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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.
The Midwest relies so heavily on one source of power that some call us the “coal belt.” It’s cheap and plentiful. But that’s about to change. A wave of government regulations is about to hit the electric industry. It has a name for all the new rules coming down the track:
“The train wreck.”
So says Ed Malley, a Vice President at industry consulting firm, TRC Corporation. That train wreck is the list of environmental regulations expected to be in place within the next few years. Electric utilities say this will mean the shutting of power plants, leading to higher prices and less peak capacity for hot summer days. Environmentalists say: about time.
“Utilities spent 20 years fighting the implementation of the clean air act,” says Sandy Buchanan of Ohio Citizen Action. “We now have some court decisions and rules that say yes, you really do have to clean up your coal plants, and they put deadlines on them.”
The Environmental Protection Agency has as many as nine new or revised rules affecting coal plants. They’re at various stages of approval. Some regulate nitrogen and sulfur dioxide—the causes of acid rain and health problems. Carbon dioxide rules are coming. Others will regulate the waste from coal plants and the condition of the water released into rivers and lakes.
The industry’s big objection here is the timeline, with these rules expected to be in place within just a few years. To prepare, some Midwest utilities have already announced coal plant shut downs, and many more are expected.
“ We’re currently evaluating everything that’s coming from the EPA and making decisions as we speak,” says Bill Sigmon of American Electric Power, a big utility based in Columbus and known to most as AEP.
Already, AEP has announced that it will retire six coal plants in Ohio, which would cut 277 jobs and hit the state’s tax base. Duke Energy is closing a power plant near Cincinnati in 2015. DTE in Michigan says it could close as many as 10 coal burners because of the EPA rules.
The recession has reduced demand for electricity, but some worry that if industry picks up, fewer power plants could mean a strained grid.
Some utilities are looking to alternatives. Besides putting expensive pollution controls on some coal plants, natural gas-fired power plants have emerged as the new favorite. Ed Malley of TRC says the cost of cleaner-burning natural gas is not that different than coal now.
“ Natural gas at this point is plentiful and inexpensive,” he says. “The price of fuels goes up and down, but in the last ten years the price of coal has increased and the price of gas has decreased, pretty dramatically.”
AEP, for one, is hedging its bets in Ohio, building both a new natural gas plant and a new, cleaner coal plant.
“I think coal is a part of the mix going forward as well,” AEP’s Sigmon says. “I think it’s going to take a combination of renewables, natural gas for sure, and keeping some of these coal plants in operation as well.”
And, as utilities decide to clean up coal or build something new, “every penny of that is going to be passed along to consumers in one form or another,” Sandy Buchanan says.
While the industry says these new EPA regulations are going to cost billions of dollars and put our power grid at risk, others say many of these dirty, old coal plants were reaching retirement age anyway, and the benefits to our health are worth far more than the costs of taking plants offline. For a region sometimes known as the “coal belt,” it might be time for a new name.
August 26th, 2011
Rahm Emanuel reached the 100-day milestone of his tenure as mayor of Chicago earlier this week. All week, our partner station WBEZ has examined the early accomplishments and shortfalls of the Emanuel administration. Using his own 72-page transition report as a checklist, WBEZ graded his progress. Here are some highlights:
- Goal: Structural changes totaling $75 million savings in 2011 budget. Progress: Complete. Emanuel cut $75 million from the budget on his first day in office.
- Goal: End revolving door between government service and lobbying. Progress: Complete. Emanuel signed an executive order banning mayoral appointees from lobbying former colleagues for two years.
- Goal: Develop data-collection plan regarding gun usage and crime, develop plan for use and dissemination of data. Progress: Partially achieved. On day 99, Emanuel announced completion of a gun report that includes data for guns recovered by Chicago Police Department, but has not provided copies of the report.
- Goal: Develop plan for retaining and recruiting high-performing school principles. Progress: In August, Emanuel announced creation of a strategic plan and establishment of financial pool for merit raises and report cards for Chicago Public School principles.
How has Emanuel done so far? WBEZ asked his competitors for the job.
- Miguel Del Valle, a former city clerk and mayoral candidate doesn’t like the concept of a 100-day evaluation. “I don’t think it’s a benchmark that should be used at all,” he said. “It takes time.”
- “He has surpassed by expectations,” said Patricia Van Pelt Watkins, another mayoral candidate. “I did not expect him to get out in the neighborhoods like he has, and talk to the people, because he shied away from all the forums.”
