- John Polk said “I knew Charles when he was EVP of The Atlanta Chamber and I worked for ...” on Memories of Oklahoma City circa 1993
- John Polk said “Back in the mid-80's and early 90's, Cleveland was actually recognized as one of the ...” on Economic development in NEO: A view from the street-level
- John Polk said “Is there any way to substantiate Dimora's claim re: GCP and the PD, other than ...” on Cleveland’s new development dynamic?
- George Nemeth said “Like all glimmers of newness in CLE+ I expect this one to be crushed too” on Cleveland’s new development dynamic?
- Cleveland’s new development dynamic? | Brewed Fresh Daily said “[...] by Ohio voters, as gambling interests convert the Ohio constitution into a zoning ordinance. ...” on Ohio’s casino deal gets a bit more messy
- About BDP Comments
August 11th, 2011
Three must-read stories about the Midwest economy.
Obama in Western Michigan: President Obama visits Holland, Mich., today to tour a Johnson Controls plant that produces lithium-ion batteries, and discuss advanced auto industry technology. It’s his seventh visit to Michigan since taking office, and second talk about fuel economy this week.
But some critics say he should be keeping his focus on jobs. Our Changing Gears partner Michigan Radio has a roundup of the discussion of the President’s trip to western Michigan, including a commentary from the Grand Rapids Press. It asks whether incentives to fund future techology are really worth the money, given what’s happening with the economy.
Lake Michigan Only Gets A Passing Grade: Illinois Republican U.S. Senator Mark Kirk gives Lake Michigan a “C” when it comes to cleanliness and other environmental concerns, reports our partner station WBEZ in Chicago.
Kirk, who co-chairs the Senate Great Lakes Task Force, said water levels are decreasing, so he wants to pass a bill that would maintain and dredge harbors. (Changing Gears’ Kate Davidson reported on Great Lakes dredging earlier this summer.) He also called for increased voltage at electric barriers to keep out Asian carp, and a ban on sewage dumping in the Great Lakes.
More Jeep Jobs in Toledo? The Toledo Blade is reporting that Chrysler will invest up to $365 million and add another shift of 1,100 workers at its Jeep plant there. The deal depends on an incentive package from Ohio, which state officials have yet to approve.
Bailouts and bankruptcies behind them, Detroit’s automakers are now facing talks on new national contracts. The United Auto Workers kicked off the ceremonial opening of negotiations at Chrysler today, and will do the same at Ford and General Motors later this week.
UAW President Bob King says he doesn’t want to put any of the companies at a disadvantage.
“We want them to be competing on the basis of product, design and quality,” he said, according to Bloomberg.
Contracts expire in September. During the last major negotiations, in 2007, the auto industry was on the verge of a devastating decline in sales that would lead to federally sponsored restructurings at Chrysler and G.M., part of an industry bailout that cost $82 billion.
This time, the Detroit automakers are each profitable again. G.M., Ford and Chrysler combined to earn more than $6 billion in the first quarter. Last year, GM earned $6.17 billion. Ford had net income of $6.56 billion in 2010, the most in 11 years. (Chrysler, now part of Fiat, did not report 2010 results.)
But competitive pressures remain.
The union wants workers, who granted concessions since the last contract that are worth up to $30,000 apiece, to share in some of those profits, in the form of pay increases for entry level workers, and more profit sharing money for all workers. They also want the car makers to re-open some of the factories closed when the auto industry was at its deepest point.
The companies note that entry level workers — called two-tiers — earn about the same wages as their counterparts at non-union, foreign-owned factories in the Midwest and South. They want UAW members to pay a greater part of their health care expense, which still costs them hundreds of millions of dollars a year, even though responsibility for administering health care programs has been shifted to outside trusts.
These negotiations have a different tone than talks in the past. G.M. and Chrysler workers gave up the right to strike as part of the bailout agreements, and also agreed to binding arbitration. There are no such restrictions at Ford, leading some experts to predict the UAW may focus its efforts there, figuring the ability to strike gives the union more influence.
