts all the existing policies together and says manufacturing matters.
“There needs to be some sort of coordination at the top level that says all of these things add up to something bigger. And, right now we don’t have that,” says Bill Rayl, who heads the Jackson Area Manufacturers Association near Ann Arbor, Michigan.
He was at a meeting in Lansing the other week where the topic of a national manufacturing policy came up. Rayl says most of his members are eager for a cohesive strategy that says “that manufacturing is important to national defense and our national economy.”
Jim McGregor agrees. He’s Vice Chairman of McGregor metalworking in Springfield, Ohio.
He says there’s just too much uncertainty in the manufacturing sector: uncertainty about regulations, legislation, and policy.
One reason businesses aren’t spending and hiring more is fear. And, he thinks a cohesive national manufacturing policy could help change that.
“I think there’s a lot of talk and no action,” McGregor says. “And, we’re passed wishing and hoping.
“For a long time, I think the preponderant view in Washington was that the decline in manufacturing was number 1, inevitable, and number 2, just fine,” says Ron Bloom.
If there was anyone in government who could have pushed a manufacturing agenda, it’s him. Until August, he was President Obama’s assistant for manufacturing policy. You might know him as one of the key players in the government’s bailout of GM and Chrysler.
Injecting taxpayer dollars into the auto industry was one of the most aggressive government actions in decades, but what about before companies fail? What about promoting and helping the ones that can succeed?
“I don’t think we have a formal, capital-P policy in the sense of something you can look up—a bound volume, as it were,” Bloom says. “We did not think it was a good use of our time to try and formalize a capital P policy.”
What we do have, Bloom says, is an administration that has pushed a number of initiatives that help manufacturing, if not exclusively.
“The President pushed very hard and hopefully we’re going to get patent reform. Is that a manufacturing policy? Two thirds of all patents are filed by manufacturing companies. Export promotion, infrastructure spending, allowing capital spending to be depreciated, all areas that are not absolutely to manufacturing, but the preponderance of their benefits go to manufacturing,” Bloom says.
Unlike Japan and China, American leaders tend to be reluctant to get too involved in private industry. That’s a big reason why the administration doesn’t want to create a document that looks like Industrial Policy. To many, even the term reminds them of something like China’s Five Year Plan or suggests the government picking winners and losers. The flap over the taxpayer losses in failed solar company Solyndra shows what happens when the government gets too involved in one company.
Ron Bloom says, in general, the government’s role is to help where the market won’t. He says actions like the auto bailout should be the rare exception. Instead, he says government should boost research and development on technologies that might not see a payoff for many years to come.
The closest thing the administration has to a formal policy is its promotion of so-called advanced manufacturing as an engine for innovation and productivity.
“Now, that does mean that the aggregate number of jobs per se in manufacturing is not going to be huge,” Bloom says. “But that’s the price of a productive sector. That’s not a bad thing.”
He says the jobs that do remain will have a bigger effect on the overall economy. After all, he says Walmarts follow auto plants. Not the other way around.
Pete Bigelow · Chicago Fed: Economic Activity Fell in August, but Midwest Manufacturing Gained Ground
September 27th, 2011
Mixed data from the Federal Reserve Bank of Chicago this week:
On Tuesday, the Fed said its monthly economic activity index fell in August. Three of the four categories that comprise the index were negative, and it decreased to -0.43 after finishing positive at +0.02 in July.
Production-related indicators still finished August in positive territory at +0.01, but the rate fell significantly from July’s +0.26.
One day earlier, the Fed’s Midwest Manufacturing index increased 0.6 percent in August to a seasonally adjusted level of 85.0. Revised data showed the index had increased 0.3 percent in July. Regional output in August rose 7.6 percent year over year, and national output increased 4.2 percent.
Pete Bigelow · Midwest Memo: Ford and White House Clash Over Ad, Critics Charge Ohio Has Grown Too Cozy With Industry
September 27th, 2011
Three stories making news across the Midwest today:
1. Ford stops controversial ad campaign. Ford has curtailed an ad campaign that featured an indirect rebuke of the federal bailout of the auto industry. The Detroit News reports the White House had “questions” about the marketing campaign, which featured a “real person” explaining his decision to buy a Ford instead of a car from a company bailed out by the government – a shot at rivals General Motors and Chrysler. “This thing is highly charged,” a source tells the newspaper. Ford “never meant it to be an attack on the policy.”
2. Ways to close Chicago’s budget gap. Chicago’s City Hall watchdog agency has proposed more than $2.8 billion in spending cuts and revenue increases, according to our partner station WBEZ. Ideas include a city income tax, tolls on Lake Shore Drive and privatizing trash collection, among others. The proposal from Inspector General Joe Ferguson includes 63 ideas to help Chicago contend with a projected $635 million deficit in 2012. Among the more controversial cuts is the possibility of laying off more than 700 firefighters and more than 300 police officers to save $190 million.
3. Critics: Ohio too cozy with industry. When the state of Ohio decided to set air-pollution standards on shale-gas wells earlier this year, the Ohio Environmental Protection Agency sought advice from Chesapeake Energy, a drilling company. That’s one example of a too-cozy relationship between Ohio officials and industry, critics charge. Their concerns have mounted as gas-shale has boomed. “These agencies have an open-door policy with industry that they don’t with the public,” Teresa Mills, director of an environmental advocacy group tells The Columbus Dispatch.
