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Pete Bigelow · Special Report: Can Detroit Airport Experiment Help Aviation Biodiesel, Local Economy Take Off?
October 17th, 2011
ROMULUS, Mich. – The runways at Detroit Metropolitan Airport rank as some of the nation’s busiest, handling some 452,000 takeoffs and landings each year along with more than 32 million passengers.
The land adjacent to them, on the other hand, sits mostly unused. Other than creating a buffer for noise-prevention and security reasons, that land has little useful value.
Officials at Detroit Metro and three other Michigan airports are hoping to change that. They’ve partnered with a Michigan State University researcher to grow oriental mustard seed and other plants on that property. Those plants will be harvested and processed into aviation-grade biodiesel that’s then used at the facility.
The project is believed to be the first of its kind in the Midwest, and it’s attracting attention from airlines, government agencies and even a former high-profile Ford Motor Company executive.
In the short term, it’s an experiment to see whether researchers can create an alternate fuel source grown in close proximity to airport users. In the long term, officials believe the biofuel industry in general and aviation-grade biodiesel in particular can make a significant economic impact in Michigan.
“It is going to take a concerted effort by farmers, by industry, by airlines and engineers and developers in order to see this all come to fruition,” said Dennis Pennington, a bioenergy educator from the MSU Extension leading the project, which is funded by a $476,000 state grant.
For now, the three-acre plots at Detroit Metro, Willow Run in Ypsilanti, Grand Rapids and Muskegon airports are primarily for demonstration. But even on a small scale, they have attracted the eyes of groups that could influence where the fledgling aviation biodiesel industry is headed.
Representatives from Delta Air Lines, Detroit’s primary carrier, the Air Transport Association, the U.S. Department of Agriculture and the Commercial Aviation Alternative Fuels Initiative are among the dozen or so groups acting as stakeholders in the project.
Wayne County EDGE, an economic development arm of the county that houses Detroit Metro, is also involved. It promotes the creation of an “aerotropolis” in the 11-mile stretch between Willow Run Airport and Metro Airport. It envisions a transportation hub that pools the area’s aviation, rail and highway resources. And, the possibility of attracting a fuel refinery or other companion biofuel businesses on or near airport grounds is intriguing.
“We want to become a region known for energy excellence,” said Azzam Elder, deputy CEO of Wayne County.
Getting there with regard to aviation-grade biofuels is complicated, however.
Biofuels is a broad term that includes soybean, corn ethanol, algae or other plants, like Pennington’s oriental mustard seed. Each source brings its own set of challenges in the growing, refining and delivery processes.
Whichever is selected, it must be processed into a standardized biodiesel that arrives at airports compatible with current fuel systems. And it must be used by all airlines — jet fuel is purchased by airports in bulk and shared among users. At Detroit Metro, approximately 300 million gallons of Jet A, essentially kerosene refined from crude oil, are pumped each year.
Investing in the infrastructure to make all that happen is expensive. Even a small refinery costs approximately $20 million. And the market is fragmented. Many entrepreneurs are waiting to see the results of experiments like Pennington’s to see which structure emerges as the most cost-competitive with gasoline before making large-scale investments.
They may now have more incentive. In August, President Obama announced that the Departments of Agriculture, Energy and Navy would invest as much as $510 million over the next three years in public-private partnerships to create drop-in aviation and marine biofuels, funding that stems from Obama’s efforts to diminish the country’s reliance on foreign oil. Ultimately, that’s the sort of investment needed for biofuels to find a niche, Pennington believes.
“Policy drives where this industry is going,” he said.
Focus on marginal land
Biodiesel accounts for approximately 2 percent of the nation’s overall 60-billion gallon annual diesel consumption. Market share is increasing: The government has mandated the production of 800 million biodiesel gallons in 2011 and 1 billion in 2012, through the Renewable Fuel Standards program.
It’s a nice jumpstart for a fledgling industry. Right now, the biggest challenge in taking advantage of it is ensuring the biodiesel cost structure is competitive with the rack price of regular diesel.
