- John Polk said “I knew Charles when he was EVP of The Atlanta Chamber and I worked for ...” on Memories of Oklahoma City circa 1993
- John Polk said “Back in the mid-80's and early 90's, Cleveland was actually recognized as one of the ...” on Economic development in NEO: A view from the street-level
- John Polk said “Is there any way to substantiate Dimora's claim re: GCP and the PD, other than ...” on Cleveland’s new development dynamic?
- George Nemeth said “Like all glimmers of newness in CLE+ I expect this one to be crushed too” on Cleveland’s new development dynamic?
- Cleveland’s new development dynamic? | Brewed Fresh Daily said “[...] by Ohio voters, as gambling interests convert the Ohio constitution into a zoning ordinance. ...” on Ohio’s casino deal gets a bit more messy
- About BDP Comments
Indiana Gov. Mitch Daniels is on the verge of achieving the top item on his agenda. Indiana’s Senate is expected to cast a final vote tomorrow on Right to Work legislation, and Daniels most likely will sign it soon after
Right to Work laws prohibit a union from collecting mandatory dues at a workplace, even if they are representing the employees. Both houses in Indiana have already approved a Right to Work measure, but one house is required to agree on the other’s bill.
This morning, there were protestors at the Indiana State Capitol, singing “Solidarity Forever” as Democratic lawmakers prepared last-minute amendments to the bill, said the Indianapolis Star.
One would seek a statewide referendum on the issue. The other would let companies choose whether to continue mandatory dues.
Neither proposal is expected to be successful, because Republicans have a strong grip on the Indiana Senate.
Indiana is set to become the 23rd state to adopt Right to Work legislation, and the first since Oklahoma in 2001.
January 31st, 2012
Talking Points Memo, an influential political blog, is estimating that as much as $100 million could be spent on the recall fight involving Wisconsin Republican Gov. Scott Walker.
It quotes analysts saying spending could be two or three times the $44 million that candidates and their supporters spent during state Senate recall races last year. Walker, at least, is getting ready for a pitched battle. He raised $4.5 million in just over a month, and has more than $2 million on hand, according to TPM.
But, given the state of our economy, that got us thinking: what else could $100 million pay for in the Midwest? We found all kinds of things that carry that price tag.
Detroit Schools’ Deficit. A year ago, the Detroit Public Schools were $327 million in the red. Now, the deficit has been reduced to $89 million, according to Roy Roberts, the district’s emergency manager.
But it wouldn’t be handing us back any change. The steps the district took to reduce its shortfall means it has to pay about $20 million a year in interest, so it will have a use for the money left over from the $100 million.
Loans in Cleveland. Last week, the The Cuyahoga County Council launched a $100 million fund designed to build businesses and create jobs.
According to the Cleveland Plain Dealer, the county is offering 11 types of loans. Five types of loans, including those to attract investors for start-ups, redevelop properties and to lure large companies, will be accepting applications immediately. The others are expected to start over the next four months.
A Bunch of Robots. Ford Motor Company is spending $100 million to install laser vision robots at three factories, including the Michigan Assembly Plant in Wayne and the Chicago Assembly Plant.
The robots are meant to give the company a more accurate reading of the way its parts fit together, helping it improve quality and reduce wind noise.
Turkeys in Indiana. Farbest Foods of Huntingburg, Ind., may spend that much to build a turkey processing plant in Vigo County, as well as a feed mill and a brooding hub.
Before it can make the investment, though, it needs to sign contracts with 60 to 70 farmers in central Indiana and east-central Illinois.
Your turn: how would you spend $100 million in the Midwest?
Line graphs are usually nothing to get excited about. But this particular graph released today by the Chicago Fed tells the story of manufacturing over the last decade. Represented in that one bold line are the lives and livelihoods of hundreds of thousands of people in the Midwest. The bold line shows the jobs that were lost, the factories that were shut down and the products we no longer make. We can learn a lot from where that line has been, and where it seems to be headed.
Now, look at the slightly thinner line. That line is manufacturing for the country as a whole. See how it didn’t dip nearly as far as the bold line in 2009? That tells you how much harder we got hit in the Midwest.
But we can learn a lot from the rise of those lines as well. Even though many, many people in the Midwest are still out of a job, our manufacturing sector is improving dramatically. We had it much worse than the rest of the nation when things got bad. But over the past two years, Midwest manufacturing has improved at better than twice the rate as the rest of the country.
