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November 30th, 2011
FLINT — There may be no better example of how the industrial Midwest is changing than the site of the old Fisher Body Plant No. 1 in Flint, Michigan. It’s one of the factories sit-down strikers occupied in the 1930s. The plant made tanks during World War II. It was later closed, gutted and reborn as a GM design center. But GM abandoned the site after bankruptcy and the new occupants don’t make cars. They sell very expensive prescription drugs.
There’s one group of experts who can always tell you the history and significance of an old factory. They’re the guys at the bar across the street.
Dan Wright is still a regular at The Caboose Lounge. He worked at Fisher Body No. 1 briefly in the 1970s.
“The bars were always full and restaurants were always full and stores were always full,” he says. “And all these stores, bars and restaurants you go to now, there’s nobody there. And it’s sad that Flint died the way it did.”
Now Michigan’s governor says there’s a financial emergency in Flint, the once prosperous birthplace of GM. In fact, seven thousand people worked at Fisher Body No. 1 when workers sat down in late 1936, demanding recognition for the United Auto Workers.
“We’re actually standing in the area, very close right now, where the 1937 sit down strike was,” says Phil Hagerman, president and CEO of Diplomat Specialty Pharmacy.
Diplomat moved in earlier this year. The company specializes in drugs that target complex medical conditions like cancer, hemophilia, MS and HIV/AIDS. Many produce side effects, so nurses here call patients to make sure they stick to their treatment plans.
“Specialty pharmacy is the fastest growing component in the pharmacy industry,” says Hagerman. “Traditional pharmacy is growing at two to five percent a year. Specialty pharmacy is growing at 15 to 25 percent a year.”
Diplomat hired more than two hundred people this year. Phil Hagerman says the company is on track to top a billion dollars in sales next year.
“We’re distributing as many as two thousand or more prescriptions a day around the country, shipping to every state every day from this building,” he says.
The building highlights the transformation of the industrial Midwest. GM shuttered the sprawling Fisher Body No. 1 plant in the 80s and much of it was demolished. The footprint of the complex shrank dramatically. But the steel and concrete of this building’s main structure were retrofitted into an engineering and design center for GM, housed in the Great Lakes Technology Center.
Diplomat later bought about half the space and it’s still enormous: 550,000 square feet. That’s more than one thousand square feet for each of the 450 employees here. The other half of the complex is now a biomedical campus, run by the company IINN.
“How often do normal business rules allow a company to have a ten year growth footprint?” Diplomat’s Phil Hagerman asks. “It just doesn’t happen. ‘Cause the cost of the building is so great. But because we acquired this from an auction process at a very, very low cost, we have a building that we know we can grow into for about ten years.”
So, that’s one advantage of acquiring property discarded by industrial giants. Advantage #2: 1700 cubicles left behind. Advantage #3: Random industrial signs that read: ‘Caution: Pedestrian traffic. Sound horn’. And advantage #4: The government loves you, especially if you’re a high-tech or medical company. In fact, Diplomat won’t pay property taxes here for almost 15 years, and it got a 62 million dollar tax break from the state. In return, CEO Phil Hagerman says he’ll hire four thousand people in the next two decades.
But thousands of people used to stream across the street to local businesses every week. At The Caboose Lounge, waitress Janet Anderson says the new workers at Diplomat don’t come in yet, but she’s hopeful.
“I do good breakfasts,” she says. “Real good breakfasts you can ask anybody in here.”
And these days, hope itself might be a welcome sign of change in Flint.
(NPR also aired a version of this story nationally. Listen to it here.)
November 29th, 2011
LIVONIA, Mich. – A recovering U.S. auto industry should add more than 150,000 new jobs by 2015, and most of them will be located in hard-hit Michigan.
Analysts from the Center for Automotive Research in Ann Arbor said Tuesday that gains sales and market share, as well as savings reaped from recently concluded UAW contract negotiations, will allow Detroit’s automakers to expand their workforces. The Big Three are projected to add approximately 30,000 new jobs over the next three years.
But that’s a relatively small share of the overall projected industry growth. Suppliers are expected to account for the bulk of the increase across the country. Estimates say the auto industry employs 590,000 today and will employ 756,800 in 2015, a 28.2 percent increase. That year, sales of light vehicles are expected to hit 15.5 million units.
“They’re going to grow,” said Kristin Dziczek, assistant research director at CAR. “They’re going to have to.”
Managing that growth is trickier than it may appear. Automakers are fearful that suppliers have promised more capacity than they can actually deliver as demand grows. Many suppliers have been reluctant to ratchet up operations in case the boom never arrives.
At best, the forecast growth will be uneven.
Dave Andrea, senior vice president of the Original Equipment Suppliers Association, said some of the top suppliers are operating at 90 percent of their manufacturing capacity and cannot add more production without adding workers. Sean McAlinden, chief economist for CAR, said automakers are already seeing shortages in areas such as integrated stamping and casting.
But other suppliers are running closer to 70 percent and see the current market as unsteady.
“This is where the complexity of the industry and working with suppliers is,” he said. “They have so many question marks, that they’re really balancing, particularly through 2011. So we haven’t really had the luxury of a steady climb.”
If and when the job boom materializes, these experts say Michigan will be the major beneficiary.
Nearly all the job growth from the Detroit automakers will take place in the state, which already is home to two-thirds of the three companies’ 171,742 U.S. employees. The Big Three are expected to add 33,000 jobs in the state, according to CAR, and should have a Michigan workforce of 135,000 by the end of 2015.
The new hires are expected to be comprised of hourly and salary workers, while forecasters see a dip of about 4,000 skilled-trade workers ahead.
More broadly, many more of the 150,000 jobs added by suppliers should occur in Michigan, although CAR experts did not pinpoint a specific number. “We’re definitely seeing a concentration in Michigan,” Dziczek said.
The news is good for a state pummeled by the recession. Michigan’s unemployment rate reached 14.1 percent in August 2009.
But the news is also bittersweet. In 1999, the state employed 316,000 in motor vehicle and manufacturing. Now, it’s 73,700.
And the three Detroit automakers employed more than 1 million across the country in their peak year of 1978. Even with the growth projections over the next three years, they’ll employ less than 200,000.
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.”
November 22nd, 2011
“What states do you consider part of the Midwest?”
It was a simple question we asked Monday on Twitter. We were caught by surprise with the number of complex and disparate answers. Geographical boundaries are apparently open to wide interpretation.
Reader responses were – pun intended here – all over the map. It seemed everyone had their own, particular definition of the Midwest.
Some of you drew the Midwest along industrial lines while others drew it along agricultural boundaries. Some considered states in the Great Plains and Great Lakes their own distinct regions. Others lumped them together.
Some of you ardently advocated for Pennsylvania’s inclusion and Nebraska’s omission – and vice versa. Some people considered state lines irrelevant.
“The fact we have to ask reveals how screwy our state divisions are,” tweeted Rod Abid (@robabid).
Officially, the U.S. Census regions created by the Department of Commerce divide the Midwest into two sub-regions: The “East North Central,” which includes Wisconsin, Michigan, Ohio, Indiana and Illinois; and the “West North Central,” which includes North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas and Missouri.
The terminology is stilted – last we checked, the North Central was an East Coast railroad. No one mentioned the “West North Central” in any of the responses we combed through.
But Michael Nardi (@iPublicPolicy) thought that, though the titles may be off, the definitions roughly matched his perception of the Midwest. He says two Midwests exist. One comprised of the “Grain States” of Iowa, Kansas, Missouri, Nebraska, North Dakota, South Dakota and Minnesota. The other comprised the “Industrial States” of Ohio, Illinois, Indiana, Michigan, Wisconsin, Western Pennsylvania and Western New York.
Others weren’t so sure about the outliers of the region – Nebraska to the west and Pennsylvania to the east. Their belonging was perhaps the most hotly debated in our impromptu Twitter discussion.
“Nebraska an easy yes. Penn., an easy no, “wrote Doug Hanks (@doug_hanks).
“Neb.? No. It’s the Plains. Western PA? Yes,” wrote Tim Logan (@tlwriter).
“Nope and nope,” wrote Scott Burgess (@autocritic).
“Simple answer. Both represented in Big Ten. Both Penn and Nebraska are Midwest,” wrote Matt Mikus (@mikusmatt).
Using the Big Ten Conference as a geographical measure aid and complicate attempts to define the region. Yes, Nebraska and Penn State are both members of the college sports conference based in Chicago. But they’re also the newest members of the 12-school conference at a time where geography is playing a diminished role in how schools determine their conference affiliations.
Besides, even the Big Ten has been vexed by the geographical conundrums presented by the Midwest.
