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June 24th, 2011
Here are three stories making news across the Midwest today:
1. McCormick Place mulls making workers public employees. Should an appeals court uphold a ruling that protects collective-bargaining agreements with private employers, officials for the Chicago convention complex may try to turn its private contractors into public employees. “It’s the only alternative to achieve the same reforms,” Jim Reilly, the executive in charge, told the Chicago Tribune.
2. Obama pushes high-tech innovation. Speaking at a robotics lab at Carnegie Mellon University in Pittsburgh on Friday, President Obama launched a $500 million program designed to spur innovation and create new high-tech products. “If we want a robust, growing economy, we need a robust, growing manufacturing sector,” he said while introducing the Advanced Manufacturing Partnership. The money will be allocated toward projects that include batteries, composites, biotechnology and more.
3. Tough talk for Detroit’s teachers’ unions. Roy Roberts, the emergency financial manger appointed by Michigan Gov. Rick Snyder to run Detroit Public Schools, submitted a budget plan that calls for 10 percent wage cuts to help deal with a $327 million deficit. He said he wants union input. “We need it and want it,” our partner station Michigan Radio reported. “But if they don’t, I’m not putting up with crap.”
Pete Bigelow · Midwest Memo: Mixed economic report, Ohio leaders plot SB5 changes, Michigan airports face cuts
June 23rd, 2011
Three stories making news across the Midwest today:
1. Economic growth remains below average. The Chicago Fed National Activity Index showed slight improvement in May, but remained below its historical average. It increased to -0.36 in May following a -0.56 mark in April. Production and income categories contributed gains to the index, but employment indicators were negative for the second straight month.
SB5 could be divided into separate ballot questions. In order to weaken fierce opposition to a bill that restricts the collective bargaining rights of public employees, Ohio Gov. John Kasich may divide the measure known as SB5 into multiple ballot questions, reports the Columbus Dispatch. Voters could then cast ballots on each provision. State Republicans are talking to the Ohio Ballot Board on options on how to present the measure(s).
Michigan airports face uncertain future. A federal subsidy that funds commercial service at smaller airports across the nation could be cut by Congress. This week, House lawmakers are targeting the Essential Air Service subsidy, which brings $9 million to Michigan airports, according to the Detroit News. Without the money, airlines may lose money on the routes and curtail service.
June 21st, 2011
Fewer tourists and business travelers are visiting Chicago.Only 38.1 million came in 2010, the lowest point for the city in the past five years, according to figures released by the Illinois governor’s office. Travel peaked in 2007, when 46.5 million people visited Chicago.
The drop is due to visitors taking day trips, which tourism officials blame on high gas prices. But overnight visits rose in 2010, so city officials say they are stepping up their efforts to attract people who will spend the night. The statistics showed tourism revenue for the state of Illinois rose in 2010, compared with 2009, even though it still isn’t as good as in 2007.
Detroit hopes for an image boost. Detroit officials are trying to put their best foot forward this week, in a three-day public relations blitz called Transformation Detroit. Mayor Dave Bing tweeted this morning, “I am looking forward to the GOOD stories that will be written as a result” of the program. The program comes as the city’s school system is launching a makeover. Changing Gears is covering Transformation Detroit on the Web and via Twitter (search for #transformd) and you can take part in our poll on whether the city’s image is improving.
Cincinnati Airport To Get A Facelift. Speaking of makeovers, Cincinnati’s airport is set for one. The Cincinnati/Northern Kentucky International Airport board approved a plan to move all carriers there into Terminal C. The project could cost up to $31 million. airport has lost a significant number of flights over the past few years, due to Delta’s decision to downgrade its hub there. The airport plans to officially close its aging Terminal 2, but hasn’t decided whether to tear it down.
June 13th, 2011
The Chicago Mercantile Exchange, following its threats to leave the city over a tax increase, has put its building up for sale, according to the Chicago Sun-Times. The sale does not necessarily signal the CME is ready to leave — it will essentially lease back a large portion of the building from the future buyer. The building is the national landmark Chicago Board of Trade Building. The CME will lease back space for at least 15 years, including the trading floor where agricultural commodities are traded. No word on an asking price yet.