The auto industry’s presence has shrunk dramatically in recent decades. There are only 112,000 UAW represented hourly workers left at the three Detroit companies, down from a peak of about 1 million hourly workers in 1978. But because the companies have closed so many out lying plants, its factories now are concentrated mainly in the Midwest.
I talked to Robin Young of Here and Now about the contract negotiations.
We’d like to hear your thoughts on unions and what they mean to you. Please take our survey and add any comments below.
Pete Bigelow · Midwest Memo: Wisconsin reports job growth, U.S. sells Chrysler, and high-speed rail’s future
July 22nd, 2011
Three stories making news across the Midwest today:
1. Wisconsin reports job growth. Citing a resurgent tourism industry, Wisconsin officials reported a gain of 12,900 private-sector jobs from May to June. It’s the largest one-month gain in the Badger state in nearly eight years, according to the Milwaukee Journal Sentinel. But the state’s unemployment rate nonetheless ticked upward from 7.4 percent in May to 7.6 percent in June. Gov. Scott Walker noted that Wisconsin’s growth accounted for nearly half of the nation’s job creation.
2. U.S. sells stake in Chrysler. Italian automaker Fiat purchased the U.S. government’s remaining stake in Chrysler on Thursday, a move that ends federal involvement with the automaker. Fiat paid $560 million to the Treasury Department in exchange for its 98,000 shares, according to our partner Michigan Radio. The government had helped rescue the automaker from bankruptcy, with Chrysler receiving $12.5 billion. Of that amount $11.2 has been repaid.
3. Is high-speed rail dead? That’s the opinion of The Urbanophile’s Aaron M. Renn, who argues that a poorly executed federal plan combined with Republican resistance at state levels has crippled the future of high-speed rail in the U.S. More than $8 billion in funds were provided in President Obama’s stimulus package, but major initiatives still aren’t off the ground. “It’s time to take a major gut check on high speed rail in America and re-think the direction,” Renn writes.
June 10th, 2011
Three must read stories from around the Midwest.
1) Old grid robs power in Detroit. Detroit’s aging municipal power system failed Thursday from overuse during the recent heat wave. City Hall, Wayne State University, several schools and public buildings all lost power. Crews are working on the problem and the power is expected to be back on sometime today. Residents’ homes and businesses that rely on Detroit Edison were not affected.The Detroit Free Press has details and a slide show. Update: on Twitter around lunch time, Detroit Mayor Dave Bing said he anticipated power would be restored this evening.
2) Car company jobs numbers are inflated. PolitiFact Ohio and the Cleveland Plain Dealer did an analysis of the recent claim the the US auto industry added around 115,000 jobs since General Motors and Chrysler emerged from bankruptcy in 2009. They found that these claims overstated the gains, and the real number might be closer to 84,000.
3) GM investing $49 million in Bedford, Indiana plant. GM said it will invest in its Bedford, Ind., plant to manufacturing an 8-speed transmission. The new transmission should improve its cars fuel economy. The car giant says the investment will allow it to retain or add 91 jobs.
President Obama spoke to employees of a Chrysler assembly plant in Toledo, Ohio on Friday afternoon. In his speech, he declared the American auto industry “is back.”
Bridget Bodnar covered the event for our partner station Michigan Radio, and was kind enough to bring Changing Gears back audio of the president’s speech. You can listen to it below.
On Friday, President Obama shook hands with workers at a Chrysler auto plant in Toledo, Ohio, and told them they were “showing the world that American manufacturing and American industry is back.” Beyond the assembly plant, which makes the Jeep Wrangler, others weren’t so sure.
As the president spoke, the latest jobs numbers showed the nation’s unemployment rate crept upward to 9.1 percent while the economy added the fewest number of jobs in eight months. And the auto industry?
“People thought auto sales this year could be much stronger than they’re turning out to be,” Changing Gears senior editor Micki Maynard said during an appearance on “Here and Now” on Friday afternoon.
Chrysler repaid and restructured debt associated with the TARP bailout – a development Obama had come to Toledo to tout. But minimal job creation, a weak housing market and middling consumer confidence tempered the auto industry’s expectations.
Those factors, combined with high energy prices, are doing more than hampering the auto industry. They have broader implications. It “adds up to another possible mini-recession,” Maynard said.
Here’s the full segment from “Here and Now,” public radio’s daily news magazine.
Five must-read stories about the Midwest economy
1) Obama Celebrates With Chrysler: President Obama is at a Jeep plant in Toledo, Ohio, today. He’s visiting on the heels of Fiat’s purchase of the government’s remaining stake in Chrysler.The move, once finalized, will give the Italian automaker a majority ownership in the Auburn Hills, Mich., company. Fiat has had management control of Chrysler since the No. 3 U.S. automaker emerged from a government-sponsored bankruptcy in 2009. Apparently, the government drove a hard bargain for the remaining 6 percent, according to David Shepardson’s story in the Detroit News. Fiat paid about $100 million more than the $400 million that Fiat originally offered.
2) Who’ll Get Rich on Groupon? As we told you yesterday, Chicago-based Groupon announced plans to go public. Now, there’s speculation about who’ll get even richer from the deal. Crain’s Chicago Business says co-founders Andrew Mason, Eric Lefkovsky and Brad Keywell own stakes in the company that will be worth hundreds of millions of dollars, once Groupon stock goes on sale to the public.
3) A New Man in the Art World: The Grand Rapids Art Museum has a new leader and he’s coming north from Austin, Texas.The museum named Dana Fris-Hansen as its new director and chief executive. He’ll start in July. In recent years, the museum has opened a new building and staged attention getting exhibits like the wedding dress of Princess Diana, which drew nearly 100,000 people. The museum is part of a burgeoning art scene in Grand Rapids, which will see the third annual Art Prize competition this fall.
4) Borders Stores Going, Going… The sale of the stores that Ann Arbor-based Borders Group is shedding could be complete in the next two to four weeks, attorneys say. The company, which is in bankruptcy protection, has been given more time to prepare a recovery plan. The new owner of the Detroit Pistons may bid for 200 of Borders’ 405 remaining stores, according to the Wall Street Journal.
Information Technology a Future Job Source? Ideas are flowing at the annual Mackinac Policy Conference and one of them centers on whether information and communication technology could be a source of jobs for Michigan. The University Research Corridor, in a report, says the state’s universities are acting as incubators for such jobs.
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.
For nearly a decade, the auto industry’s Big Three included at least one company that wasn’t from Detroit. Now, Chrysler is back among the three best-selling automakers.
It ranked behind General Motors and Ford in May auto sales. It’s the first time the Detroit Three have been the Big Three since February 2006, according to Edmunds.com, a Web site that offers car-buying advice. During its worst days, such as its 2009 bankruptcy filing, Chrysler fell as low as fifth in the industry, outsold by Toyota and Honda as well as its Detroit neighbors.
The gain isn’t only because Chrysler’s sales have rebounded, although the company has received an image boost in recent months.
The return of the Big Three is in large part due to weakness by Japanese auto companies. They had a terrible month, in part because of disruptions caused by the Japanese earthquake and tsunami.
Sales at Toyota dropped 33 percent from a year ago, while Honda was down 22.5 percent and Nissan was down 9 percent. Hyundai and Kia, combined, came within a thousand vehicles of outselling Toyota. Honda failed to put a vehicle on the top-selling list for the first time that anyone can remember.
Last month, eight of the top 10 selling vehicles in the United States were from Detroit automakers, reported Nick Bunkley in The New York Times. That compares with four of 10 a year ago. The country’s best selling car in May, long the Toyota Camry, was the Chevrolet Malibu.
Says Justin Hyde at Jalopnik.com,
“And for one month, General Motors, Ford and Chrysler can reclaim the mantle of the “Big Three,” which had until now been stored in a government warehouse next to the Ark of the Covenant. It’s expected to return to its resting place within a few months.”
After a bruising couple of years, companies around the Midwest are planning to expand, rehiring workers and in some casing, adding new ones. But some also have used the recovery as an opportunity to hint that they might move elsewhere. In response, cities, states and local communities have come up with significant financial incentives aimed at convincing these companies to stay put.
In Illinois, Motorola Mobility Holdings Inc. is getting $100 million in financial incentives to keep its corporate headquarters in Libertyville. Company officials said they had considered moving the headquarters to more “tech-friendly” locales like the Bay Area or Austin, Texas. Most of that $100 million in incentives comes from tax credits spread out over the next decade. In return, Motorola Mobility is keeping its 3,000 jobs at the Illinois based headquarters and will invest about $600 million over the next tree years on research and development.
Caterpillar Inc. made similar headlines last month when its CEO, Douglas Oberhelman, wrote an open letter to Illinois Governor Pat Quinn. The letter outlined his concerns about the business environment in Illinois and mentioned that he was considered moving the Peoria, IL based company elsewhere. Not long after that letter was published, Oberhelman said he received e-mails, letters, packages, and even a hand delivered request from more than 30 states inviting Caterpillar to move. Shortly after that, Oberhelman met with Quinn, and later announced “Caterpillar is here to stay.”
Still, Oberhelman continues to lobby Quinn to make Illinois more “business-friendly.” Oberhelman argues Illinois needs to offer more incentives to businesses to keep up with ultra business friendly states like Texas. Incidentally, it was Texas who sent the lone hand delivered offer to lure Caterpillar away.
Two years ago, NCR Corp. announced it was moving its headquarters from Dayton, OH to a suburb of Atlanta, GA. Georgia had enticed the world’s top ATM provider through $60 million in incentives. The move was a huge blow to hard-hit Dayton, made only worse by competitor Diebold’s decision to look for a home elsewhere. The ATM and bank security system manufacturer ultimately announced this past April that it would be staying in Ohio, accepting $56 million in tax breaks, grants, and loans from the state. The company said it will use that money to build a new $100 million world headquarters in the Akron area.
It’s costing Ohio a bit more to keep American Greetings Corp. The greeting card maker will be getting $93.5 million in incentives over the next 15 years. Ohio Governor John Kasich even signed the tax reform legislation making the deal possible at the company’s Cleveland area headquarters. It’s still unclear if the company will be moving its headquarters within Ohio.
It took the help of outside financiers to keep Goodyear Tire & Rubber in the Akron area. Akron, Summit County, and Ohio had been saving up for years to pitch in for the tire makers $160 million new headquarters to help keep it in state. Most of the money for that project ($98 million, to be exact) came from a New York based private-equity firm. That was just a few weeks ago, and construction is already under way. Local officials say this means Goodyear stays, and more jobs for construction workers.
But these sorts of corporate moves aren’t just happening between states. Within Ohio, breakfast restaurant chain Bob Evans Farms Inc. recently decided to move its headquarters from Columbus to New Albany. That move upset Columbus officials, who had offered the company incentives to stay. It also caused Ohio Valley Bank to pull out of Columbus, too. In the Miami Valley alone, Ohio spent more than $1.3 million in state funded tax credits to keep existing jobs.
Around the Midwest, the economic recovery is finally starting to show. Automakers like General Motors, Ford, and Chrysler are announcing that they plan to hire and rehire thousands of autoworkers, bringing employment among the U.S. automakers backnear pre-recession levels. GM also plans to invest $2 billion in 17 of its plants nationwide.
Illinois Gov. Pat Quinn and Ohio’s John Kasich (both Republican) say financial incentives are worth it if it means keeping thousands of jobs in state. They say it’s a critical part of keeping the Midwest on track for a complete economic recovery. But critics of such incentive programs say these aren’t new jobs. They say states like Ohio and Illinois are too broke to afford paying this much just to keep the same jobs and should instead by focusing on creating new jobs.
What do you think of incentives to keep companies in states and communities? Is it money well spent, or should communities act differently in a time of tight budgets?