On Friday, Jet A sold for about $3.06 per gallon in the Chicago market, according to the Oil Price Information Service. Biodiesel prices are volatile and can vary greatly based on the plant source. But a generally accepted industry rule of thumb is that biodiesel is a niche product that costs approximately 10 percent more per gallon — and that’s after a federal subsidy.
The significance of Pennington’s project is that it addresses the biggest component of those costs.
Jim Padilla, co-founder of The Power Alternative, a southeast Michigan-based company that focuses on biodiesel plant construction and process innovation, says that 80 percent of overall costs come from the crops and land used to grow them.
In many cases, like the growing of corn for ethanol, that land is also used in food production. Combined demand between fuel and food drives up prices. That’s why Padilla is enamored with Pennington’s experiment. None of the land in the aviation biofuel project is otherwise used for farming.
“With respect to that cost, one of the ways you decouple yourself from the agriculture market is to decouple yourself from food production,” says Padilla, a former executive with Visteon and Ford.
Pennington has focused on farming marginal land, or acreage that’s never been farmed for food. Airport sites make attractive options. Muskegon County Airport has 1,500 acres used for approach protection, according to airport manager Marty Piette. Together, Detroit Metro and Willow Run hold 1,700 acres suitable for use, according to the Wayne County Airport Authority.
In addition to airport property, Pennington has also farmed sites along highways, behind rest areas and vacant urban lots. Padilla is growing crops on a former Superfund site in Detroit.
In Michigan, there are approximately 4.5 million acres of marginal land not being farmed, Padilla said. It would be inconceivable to suggest every available acre could be utilized, but he uses the figure to illustrate the untapped potential of land that does not compete with food crops. What sort of dent could Michigan’s unused land put in meeting fuel demand?
Using mustard seed, Pennington says it would take roughly 200,000 acres to supply enough crops for a processing plant that makes 50 million gallons per year. On 4.5 million acres, that could yield 1.125 billion gallons per year — roughly the same amount of biodiesel that flows through the U.S. each year.
If a burgeoning industry could tap just a fraction of that potential, it would create “infrastructure to handle it, crush it and get it into a plant to refine it into a fuel,” Pennington said. “That’s job creation and economic development.”
Federal government subsidies help biodiesel close the cost gap by approximately $1 per gallon. Their funding levels have been uneven, which hurt production this year and pointed prices upward. But in the long run, Padilla said there would be an economic payoff on that investment.
“Obviously, that provides a little heartburn for people,” Padilla said. “But there’s a couple things around that. One, is the multiplier effect to fuel that’s being produced locally. Two, is that’s effectively 1 billion gallons we’re not importing. It’s domestic content. And domestic content equals domestic jobs.”
Why Detroit works
A chance meeting led to Detroit Metro’s involvement in Pennington’s project.Officials at the Wayne County Airport Authority wanted to explore using some of the acreage surrounding the airport — in what way, they weren’t sure. A consultant recommended biofuels as an option to Michelle Plawecki, who manages DTW’s noise-mitigation program.
She knew nothing about biofuels. So she attended a green-energy conference at Henry Ford Community College, at which Pennington happened to be speaking. Intrigued by his presentation, she approached him afterward.
“Aviation as an industry is interested in developing alternate sources of jet fuel,” Plawecki said. “There’s a lot of land near the airports in urban areas, and if that could be used to create a renewable natural resource, wouldn’t that be wonderful?”
In many ways, Michigan in general and Detroit Metro are ideal places for the experiment.
Agriculture ranks as the second-largest component of the state’s economy. Conventional supply chains already in place. And Michigan’s two-fold winters offer a two-fold benefit: some crops used for biodiesel can be grown in the winter months when farmers and their fields are otherwise idled, and cold weather typically means better performance for biodiesels.
From an entrepreneurial standpoint, southeast Michigan also was intriguing. In December 2010, the Michigan state legislature passed laws that created the aerotropolis as a regional authority that melds jurisdiction from two counties and seven municipalities surrounding Detroit Metro and Willow Run Airport. Tax incentives are available to companies settling within its borders.
