Chrysler Struggles, Finally Falls

Story from Yahoo! News

DETROIT – After months of living on government loans, Chrysler finally succumbed to bankruptcy Thursday, pinning its future on a top-to-bottom reorganization and plans to build cleaner cars through an alliance with Italian automaker Fiat.

The nation's third-largest car manufacturer filed for Chapter 11 bankruptcy protection in New York after a group of creditors defied government pressure to wipe out Chrysler's debt. The company plans to emerge in as little as 30 days as a leaner, more nimble company, with Fiat potentially becoming the majority owner in the future. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.

"It's a partnership that will give Chrysler a chance not only to survive, but to thrive in a global auto industry," President Barack Obama said from the White House.

Chrysler said it will close all its plants starting Monday and they will stay closed until the company comes out of bankruptcy. At least three Detroit-area factories sent workers home Thursday after suppliers stopped shipping parts over fears they would not be paid.

CEO Robert Nardelli announced he would step down when the bankruptcy is complete and take a post as an adviser with Cerberus Capital Management LP, which will give up its 80 percent ownership of Chrysler under the automaker's plan. Vice Chairman Tom LaSorda, who once ran the company when it was owned by the German automaker Daimler, said he would retire.

"A lot of us are scared," said Steve Grabowski, 33, who has worked at a Warren, Mich., parts stamping plant for seven years and was sent home Thursday. "We knew something like this was going to happen, but we didn't think it would be so soon."

Chrysler's bankruptcy filing is the latest step in a drastic reordering of the American auto industry, which has been crushed by higher fuel prices, the recession and customer tastes that are moving away from the gas-guzzling SUVs that were once big money makers.

Lee Iacocca, the retired chairman and CEO who led Chrysler through a government bailout in the late 1970s, said it was a sad day.

"It pains me to see my old company, which has meant so much to America, on the ropes," he said in a written statement. "But Chrysler has been in trouble before, and we got through it, and I believe they can do it again."

The government has sunk about $25 billion in aid into Chrysler and rival General Motors Corp.

GM faces its own day of reckoning on June 1, a date the administration has set for it to come up with its own restructuring plan. GM has announced thousands of job cuts, plans to idle factories for weeks this summer and has even offered the federal government a majority stake in the company as it races to meet the deadline.

Like at Chrysler, debt may be the stumbling block. GM has asked its unsecured bondholders to exchange $27 billion of debt for a 10 percent stake in the automaker. The creditors balked, saying that would leave them with just pennies on the dollar and they deserve a majority stake if they give up their claims.

When Chrysler emerges from bankruptcy, the United Auto Workers union will own 55 percent of the automaker and the U.S. government will own 8 percent. The Canadian and Ontario governments, which are also contributing financing, would share a 2 percent stake.

Under the deal, Chrysler would gain access to Fiat's expertise in small, fuel-efficient vehicles. The U.S. automaker eventually wants to build cars that could get up to 40 mpg, far more economical than its current fleet focused on minivans, Jeep SUVs and the Dodge Ram pickup.

In exchange, Fiat would initially get 20 percent of the company, but its share could rise to 35 percent if certain benchmarks are met, and Fiat said Thursday it could get an additional 16 percent by 2016 if Chrysler's U.S. government loans are fully repaid. Fiat would also get access to the North American market through Chrysler factories and dealerships.

Fiat CEO Sergio Marchionne said he planned to spend time meeting Chrysler employees and touring its plants over the next few weeks.

He said Fiat was preparing for Chrysler to "re-emerge quickly as a reliable and competitive automaker." Fiat also plans to reintroduce brands like Alfa Romeo in North American markets.

First, though, bankruptcy court Judge Arthur Gonzalez will have to sort out the issue of Chrysler's creditors, who hold $6.9 billion of the company's debt. The company's first hearing is set for Friday.

The Treasury Department's auto task force had been racing for the past week to clear the hurdles that led the government to reject Chrysler's initial survival plan one month ago. Along with the Fiat deal, Chrysler adopted a cost-cutting pact with the UAW on Wednesday.