Pete Bigelow · Midwest Memo: Big Three Eye Ohio, Indiana Snags Illinois Company, Toyota Banks On Revamped Camry
August 24th, 2011
Three stories making news across the Midwest today:
1. Chrysler invests in Toledo. Ohio Gov. John Kasich emerged from meetings with Big Three officials with a promise from Chrysler to invest $72 million in a Toledo-area machine plant that retains 640 jobs. That may just be the beginning. The auto companies see Ohio as fertile ground for future investments. “We’re very encouraged by the changes we see happening in Ohio,” GM executive director Bryan Roosa tells the Columbus Dispatch. “The attitude toward manufacturers is very supportive.”
2. Toyota unveils 2012 Camry. After two years of setbacks associated with a widespread recall and Japanese catastrophe, Toyota is banking on its 2012 Camry to reestablish itself as an industry leader. Unveiled Tuesday, the ’12 is its first redesign in five years and attempts to match competitors in styling. “It’s critical they get this right,” Michael Robinet, VP of global vehicle forecasts at HIS Automotive tells AOL Autos. “They are facing a deluge of competitors that are really getting it right.”
3. Indiana snags Illinois company. Modern Drop Forge, a manufacturer of vehicle parts, said Tuesday it will move operations from Illinois to Merrillville, Ind. The company, which employs 700 in four states, received incentives worth as much as $2.2 million from the Indiana Economic Development Corporation. Business owner Greg Heim told partner station WBEZ the cost of doing business in Illinois had crept too high, with the state raising its corporate income tax from 4.7 to 7 percent until 2015.
Pete Bigelow · Midwest Memo: Ohio Unemployment Rate Rises, Michigan Governor Seeks Supreme Court Intervention
August 19th, 2011
Three stories making news across the Midwest today:
1. Ohio’s unemployment rate rises. Employers in Ohio added more jobs in July, but the state’s unemployment rate nonetheless inched upward 0.2 percent to 9 percent overall, the Columbus Dispatch reported Friday. It’s the second consecutive month the figure has climbed. A separate survey showed Buckeye state manufacturers added 7,900 jobs in July. Ohio wasn’t the only state to see an unemployment climb. Earlier this week, Michigan’s unemployment rate jumped 0.4 points to 10.9 percent in July.
2. Chicago casino’s path clearer. “I cannot continue to have Hammond, Indiana, get $20 million a month while our infrastructure is crumbling.” That’s how Chicago mayor Rahm Emanuel explains his transition from a position of reluctance to now embracing the idea of a Chicago casino. CBS Chicago says the mayor believes he and Illinois governor Pat Quinn can iron out differences in casino plans. The Illinois state senate still has a hold on a bill that paves the way for the casino and other state gambling.
3. Michigan governor seeks court ruling. Gov. Rick Snyder has asked the Michigan Supreme Court to quickly address the constitutionality of legislation he signed earlier this year that allows emergency managers to take over financially troubled communities and school districts. Opponents of the law who filed a class-action lawsuit in Ingham County earlier this year called Snyder’s move an attempt to “bypass the judicial system,” according to the Detroit Free Press.
August 18th, 2011
On a three-day bus tour through the Midwest this week, President Obama expressed confidence the region’s fragile economy would show gradual improvement over the next year.
Depending on the vantage point, that has different meanings.
In Iowa, the unemployment rate hovered at 6.0 percent in June,” a rate that “is much higher than Iowans are comfortable with,” said David Swenson, who teaches economics at Iowa State University, during a roundtable discussion Wednesday on PBS News Hour.
In Michigan, such a figure would be cause for relief. The state holds the Midwest’s highest current unemployment rate at 10.5 percent. It also endured the region’s highest peak unemployment rate, reaching 14.1 percent in September 2009.
The loss of manufacturing jobs has been a significant theme in Michigan and Ohio, where the unemployment rate hovered at 8.8 percent in June. Agriculture has protected the economies of the western Midwest state to some extent. But now, manufacturing losses have spread to places like Minnesota and Iowa, two of the three states Obama visited.
“Manufacturing is a big component of the Iowa economy,” Swenson said. “We know that manufacturing has taken an extra-special hit.”
Though unemployment rates differ by as much as 4.5 percentage points throughout Midwestern states, one common thread is that all are leery of a recent uptick in their rates following declines over the past year-and-a-half. Minnesota’s rate crept upward to 6.7 percent in June after reaching a low of 6.5 percent two months earlier. Illinois’ rate stood at 9.2 in June after falling to 8.8 percent in March.
“People say that manufacturing is coming back, and it is coming back to a certain extent, but there are still jobs being lost,” Micki Maynard, senior editor of Changing Gears, said on the NewsHour segment.
“You need a bulk of jobs to come back and replace the jobs that were lost,” she said. “There was something like 500,000 jobs lost in Michigan alone during this recession, and there really aren’t the magic bullets that are going to create those thousands of jobs that can come back, so those people can go back to work.”
There’s major technology news for our region, with the announcement by Google that it is buying Libertyville, Ill.-based Motorola Mobility for $12.5 billion in cash. Google said it would pay $40 per share, a 63 percent premium, based on the company’s Friday closing price on the New York Stock Exchange.
On Monday, shares of Motorola Mobility jumped as much as 59 percent, Reuters reported.
Mountain View, Calif.-based Google, which has offices around the Midwest, has been collaborating with Motorola Mobility for some time on its Android-operating system cell phones.
Crain’s Chicago Business billed the buy as a win for both companies, saying that Google gets more than 17,000 Motorola patents to solidify the Android software. Key Motorola Mobility shareholder/billionaire investor Carl Icahn called it a “great outcome for all shareholders”.
Still, the announcement came as a surprise to the local tech community, Wailin Wong of the Chicago Tribune reported. In May, after reportedly considering a move to California, Motorola Mobility accepted $117 million in incentives over 10 years from the state of Illinois to stay and retain about 3,000 jobs.
A spokeswoman for Gov. Pat Quinn said the state expects Google keep workers here in Illinois, rather than move them to California. She told Crain’s via email,
“We welcome Google’s expanded presence in Illinois, and would expect that Google will live up to the agreements that Motorola Mobility made to the state, which includes keeping its corporate headquarters here, along with thousands of high-tech jobs and hundreds of millions of dollars in private investment.”
The big question — how many of these jobs will stay in Illinois – has yet to be answered.
July 29th, 2011
View Midwest Road Trip 2011, Changing Gears in a larger map
This afternoon, Changing Gears reporters wrapped up a week on the road, traveling to places throughout the Midwest where local economies and town cultures revolve around single employers. We started our trip Monday in Kohler, Wisc., and completed our trip today in Orrville, Ohio.
If you missed anything, here’s a recap of our road-trip coverage:
MONDAY: Niala Boodhoo visited Kohler, Wisconsin, a town created by The Kohler Company nearly a century ago. The home-fixtures and plumbing company remains the county’s largest employer. Main story
WEDNESDAY: Far to the north, the iron-ore mining industry is alive and well in Ishpeming, Mich. Kate Davidson traveled to the Upper Peninsula and found perhaps one of the last places in Michigan where blue-collar workers hold some degree of job stability. Main story
THURSDAY: Dan Bobkoff told the story of Norwalk, Ohio, where the town’s major employer, Norwalk Furniture, was rescued by 12 local citizens who bought and invested to keep it open after previous owners faced financial turmoil. Main story
FRIDAY: You may have already heard of Smuckers, located in the north-central Ohio town of Orrville, but you may not have known there are plenty of other family-owned businesses in town that have kept the local economy moving for decades. Main story
July 27th, 2011
Three stories making news across the Midwest today:
1. How default may affect Chicago. The city of Chicago plans to borrow $800 million later this year. A short-term debt default wouldn’t affect those plans, but could affect interest rates. Crain’s Chicago Business analyzed what a downgrade of the federal government’s credit rating would mean for the city and state of Illinois: the addition of “hundreds of millions of dollars in interest costs to bonds.”
2. Demand for manufactures goods falls. Orders for U.S. manufactured goods fell in June and another barometer of business spending declined, deepening worries that the economy’s current slump could worsen. The Commerce Department said Wednesday that durable-goods orders fell 2.1 percent, according to Reuters. That follows a 1.9 percent increase in May. Capital goods orders, excluding aircraft, fell 0.4 percent in June.
3. Fuel-economy deal ahead. Officials in the Obama administration say recent changes will make it easier to reach a deal with automakers to increase fuel economy. A proposal for light trucks to get 56.2 miles per gallon by 2025 has been lowered to 54.5, according to the Associated Press. Last week, Michigan lawmakers said the higher proposal was “overly aggressive.” In 2009, automakers reached an agreement to boost fuel-economy standards to 35.5 miles per gallon by 2016.