When Michigan Gov. Rick Snyder traveled to Asia earlier this month on a trade mission, the aerotropolis and its energy potential was a fixture in his recruitment efforts. Much of that was focused on advanced-battery technology, but biofuels were also part of the conversation, according to Elder.
Citing the two interstates and two airports within the aerotropolis borders, he said, “we are definitely in a great position to encourage the businesses of biofuels and refineries, that’s the easy part for us. If you can move cars, you should be able to move fuel.”
Twenty-five years from now, the aerotropolis region could employ 64,000 more workers and add more than $10 billion of economic activity, according to a study completed by Jones Lang LaSalle, one that the authority officials like to tout.
Whether that growth actually happens or remains a pie-in-the-sky prediction like so many other reclamation projects around Detroit remains in question. But the fact that a biofuel contribution has the potential to touch multiple industries — from farming to engineering to aviation research and development — makes it an intriguing proposition.
“The question then becomes, ‘Can we get a critical volume?,’” Pennington said. “We burn an awful lot of fossil fuels in the U.S. every year. I don’t have a silver bullet or magic answer. But I certainly believe we have got to come up with some kind of alternative.”
Pete Bigelow · Midwest Memo: Ford-UAW Contract Support Increases, Report: Illinois’ Business Climate Still Sturdy
October 17th, 2011
Three stories making news across the Midwest today:
1. Illinois still strong business center. Reports of Illinois’ demise have been greatly exaggerated. At least that’s the conclusion of Crain’s Chicago Business, which examined the business climate of the state and its neighbors in the wake of headlines about rising corporate taxes and companies threatening to relocate. The crux of the analysis: Illinois’ workforce, market size, capital available for investment and transportation infrastructure outweighs rising taxes and the state’s budget deficit, which puts it in better position than neighboring states.
2. Ford-UAW contract gains ground. Sixty-two percent of voters now support the tentative agreement between Ford and the United Auto Workers, according to the UAW Facebook page. Several large local unions voted over the weekend on the deal and moved it closer to ratification. Voting ends Tuesday. Last week, initial votes had showed weak support for the agreement, which offers signing bonuses but does not restore cost-of-living increases.
3. Wisconsin home sales up, prices down. In September, existing home sales in Wisconsin rose 17.7 percent year over year, according to the Milwaukee Journal Sentinel. Sales in the Milwaukee area were particularly strong, growing 26.8 percent from September 2010. The media sales price fell 1.5 percent, however, to $134,900. It was the smallest decline this year, and considered good news by members of the Wisconsin Realtors Association. New listings are down 17.4 percent this year, the newspaper reported, while an inventory backlog remains.
October 14th, 2011
Fourteen million people are searching for work in the United States. Some must be qualified to fill thousands of vacant manufacturing jobs.
Not necessarily, according to Reuters, which reported Friday that U.S. manufacturers are having trouble finding qualified candidates for openings. A survey by ManpowerGroup found that 52 percent of U.S. employers are having trouble filling critical positions, a percentage that’s dramatically increased from 14 percent in 2010.
Most of the jobs employers are finding a shortage of qualified workers involve skilled trades, internet technology, engineers and machine operators, according to Reuters. American colleges are graduating fewer math and science students.
“It’s very difficult to find skilled people,” Jeff Owens, president of ATS, a manufacturing consulting company, tells the news agency. “We are creating jobs. We just don’t necessarily have the right people to fill them.”
The Reuters story echoes a Changing Gears report earlier this month that found a surge of available jobs, albeit in a temporary capacity. Temp agencies that service the manufacturing sector say they’re having trouble meeting demand for skilled workers.
Stacey Bigelow, who runs temp agency Advance Staffing Solutions in Southeast Michigan and Northwest Ohio, says that there’s a labor shortage.
“Our job boards are full. Every day, they’re full, “said Bigelow (no relation). “I think we’ve been pushing our kids to go to college for so many years that they’re not in these apprenticeship programs or any of these trades. So these people are very hard to find.”