June 7th, 2011
Changing Gears Senior Editor Micki Maynard talked with travel writer Paul Brady about Chicago reinvention the other day. Brady writes for Gadling.com and is going on a Visa-sponsored road trip of the country.
He and Micki talked about how Chicago has diversified its way to economic success. They also discussed Millennium Park, a pet project of former Mayor Richard Daley, and “the Bean.”
Five must-read stories on the Midwest economy
1) GM Tech Center Investment: General Motors said today it is investing $130 million in its technical center in Warren, Mich., and expects to add 25 jobs.
The automaker will build an enterprise data center, and remodel an administrative building on the tech center campus. The move comes after the Warren City Council approved tax credits. GM also is getting a credit from the state of Michigan.
2) Union Law Before WI High Court: The Wisconsin Supreme Court is hearing an appeal today of a decision by a lower court to void a controversial new state law. The law stripped most unionized state employees of their collective bargaining rights. The lower court said Republicans in the state legislature didn’t obey open meeting requirements. Both union supporters and lawmakers want a quick decision so they can plot their next moves.
3) Wilkommen, Bienvenue, Welcome: With summer in full swing, foreign tourists are showing up in Chicago and across the region. Cities are happy to have them visit, but they say the U.S. is losing out to countries that make tourist entry easier. Our partner station WBEZ looked at how foreign tourists could help boost the local economy.
4) Another Big Win For Indianapolis: Indianapolis has had its share of major sports events through the years, including the annual Indy 500 and the NCAA basketball playoffs. Now, Indianapolis will get to hold the Big Ten championship football game through 2015, beating out a bid by Chicago. Indianapolis already was tapped to hold the first championship game this year, on Dec. 3. Cities vie for these games because of hotel, restaurant and concessions revenue, as well as international exposure.
5) Casino Closer in Toledo Towns all over Ohio are going ahead with plans to build casinos. In Toledo, construction is about half finished, and developers say they’re on track to open in the second quarter of 2012. If it meets the deadline, it would be the first of the new crop to launch.
The jokes are already starting: $10 gets you $20 in shares.
Chicago-based Groupon, the Web company that offers coupon-style deals to its subscribers, announced plans to file for an initial public offering today. The company isn’t saying how much stock it plans to sell, what the price will be, or how much it thinks it will raise.
But the deal will be watched for two reasons.
1) Investors have been worried about the health of the stock market. Strong demand for Groupon shares could lift the market’s spirits.
2) Groupon is the highest profile company to go public since General Motors did so last fall.
Here’s CEO Andrew Mason’s letter to shareholders.He says,
“We want the time people spend with Groupon to be memorable. Life is too short to be a boring company.”
The Wall Street Journal has reported a Groupon IPO could raise as much as $1 billion, which would pay for a lot of spa manicures or sportswear purchases or rooftop parties to watch the Chicago Cubs. Those are all things the company has offered, in deals that are generally about half off. Today, for example, Groupon is offering a deal at Old Navy that costs $10 for $20 in merchandise.
By filing its intend to sell stock, Groupon is placing a bet that it will be able to operate more successfully as a public company than as an arm of another. In December, it rejected an offer from Google that was valued at $6 billion, although the Journal says only $3.5 billion would have been in cash up front.
Check out our partner WBEZ in Chicago for more coverage. And tell us: do you buy Groupons? Would you invest in Groupon shares?
Five must-read stories about the Midwest economy
1) Bridging the debate from Detroit to Windsor. The annual Mackinac Policy Conference is under way in Michigan, and the idea of a new bridge between the U.S. and Canada is taking center stage. Michigan’s governor, Rick Snyder, says the bridge is an important economic development tool. But the owners of the Ambassador Bridge are fighting the idea, and even members of Snyder’s own Republican party are skeptical. There is plenty of MPC coverage at our partner Michigan Radio, and you can get updates from attendees on Twitter via #mpc11.