When Nebraska was added in 2010, the conference split into two divisions. Initial expectations were they would be called the “Lakes” and “Plains” divisions. At the very least, many expected them to contain some sort of geographic reference points.
But the schools couldn’t fit neatly into those definitions and were ultimately not sorted by geography. The Big Ten elected to instead go with generic “Legends” and “Leaders” names for the respective divisions. (A local sports columnist was not impressed).
Another key sticking point for our readers was Pittsburgh. At the crossroads of Appalachia, the Atlantic states and the industrial Midwest, a consensus emerged that Steel City merited inclusion because it had more in common with Detroit and Cleveland than Philadelphia and New York. But not everyone agreed.
Erin Presson Ladd (@WordNerdErin) wrote us and said that her master’s thesis was based on this topic of Midwestern geography. In some broadly sketched parameters, she concluded the Midwest includes the area west of the Allegheny Mountains, north of the Mason Dixon Line, south of Canada and east of the Rocky Mountains.
But she added that, as an Illinois native, should could “NEVER” consider Pennsylvania as part of the Midwest.
Just when we were thinking we’d never come to a definitive conclusions – or perhaps reassuring ourselves because there are no right answers – along came a tweet from Nick Castele (@nickcastele), who traveled all the way to Hawaii to find the best definition we’ve heard yet.
“A Brit I met in Hawaii over the weekend asked,” he wrote, “If Ohio was ‘one of those flat, cold places.’”
Yep, sounds about right. Finally, a simple answer for our simple question.
Thank you to everyone who participated in our discussion about the Midwest states. We’re by no means done with the topic. If you have more thoughts, we’d love to hear them. You can comment on this post below or find us on Twitter @chgears.
November 22nd, 2011
Michigan Gov. Rick Snyder has an unlikely ally in his push to build a new international bridge between Detroit and Canada — the Buckeye State.
Ohio state senators say their state needs the bridge as much as Michigan.
They have introduced a senate resolution encouraging their northern neighbors to build a replacement for the 83-year-old Ambassador Bridge. Ohio Senate Resolution 141 states that bilateral trade with Canada generated $30.9 billion in 2010, and said Canada was the top market for Buckeye State exports.
“A modern border crossing that can support the ever-increasing amount of trade and travel between the U.S. and Canada is essential to the economies of Ohio, the Midwest and the U.S.,” says SR141, which was introduced by Republican Sen. Gayle Manning.
In Michigan, Snyder has been spurned by fellow Republicans in his attempts to build the bridge. They recently shelved two bills that would allow for the creation of an authority which would solicit bids for the project. Canada has volunteered to contribute $550 million toward the bridge.
Matty Moroun, owner of the private Ambassador Bridge, has fiercely lobbied against the project. On Monday, Snyder said he may try to circumvent the Michigan state legislature, a strategy that could test the limits of his executive power.
November 21st, 2011
The Midwest has the highest concentration of homegrown residents of any region in the country.
That’s good and bad news, according to analysts. The distinction could mean the Midwest has done the best job retaining strong community ties with native residents. It can also mean the area, overall, has struggled to lure employees from other states.
William Frey, a Brookings Institution demographer, tells Governing, which compiled state-by-state data on residents living in the state of their births, that “you have a very rooted population in some of the Midwestern middle of the country,” while the western U.S. is “still filling in.”
Louisiana ranked highest in the data with an overall homegrown population of 78.8 percent, but Midwestern states took the next four spots: Michigan (76.6 percent), Ohio (75.1 percent), Pennsylvania (74.0 percent) and Wisconsin (72.1 percent).
Looking at the homegrown population ages 25 and up, the results are similar. The top five are: Louisiana (75.0 percent), Michigan (71.9 percent), Pennsylvania (71.4), West Virginia (70.7) and Ohio (70.2).
Nationwide, slightly less than half residents age 25 and above live in the state of their birth, according to Governing.
Across the Midwest, the six states of Wisconsin, Illinois, Michigan, Indiana, Ohio and Minnesota averaged 71.3 percent of homegrown residents. The Deep South ranked second, with the five states of Louisiana, Mississippi, Alabama, Georgia and South Carolina averaging 66.9 percent.