Pete Bigelow · Midwest Memo: UAW Momentum Swings In Favor of Ford Contract, Mixed Chicago Foreclosure News
October 14th, 2011
Three stories making news across the Midwest today:
1. Mixed Chicago foreclosure news. The number of foreclosure filings in the Chicago area fell in September, but that doesn’t necessarily mean the crisis is dissipating. Our partner station WBEZ reports it’s merely getting dragged out. Ed Jacob, head of a city non-profit that helps people stay in their homes, says banks are taking more time to make sure their foreclosure paperwork is in order, and a backlog has been created that may take two to three years to process. “It’s a slow slog,” he tells the station. “It’s like we’re running through quicksand or we’re running through mud.”
2. Ohio examines municipal collaborations. Founded seven years ago, a group examining consolidation and collaboration among Ohio municipalities is finally gaining some traction. Many officials discussed the topic at a regional conference held in Akron on Thursday, according to our partner station Ideastream. “We’ve identified about 250 efforts of some kind, and then over half of those efforts have actually culminated in some ongoing collaboration,” John Hoombeck, director of the Center for Public Administration and Public Policy, tells the station. The highest numbers of collaborations have come in public-safety areas. Economic development ranks second.
3. Ford contract in jeopardy. With a little more than a third of voting completed, Ford workers are narrowly supporting the automaker’s tentative contract with the United Auto Workers union. As of 11:30 a.m. on Friday morning, 50.8 percent of voters supported the contract. According to the UAW Ford Department, 6,271 workers had voted in favor of the deal, while 6,085 had rejected it. Thirty-six percent of votes had been received, with voting set to end Tuesday. The numbers represented a swing from earlier results, in which 53.2 percent of the counted votes had nixed the deal.
Next week, Changing Gears reporters will tackle a subject that’s long been a part of the Midwest mind frame: magic bullets.
By magic bullets, we mean the big ideas and big projects that politicians and government officials say their cities and states must embrace, in order to boost the economy. But what is their track record? Should we really be shooting for the stars, or trying to create jobs one at a time?
Kate Davidson kicks things off Monday with a look at the history of magic bullets (remember AutoWorld in Flint? How about the Chicago Olympic bid?)
Later in the week, Niala Boodhoo tackles small business, and whether big programs actually help companies grow. Dan Bobkoff looks at a subject dear to Cleveland’s heart: health care.
Contributor Dustin Dwyer will examine the race to build battery plants and whether that fledgling industry is actually creating the jobs that mayors and governors hope.
Find our reports on Michigan Radio, WBEZ Chicago and ideastream Cleveland. And check back here for special features related to our Magic Bullets series.
Contribute to our coverage: What are past magic bullet ideas that fell flat?
October 13th, 2011
The mood of several workers at Ford’s engine plant in Brook Park, Ohio, sums up the mixed feelings of the company’s workers nationwide: In a tentative contract agreement Ford struck with the United Auto Workers union last week, workers feel they’re not getting enough back to compensate for concessions in previous contracts.
The contract is faltering in early voting across the country, with 54.6 percent of voters so far rejecting the deal. Thursday afternoon, the UAW Ford Department said 3,256 workers had voted yes and 3,915 had voted no. Voting on the four-year deal is expected to end Tuesday.
Results from the Cleveland-area Brook Park plant were not yet known, but an early survey of workers showed results titled against the deal, and anger toward bonuses given to executives had risen.
“I gave up $20,000 a year,” between a lack of raises and moving from skilled trades to production,” Erich Ockuly, a Brook Park worker, told The Plain Dealer. “All that so Alan Mulally could make $24 million.”
Elsewhere, employees at a Chicago Ford plant overwhelmingly rejected the contract. UAW Local 551 reported Thursday morning that 77 percent of 2,317 votes cast went against the agreement, which offered a $6,000 signing bonus but no cost-of-living adjustment. Chicago Mayor Rahm Emanuel has endorsed the contract, saying it would create 1,100 new jobs in Chicago, according to our partner station WBEZ.
