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April 4th, 2012
Still no deal Partner station Michigan Radio reports the Detroit City Council decided not to vote last night on a proposed consent agreement with the state to resolve the city’s financial crisis. A judge has blocked any agreement from going forward. Michigan governor Rick Snyder is appealing that decision. If no deal is reached by the end of the day tomorrow, Detroit will likely face a takeover by an emergency manager.
Indiana in court The state of Indiana is facing off in court with IBM over who was at fault when a $1.4 billion deal to handle the state’s welfare caseload went bad. IBM says the state broke off the deal because of budget problems. A lawyer for the state says IBM failed to meet its obligations, according to the Associated Press. The Department of Labor lists Indiana as the worst state in the nation when it comes to improper payments for welfare assistance. The DoL says Indiana has a 44% improper payment rate. The state disputes that number.
Groupon’s bad week It’s been a rough couple of days for Chicago-based Groupon. The coupon website was forced to revise its previous financial statements, and admit it has “material weakness” in its accounting practices. The SEC is reportedly looking into the problems. And now, the Chicago Tribune says a shareholder has filed a class action lawsuit.
A big fat check Whirlpool will write the state of Indiana an $800,000 check, after deciding to move jobs out of the state.
2.6 billion cubic feet That’s how much natural gas Chesapeake Energy pumped from Ohio shale formations last year, according to BusinessWeek.
Dustin Dwyer · Midwest Memo: Workers Need More Skills, Detroit Needs More Money And Wisconsin Needs Faster Internet
February 27th, 2012
Collared The Presidential candidates are all out talking about creating more manufacturing jobs. The National Journal looks at what that’ll take. The magazine says we’ll need more blue-collar workers with white-collar training.
Detroit’s ticking clock Detroit leaders have been furiously trying to cut costs to avoid being taken over by an emergency manager. But the Detroit News says the city is still dangerously low on cash, and could run out of money by April.
Pension predicament The new tax on worker pensions in MIchigan is either confusing people, or angering them, according to the Detroit News. The pension tax was created last year to offset a reduction in Michigan’s business tax. The change took effect in January.
Broadband dreams Wisconsin ranks 43rd in the nation for access to high-speed broadband internet.The Milwaukee Journal Sentinel takes a look at how to change that, and finds Chattanooga, Tenn. may be the model to follow.
Guardian angels Crain’s Chicago Business says angel investors are focused in on Chicago tech companies, hoping to find the next Groupon.
This is a new one In an interview with the Associated Press, Ford chairman Bill Ford Jr. says he’s worried about selling too many vehicles.
The non-profit group Built In Chicago analyzed data from 2011 and found that it was a big, big year for web-based startups in the city.
128 new companies launched last year, and the total amount of new capital raised by web-based companies in Chicago was up 431 percent. A hefty chunk of that increase came from Groupon. But even excluding the coupon giant, funding of Chicago’s web startups was up 75.8 percent.
UPDATE: Maria Katris, Executive Director of Built In Chicago, estimates in an email to us that the the 128 businesses launched last year created 700-1,000 jobs. And the digital sector as a whole is responsible for 25,000 – 30,000+ jobs for the Chicago area. Built In Chicago also looks at the top 50 digital companies in the Windy City and finds that they’ve created more than 11,500 jobs.
And there are signs that Chicagoans are preparing for some long-term growth in this area. We told you last month about 1871, a new 50,000 square foot startup tech center in Chicago. And companies from other parts of the country are starting to take notice of Chicago’s tech talent, particularly in the sales and marketing world.
Katris says she expects further growth in the coming years. She tells us:
In 2011, a new startup launched every third day. We predict you will see a new startup launching every other day in 2012, and every day in 2013.
Venture Capitalist, entrepreneur and blogger Brad Feld highlighted Chicago’s startup activity in a blog post yesterday.
Feld said what’s happening in Chicago “is a great example of what happens when entrepreneurs take a long term view to building their startup community.”
Dustin Dwyer · Midwest Memo: Groupon’s Growth, Toledo’s (Unfinished) Transformation And The Big Easy Takes One Away
February 20th, 2012
Groupon grows Chicago-based Groupon has acquired a new York company that specializes in gathering data about local consumers. The Chicago Tribune says it could be the “deal of the year.”
Long way to go in Toledo The Toledo area has seen 7,200 new jobs in manufacturing since June of 2009. That’s the second best improvement in the country (Lansing, Mich. is number one). But the Toledo Blade says there are still 36 percent fewer manufacturing jobs than there were in 1998.
Background check The Blade also has a Special Report out this morning. The newspaper hired investigators in China to look into two Chinese investors who’ve invested millions in Toledo. The paper finds that the two investors amassed their fortunes thanks to connections to the ruling Communist Party in China, and after years of service as government bureaucrats. (Our own Dan Bobkoff reported on Toledo’s China connection last summer).