Here are state-specific results across for homegrown populations across the Midwest:
Michigan 76.6 percent
Ohio 75.1 percent
Wisconsin 72.1 percent
Minnesota 68.8 percent
Indiana 68.3 percent
Illinois 67.1 percent
Midwest percentage homegrown, age 25 and above
Michigan 71.9 percent
Ohio 70.2 percent
Wisconsin 68.4 percent
Minnesota 63.8 percent
Indiana 63.2 percent
Illinois 59.3 percent
Curious about the rest of the country? Here’s an interactive map at Governing that has state-by-state data.
Pete Bigelow · Midwest Memo: Michigan Debates International Bridge, Ohio Foreclosures Rise, U.P. Coal Plant Could Close
November 21st, 2011
Three stories making news across the Midwest today:
1. Detroit bridge project scrutinized. Michigan Gov. Rick Snyder absorbed his first major political defeat since taking office – and it came at the hands of his own Republican party, which refused to green-light the construction of a new bridge between Detroit and Windsor. Expectations are growing, according to the Detroit Free Press, that Snyder will try to circumvent the legislature, a strategy that will raise legal questions about the range of the governor’s executive authority. Last week, Changing Gears senior editor Micki Maynard detailed the skirmish over the new bridge for The Atlantic Cities, and examined forceful opposition from Ambassador Bridge owner Matty Moroun.
2. Ohio foreclosures on the rise. After enjoying their lowest level of foreclosures in five years, Ohio residents saw a foreclosure uptick in the third quarter of 2011, mirroring a nationwide trend. Our partner station Ideastream reports foreclosures in Cuyahoga County increased 17 percent from the previous three-month period. Experts attribute the jump to mortgage lenders resuming the foreclosure process after last year’s robo-signing scandal had halted proceedings. Over the summer, less than 1 percent of Ohio home loans entered the foreclosure process, Ideastream reports. Currently, 9.3 percent of Ohio mortgage holders are late on their payments, according to the Mortgage Bankers Association.
3. Future of Michigan coal plant unclear. The only major power plant in Michigan’s Upper Peninsula is at a crossroads. A coal-fired plant owned by We Energies could be shut down over the next five or six years as new environmental rules go into effect. One alternative would be a switch to natural gas, a conversion being employed by numerous plants across the Midwest. The Milwaukee Journal Sentinel reports the future of the plant is of high concern in Marquette, where We Energies employs 180 workers and plays 17 percent of the city’s property taxes. “A closure would be devastating for our community,” Mayor John Kivela tells the newspaper.
(Clarification: An earlier version of this entry contained dated information. It has been revised to indicate that a Michigan state senate committee defeated a proposal regarding a new bridge linking Detroit to Canada last month.)
Pete Bigelow · Here’s What You Need To Know About How Mayor Dave Bing Intends To Fix Detroit’s Fiscal Crisis
November 17th, 2011
Detroit faces a bleak fiscal future and needs to change. In a hurry.
That’s the message Mayor Dave Bing delivered in a speech about the city’s grave financial condition. Detroit faces a cash-flow shortfall of $45 million as soon as April, at which time it would be insolvent. Without immediate changes, the state of Michigan will likely appoint an emergency manager whose power exceeds the mayor and city council.
In order to stave off a move that would be unprecedented for Michigan’s largest city, Bing has proposed a variety of fixes: an across-the-board 10 percent pay cut for city employees, increasing employees’ share of health-care premiums by 10 percent, a not-quite-1-percent tax increase on city businesses, the privatization of the city’s lighting and transportation departments and retiree pension reforms.
He also requested $220 million from the statehouse, a give-back for cuts in revenue sharing (a request that almost certainly will not be granted).
Is Bing’s overall plan enough to thwart state intervention? Reviews are mixed.
Columnist Stephen Henderson at the Detroit Free Press says longer-term projections show the city needs at least $161 million to stay afloat in the not-too-distant future and that the mayor’s proposal is not far-reaching enough. “Bing still gives the impression of a leader who is looking more readily for short-term relief than long-term solutions,” he writes.
Daniel Howes at the Detroit News sees Bing’s solutions in a more positive light. But ultimately he finds too many parallels with Detroit’s automotive collapse and eventual federal bailout to think that state intervention isn’t an almost-certain outcome.
To recap decades of Detroit’s fall, Howes writes the city’s strategy seemed to be, “Ignore reality, no matter how many times critics and analysts outline it.” And, “Delude constituencies into believing that decades of weak management, poor decisions, ineffective leadership, over-reaching unions and inane political grandstanding can be overcome in months … by the same institutions culpable in the crack-up.”
Bing says he’s trying to avert the appointment of an emergency manager at what is, for all intents and purposes, the eleventh hour. Minutes after his speech concluded, Michigan Gov. Rick Snyder released an ominous statement that made an appointee seem like an inevitability: “Based on the mayor’s remarks tonight and the severity of the situation he described, we anticipate he will be submitting a request for a preliminary financial review in the near future.”
Can financial woes decades in the making be corrected in a matter of months? The clock is ticking.
Pete Bigelow · Midwest Memo: Michigan’s Unemployment Rate Drops, Indianapolis Plant Stops Using Coal, Hearing Held On Milwaukee Streetcar
November 17th, 2011
Three stories making news across the Midwest today:
1. Michigan’s unemployment rate drops. Michigan’s unemployment rate fell a half-point to 10.6 percent in October from 11.1 percent in September, according to numbers released Wednesday from the Michigan Department of Technology, Management and Budget. It was the second straight month the state’s rate declined. The decline came “due primarily to a reduction in the number of unemployed individuals actively seeking employment,” Rick Waclawek, director of the Bureau of Labor Market Information & Strategic Initiatives, said in a statement. Nationally, unemployment claims fell to a seven-month low Wednesday, according to our partner station WBEZ. The four-week average fell to 396,750, the first time the average has been below 400,000 in seven months.
2. Indy Plant Eschews Coal For Natural Gas. A plant that generates steam for heating some of Indianapolis’ biggest downtown institutions will convert its coal-burning boilers to natural gas. Citizens Energy Group CEO Carey Lykins tells the Indianapolis Star the project will “mean cleaner air for downtown Indianapolis and provide significant savings for our customers compared to continued use of coal.” The conversion could be completed as early as 2014 and save the company $5 million in annual operating costs. The Perry K plant heats many downtown businesses and institutions, including Lucas Oil Stadium and the Indiana University-Purdue University Indianapolis campus.
3. Milwaukee Streetcar Support Swells. Supporters of a Milwaukee Streetcar project outnumbered its detractors by a 2-to-1 margin at a public hearing held Wednesday night on the planned streetcar line’s environmental impact. Supporters said the streetcar project will improve city transportation and stimulate economic development along the line. Opponents believe the cost is one the city cannot afford. City alderman have already voted to approve the project and move ahead with engineering, according to the Milwaukee Journal Sentinel, but have withheld final approval “until more details are fleshed out.”
Pete Bigelow · Midwest Memo: Obama Chides China, New Detroit Dock Boosts Michigan Tourism, New Owners For Gary Casinos
November 14th, 2011
Three stories making news across the Midwest today:
1. Obama chides China. Using uncharacteristic blunt language, President Obama said America had enough of China’s currency manipulation and encouraged the global power to abide by “the same rules as everybody else.” At the closing news conference of the Asia-Pacific Economic Cooperation summit, Obama told reporters, “Enough’s enough,” and that “we don’t want them taking advantage of the United States.” The comments came one day after Obama held face-to-face talks with President Hu Jintao, according to Reuters. Obama and other U.S. leaders have grown weary of China keeping its currency value artificially low, thus hurting American companies and jobs.
2. Detroit dock brings tourist upswing. When a $21.5 million dock opened in Detroit earlier this summer, critics doubted the facility would see much use. Although only two cruise ships visited the port this past summer, according to the Detroit Free Press, cruise-ship operators have scheduled 23 visits in 2012. The uptick is expected to bring 2,500 new visitors and an increase in Michigan tourism dollars. Calling it a “significant win” for the region, W. Steven Olinek, deputy director of the Wayne County Port Authority, told the newspaper, “in future years we hope to play an even greater role in the re-emerging Great Lakes cruise industry.”
3. Gary casinos have new owner. New Mayor-elect Karen Freeman-Wilson says new ownership for two bankrupt casinos in Gary, Ind. is good for both the casinos and the city. “Investment in their structure will attract more gamers,” she said. Freeman-Wilson tells our partner station WBEZ that money is needed for infrastructure improvements, especially fixing city streets. Attendance has dropped at Northwest Indiana casinos, according to recent numbers, a falloff that comes even before a proposed Chicago casino heightens competition. Wayzata Investment Partners in Minnesota has taken over at the Majestic Star Casinos, which owe the city up to $15 million.