Four of the largest banks holding 70 percent of Chrysler's debt agreed this week to a deal that would give them $2 billion. But a collection of hedge funds refused to budge, saying the deal was unfair and would only return a small fraction of their holdings.

When the hedge funds refused a sweetened offer Wednesday, Chrysler and the government resorted to bankruptcy.

Obama chastised the funds for seeking an "unjustified taxpayer-funded bailout."

One lender, OppenheimerFunds Inc., said it rejected the government offer because it "unfairly asked our fund shareholders to make financial sacrifices greater than the sacrifices being made by unsecured creditors."

Later Thursday, one of the hedge funds that had been a holdout issued a statement agreeing to the offer.

"We believe that this is in the best interests of all Chrysler stakeholders, and our own investors and partners," said the statement from Perella Weinberg Partners. The fund said it was working "to encourage broad participation in the settlement."

The White House said Chrysler could comes out of "surgical" bankruptcy in 30 to 60 days. Under normal circumstances, it would be difficult to complete such a large bankruptcy so quickly.

But John Pottow, a University of Michigan professor who specializes in bankruptcy, said the government's level of involvement is much greater than a typical corporate bankruptcy.

"If you have the president of the United States who wants something to happen, I think anything's possible in bankruptcy protection," he said.

The Fiat deal and bankruptcy cap a disastrous time for Chrysler.

The Auburn Hills, Mich.-based company lost $8 billion last year and its sales through March were down 46 percent compared with the same period last year, leading some auto industry analysts to question whether Chrysler can survive even in bankruptcy.

But company executives told reporters Thursday that Chrysler vehicles with Fiat's fuel-efficient technology should reach showrooms in 18 months.

Vice Chairman Jim Press said Chrysler has cut expenses to operate profitably at a lower sales volume, and he said it would be able to take advantage of Fiat's distribution network to sell more vehicles globally.

Also, the company has new products coming out such as the new Jeep Grand Cherokee, which debuts in early 2011.

Press said the company predicts that small-car sales will rise dramatically around the time the Fiat products hit the U.S. market.

"The real volume pickup opportunity for smaller cars is going to start to ramp up about two years from now," he said.

Despite the turmoil with Chrysler and GM's looming deadline, Obama urged consumers to keep buying cars.

"If you are considering buying a car, I hope it will be an American car," he said.

Glum Time Is Boom Time For Auto Repair Shops

Story from the Wall Street Journal

The red 2002 Ford Thunderbird convertible sits in the back of the Wiygul Automotive Clinic in Alexandria, Va., as Kevin Coppedge works under the hood. It needs $3,363.99 of repairs -- more than one-third of its trade-in value.

At Autobahn Motor Works, some clients who might once have bought new cars are getting old ones fixed.

In good times, owner Suzie Clayton probably would have sold the T-bird or traded it in for something new. "My husband talked about buying a new car," says Ms. Clayton, a co-owner of Dalton Brody Ltd., a high-end gift shop in Washington, D.C. "But I asked, did we really want the monthly payments for a new car? I own a business, and it's a little scary right now to spend a large amount of money on anything."

Economic fears are driving a resurgence for repairmen. When it comes to autos, computers and all kinds of appliances, consumers are more likely to repair what they have, rather than buying a new replacement.

At Daniel Hand's Computer Medics of Northern Virginia in Fredericksburg, work orders are stacked up on his desk. Two years ago, the repair estimates would have scared off his customers. "When people used to come around, if the cost was $300 to fix it and a new one was only $500 or $600, they'd typically get a new one," says Mr. Hand. Now, he says, "nine out of 10 times they come back and say, 'Fix it.' " His business's revenue is running about 30% higher now than a year ago.

Mr. Hand, who is president of the National Association of Computer Repair Business Owners, said the pattern he sees in his business is consistent across the industry.