September 27th, 2011
Especially in hard times, people look for ideas that will be “magic bullets,” big ideas touted as economic saviors able to restore wealth and jobs and to transform the economy. What are some of the “magic bullets” you’ve seen come and go, or that you’ve heard about? What did they promise and how did they deliver?
September 26th, 2011
Throughout his economic development trip to Asia, Michigan Gov. Rick Snyder has had an unlikely ally.
Detroit Tigers ace Justin Verlander.
The sure-fire Cy Young award winner isn’t actually traveling with the governor – he’s busy helping the Tigers contend for the American League pennant. But Snyder has been chatting about Verlander and his team’s success with his Japanese counterparts before meetings turn to the subject of bringing business investment to Michigan. He’s been giving gifts of Detroit Tigers hats.
“I presented several of them to different people today,” he tells MLive.com. “I gave one to the Japanese commissioner of baseball. And they love the Tigers. They know all about Verlander and how the season’s going.”
Will Snyder and his entourage find similar success on his overseas visit? The Detroit Free Press reports Wayne County officials are pitching a 1,000-acre site that straddles Plymouth and Northville ownships to battery suppliers in hopes of creating a “cluster of high-tech battery makers and suppliers” in western Wayne County.
“There’s a lot of emphasis this trip on battery development and energy,” Robert Ficano, the county’s CEO, told the newspaper.
Snyder sold the virtues of a revamped tax structure to his Japanese hosts on Sunday and Monday, saying it has made Michigan’s business climate friendlier to outside investment, and that a two-year balanced budget has increased the state’s fiscal stability.
“We have been busy reinventing Michigan, breaking some bad habits of the past and embracing new opportunities for our future,” he said in a written release. “We have come to open new doors for trade and business between our state and Japan. We see many great opportunities ahead for all of us to do more business together.”
His trip began Sunday, and includes stops in Japan, China and South Korea. On Monday morning, he said Japanese firms employ more than 32,000 Michiganders and that he’s intent on growing the relationships that create those jobs during the course of his visit.
This is his first official overseas visit as governor, but it’s hardly a new strategy in the Midwest. In June, Changing Gears reporter Dan Bobkoff examined Toledo, Ohio, and the efforts of the city’s leaders to court investments from China. Former Missouri Gov. Bob Holden is now chairman of the U.S. Midwest China Association, an advocacy group that believes in a regional approach to wooing Chinese business.
And under Ficaro, Wayne County, already operates four offices in China: Chonquing, Wohan, Nanjing and Beijing.
September 26th, 2011
Nathan Oostendorp is a successful open-source entrepreneur living in Ann Arbor, Mich. He is the founder of Ingenuitas, a company that uses Open Source software to improve quality control in manufacturing.
He shares his thoughts on why he thinks the future of manufacturing depends on factories working together to improve their industry.
As we soul-search for what manufacturing needs to reinvent itself, there is a light in the darkness. We can look to a sector that has drastically impacted the way we live and communicate.
Mobile devices, online social networks, and the Internet have changed the way we interact — but they also show us a new, more open, way to innovate in manufacturing.
Companies like Google, Apple, and Facebook created immense value for their shareholders and users. But one thing they have in common, is they have all used open innovation, often in the form of Open Source software, to bring products to market quickly and cheaply.
Open Source is software and code that’s freely distributed over the Internet. This lets people use it in their own way.
There would be a lot fewer web companies if it still cost $10,000 for a server and the software to run it, like it did in the early 90’s. Today it costs a few bucks, if you pay anything at all.
Walk in a factory today, there’s a lot of computers being used on the floor. But they’re usually expensive and you can’t upgrade them yourself. With an Open Source system, anyone could make improvements as they adapt them to their needs for safety, quality control and data management. The result would be something that’s low-cost and creates a lot of value.
If you want to see at what the future of manufacturing with open source could look like, go no further than the Maker Faire Detroit at the Henry Ford Museum.
The exhibitors, or “Makers”, figure out ways to manufacture their own designs, in a way that is very similar to Open Source: They publish designs for their prototypes. They use Open Source software and off-the-shelf hardware. They blog, and tweet every dead end and every small victory.
Sure, at the Maker Faire there’s dragon trucks, life-size games of mousetrap, and souped-up micro race cars – but they’ve also produced some pretty impressive machines – Open Source Computer Controlled Routers, Laser Cutters, and 3D Printers were all on display. All things used in manufacturing today.
Some are sold by as kits by profitable businesses, some are works in progress and many are merely extensively documented weekend projects. But these developers of “Open Hardware” and doing just what the Open Source Software hackers did, only with electronics and machines.
It may seem like a big leap from a few Open Source machines to a massive change in how things are made, but if you look automation’s history, big things can happen when entire industries decide to collaborate.
For 30 years Henry Ford’s automobile manufacturers association required automakers to share their patented innovations with each other, and the result was the golden age of Detroit.
Today, with our means of communication and the pace of global innovation, Open Source collaboration on automation technology represents a way for an entire sector to create much more value to their customers.
In the US, the era of manufacturing turning massive amounts of unskilled labor into a production system is over. Technology can move manufacturing towards an industry where the best innovators, not the cheapest workers, will reap the rewards.
This story was informed by the Public Insight Network.