In Detroit, voting was more mixed. Sixty-six percent of production workers and 64.5 percent of skilled-trade workers voted yes on the deal, according to UAW Local 228, which represents 1,740 hourly employees at Ford’s axle plant in Sterling Heights. Earlier this week, Ford workers at a stamping plant in Wayne, as 51.5 percent rejected the contract, according to the Detroit Free Press.
Changing Gears senior editor Micki Maynard discussed the flagging support of the Ford contract during a Wednesday evening appearance on PBS NewsHour.
“The Ford workers, I think they feel they deserve more,” she said. “Their company didn’t take a federal bailout, and it really isn’t in bad shape at all. It’s in the most profitable position of any of the car companies.”
That is reflected in the contract agreement: Ford workers are faced with a better deal than their counterparts at General Motors and Chrysler. Ford workers would receive a $6,000 signing bonus, while GM workers will receive a $5,000 bonus; Chrysler workers would receive $1,750 upon ratification and $1,750 after the company hits certain financial targets.
(Here’s a handy chart that compares the basics of the three UAW contracts, courtesy of the Free Press).
If Ford workers reject the contract Tuesday, the company could lock out workers, the union could strike or the two sides could return to the negotiating table.
Pete Bigelow · Midwest Memo: Biden Touts Jobs Bill in Michigan, Rahm Emanuel Promises to Face Chicago’s ‘Sacred Cows’
October 13th, 2011
Three stories making news across the Midwest today:
1. Biden champions jobs bill. Vice President Joe Biden made two stops in Michigan on Wednesday, touting President Obama’s $447 billion jobs bill. In a visit to Flint, Biden noted the city’s rise in murders, rapes and fires that occurred as police and fire staffing levels dropped. “That is a witch’s brew,” Biden tells Businessweek. “That is a mixture for a cancer in the city.” Later, during a stop in Grand Rapids, the vice president said economists believe the American Jobs Act would create 2 million jobs next year. Flint Mayor Dayne Walling said federal funding recently helped the city hire six police officers, but more are needed.
2. Chicago budget proposal chops services. On Wednesday, Chicago Mayor Rahm Emanuel unveiled a budget that called for taxes on tourists and suburbanites, close three police stations, streamline garbage collection, cut library hours and double water bills for the average household by 2015, according to the Chicago Tribune. “I’ve taken on a tremendous amount of political sacred cows,” Emanuel said during a presentation to the City Council. “Not once, not twice, not three times, not four times, but multiple times across the budget.”
3. Hydrofracking permits soar in Ohio. The pace of permits being issued for hydrofracking in Ohio has quickened. The Columbus Dispatch reports today that 27 permits were issued for drilling in the Utica Shale formation underneath Ohio from July to September – more than half the total number issued since 2009. Meanwhile, Democrats in the state House said yesterday they would seek a moratorium on hydrofracking in the state until the U.S. Environmental Protection Agency completes a study on the controversial drilling’s effects on air and water.
Pete Bigelow · Midwest Memo: UAW Reaches Chrysler Deal, Wisconsin Democrats Begin Effort to Recall Gov. Scott Walker
October 12th, 2011
Three stories making news across the Midwest today:
1. Chrysler and UAW reach deal. Eight days after reaching a tentative agreement with Ford, the United Auto Workers announced today it had reached a tentative agreement with Chrysler. As part of the deal, Chrysler has agreed to add 2,100 jobs by 2015 and invest $4.5 billion in its U.S. plants. “This tentative agreement builds on the momentum of job creation and our efforts to rebuild America,” UAW president Bob King said in a written statement. Chrysler’s 26,000 UAW members will vote on the deal in the coming days and weeks.
2. Democrats commence Walker recall effort. Next month, Democrats in Wisconsin will begin efforts to recall first-year Republican Gov. Scott Walker. Mike Tate, chairman of the state Democratic Party, announced the decision to pursue a recall Monday night during an MSNBC interview. Organizers must gather 540,208 valid signatures, one quarter of the votes cast in last fall’s election, within 60 days of commencing their efforts on Nov. 15, according to The New York Times. If those efforts are successful, Walker would be required to run for his office again.