The Chicago Fed also provides a set of data with a longer view of things. In that data, we can see that our manufacturing sector is now more productive than its been since September of 2008. But that number is still worse than it had been for the previous ten years. So, things are bad. But at least we’ve made it back to where we were in 1997.
The economic transformation of the Midwest has been the story of our lives for at least the past three years. Depending on where you live, the transformation has been going on for a lot longer. But as the economy transforms, one thing isn’t changing: This is a region that makes things.
The line proves it.
In 1889, on Chicago’s Near West Side, Jane Addams and Ellen Gates Starr opened the Hull-House as a way to give their less fortunate neighbors an education in the arts and literature. The role of the Hull-House quickly expanded, offering English class, child care and job training to the city’s rapidly growing immigrant population. Jane Addams went on to win the Nobel Peace Prize. The House she created has been helping Chicagoans in need ever since.
But that ends today.
At 5p.m. Chicago time, Hull House will close its doors forever. The museum that honors Jane Addams and the house she built will remain open. But, for those seeking help, the Jane Addams Hull House Association will no longer be there to give it.
The leaders at Hull House say the closure is unavoidable. They say revenue has dropped from $40 million a decade ago, to half that today. But the staff at Hull House has been telling a different story on the Association’s Facebook page.
They say the end of the charity came as a sudden and shocking surprise to them, and to the people they serve. They say because the closing was only announced this week, there’s been no time to help transition clients to other service providers. As of Wednesday, they wrote that less than half of their clients were able to find a replacement for Hull House services. And most of Hull House staff have no job prospects, no severance and no health care.
“It’s a bitter irony,” they wrote on Facebook, “that some Hull House staff members might well find themselves in desperate need of the same services that they once provided to clients.”
Hull House staff say they’ve contacted the Illinois Attorney General’s office to investigate how things got so bad so fast for Hull House, and whether management did anything illegal along the way.
Whoever is running the Hull House Facebook site says they will keep it active even after the charity closes its doors. And they’ve set up an email account for anyone who has questions. The address is AskAboutHullHouse@gmail.com.
RELATED: In November, we brought you the story of Chris Busse, a laid off teacher who launched a new business. He launched that business with the help of Hull House.
January 26th, 2012
Last year, it seemed unlikely. Now, Indiana looks bound to get a Right to Work law.
On Wednesday, the Indiana House followed the state Senate by approving Right to Work legislation. The action came just a day after Indiana’s governor, Mitch Daniels, delivered the Republican response to President Obama’s State of the Union address.
Both houses have to approve the same bill before it can go to Daniels for his signature. The Indianapolis Star says it’s likely that the Senate will consider the House version, because Republicans are in tighter control in the Senate. After that, Daniels can sign it into law — which he could do before the Super Bowl is played in Indianapolis on Feb. 5.
Right to Work laws prohibit unions from collecting mandatory dues. Labor unions say the laws make it much harder for them to organize, since workers don’t have to support them. Some political analysts say that weakens the unions’ political clout, too.
Indiana would be the 23rd state to approve Right to Work, and the first since Oklahoma approved a Right to Work law in 2011. Indiana also would be the first Right to Work state in the industrial Great Lakes. And, with Republican governors in Michigan, Wisconsin and Ohio, it probably won’t be long before the issue comes up for a vote in at least one of those states.
Earlier this week, we told you why Daniels decided to push for the bill this year. He says he was tired of seeing Indiana lose out on projects just because it wasn’t a Right to Work state. One of the projects the state lost, said Daniels, was the Volkswagen plant that went to Chattanooga, Tenn.
Do you think Right to Work legislation is now likely in other Great Lakes states? What’s your thinking on the issue?
You might have heard something about a speech last night. From his claim that GM is back on top (rated “half-true” by PolitiFact.com), to his mention of a battery plant worker from Holland, Mich. (which, by the way, we’ve covered before), the Midwest got plenty of attention from the President during his State of the Union address.
And he’s not done with us. This afternoon, the President is in Cedar Rapids, Iowa to talk manufacturing jobs. He’ll also be traveling to Arizona and Nevada. This Friday, the President returns to the Midwest for a stop in Ann Arbor, Mich. This time, he’ll be talking about higher education.
During the State of the Union speech, President Obama said higher education shouldn’t be a luxury, and he’s committed to funding it. That was the carrot for colleges and universities. This was the stick:
“Let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down,”
The idea is similar to a law passed in Michigan last year for the state’s public universities. They raised tuition anyway.