2) A new college neighborhood: One of the largest downtown apartment developments that Cleveland has seen for years will rise at Cleveland State University in 2012. Campus Village is aimed at CSU faculty, staff and graduate students as well as young professionals. It will include nine buildings with 308 units, a parking garage, outdoor pool, stores and restaurants on 6.8 acres. Three buildings are scheduled to open by next August, and the others by October 2012.
3) Kids are actually eating breakfast: There’s some good news from the efforts in Chicago aimed at getting kids to eat the first meal of the day. Chicago schools have been gradually rolling out the federal Breakfast in the Classroom program, which is now mandatory in city run grammar schools. The final schools begin the program today. But already, nearly 300,000 students at some 475 schools are now participating in the program. Early numbers show the percentage of kids eating breakfast has jumped from 26 percent to 62 percent at schools that added the program, Louise Esaian, head of food programs for CPS, told our partner WBEZ.
4) Auto sales winners and losers: Yesterday, we told you that Chrysler had returned to the Big Three automakers for the first time since February 2006. Now, Edmunds.com offers some winners and losers from May auto sales and there is lots of news affecting operations in our region. Along with Chrysler, the big news was Korea’s Hyundai and Kia, which have a development center outside Ypsilanti, Mich. Taken as one, the sister companies shot past Honda, which has big operations in Ohio, to rank as the No. 5 automaker last month. Toyota, meanwhile, came in at No. 4. The carmaker, which has safety and design operations in and near Ann Arbor, has ranked as high as second in the American market, behind G.M.
5) Where is he now? It hardly seems possible, but one year ago tonight, Armando Galarraga pitched a near-perfect game for the Detroit Tigers. Since then, however, his fortunes have fallen. Galarraga gained major points on the graciousness scale for refusing to challenge umpire Jim Joyce’s call that robbed him of a place in history, even though Joyce admitted he was wrong. The Tiger pitcher got a car from G.M. in a ceremony the next day. But he’s now in the minor leagues. You can find him toiling on the Reno Aces, a AAA team in Nevada.
May 31st, 2011
Mixed news on Midwest manufacturing arrived today, courtesy of the Federal Reserve Bank of Chicago.
It reported that the Midwest Economy Index, a weighted average of 128 state and regional indicators, reached its highest level in 16 years. In April, the index climbed to +0.83, its best mo nthsince March 1995 and up from +0.79 in March. April marked the seventh consecutive month the marker finished above its historical trend.
Manufacturing activity led that growth. It added +0.73 to the MEI, the sector’s largest contribution since January of 1984. Iowa, Michigan and Wisconsin all gained manufacturing activity in April, while the sector held steady in Illinois and Indiana. (The Seventh Federal Reserve District does not include Ohio).
But the overall pace of growth slowed from the previous month. The index had climbed to +0.79 in March from +0.39 in February. And, in a separate release, the Fed said its Midwest Manufacturing Index showed a 0.9 decrease in output to a seasonally adjusted level of 83.6 percent.
The automotive sector led the decline, falling 5 percent in April. The loss was widely attributed to supply disruptions caused by earthquake, tsunami and nuclear fallout in Japan. One month earlier, automotive sector output had risen 3.3 percent.
CHICAGO – This week marks the last we’ll be seeing of new broadcasts of the Oprah Winfrey Show. I’m someone who basically has grown up with the show (to be exact, the nationally syndicated show has run for 25 years). It’s spawned the empire of all things Oprah – including her magazine and now her own cable network.
Over the years, Oprah’s singled out many products for her Favorite Things list. Regrettably, the video montages of people hysterically screaming during those episodes are quickly removed from YouTube, so I can’t embed them here. But what people don’t realize is that many business owners are just as excited about trying to get their products on the show.
Whether they’ve tried to get on the list or not, it’s an incredible opportunity (hat tip to my our reigning Changing Gears punster Dan Bobkoff, who coined the phrase Oprah-tunity) for companies as varied as Zingerman’s in Ann Arbor to Nonnie’s Southern Food in Spring Valley, Ohio.