3. Columbus-area tax incentives brought jobs. Six Franklin County, Ohio, companies received property-tax breaks in exchange for a promise to create 298 full-time jobs over the past seven years. They delivered more than county executives anticipated. Those companies created 665 jobs and added $32.8 million in new payroll, according to a report released Tuesday night by the county’s Tax Incentive Review Council. Leading the way, according to The Columbus Dispatch, was TS Tech North America, a seat supplier for Honda that created 310 more jobs than promised in 2004. TS Tech had received a 10-year, 50-percent tax break on taxes worth $829,000. “This is proof our staff knows what they’re doing,” county commissioner John O’Grady told the newspaper.
October 11th, 2011
Three stories making news across the Midwest today:
1. First UAW rejects Ford deal. UAW Local 900, which represents workers at three Detroit-area auto plants, has narrowly rejected a tentative contract agreement with Ford, the Associated Press reported today. Local 900 was the first to vote on the agreement reached last week, and 51.1 percent of 2,582 voters nixed the deal. More votes are scheduled this week and next week. Bill Johnson, bargaining chairman of the Michigan Assembly Plant, tells the AP that workers are angry the contract does not restore some items lost in previous concessions.
2. Michigan State creates economic development center. The U.S. Economic Development Administration has given Michigan State University a $915,000 grant to create an economic development center that will focus on innovative ways to generate Michigan jobs. MSU will partner with other colleges, local and regional governments, private businesses and other groups to identify innovative ideas and practices. Rex LaMore, the head of the initiative, said many economic development practices have become outdated in what has become a knowledge-based economy.
3. Construction begins on Chicago rail project. Fourteen Amtrak, 78 Metra and 46 freight trains vie for rail space each day near 63rd and State Street in Chicago. On Tuesday, workers broke ground on a $133 million project aimed at breaking that bottleneck. U.S. Senator Dick Durbin tells our partner station WBEZ that the project allows for expanded Amtrak service around the Midwest, and will create more than 1,500 jobs. But one union laborer who watched Tuesday’s groundbreaking was skeptical of that number. “They say they’re going to hire from the community, but I’ve been hearing this for years,” Bob Israel tells the station. “It’s just a dog-and-pony show. Trust me.” The project, called the Englewood Flyover, is due to be completed in 2014.
October 10th, 2011
The U.S. high-tech industry lost 115,800 net jobs in 2010 that represented approximately 2 percent of the overall high-tech workforce, according to the annual Cyberstates report compiled by the TechAmerica Foundation.
With one notable exception, states across the Midwest reflected the national trend.
Illinois lost 6,400 tech jobs, approximately 3 percent of its high-tech workforce. It was the fifth-biggest decline in the U.S. and the state slipped to eighth place in the country in terms of overall technology jobs. Minnesota lost 2,900 jobs, Wisconsin lost 1,900 tech jobs, Ohio 1,400 and Indiana shed 300.
Michigan, on the other hand, trended in an upward direction.
After eight years of declining numbers, it added more tech workers than any state in the country, according to the report. Michigan added 2,700 high-tech jobs and ranks 15th nationwide in total technology employment.
“The fact that Michigan added more tech jobs in 2010 than any other state may surprise people, including people within the state,” said Ed Longanecker, the executive director of TechAmerica. “But job gains in key sectors like software and research and development have helped the state recover from hard economic times.”
That recovery is, by no means, complete. In 2001, Michigan had 201,800 high-tech jobs according to the report. Even with this year’s growth, Michigan currently employs 155,100 high-tech workers.
Overall, the U.S. high-tech industry employs 5.75 million workers, according to the report. While 115,800 total jobs were lost across the country, the decline was less than half of the 249,500 jobs lost in 2009.
Despite its losses, Illinois still employs more tech workers than any other Midwest state. Here’s how they stack up: