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Three must-read stories about the Midwest economy.

Obama in Western Michigan: President Obama visits Holland, Mich., today to tour a Johnson Controls plant that produces lithium-ion batteries, and discuss advanced auto industry technology. It’s his seventh visit to Michigan since taking office, and second talk about fuel economy this week.

But some critics say he should be keeping his focus on jobs. Our Changing Gears partner Michigan Radio has a roundup of the discussion of the President’s trip to western Michigan, including a commentary from the Grand Rapids Press. It asks whether incentives to fund future techology are really worth the money, given what’s happening with the economy.

Lake Michigan Only Gets A Passing Grade: Illinois Republican U.S. Senator Mark Kirk gives Lake Michigan a “C” when it comes to cleanliness and other environmental concerns, reports our partner station WBEZ in Chicago.

Kirk, who co-chairs the Senate Great Lakes Task Force, said water levels are decreasing, so he wants to pass a bill that would maintain and dredge harbors. (Changing Gears’ Kate Davidson reported on Great Lakes dredging earlier this summer.) He also called for increased voltage at electric barriers to keep out Asian carp, and a ban on sewage dumping in the Great Lakes.

More Jeep Jobs in Toledo? The Toledo Blade is reporting that Chrysler will invest up to $365 million and add another shift of 1,100 workers at its Jeep plant there. The deal depends on an incentive package from Ohio, which state officials have yet to approve.

 

 

 


Throughout September, the Changing Gears team will be looking at the future of manufacturing. It’s still a vibrant part of our region, but today’s factories may not be the same as the ones your dad, grandfather and even you worked in.

We’d like to get your thoughts on the future of manufacturing. Is it dying? Is it changing? What is the role that our states can play?

Take our survey, and share your own stories of working in manufacturing. We’d love to feature you on Changing Gears. Thanks.


Detroit lost nearly a quarter of its population during the 2010 census, and entire neighborhoods sit empty. But a determined group of people are not giving up on the city.

Photo submitted by Nathan Barnes

One of them is Charlie Cavell, a Wayne State University student, who has taken on education as his primary cause. Cavell, 20, was profiled on NPR’s All Things Considered Tuesday evening, for his efforts to help launch a new charter school and his non-profit, the Pay It Forward Initiative.

Pay It Forward helps provide jobs for inner city kids, while Cavell, who grew up in Manchester, Michigan, is now a board member at the new charter school that will take the place of Loving Elementary on Detroit’s east side.

Says Cavell: “Rough times for some people, but I’m hoping to do what I can to fix that.”

 


Today’s must-read stories about the Midwest economy.

More Jobs in Chicago: Mayor Rahm Emanuel and JP Morgan Chase announced the opening of four new Chase bank branches in the city yesterday, a move that will create more than 400 jobs. Chase now has the most bank deposits of any financial institution in the city. 

Meanwhile, Crain’s Chicago Business reports today that Starbucks and Caribou Coffee are both expanding in the city. Each coffee company expects to open dozens more stores in the area over the next few years. It would be the first expansion in Chicago for Starbucks since 2008, when the company closed 600 stores nationwide.

Michigan Venture Accelerator Gains Companies: Three new companies have moved into the University of Michigan’s Venture Accelerator, which provides space, services and mentoring for emerging startups.

The accelerator now is 60 percent full after just seven months in operation, and could be at capacity by the end of the year. The project occupies 16,000 square feet of space at the facilities once used by Pfizer on U-M’s North Campus.

Ohio School Bells to be Delayed?  An Ohio lawmaker is proposing to limit the state’s school year to the weeks between Labor Day and Memorial Day, in order to boost Ohio’s economy. The report comes from State Impact Ohio, a project of our partner station ideastream in Cleveland. Rep. Bill Hayes points to nearby states like Michigan that already have similar laws, and the economic success they’ve enjoyed.

According to a membership survey by the Michigan Lodging and Tourism Association, tourism has increased by 25 percent annually since the state changed its school start days in 2006. Hayes says Ohio needs that kind of boost.


Good morning! Three must-reads from around the Midwest region today:

Sara Lee sells its dough business. Downers Grove, Illinois-based Sara Lee Corp. is selling its North American refrigerated dough business to Ralcorp Holdings Inc. for $545 million, the Associated Press reports. The company said in May it wanted to start a process of splitting in two.

Allstate hiring in Ohio. The insurer, the fourth-largest in Ohio, is ramping up its workforce in Cincinnati, Cleveland, Columbus, Dayton, Toledo and Youngstown, according to the Youngstown Business Journal. The company said it sees a “significant” opportunity in this economy to expand, adding it wants to appoint 50 new insurance agency owners and hire more than 175 licensed sales professionals across Ohio this year.
New Detroit Bridge to Canada. Michigan Gov. Rick Snyder’s administration said it would like to have a deal on a new bridge between Detroit and Windsor, Ontario before the end of the year, our partner Michigan Radio reports. An impending deal would force many lawmakers, especially Republicans – who are in control of the Legislature — to take a position on the bridge issue.

Detroiters are mourning the death of Eleanor Josaitis, the co-founder of FOCUS:Hope, an inner city organization that grew from a civil rights organization to a major hub of worker training.

Eleanor Josaitis, co-founder of FOCUS:Hope

Josaitis, 79, died this morning at a hospice in Livonia, Mich. The Detroit Free Press obituary can be found here.

Said Detroit Mayor Dave Bing: “Eleanor was a stalwart of community activism. She has touched the lives of countless Detroiters and built a legacy of hope and help that will last for generations. She will be sorely missed as a friend and community leader.” Read more tributes to Josaitis.

FOCUS:Hope was founded in 1968 by Josaitis and William Cunningham, a Roman Catholic priest, as a civil rights organization. Josaitis, who attended the parish where Cunningham was weekend associate pastor, moved her family from the suburbs into the city the year after the Detroit riots and began working with him.

FOCUS:Hope began with an all-volunteer staff, and no budget, mainly as a food distribution service for needy residents. Its 40-acre campus on Detroit’s Oakman Boulevard now includes a Center for Advanced Technologies, a Machinist Training Institute and an Information Technologies Center.

Its food program, which continues, provides groceries to about 43,000 people monthly in a setting that is meant to resemble a grocery store.

FOCUS:Hope has an operating budget of $23 million, employing about 280 people known as “colleagues” and has 15,000 volunteers.

Josaitis and Cunningham, who died in 1997, worked tirelessly to attract attention to the venture, raising money, lobbying area executives to support it. and enlisting former executives to teach students. Josaitis hosted visiting presidents, testified before Congress and served on numerous non-profit boards.

“Focus: HOPE is such a remarkable charity and will continue well past her death,” said Edsel B. Ford II, a Ford Motor Company board member and Detroit philanthropist.

Did you participate in any FOCUS:Hope programs? Feel free to share your memories of Eleanor Josaitis.

 

 


Midwest in the midst of a tech hiring boom?  According to Bloomberg Business Week, Cleveland is adding more tech jobs than any other city in the nation.  Detroit and Cincinnati follow Cleveland. A word of warning, though: The ranking measures the percentage increase in tech jobs over last year, meaning these cities aren’t necessarily seeing a big increase in the actual numbers of jobs being added.

Detroit home prices on way to record lows. Home prices in Detroit continue to fall. The average home price is now 80% lower than in 2005, when prices hit their peak. Partner station Michigan Radio reports prices have fallen steadily this year and the outlook is for more of the same. More than half of the available properties in Detroit are foreclosed properties, making a near term rise in the average home price unlikely.

Kraft Foods splits in two: The Northfield, Illinois-based company has announced it will now be running separate companies to focus on domestic and international markets. Crain’s Chicago reports one company, considered to have high growth potential, will focus on bringing American “snack food” like Oreos, chocolate and Tang to emerging markets. The domestic grocery company on the other hand, will focus on North American sales of items like Kraft cheese, Oscar Mayer meats and Maxwell House coffee. The change is expected to take about a one year to complete.


Three must-read stories from around the Midwest today:

(Ricardo Giaviti via Flickr)

Crysler CEO says to temper expectations for U.S auto sales: The Detroit News reports Sergio Marchionne remarked the troubled economy will likely keep U.S auto sales from hitting 13 million units for the year – a goal the industry has been touting as a signal of U.S auto recovery. In the same speech to auto executives, Marchionne also said his company’s preliminary talks with the United Auto Workers Union are going well. Labor negotiations between the two begin in earnest next month.

Ohio’s collective bargaining ban drama continues today: Efforts to repeal SB5, an Ohio law that, among other things, reduces the collective bargaining power of the state’s public employees, are at a crossroads. According to the Cleveland Plain Dealer, the Ohio Ballot Board is deciding today how the measure to repeal the ban will be worded on the November ballot. The ballot language has been contentious. Opponents have argued the current ballot language is confusing to voters.

Construction in Detroit reaches busiest pace in more than a decade. Good news for Metro Detroit, which has added more than 6,000 construction jobs this summer – a rate of growth not seen since more than a decade ago. The Detroit News reports growth is the result of several very large construction projects and smaller developments fueled by private investment. Nationally, the unemployment rate for those in the construction trades still stands at over 15%.


When a company bears the name of its hometown, it can be hard to separate the two. Such is the case with Norwalk Furniture and the town of Norwalk in Northern Ohio.

Dan Bobkoff

Saving Norwalk Furniture means about 150 locals have jobs again.

“It really is our flagship company,” said Sue Lesch, Norwalk’s mayor. “It’s the company we’re proud of. We’re known for furniture all over the country.”

For more than a hundred years, Norwalk Furniture made custom-order sofas and chairs in its Ohio factory. For a long time, it was the biggest business in town, employing about 700 in this town of 17,000.

Jump ahead to 2008. The housing crisis depressed demand for furniture. The company’s bank pulled its credit line. Meanwhile, the town’s unemployment rate was heading toward 18 percent. Norwalk Furniture closed its doors.

“The closing of Norwalk Furniture was just such a symbol of not only the devastation we were seeing in many companies, but just a shock to the very system of this city just because of the importance of that company,” Mayor Lesch said.

Dan Bobkoff

The name is the same, but this is a new company. It's owned by 12 local families.

So, the story could have ended here. A company dies, leaving hundreds without jobs.

And, yet they’re still making furniture in Norwalk. How this factory reopened is a remarkable story.

LOCAL INVESTORS

Tom Bleile is a Norwalk local. He worked in the family business much of his life: highway construction. But, like many in this small town, he didn’t like its most famous company closing up shop. Over just four days, Bleile and a group of local families came together to buy the company.

On the surface, it might not seem like this group had any hope of succeeding. There wasn’t much time to do their homework, and they weren’t exactly experts on this market.

“Quite frankly, most of the investors couldn’t tell you the difference between a sofa and a love-seat,” Bleile said.

There was something unusual in this deal to save Norwalk, though. Investors like Dan White saw this as almost civic duty.

“The people who live here are truly devoted to this town and their friends and neighbors in this community,” White said. “So, it really wasn’t that difficult to get those 12 families to come together to look at doing something to help Norwalk Furniture.”

Dan Bobkoff

Dan White is an investor and Norwalk Furniture's president.

Dan White had made his money starting a firm that helps predict flood zones. He too knew very little about furniture, but with financing secured, and the company sold to the group of families, White became president. He streamlined the business. Maybe his inexperience in furniture was an asset: he says the company is now profitable. It has no bank debt. And, about 150 workers like Jim Spears are back on the job.

“I got hired in here when I was 20 years old. I’m 45 now,” Spears said from the shop floor. “I have a wife and three daughters. And, it was scary. Definitely a little bit of depression going on there.”

Of course, Norwalk Furniture isn’t the only company in town, but others were watching closely. The New Horizons Baking Company churns out thousands of hamburger buns for companies like McDonald’s. It’s just down the street and is growing. Trina Bediako is New Horizons’ executive vice president and she says what happened with Norwalk Furniture influenced their decision to expand here.

“It kind of helped to reaffirm what kind of community this was. There is growth. The people do care. The businesses do want to thrive,” Bediako said.

Dan Bobkoff

Downtown Norwalk. The town is more than 200 years old.

It’s not a totally happy ending yet. Not all the workers from the old Norwalk Furniture were hired back. The economy still needs help. Mayor Sue Lesch worries about the remaining unemployed and underemployed in her town.

“I think we have a lot of folks that have not been able to find that job that they want, but they’re working to provide for their families. They’re working two jobs. I worry about those folks,” Lesch said.

Perhaps the biggest contribution of these 12 investors is showing what’s possible.

 


The Empire Mine has been producing iron ore for more than 40 years. Photo courtesy of Cliffs Natural Resources

Our Changing Gears project is on the road, bringing you stories of towns where one company still affects everybody’s lives. Today we head north, to Michigan’s Upper Peninsula. That’s where North America’s biggest supplier of iron ore has been blasting the earth, and creating jobs, for more than 160 years. 

Ishpeming is a city built on iron ore. Photo by Kate Davidson

Our destination is the city of Ishpeming. It’s small.  Basically, you can’t throw a rock here without hitting a miner.

Take Steve Carlson. After high school, he worked 37 years for the mines.

“When I started as a young man, all the old bucks set you straight on the dos and the do nots,” he says.  “And what you want to do is go home every day to your family.”

Ken Hietikko is still mining after 36 years. He operates an enormous shovel at the Tilden and Empire open pit mines outside of town. They’re deep craters that have produced more than 450 million tons of iron ore. Hietikko runs the machinery of giants. The first time he saw it, he was struck with awe.

“I still am,” he says. “I like this. You know this is me running this great big piece of equipment. And supplying a living for a lot of people in our area. And supplying iron ore, to the world actually.”

Dale Hemmila says North American steel begins here. Photo by Kate Davidson

Like other miners, Hietikko endured his share of layoffs in the 1980s. But he still calls mining a “dinosaur industry” — one of the last places where a blue-collar kid with little education can make good money for life.

As for Ishpeming, it wouldn’t exist if Cliffs Natural Resources hadn’t started mining the UP in 1848.  Around here, the company is still known as Cleveland Cliffs.

The Empire and Tilden Mines produce about 13 million tons a year. Photo courtesy of Cliffs Natural Resources

“What we tell people is that steel in North America really begins here in Michigan’s Upper Peninsula,” says Dale Hemmila, the company’s director of public affairs in North America.

We’re standing at the edge of the Empire pit, which stretches nearly a mile long and a mile wide.  Here, the miners extract low-grade ore, which is processed into higher-grade pellets.

The iron ore is pulverized and turned into higher grade pellets. Photo by Kate Davidson

“The pellet is about the size of a marble,” Hemmila says. “And literally we create billions of them on an annual basis here.”

Pellet prices are high right now. Countries like China and India are using a lot of iron ore, to make a lot of steel. That’s good for Cliffs. Dale Hemmila says when you add up payroll, taxes, electricity and supplies, the company has a regional economic impact of more than $830 million. That includes 600 employees in Ishpeming and lot of other people who rely on the economic oxygen of the mines.

People like Sandra Sundquist. Where else besides Ishpeming could a gal sell 800 pairs of steel boots a year?

“We do have an issue in the UP of wide feet, and we actually call them pasty feet,” she says.  “They need extra wide boots.”

She has them in stock at Wilderness Sports downtown.

Sandra Sundquist sells 800 to 900 pairs of steel boots a year. Photo by Kate Davidson

Lee Woods sells giant tires to the mines. Photo by Kate Davidson

 

 

 

 

 

 

 

Down the road is a big guy, Lee Woods. He’s president of Northern Tire Inc., which provides giant tires for the mine’s giant haulers. The largest hauler can carry 320 tons of iron ore. The tires stacked up out back make Woods’s lot look like a sandbox for Titans.

“This tire weighs 10,500 pounds,” he says. “It’s twelve-and-a-half feet in diameter and these are just almost 50,000 apiece.”

Which all begs the question: How long is this going to last?

“Well, the iron’s gonna run out sometime. The ore’ll run out sometime. I don’t know when,” says Jered Ottenwess.

Ottenwess is Ishpeming’s city manager. He says it’s hard to do long-range planning when the local economy is so dependent on one company.

City Manager Jered Ottenwess says diversification is key. Photo by Kate Davidson

“What’s Ishpeming gonna look like in 25 years?” he asks. “Well that’s entirely predicated on whether Cliffs is still gonna be here, operating those mines. If they’re not, what’s our economy actually going to look like?”

All of Marquette County is trying to grow tourism, education and health care. The Marquette General Health System is already the biggest employer in the county; Cliffs ranks second overall. But the city manager worries Ishpeming itself won’t diversify fast enough. He says that shifting this old mining town’s economic base is an overwhelming challenge.

Meanwhile, a lot of people think mining will be here for a very long time.  Dale Hemmila says Cliffs is trying to extend the life of the Empire pit to 2015.  He says the Tilden Mine should operate another 30 or 35 years, depending on economic viability.