January 24th, 2012
Over the weekend, the New York Times ran a must-read story on why Apple products are not made in the U.S.
And, earlier this month, This American Life devoted an hour to a stunning look at work conditions inside Apple’s supplier factories in China.
Not long after TAL’s story ran, Apple released its annual progress report on suppliers in China. For the first time ever, the company issued a list of its suppliers and said it would allow an independent third party to audit its operations.
But there’s one claim in all this reporting that has particular relevance for the Midwest economy.
Early on in the New York Times story, reporters Charles Duhigg and Keith Bradsher (once the Times’ Detroit bureau chief) make the case for why Apple stopped making its devices in the U.S., and why that work is never coming back:
It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
And, deeper in the story, we get this claim from an unnamed Apple executive:
“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”
Is that true? Do American, and particularly Midwestern, workers really lack the “flexibility, diligence and industrial skills” that Apple needs?
Changing Gears has reported in the past that finding skilled workers is, in fact, a problem for manufacturers in the Midwest. But that same reporting revealed that many training programs are full across the region. The willingness to learn new skills is there. And, certainly, there are plenty of people looking for work.
To get a Midwest perspective on why Apple might be hesitant to try its luck with this labor pool, we called up Jeffrey Liker. He’s an expert on manufacturing in both the U.S. and Asia, and he’s the author of a number of books on the “Toyota Way” of manufacturing.
Liker doesn’t buy the claim that U.S. workers don’t have the skills or the flexibility to make Apple products. Any manufacturer opening a new plant has to do some training, he says.
Instead, Liker gave three main reasons why he believes Apple won’t build in America:
- Cheap labor Apple executives may not want to admit it, but Liker says one of the biggest advantages of going overseas is that workers there are much, much cheaper. This is really an obvious reason, and we all know it. But it’s worth remembering whenever someone tries to claim that the actual reason is because our workers don’t have the right skills. “Right now is the worst time to make that statement since the recession has put so many people out of work,” Liker says. “There are all kinds of skilled workers right now.”
- Taxes Liker says another big reason Apple and other manufacturers do work in Asia is because taxes are cheaper there. Usually, if a company makes profits from something built overseas, they have to pay American taxes when they “repatriate” those profits back to their headquarters here. But if a company spends money at lots of overseas factories, it just re-invests the profits over there, and it never pays the higher tax. Liker estimates this could make a 20-30 percent difference in profits for a company like Apple.
- They’re there because they’re there Once the decision to make products overseas has been made, it becomes incredibly difficult to reverse, Liker says. “Apple is not a manufacturing company,” he says. “They’re a design and marketing company.” All of Apple’s manufacturing plants in Asia are owned by suppliers, not by Apple. If Apple executives suddenly decided they wanted their products built in the U.S., they’d have to invest billions of dollars in new factories. In China, the infrastructure is already there. “They made that decision decades ago,” Liker says. “I don’t think they’re revisiting it.”
There’s another wrinkle to this discussion that Liker says is worth mentioning. Right now, he says China actually has a far greater shortage of skilled workers than the U.S. Demand for workers in China is so high that factories there have trouble holding on to people. Liker says turnover rates of 20-30 percent are common in Chinese factories. So, according to Liker, the truth is the exact opposite of what Apple claims.
The New York Times article generated lots of discussion online, and yesterday one of the reporters responded to readers questions. The Times says this is the first in series of articles about the “iEconomy.”
But there’s another side to the jobs numbers: people simply giving up on finding work. (Take our Changing Gears survey.)
The conflicting numbers make it hard to get a clear picture of the jobs market.
Here’s what we know:
- Michigan’s unemployment rate fell to 9.3 percent in December, but the size of the workforce continues to drop, according to our partner station Michigan Radio. It says Michigan’s unemployment rate plus the “under-employment” rate (people working part time jobs because that’s all they can find, or in fields not related to their expertise) is 18.8 percent.
- Nationally, initial claims for unemployment benefits dropped by 50,000, to a seasonally adjusted 352,000. It’s the lowest figure since April 2008, says the Labor Department. Reuters reports that economists are watching for the seasonal number to drop to 350,000, which would be an indication that jobs growth is stronger.
- Manufacturing output rose 0.9 percent from November to December, the Federal Reserve said on Wednesday. Overall, it’s up 15 percent since the depth of the recession. Factories added 23,000 jobs in December, the most since July.
But there are concerns about the job market, in part because of the prospect that gasoline prices will rise this winter and into the spring. Consumer comfort dropped last week, in part due to a 20-cent a gallon rise over the past month, Bloomberg says.
We’d like to get a handle on your job prospects. Changing Gears would like to know if you’ve recently found work, or if you’re among those who’ve given up on landing a job. Please take our survey and we’ll be reporting on this situation as we sift through the results.
January 19th, 2012
Flint Plan: Michael Brown, the emergency manager of Flint, Mich., unveiled his plan yesterday for reducing an $11.3 million deficit. Not surprisingly, one of his top priorities is to overhaul bargainingagreements with city unions, something an emergency manager is allowed to do under Public Act 4, passed last year by the Michigan Legislature. Brown also wants to reopen the city jail, which closed in 2008.
Wisconsin Candidates: Democrats are raising their hands for the opportunity to challenge Wisconsin Gov. Scott Walker, who appears to face an almost certain recall election this fall. Former Dane County chief executive Kathleen Falk said the 1 million signatures submitted by opponents to Walker on Monday convinced her to run. State Senator Tim Cullen of Janesville also plans to enter the race.
Toyota Milestone: It may be hard for car buffs to believe, but Toyota’s plant in Princeton, Ind., will turn 14 years old this year. And this week, it built its 3 millionth vehicle. The factory, in southwest Indiana, makes the Sienna minivan, which was the best selling family van in the United States last year. It has 4,100 workers and an annual payroll of $288 million.
Rock Hall: Dead Heads, listen up: the Rock and Roll Hall of Fame in Cleveland will celebrate the Grateful Dead this spring with an exhibit called The Long Strange Trip. It opens April 12, giving you plenty of time to launder your tie-dye t-shirts and get out your Jerry Garcia ties.
January 18th, 2012
CHICAGO – 1871 was the year of the Chicago Fire. For local tech entrepreneurs, they say they like to think of it as the year Chicago rebuilt – and have seized upon it as the name for a new tech center that will open this spring at Chicago’s Merchandise Mart.
1871 is the brainchild of local tech entrepreneur Matt Moog (full disclosure: Matt Moog is a board member of Chicago Public Media, parent of our partner station WBEZ), who is also the CEO of Viewpoints Networks and founder of builtinchicago.org. It will be operated by not-for-profit Chicagoland Entrepreneurial Center, which is run by Kevin Willer.
Willer helped open the Google office in Chicago in 2000 – back then, it was a windowless interior office for two people. It was a “pretty depressing” place to work, Willer told me earlier today.
“It wasn’t vibrant and energetic and the people that weren’t around us weren’t working on similar problems that we had,” he said.
Fast forward to today, and the tech environment in Chicago has changed. Willer and organizers point to stats like the $1.45 billion raised by Chicago start-ups last year (most of that from Groupon) as proof that there is a vibrant young tech community throughout the city.
I asked Willer if the goal is to create the next Groupon. He said it wasn’t just “Groupon, but the next Google, or the next GrubHub – really creating a place where in the next five years, or ten years, we can look back and say, this is where a lot of great tech companies in Chicago got started.”
It will work sort of like a gym membership for startups. It’s designed for new companies with two to eight employees, and for companies that do or don’t have financing. Members will pay $400 a month for reserved desk space, with lockable cabinets, etc. There are cheaper plans, around $200/month, for shared space. All of this will be in 50,000 square feet that is being built in Merchandise Mart, on the 12th floor, across space Razorfish has just rented out.
It will be run by CEC, and is being funded through support from J.B. Pritzer, the state of Illinois, and a few corporate sponsors: Comcast is providing free ethernet access and Cisco helped with the design of the “smart” work space, a concept they’ve been working on in Europe and will make its American debut in this space. The facility will also include a cafe, auditoriums and classrooms – the idea is to have more than 180 classes on financing, technology, marketing and the like for members and the general public.
At a news briefing today for reporters on the center, Moog and Willer declined to say how much funding has gone into it, although Willer did say the goal is for the tenant payments to make the center eventually “break even” financially.
Willer stressed that this isn’t an incubator. He said the idea is to have a collaborative working space where entrepreneurs can bounce ideas off each other. Venture capital and angel investors will also have a presence at the facility.
“Economic development is about creating new enterprises as well as supporting corporations that are already here,” Willer said, adding he hopes 1871 will become part of the Chicago’s tech “ecosystem”.