To find out what happened to those businesses years after Oprah’s spotlight has left, I started out in the west suburbs of Chicago, in a town called Geneva.
Twenty five pounds of chocolate chips smell heavenly. And Moveable Feast owner Matt Lennert told me that when you get a couple of hundreds of pounds of his fudgey brownies baking, the smell is “intoxicating”.
I’m sure the neighborhood must love those smells from Matt and Kim Lennert’s shop in Geneva. That’s where the couple runs their café and catering business, Moveable Feast.
A while back, the business transformed from storefront café to a national mail order food company – in the span of about a month.
“We were catering for Oprah and she tried these brownies that we make and she fell in love with them,” Lennert told me. It was a while later – maybe a year and a half – that they got a call from a producer who said they wanted to put the brownies on Oprah’s Favorite Things segment on the show.
I asked him whether he was excited, or terrified.
Matt said both.
“We were of course really excited. But we were concerned – we wanted to make sure could sort of insulate our existing customers,” he said, adding they knew the horror stories from other business who had been featured and they weren’t ready for it.
At the time, the Lennerts had 10 workers. They were making brownies in small batches, stirring by hand about 20 pounds at a time. They knew they would have to be ready to make hundreds – it actually turned out to be thousands of pounds – of fudgey brownies.
They weren’t even selling their brownies in a package – but on a plate in their store.
“So we had to actually come up with a whole retail package so we could offer the whole shipping and fulfillment side,” he said. They did it all in about six weeks.
At the peak in 2006 Moveable Feast had 50 employees, including at call centers and doing shipping. Business has calmed down some since then and a smaller staff is back to baking brownies in the café kitchen.
But Matt Lennert says mail order customers are still adding about 10 percent to the company’s sales.
Going from a neighborhood café to a nation-wide mail-order business is risky. It takes planning and according to economist Craig Garthwaite – a savvy business strategy.
That’s what he teaches at Northwestern University’s Kellogg School of Management. I met up with him to talk business strategy at the Pastoral Artisan Cheese, Bread and Wine in Lakeview.
Garthwaite is a big fan of their cheese. So is Oprah – it’s made O magazine’s Favorite Things list two years running.
“The benefit to being on Oprah is that it’s for a small business in particular is that it is an advertising buy that they could never do on their own,” he said. But it’s not just an opportunity – it can be a critical juncture of success or failure.
“I think it’s hard to understand the increase in demand that we’re talking about,” he said. “Garretts Popcorn in Chicago was featured in 2002, and they had a 100,000 hits on their web site the day they were featured on the show, and their December sales increased 100 percent from the year before.”
That type of increase in demand is hard for any business to adjust to – even large companies, Garthwaite said.
“Even the largest companies like Yum Brands – [they] own KFC, Pizza Hut, Taco Bell, to be candid, they underestimated the amount of demand that they would have,” he said.
So KFC ended their free chicken promotion early. And people were so upset they’re suing.
“Make sure you have the ability to have a large number of hits on your website,” he said simply. “Make sure you have more than two or three phone numbers um and make sure you have the inventory to satisfy people, because you don’t want the people coming to your store and being perpetually unable to get the product what they want.”
Pastoral Artisan sent samples to Oprah to get her attention. They were rewarded in 2009 – and again in 2010 – when they made the Favorite Things spread in O magazine.
“People listen to what others say about your business much more than what you say,” Pastoral co-owner Greg O’Neill told me. O’Neill knew they had to be ready for the onslaught – even notifying their cheese supplier – many small businesses themselves – to be ready to send more.
Even then, Pastoral was inundated. O’Neill’s partner ended up having to drive to Denmark, Wisconsin in the middle of a snowstorm in December to get more of the gift boxes they ship their baskets in.
O’Neill told me they would do it all again in a heartbeat.
“If she’s listening – do you think she’s listening? The Oprah magazine is not going away,” O’Neill told me. “We want a three-peat.”
Have you been either a business owner or a consumer involved with Oprah’s Favorite Things? Share your story in the comments section below.
In the meantime, here’s a little slideshow of Moveable Feast and Pastoral: