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Three stories making news across the Midwest today:

1. UAW nears Ford deal. Local leaders in the United Auto Workers union have been called to Detroit for a Tuesday meeting, a “strong sign” that a contract has been reached with Ford Motor Co., according to the Associated Press. A UAW spokesperson said Monday that no deal has been finalized, although the union is hoping it will have one to present at tomorrow’s meeting. The four-year deal is expected to be more lucrative than the one UAW workers reached with General Motors last week, and include profit sharing instead of annual wage increases.

2. Emanuel hosts airline leaders. Chicago Mayor Rahm Emanuel will hold a summit today with airline executives. He will discuss what kinds of improvements they’d like to see in Chicago’s workforce and infrastructure to maintain the city’s status as a transportation leader. United Air Lines and Boeing are based in Chicago, and American Airlines uses O’Hare as one of its major hubs. “I do not want to just sit on that lead. I want to build it,” Emanuel said last week. The CEOs of United, American, Boeing and electronic-booking agent Orbitz, as well as government officals, are expected to be in attendance.

3. Chicago native wins Nobel Prize. Bruce A. Beutler, a genetics professor born and educated in Chicago, is one of three winners of the Nobel Prize for Medicine. The prizes were announced Monday. Buetler was born in Chicago and earned his medical degree from the University of Chicago in 1981. He currently works at the Scripps Research Institute in La Jolla, Calif, where officials credit his groundbreaking work in immunology for the prize. “I awoke in the night, looked at my cell phone and saw that I had a message that said, ‘Nobel Prize,’” Beutler told the San Diego Union-Tribune.


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.


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.


Three stories making news across the Midwest today:

1. Ohio eyes energy jobs. Ohio Gov. John Kasich hosted an energy summit Wednesday on the Ohio State University campus that brought together members of the oil and gas industries, utilities officials and environmentalists. The Plain Dealer reports there was widespread enthusiasm over the prospect of Chesapeake Energy Corp. investing $200 billion in Ohio that could bring more than 200,000 jobs. Kasich held some skepticism. “I want to make sure we are steady in this,” he told the newspaper. “I don’t want to get ahead of the curve.”

2. Ford next in UAW talks. While United Auto Workers began to vote today on a four-year deal reached last week with General Motors, the UAW has shifted its focus to negotiations with Ford. The only U.S. automakers that avoided bankruptcy in 2009, Ford workers will likely expect more lucrative terms than the ones reached in the GM deal. Reuters reports there’s some resentment among UAW Ford workers over the $26.5 million compensation package Chief Executive Alan Mulally received, one that UAW president Bob King called “morally wrong.”

3. Wisconsin median income plummets. Adjusted for inflation, median household income in Wisconsin plunged 14.5 percent between 1999 and 2010, according to U.S. Census Bureau Data released today. The Milwaukee Journal Sentinel reports the median household income dropped, when adjusted, from $57,316 to $49,001 last year. “The middle class is taking a beating,” Timothy Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin-Madison, tells the newspaper. “We were manufacturing our pants off. But times are changing.”

 


Contracts covering United Auto Workers members at the Detroit auto companies expire tonight and the pace is stepping up.

Sergio Marchionne, the Fiat chief executive who also oversees Chrysler, flew back to the United States from Germany, skipping a meeting with Chancellor Angela Merkel, according to the Detroit News.

UAW President Bob King says he’s confident a deal can be reached by the deadline, although it’s not unusual for talks to go on longer.

There can’t be strikes at General Motors and Chrysler, due to agreements reached when the companies received federal bailouts. And while the UAW could walk out at Ford, the cordial relationship there makes a strike highly unlikely.

So, what are the big issues at stake in these talks? I talked to WBEZ’s Venture program this week about the negotiations.

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Essentially, there are two big issues of importance to the two sides.

One is the future of newly hired workers, who are called two-tiers within the industry. They earn sharply lower wages than veteran workers, even though they work on the same assembly line. Our Kate Davidson profiled two-tiers last year.

These workers earn about $14 an hour, versus $28 for workers who were hired a few years ago. The UAW wants that base wage to go up. The companies, however, say they need to stay competitive with non-union auto workers in the United States, and beyond, where wages as low or even lower.

The other issue is health care. Before 2007, UAW members paid very little for health care coverage. Their benefits, while not as rich now, are still better than those received by workers at many other companies across the United States. However, these benefits cost the car companies hundreds of millions of dollars a year, and they are determined to save money.

The UAW’s ranks at the auto companies are vastly smaller than they once were. About 120,000 people work on assembly lines at the three companies, versus nearly 1 million at the peak in 1978. And, the role of the auto industry has diminished as part of the regional economy, according to the Federal Reserve.

As we’ve been reporting all month, big changes are taking place in manufacturing, where companies are taking new approaches and need virtually no workers.

But there are still auto plants in Detroit and Chicago, as well as other parts of Michigan, Indiana, and Ohio, where people are watching closely to see what happens with these negotiations.

Are you paying attention to the talks? Predictions on the outcome?


The location of their first meeting, a clandestine airport lobby, remains a secret. But Ford Motor Company CEO Alan Mulally and Toyota chief Akio Toyoda are willing to share everything else – including hybrid technologies.

Ford will partner with Toyota on hybrid technologies, the companies announced Monday. Photo by Slobodan Stojkovic via Flickr.

Months after a chance encounter at a nameless airport, the two automotive leaders announced Monday their companies would collaborate on hybrid technologies for rear-wheel drive pickup trucks and SUVs. Both hope the move expedites the arrival of hybrid models in the marketplace at more affordable prices for consumers.

Ford’s F-series pickups have been the best-selling in the United States for the past 25 years, according to our partner station Michigan Radio. Toyota’s Prius has been the top-selling hybrid in the U.S. since it’s inception. Is it a complementary marriage or awkward entanglement with a competitor?

Derrick Kuzak, Ford’s group vice president of global product development, tells the Detroit News the tentative agreement does not give away proprietary information. “Clearly, Ford and Toyota will remain competitors,” he said. “But at the same time, by working together and sharing our product development expertise, cost and leveraging our scale, we’ll be able to offer our customers even more affordable technology sooner.”

Officials did not say which models would be the first to get hybrid updates under the agreement, and it was unclear Monday how – or if – the collaboration would affect jobs throughout the Midwest.

The surprise collaboration was accelerated by the recent federal changes in fuel economy standards. By 2025, automotive manufacturers must average 54.5 miles per gallon in their vehicles, although the standard may be lower for trucks. Officials said more details on the tentative partnership will be ironed out and a formal pact will emerge in early 2012.


Big news from two auto big auto companies with big ties to our region. Ford, the second-biggest American auto company, and Toyota, Japan’s biggest, said today they’ll be teaming up to develop a new hybrid-electric system for light trucks and sport utility vehicles.

The pair have signed a memorandum of understanding, with a formal agreement coming by next year.

Until now, the two companies have been working independently on hybrid systems for rear-wheel drive vehicles. But now, they’ll pool their resources, hoping that the project will let them bring hybrids to consumers “sooner and more affordably than either company could have accomplished alone,” according to the announcement.

Ford CEO Alan Mulally/Ford

Said Ford CEO Alan Mulally. “This is the kind of collaborative effort that is required to address the big global challenges of energy independence and environmental sustainability.”

Toyota President Akio Toyoda added: “By building a global, long-term relationship with Ford, our desire is to be able to continue to provide people in America automobiles that exceed their expectations.”

Toyoda CEO Akio Toyoda/NY Times

Ford is based in Dearborn, Mich., while Toyota has engineering, design and safety operations in and near Ann Arbor.

The pair have collaborated many times in the past, on hybrids and on other projects. When Toyota was getting back on its feet after World War II, company officials were given access to Ford’s Rouge manufacturing complex in order to get ideas for restarting their assembly lines.

Within months of joining Ford in 2006, Mulally flew to Japan to visit the company’s then-chairman, Fujio Cho. Before that, Mulally used Toyota’s production system when he was at Boeing to streamline the aircraft manufacturer’s assembly lines.

 

 


Three stories making news across the Midwest today:

1. Head tax faces guillotine. Mayor Rahm Emanuel pledged to end the city’s head tax on businesses with 50 or more employees during his campaign. Now Chicago aldermen are negotiating what comes next, according to our partner station WBEZ. Companies with 50 or more employees are taxed $4 per month per each full-timer on the payroll. Although the city generates $20 million in revenue each year, some officials are concerned the tax discourages expansion.

2. Detroit mayor unveils overhaul. The city of Detroit will no longer treat its neighborhoods equally. They will instead be designated as steady, transitional or distressed, and city services will be prioritized in certain areas, according to The Detroit News. Detroit mayor Dave Bing said the move is a “short-term intervention strategy” to save certain neighborhoods. The redeployment strategy begins in two weeks. “We must be smarter about how we align our resources,” Bing told The News.

3. Ford building second India factory. Following in the footsteps of rivals General Motors and Tata Motors, Ford announced today it would build a factory in the western state of Gujarat in India. The $906 million facility will be operational in 2014, according to Bloomberg. The factory is Ford’s second in India, with another plant located in the southern state of Tamil Nadu. Analysts said the move gives Ford access not only to northern India, but perhaps to the European market as well.


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.

Auto talks open at Chrysler, by Jeff Gilbert, WWJ Detroit

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.


Three must-read stories about the Midwestern economy.

1. Michigan’s unemployment rate is the highest in the region. The Detroit News reports new monthly jobless numbers show the number of people filing for unemployment rose in Michigan. The rise was attributed to job losses in government work. Michigan’s unemployment rate is now 10.3 percent, more than one percent higher than the national average of 9.1 percent. Indiana’s rate fell over the last month to 8.2 percent. Wisconsin has the lowest unemployment in the region at 7.3 percent.

2. Borders Group Inc. may have reached a deal to keep more than 40 stores open. The bookstore chain has been working with lenders to modify its bankruptcy filing in a way that allows them to keep the stores open, says the Wall Street Journal. A judge will still have to approve the changes.

3. Chevy’s Camaro is outselling Ford’s Mustang. Bloomberg Media reports the Camaro is consistently outselling the Mustang. This development has left a factory that makes the Mustang in Flat Rock, Michigan with too much space and not enough to produce. Ford used to share the space with Mazda, but that company just pulled out of the factory. Ford says it will now have more flexibility in building more Mustang variations. The Mustang isn’t due for a redesign until 2014.