Appliance-repair businesses, too, have seen an uptick in business in recent months, says Michael Donovan, president of National Appliance Service Association. Mr. Donovan has noticed a rise at his own business, Turnpike Appliance Service of Bay Shore, N.Y., in the past six months, even though the appliances he works on are not very expensive to buy new.
Repairs for Electric Razors

He and other business owners are surprised by the repair work people authorize these days. "Much to my amazement, people are spending $60 on repairing a vacuum that they bought for $100 new," he said, adding that limiting new purchases is "definitely a factor on everyone's mind." Mr. Donovan has even seen a rise in repairs of small home items, such as electric razors.

Cars, however, are the most visible signs of the new frugality, with new-vehicle sales down sharply. Opting to keep cars running, consumers are extending the lives of their vehicles to nearly 10 years on average from eight just two years ago, says the Automotive Services Association, a trade group for repair businesses.

At Autobahn Motor Works in Bethesda, Md., an affluent suburb of Washington, the mechanics who fix Audis, BMWs and Mercedes-Benzes say their customers fall into three groups: those who have always paid for repairs, those who would once have bought new cars but are now approving work, and those who are asking if work can be postponed.
'An Imaginary Threshold'

"I had a lot of customers who had an imaginary threshold. They'd say, 'I won't fix it, I'll unload it.' Those customers are rethinking that threshold and saying, 'Maybe I'd better take better care of my car,' " says service manager John McWilliams.

Zack Wiygul, who operates the shop where the Claytons brought their convertible, stayed on the phone with Ms. Clayton for 30 minutes explaining what it needed before she said, "Do the work. I'm not going to buy a new one."

"I'm having that conversation with somebody every day now," he says.

The situation is the same at Wiygul Automotive Clinic's three other shops in northern Virginia, says Bill Wiygul, Zack's father and a co-owner of the chain. "It's counter-cyclical," the elder Mr. Wiygul says. "If people aren't buying cars, they have to fix the ones they've got."

In the waiting room, customers come in throughout the day for everything from oil changes to major engine work. The work bays are full. Renee James, 42, is having her 2002 BMW prepared for a state safety inspection. Life is considerably different for her and her husband since she quit her six-figure job with a cosmetics company last fall.
'Not in the Budget'

"We've definitely changed our lives. In our 30s we were the folks who traded in cars regularly. We were compulsive traders," she says. "Now we baby our cars. I'm babying mine because it has to last. We cannot afford a car payment right now. It's not in the budget."

For Ms. James, the issue is preventive maintenance. While she once frowned at a $50 oil change, her new economic situation makes that oil change more palatable than risking bigger problems. "When you're young you balk at a $50 oil change, but you grow up and realize that a $50 oil change is cheaper than a $5,000 repair or $50,000" for a new car, she says.

John Kukar, 67, has a similar attitude. A retired insurance man and Air Force veteran, he has recently taken new interest in regular car checks for his 2003 Ford Taurus. "I can't afford to go out and buy a new car. I couldn't get one even if I wanted one," he says. "I don't have the credit for one."

The Weight Of The (Chrysler) World

Story from the Wall Street Journal

Geoffrey Gwin is wrestling with the knowledge that the retirement plans of some 80,000 Americans may rest in his hands.

"I am in turmoil," says Mr. Gwin, principal of the Group G Capital Partners LLC hedge funds in New York.

One of 46 secured creditors to Chrysler LLC, Mr. Gwin was debating Wednesday whether to accept about 33 cents on the dollar for his debt. With some debtholders refusing to budge late Wednesday night, Chrysler moved closer to filing for bankruptcy protection, a step that would complicate its reorganization and put at risk the pensions of employees and retirees. In a bankruptcy scenario, a majority of lenders could still block Chrysler's restructuring if they don't agree to a deal.

President Barack Obama targeted these debtholders specifically in remarks at a Missouri town-hall meeting. "Are the bondholders -- the lenders, the money people -- are they willing to make sacrifices as well? We don't know yet," he said.