July 26th, 2011
Our Changing Gears road trip continues. Yesterday, I was in Kohler, Wisconsin. Today, I went down state in Illinois to Decatur.
DECATUR – Driving south from Chicago, it only takes about 25 miles to hit the corn fields. For the next 150 miles to Decatur, it’s a sea of yellow corn tassels, a head tall.
At night, the central Illinois darkness is broken only by the lights of the corn and soy processing facilities at Archer Daniels Midland Company.
At dawn, the truck and rail traffic starts rolling into the yards of ADM, one of the largest food processing companies in the world.
Its global sales were $62 billion last year. Its headquarters are in Decatur, as well as some of its largest processing facilities.
Its operations are so large that to tour all their plants, I had to get in a car.
ADM doesn’t grow crops, like those surrounding its operations in Decatur. It buys and sells crops – wheat, corn, soy and cocoa, from all over the world. Some of those crops are brought to processing plants, where they’re turned into products like corn syrup, vegetable oil, animal feed, or ethanol.
“This is the center of agriculture, and I joke a little, it’s the center because we’re here,” said Mike Baroni, a vice-president with ADM. “But if you look around, when you drove from Chicago you saw some of the most fertile land in the world, and corn and soybeans as far as the eye can see.
The company started its first plant in Decatur in 1939. Thirty years later, it moved its headquarters to Decatur, too.
Baroni said the company thinks of Decatur as its home: “We’ve been here a long time,” he said, adding that as far as he knows, the company has no plans to leave Decatur.
ADM has almost 4,500 workers in Decatur. While many of them work in the processing plant, the company also runs one of the largest private trading floors in the country and does a lot of scientific research.
That varied workforce should dispel any misconceptions people have about Decatur, the City Manager Ryan McCrady told me.
“We have a rich history of industry, so I think a lot of folks think we’re a dusty, old, blue collar city,” McCrady said. “It’s quite the contrary.”
When you talk about employers in Decatur, three names loom large: ADM, Caterpillar and Tate & Lyle, the British food giant that bought Decatur’s homegrown Staley Company in 1988. (Interesting side note: today’s Chicago Bears were started as the Decatur Staleys in 1919, then moved to Chicago as the Chicago Staleys in 1920, where the NFL franchise was officially started.)
But Tate & Lyle is moving some research operations to the Chicago area.
And Caterpillar’s employment has been more cyclical. Over the past few years, it has laid off, and since rehired, hundreds of Decatur workers.
ADM’s been steady. Last fall, it bought a building in downtown Decatur to consolidate 300 IT, audit and accounting workers.
McCrady says that was a big deal.
“First of all, to have all that many more people in your central business district is going to be great for commerce,” he said. “But bigger than that was a sign of ADM’s commitment to Decatur by buying this building, especially in this age of downsizing.”
The unemployment rate in Decatur has dropped below 9 percent – better than Chicago’s jobless rate. McCrady says Decatur sales tax revenues are up 10 to 15 percent over the past year. That’s a faster rate of growth than Illinois as a whole.
With job prospects good in Decatur, welding classes are full at Richland Community College – even at midnight.
“Everybody seems to be in more of a hiring mode,” said Douglas Brauer, a vice-president with the college.
For spring semester the school started offering welding classes at midnight, to accommodate students who were working full-time. The class was full, so they offered it again this summer.
Richland Community College is literally in ADM’s backyard. When it was built, ADM built a pipeline to the campus to send steam. That has powered the college’s heating and cooling systems for the past 20 years.
I stepped outside with Andy Perry, who also works at Richland. He explained that we were standing directly north of one of the production facilities for Archer Daniels Midland, as well as northeast of Tate & Lyle.
“So on a given day, when some of those production facilities are giving off you steam and other elements, we can smell the products from here,” he said.
But Perry says nobody in Decatur minds.
“Really,” he said, “it’s the smell of money.”
The world’s population is expected to reach 7 to 10 billion people by 2050. That means the demand for agricultural products – everything ADM produces – is supposed to double. That can only mean good things for Decatur, which likes to call itself the heart of agribusiness.
Correction: an earlier version of this story contained an invalid figure for the world’s population. It is approximately 6.7 billion, according to the World Bank.