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Pete Bigelow · Midwest Memo: Michigan Governor Off to Asia on Trade Mission, Wisconsin may Ease Mining Laws
September 23rd, 2011
Three stories making news across the Midwest today:
1. Michigan governor’s trade mission. Gov. Rick Snyder and an entourage of administration and business officials head to Asia this weekend as part of his first trade mission while in office. Snyder will spend two days in Tokyo, one day in Beijing, one day in China and one in Seoul, according to our partner station Michigan Radio. He will emphasize the state’s business tax structure and workforce in his attempts to entice overseas leaders to invest in Michigan, though downplays any expectation of immediate results. “I don’t have high expectations there,” he said. “This is more about starting the relationships and then looking six months, a year out.”
2. Manufacturing’s one key trait. In a short essay for Bloomberg Business Week, General Motors CEO Daniel Akerson writes the key to saving the American manufacturing industry is adaptability. In the wake of bankruptcy, he points toward an agreement the United Auto Workers made to lower wages at a plant in Lake Orion, Mich., as one that hailed the arrival of a more flexible cost structure. “If you don’t prize adaptability, whether it’s industrial relations or it’s in how you view, perceive, and react to your competition, you’re going to be a dinosaur,” he said.
3. Wisconsin could ease mining laws. A special legislative committee in Wisconsin will examine proposals to minimize state laws that regulate the mining industry, according to the Milwaukee Journal Sentinel. “We need to focus, one, on the environment and, two, on job creation,” Republican State Sen. Neal Kedzie told the newspaper. Regulation became an issue recently when Gogebic Taconite announced it would delay plans for an iron-ore mine near Hurley until state laws eased. Gogebic said the mine would employ 700 workers.
Pete Bigelow · Midwest Memo: UAW Talks Continue, Ohio Eyes Energy Jobs, Wisconsin Median Income Plummets
September 22nd, 2011
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.”
September 20th, 2011
UAW President Bob King has followed through on his vow to win a raise for entry level auto workers. Details of the new contract between the union and General Motors, released today, show some of them will be earning nearly $20 an hour by the end of the contract.
The Cleveland Plain Dealer has a story that includes both the summary sheet of the contract, and the actual contract language.
Workers begin voting on the new four-year contract this weekend. The union will now negotiate deals with Ford and Chrysler.
Changing Gears has reported on the situation facing entry level auto workers, known as “two-tiers.” These workers, hired after 2007, earn sharply lower wages and less generous benefits than veteran workers. At GM, about 4% of workers fall under the entry level category.
They’re in line to get raises of about $3 an hour through 2015. That would put the top wage for these workers to $19.28 per hour.
There also are bonuses for all GM workers that are tied to the company’s profitability. Said the Plain Dealer,
“,,, the biggest benefit could be a change to GM’s profit-sharing formula with workers. Under the new deal, employees would get $1 in bonuses for each $1 million in GM North American profits — starting at $1.25 billion in profits. Workers would not get bonuses if GM loses money or earns less than $1.25 billion in North America.
UAW President Bob King estimated that workers could get $20,000 over the next four years if GM remains as profitable as it has been this year.
“There’s nowhere else in America in manufacturing that’s creating good, middle-class jobs like the auto industry,” King said”
You can find more on the new contract at the UAW’s web site.
September 14th, 2011
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.
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.
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?
Pete Bigelow · Midwest Memo: China Seeks Chevy Volt Secrets, Ohio Could Retreat from Green Energy Standards
September 9th, 2011
Three stories making news across the Midwest today:
1. China jolts Chevy Volt. China is increasingly looking to leverage access for Western Markets in exchange for concessions on advanced technologies. The latest example, reports The New York Times, is a press for General Motors to share core technology from the Chevrolet Volt plug-in hybrid. The Chinese government will not let the Volt qualify for subsidies worth up to $19,300 per car unless G.M. agrees to share engineering, a possible violation of World Trade Organization rules, according to some international trade experts.
2. Ohio’s green power retreat? Three years after legislators voted nearly unanimously to require Ohio power companies to meet new green energy standards, some Republicans tell The Columbus Dispatch it’s time to repeal the rules. State Sen. Kris Jordan said in a release that the standards, which require at least 12.5 percent of energy generation come from renewable sources by 2025, will drive up energy costs for Ohio businesses and families. Environmental groups have criticized the proposed repeal.
3. Michigan begins entrepreneurial law program. The University of Michigan Law School launches a new program this fall that will train student lawyers to better serve start-up and existing entrepreneurial businesses. The program, which also establishes a clinic to offer free legal advice to Michigan’s student entrepreneurs, will contain opportunities for students across the university.
Pete Bigelow · Midwest Memo: Illinois Casino Bill Jeopardized, Ohio Scales Down Prison Plan, GM Sales Rise
September 1st, 2011
Three stories making news across the Midwest today:
1. Illinois casino bill teeters. As Chicago alderman and Mayor Rahm Emanuel continued lobbying for a gambling expansion bill, Illinois Gov. Pat Quinn has intensified his criticism of it, according to our partner station WBEZ. The governor said he has reservations about slot machines at horse tracks around the state. Lawmakers have not yet sent a gambling bill, which paves the way for a Chicago casino, to the governor yet for fear he would veto it.
2. Prison plans scaled down. Ohio will sell the Lake Erie Correctional Institution to a private corporation for $72.7 million, but officials have backpedaled from initial plans to sell four other facilities. The Columbus Dispatch reported the development Thursday. Ohio administrators released a statement that said “it was not in Ohio taxpayers’ best interest” to pursue further sales. As Ohio readies to make one sale, The St. Petersburg Times carries a cautionary tale today about the shift toward private prisons.
3. General Motors sales rise. U.S. sales of General Motors autos increased 18 percent in August, the Detroit Free Press reported Thursday. GMC led the gain with sales climbing 40.3 percent year-over-year. The Chevrolet Cruze sold more than 20,000 cars for the fifth straight month, and was GM’s best-selling car for the third consecutive month. GM has gained market share in 7 of the past 8 months, the company’s vice president of U.S. sales operations told the Free Press.
July 6th, 2011
Three former General Motors plants located in Michigan and Ohio have been sold in separate transactions to new owners who pledged to revitalize the vacant property and bring new jobs to the Midwest.
The RACER Trust, which was created by a U.S. Bankruptcy Court in March to oversee revitalization of 89 former GM sites in 14 states, announced the transactions Wednesday. Financial terms of the sales were not released.
The plants are located in Wyoming, Mich., Parma, Ohio and Moraine, Ohio, outside Dayton. Developer Lormax Stern purchased an 88-acre site in Wyoming that formerly housed the Grand Rapids Stamping Plant. The existing 2.6-million square-foot facility will be torn down and marketed for redevelopment.
In Parma, Ohio, a former transmission plant was sold to Ohio-based development firm 54 Chevy LLC, which plans to redevelop the 60-acre facility to attract green manufacturing jobs. In Moraine, a 400-acre site was sold to Industrial Realty Group, a Downey, Calif., development firm that plans to divide the 4-million square-foot facility among multiple tenants. They hope the facility could create as many as 2,000 jobs.
The Revitalizing Auto Communities Environmental Response trust was created in March to oversee the redevelopment of 89 industrial sites and allocated $769 million in funding in the wake of GM’s 2009 bankruptcy.
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.
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?