Losing to the Big Easy Indianapolis was in the running for a GE corporate office with 300 high-paying jobs. But the company picked New Orleans instead.
Next in line The New York Times profiles the heir apparent to the CEO office at Ford.
Unpaid fees Detroit decides it’s time to collect.
Media moratorium The Chicago News Cooperative, a non-profit news agency that had been providing content to The New York Times, will suspend its operations on February 26th.
Dustin Dwyer · Midwest Memo: A Buyer For The Board Of Trade, A Budget That Takes A Bite Out Of Crime And A Cleveland Fund Carries On
February 9th, 2012
An expensive building The Wall Street Journal reports that the historic Chicago Board of Trade building has found a buyer. The price tag? Between $150 and $180 million, according to the paper (subscription required).
Growing pains for Groupon Chicago-based Groupon reported quarterly earnings for the first time since becoming a public company, and Wall Street was not impressed.
The price of news Crain’s Chicago says the Chicago Tribune is considering a “creative way” to charge for its content online.
A Fund without its founder The Cleveland International Fund has helped get a number of revitalization projects done in the city in recent years. Now, the Cleveland Plain Dealer reports the group is trying to carry on despite the indictment of its founder and leader.
Taking a bite out of crime Michigan governor Rick Snyder unveils his budget proposals today. Partner station Michigan Radio has a look at what’s expected to be in the budget, including an extra $45 million to fight crime. The Wall Street Journal says the new spending is meant to take on the state’s “deadly cities.”
Struggling schools A new report says Michigan schools face “alarming and persistent” problems, and it’s falling behind other states in education, according to MLive.
A dining destination reborn The Detroit Free Press has a great writeup of the history and rebirth of the city’s London Chop House, which was once considered among the top restaurants in the country.
Say it ain’t so Organizers have canceled a sled dog race in northern Michigan because of a lack of snow.
Pete Bigelow · Midwest Memo: Groupon Gets Mixed Reviews, GM Stymies Saab, Harley-Davidson Begins Wisconsin Layoffs
December 19th, 2011
Three stories making news across the Midwest today:
1. Groupon gets mixed reviews. Three investment banks that sold Groupon’s initial public offering in November have mixed views of the company’s stock. Credit Suisse analysts rated the stock “neutral” in research reports released today. Morgan Stanley advised its clients to wait to buy shares of the Chicago-based company until the stock price fell, according to our partner station, WBEZ. Only Goldman Sachs rated the stock a “buy.” Banks that lead an IPO traditionally deliver favorable ratings. Shares were sold to the public at $20 each in the IPO, and traded at $22.20 this morning.
2. Saab files for bankruptcy. Concerned that its technology could land in the hands of Chinese competitors, General Motors blocked a sale of Saab, which subsequently filed for bankruptcy. Experts tell the Detroit Free Press that the 60-year-old company will likely be sold off in parts. Saab CEO Victor Muller purchased the company from GM in 2010 intent on restoring it. But GM still owned some technology licenses for the car, and feared that reorganizing the company through Chinese and Russian financing could mean the technology would be used by competitors. Saab filed the bankruptcy in southwestern Sweden.
3. Harley-Davison layoffs begin. Harley-Davidson Inc. has started sending layoff notices to hourly workers in its Milwaukee-area manufacturing facilities as part of its plan to reduce its headcount by 26 percent, according to the Chicago Tribune. The company plans to lay off approximately 250 of its 950 union workers, and then will hire 150 to 250 temporary employees to handle seasonal production increases. The company expects to save $50 million per year. The move comes as part of CEO Keith Wandell’s push to make the company and its workforce more flexible while courting a wider set of buyers.
Pete Bigelow · Midwest Memo: Shale Boom Could Bypass Ohio, Groupon Stock Price Falls, Detroit Short On Time To Address Fiscal Woes
November 23rd, 2011
Three stories making news across the Midwest today:
1. Detroit’s fiscal crisis looms. The amount of time Detroit has to address the city’s looming financial crisis is “relatively short,” Gov. Rick Snyder tells the Detroit Free Press, before he must decide whether to commence a financial review of the city under the state’s controversial emergency manager law. The city could be insolvent as soon as April, according to reports. In response, the city council issued a proposal that was more far-reaching than Mayor Dave Bing’s earlier this week, proposing a 20-percent income tax increase and 2,300 layoffs, among other items. “We are running out of time,” councilman Andre Spivey tells the newspaper.
2. Groupon stock sharply declines. Shares of Chicago-based Groupon are “getting pummeled” for the third consecutive day, reports the Chicago Tribune this afternoon. They are now trading 15 percent below the initial public offering price of $20 on Nov. 4, and down 35 percent since Friday’s closing price of $26.19. Groupon had cautioned investors that trading could be volatile because it offered only a 5.5 percent stake in its IPO.
3. Shale boom could miss Ohio. Shale gas may not create the economic prosperity across Ohio that Gov. John Kasich has touted as a jobs creator, warns a new report. The problem? The gas industry has been too successful. There’s so much natural gas supply across the U.S. that prices are falling. And no one is quite sure how much actually lies beneath the Buckeye State, reports The Plain Dealer. The jobs gain, once predicted to number as many as 200,000, “will happen on some scale,” Andrew Weissman, executive director of Energy Business Watch, tells the newspaper. “But the question is whether it moves quickly or whether it moves slowly so that it only has a modest impact on Ohio’s economy.”
Pete Bigelow · Midwest Memo: Google Causes Groupon Angst, Cain Campaigns In Michigan, Tea Party Seeks Ohio Right-To-Work Push
November 11th, 2011
Three stories making news across the Midwest today:
1. More complaints about Groupon. Some merchants have already swore off Groupon after they wound up losing money – or in some cases, their businesses – by running promotions with the Chicago-based company. Now comes another gripe. Merchants tell The Wall Street Journal that Groupon collects money immediately while payments to customers linger for more than 60 days, affecting their cash flow. Rivals of the daily deal site are offering faster payments, which puts a crimp in Groupon’s business model. Meanwhile, our partner station WBEZ reports Google is stepping onto Groupon’s home turf with daily-deal service.
2. Cain campaigns in Michigan. One day after a debate in suburban Detroit, Republican presidential candidate Herman Cain made stops across southern Michigan on Thursday. He discussed the state’s 11-percent jobless rate in Calhoun County, a key battleground that has been split in the two most recent presidential elections. “This is one of the greatest tragedies that we face, and that is we have all these people that are unemployed,” Cain told supporters, according to the Battle Creek Enquirer. Michigan voters head to the primary polls on Feb. 28.
3. Could Ohio become right-to-work state? Two days after voters defeated Issue 2 at the polls, a Tea Party group has started a push to turn Ohio into a right-to-work state. Ohioans For Workplace Freedom said Thursday it is seeking 386,000 signatures to put the issue on the Ohio ballot, perhaps as early as next November. Ohio is one of 28 states that require employees to join unions or pay fair-share dues in places where workers are represented by unions. “A lot of people in the patriot movement feel this was a key component of Senate Bill 5 that never came out,” Tom Zawistowski, president of the Portage County Tea Party, tells the Akron Beacon-Journal.
November 7th, 2011
In Chicago, Groupon Inc. has grown its workforce from 37 employees to more than 10,000 in a little more than two years. That’s provided a nice boost to the city’s economy and employment rate.
And that’s just the start of the company’s impact in Chicagoland.
Former Chicago Mayor Richard M. Daley, tells BusinessWeek that Groupon’s high-tech cache has spread throughout the city and awakened aspiring entrepreneurs. “We were never identified as a tech city. … It’s changed the whole image,” he said of Groupon.
The company raised $700 million with its initial public offering last week. Through that, BusinessWeek opines that Groupon’s “success legitimizes Chicago and the Midwest as an incubator for technology companies” and spawned talk of a “Silicon Prairie.”
Is Groupon’s shine extending across the entire Midwest? That might be a stretch at this still-early juncture. But it has done wonders for refurbishing Chicago’s industrial image.
“We’ve identified the city as a city with tech people, creative people, risk takers,” Daley said.
November 4th, 2011
Groupon, the Chicago-based daily discount company, went public today at a price of $20 a share. (Yes, that only got you one share.)
Within a few minutes of trading on Nasdaq, the price for Groupon (trading symbol GRPN) had soared to nearly $28 a share, for an overall value of about $18 billion.
That, points out Mashable, would make it the second most valuable technology company to go public since Google did so in 2004. It also gives Groupon a higher value than Xerox, The Gap and Nordstrom’s, according to the Wall Street Journal.
The Groupon public offering was larger than many analysts anticipated, according to the Chicago Tribune, which reported.
“Groupon priced its IPO late Thursday, raising $700 million and garnering a valuation of $12.76 billion. Pricing for the IPO came in above Groupon’s initial anticipated price range of $16 to $18, which would have resulted in a valuation between $10.1 billion and $11.4 billion.
Groupon raised the number of shares it is selling from 30 million to 35 million, but this still represents just 5.5 percent of the company and is considered a small float compared with typical IPOs. In its regulatory filings, the company had cautioned that the relative scarcity of its stock could lead to volatility in the share price, given the imbalance between supply and demand. Groupon’s underwriters have the option of selling an additional 5.25 million shares.”
In a blog post, Groupon CEO Andrew Mason seemed a little humbled by the latest development for a company that has grown in leaps and bounds over the past few years, but not without growing pains.
“Our IPO is a small milestone on our journey, but one that warrants a few words of thanks,” he wrote. “Thanks to my cofounders—Eric Lefkofsky and Brad Keywell. Thanks to shareholders. Thanks to our employees. Thanks to our board of
Do you buy Groupons? What’s been your experience? Have you bought any Groupon shares?