As of late Wednesday afternoon, neither did Mr. Gwin, who says he didn't consent to the Treasury's sweetened offer to lenders.

At the heart of his angst, Mr. Gwin says, lies his own family's experience. His father, a 30-year veteran of Delta Air Lines, lost most of his pension and health-care benefits after the airline filed for bankruptcy protection in 2005. Julius Gwin, now 70 years old, started his career with Ford Motor Co. before joining Delta in Atlanta in 1967, working in its finance and corporate-planning departments until he retired in 1997.

While he may swallow hard and vote to help salvage parts of the company, Mr. Gwin says his father's treatment makes him loath to pave an easy road for Chrysler.

"It's very hard for me to deal with this," says the younger Mr. Gwin, a 41-year-old father of three. "As horrible as the situation looks for Chrysler's employees, I keep thinking about how horrible my own family felt when Delta was going to file for bankruptcy and my father's pension was going to take a hit. No task force or the federal government came to his aid then."

Even before this decision, Mr. Gwin hasn't lived and worked like many Wall Street hedge-fund managers. He lives in a two-bedroom apartment in Manhattan's Upper West Side. His kids share a bedroom. Mr. Gwin drives a 10-year-old Audi.

Mr. Gwin says he sat at the dinner table with his wife earlier this week and went over the pros and cons of his choices. Voting against the government-led restructuring would likely increase his chances of recovering more money in bankruptcy court.

It also would be a stand against what Mr. Gwin views as government strong-arm tactics. Usually secured lenders are paid back in full before other unsecured creditors, which includes employees. This time, he says, the government is brokering a plan that he says goes against decades of bankruptcy law.

He also talked it through with his father and brother.

"When I think about the vast number of people that could be affected, it's incredibly sobering," Mr. Gwin says. "I've been asking my family whether it's right to stand on principle, or whether my feelings are based in bitterness because of what happened to my father, or a desire that the government doesn't head down the wrong path and cause more pain later."

Group G's funds, like several other private investors, invested in Chrysler's loans in February 2008 when banks such as Goldman Sachs Group Inc. were syndicating, or selling, the debt to other institutions. The funds paid about 76 cents on the dollar for the loans, which today trade below 30 cents. The past year was the worst on record for high-yield debt funds that invest in junk bonds and leveraged loans. Group G's two funds were down 23% and 10%.

"Like many others I made the mistake of buying what I believed was 'value,'" Mr. Gwin says, adding that investors who bought at the time believed the loans were worth more than their market price. "We did not contemplate having our first liens invalidated by a sitting president," he adds.

Whether Chrysler averts a messy, protracted bankruptcy reorganization will largely depend on secured lenders like Mr. Gwin, who are being asked to exchange $6.9 billion in loans for a fraction of that sum.

Large banks that have received capital infusions from the government hold much of the debt, including Goldman, J.P. Morgan Chase & Co. and Morgan Stanley, and they are leaning toward an agreement that would see holders being paid $2.25 billion in cash. The government is hoping they will release their claims over Chrysler's assets, allowing a restructuring to proceed.

Mr. Gwin says he worries that if he votes against the agreement, it is unlikely that Chrysler will be able to reach a deal with lenders. "I could be the lone vote to push thousands of families into the uncertain and very dangerous waters of our bankruptcy system," Mr. Gwin lamented.

Speaking from his home in Peachtree City, Ga., Julius Gwin says he has refrained from advising his son on the Chrysler situation. While the Delta bankruptcy was "a very difficult and emotional time" for him, he acknowledges that there were laws and rules that had to be followed. Fortunately, he had built up a pool of savings over the years because he wanted to become a missionary, and is now living off that.

"The outcome of the Delta bankruptcy was a huge disappointment," says the elder Mr. Gwin, "but I didn't feel singled out when it happened.

"But now, I feel personally threatened because of what the government is doing at Chrysler and General Motors and how they are changing the rules of the game, instead of allowing bankruptcy laws to be carried out the way they are written."

Says the younger Mr. Gwin: "I have regret and bitterness about this process but may still swallow it and vote yes,"adding facetiously, "but if we want to talk about fairness here, give my dad's pension back and I will gladly forgive Chrysler's loan."

A Buyer's Market For College Applicants

Story from the Detroit News

Economic uncertainty and the recession have created a buyer's market in college admissions this year, as high school seniors and their families shop around for the best financial aid and tuition deals, while colleges anxiously wait to see who chooses them.

Public university leaders say it's still too early to tell whether the increase in applications they've seen this spring will translate into more students in the fall, while community colleges statewide are predicting a bumper crop of new students.

"There's a huge wild card this year called the economy," said Kathy Orscheln, director of admissions at Eastern Michigan University. "These are tough choices for families to make. I'm not sure any of the old rules apply."

While the number of applications and admitted students is up this year at Eastern and other public universities, Orscheln is not cheering yet.

"In any other year, we would say that looks pretty good, and we can expect our (enrollment will) be healthy for the fall and probably up from last year. But with the ... economy, I'm not sure we can count on that."

Friday is the national enrollment deposit deadline that many colleges use as a gauge for their fall headcount, but typically students can still enroll or change their minds through the summer.

Jim Cotter, admissions director for Michigan State University, expects more admissions decisions will be made in this summer, as parents wait to see what happens with their jobs, economy and tuition increases.

"May 1 is really a milestone date, but this is not a typical year," Cotter said. "This is very different for all of us in higher education. We will be watching the numbers very closely."

Closer to home

The spiraling economy has begun to affect students' college choices, experts say.

"Parents are more realistic, and students are looking at staying at home as more of an option now," said Lynette Bennett, president of Schollegiate Edge, a White Lake Township-based college admissions and financial aid consulting firm. "But I also think colleges -- not all -- are a little bit more realistic. We are seeing a little bit better financial aid awards."

Many public universities, including Oakland and Wayne State universities and University of Michigan-Dearborn, have beefed up their budgets to help families in crisis. Still, many students seem to be delaying decisions until they have a clearer picture of their finances.

"I think a lot of families are waiting to see what happens with GM and Chrysler," said Stanley Henderson, vice chancellor for enrollment management and student life at U-M Dearborn.

Many Michigan families, rocked by losses in college savings plans and income, are carefully weighing financial offers from prospective schools.

"It's stressful," said Denise Tinskey of Howell, whose son Steven, 18, is deciding between Central Michigan University, Aquinas College and, potentially, MSU if he gets off the waiting list. "A lot of paperwork. A lot of dates to keep in your head when you have to get deposits turned in."

The Tinskeys' 529 college savings plan took a hit with the economy, so they're waiting a year to tap into the fund in hopes its value will increase. Meanwhile, Steven's father, an electrician, is trying to pick up more side jobs to cover the $13,500 out-of-pocket costs after deducting financial aid.

Federal financial aid applications are up 26 percent in Michigan for the first quarter of 2009, compared to 20.8 percent nationally, according to U.S. Department of Education data analyzed by Student Lending Analytics. Michigan students filed 301,985 Free Applications for Federal Student Aid, compared to 239,659 in the same quarter last year, among the highest in the nation for percentage increase.

Starting college small

Community colleges, which can cost about one-fourth of public universities, have been booming in recent years, reaching a 10-year peak at nearly 235,000 students in 2008.

Historically, community college enrollment spikes when the economy is down and flattens when it prospers.

"We have no reason to expect any downward trend in enrollment, at least in the short term," said Mike Hansen, president of the Michigan Community College Association.

Not only are enrollments growing for career and technical training, but colleges are also seeing younger students, who are choosing to start off at community colleges rather than four-year universities to save on costs.

"Our tuition is going to be a lower rate, and they can save on room and board as well," said John Bolden, executive vice chancellor at Wayne County Community College District, which is bracing for record enrollment in the fall. "That gives (students) a real strong option."

Tuition and fees are $1,009.75 for a semester of 15 credits at WCCCD, $936.50 at Oakland Community College and $1,080 at Macomb Community College. Average cost of a semester of 15 credits at Michigan public universities is about $4,300.

"Community college can be a great option for students," Bennett said. "It can reduce out-of-pocket expenses $10,000 or more a year -- especially if a student is funding college themselves."

Recognizing the demand for lower-cost education, community colleges have increased their partnerships with four-year universities, offering programs ranging from architecture and accounting to business and computers. The agreements ensure that community college students can easily transfer credits to a university to finish out a bachelor's degree.

Hoping for growth

Similar to community colleges, total enrollment among Michigan's 15 public universities has grown steadily over the last decade, from 272,316 in 1999 to 293,649 in 2008. And some universities are still hoping for new growth.

The University of Michigan in Ann Arbor -- with a record-breaking 30,000 applications -- is projecting 200-300 more students in its freshman class. Undergraduate applications were also up at Wayne State, Northern Michigan, Ferris State University, Grand Valley State, Saginaw Valley State, Oakland and Central.

Western Michigan University, Lake Superior State University and U-M Dearborn saw applications dip slightly, but are planning for overall enrollment increases.

Applications dropped less than 1 percent at MSU, following a record high in 2008. MSU plans for 100 fewer freshmen because retention rates are up and the university aims to stay between 46,000 to 47,000 students, said MSU's Cotter.

Michigan Tech is also planning for a 100-student drop, because of a historically large incoming class last year and normal headcount ebb and flow, said John B. Lehman, assistant vice president for enrollment services.

Cheap Commercial Real Estate Attracts Small Firms To State

Story from NPR

Michigan faces pressure to find another line of work.

Detroit's downsizing auto industry is a long way from the heroic role it plays in Detroit's past. Visitors to the city can still see a Depression-era mural that covers all four walls of a room in a Detroit Museum. Diego Rivera portrayed workers slamming together automobiles as they wrestled with the machinery of a Ford Motor Company plant.

Today, the auto industry's trouble is one big reason behind the nation's highest unemployment rate: 12.6 percent across Michigan, and much higher in Detroit. Hope for creating jobs may lie instead with a host of much smaller firms, like a manufacturer that is hiring in a small city outside Detroit.

A Growing Export

Instead of cars that run on oil, workers at this plant in Monroe, Mich., make a product that moves water.

"Most of what you see here is exported. That one is going to Saudi Arabia," says Robert Oklejas of Pump Engineering as he watches some employees spin stainless steel cylinders, shaving them to size for a custom-made water pump.

These high-efficiency pumps help create fresh water.

Desalination plants, as they're called, push ocean water through filters so it can grow the crops, or fill the glasses, of increasingly thirsty nations. Oklejas rattles a few of them off: "Pakistan, India, and North Africa, Algeria's going to be a big customer, Spain."

Pump Engineering's competitors include another firm in Monroe, Mich., that happens to be run by Robert Oklejas' own brother, Eli.

"We sell directly to the local system builders in Saudi Arabia, UAE, India, Spain, Indonesia, we're truly global," Eli says.

If it sounds like Eli Oklejas serves the same markets, that's true.

The brothers both decorated their conference rooms with nearly identical floor-to-ceiling wall maps of the world.

Their competition leads to one big question: "Is Thanksgiving awkward?"

"Ummm…," says Robert Oklejas with a long pause.

He says they don't see much of each other. This wasn't always the case. The brothers grew up together. They went into business together. They were both inspired by an inventor named Nikola Tesla, who, like their family came from Serbia. But after a business disagreement, they split into rival firms.

And both companies are still growing in a recession.

People can put off buying a car, but they still need water.

"At one time we lost employees to the automobile industry. They're coming back to us," says Robert Oklejas, "I think they're appreciative of having a job."

Robert Oklejas' company has a bell which used to ring after every sale. Now sales are so common they've stopped the practice.

Pump Engineering may be succeeding, but it employs only 38 people.

A Growth Area For Michigan

Jim Epolito just finished three and a half years as the head of economic development for Michigan.

"We were managing an auto industry that continued to decline," he says. "So when we added a thousand jobs in the life sciences, GM would lay off 10,000 jobs, or 20,000."

And GM is making even more layoffs this week.

The state will keep losing that race until it finds even more new employers. The Oklejas family trouble helped in a way, creating two firms instead of one. Eli Oklejas says that it's nice to be hiring when everybody else is cutting staff.

So nice that Eli is expanding his company's building. Which is one more thing about doing business in Michigan's recession: commercial real estate is really, really cheap.

Water Tech Programs To Bring Jobs To The State

Story from the Oakland Business Review

Could lowering the amount of water lost through the state's aging networks of municipal water systems help replace lost jobs in Michigan?

That's the goal of a new initiative unveiled today at Detroit's Water Works Park involving the state, the city's Water and Sewerage Department, the city of Farmington Hills and an Israeli company that specializes in urban water-loss technology.

The so-called "Green Jobs for Blue Waters" initiative involves setting up pilot demonstration projects – one each in Detroit and Farmington Hills – where officials from Tel Aviv, Israel-based Miya will work to identify leakage areas and devise fixes.

The goal is to eventually broaden out the program and establish a Michigan training center to help create new jobs in fields like engineering, manufacturing, installation and maintenance.

"As these projects expand, we will train more Michigan workers and develop expertise that we can export nationally and globally as well," Lt. Gov. John Cherry said in unveiling the initiative.

Water technologies, the state estimates, represent a $500 billion global market, and it's expected to grow to $1 trillion by 2020. Proponents say the initiative holds the potential to save energy and money for ratepayers.

"No question, it's a business opportunity, but we see it as a business opportunity for Michigan as well," said Booky Oren, executive director for Miya. "I think that when you are dealing with efficiency, you create more from existing resources."

Miya, a privately held company that Oren would only say has a "few thousand" employees globally, provides its technology and engineering expertise in other countries, but not yet in the U.S. The company uses acoustic sensors and works to control pressure across a water system.

Most water system operators make "major mistakes" in seeking to immediately replace pipes when leaks occur, he said.

"By controlling pressure, you immediately reduce the water loss amount and only after that you have a lot of data (about) what's going on, and then you begin to prioritize where you replace pipes," Oren said.

The Detroit Water and Sewerage Department provides an average of 675 million gallons of drinking water per day to nearly 4 million customers across 1,079 square miles in Southeast Michigan.

While amounts of loss vary according to location and age of the system, the department's latest estimate is that it loses an average of 9 percent of its drinking water supplies to leaks, said Pam Turner, interim director.

"This is treated water that we're losing out of the system," she said.

Miya workers will initially staff the two pilot projects, Oren said.

"No question that as soon as possible we need to find the right partners. Most of the jobs need to be by the local (companies) or even employees of the local utility," he said.

The project resulted from Gov. Jennifer Granholm's economic investment trip to Israel in November and a corresponding partnership agreement she signed with Deputy Prime Minister Eli Yishai. It follows a similar partnership with a Swedish firm to convert wastewater to biogas in Flint and other recent successes in alternative energy.

"We have to understand that there is this nexus between water and energy," said Cherry, who leads a joint Michigan-Israel water technology working group. "This initiative is the next step in that progression to a new Michigan - alternative energy, blue water and on and on as we build the dream of a Michigan future.

"Ultimately what our goal here with this initiative is to put Michigan in the position of global leadership and expertise with water management systems."

Introducing The Enhanced Michigan Driver's License

Story from the Sault St Marie Evening News

Michigan residents can now apply for the state’s new enhanced driver’s license, according to a Tuesday announcement from Secretary of State Terri Lynn Land.

“The enhanced driver’s license promotes the smooth flow of trade and tourism between our state and Canada and aids law enforcement in its efforts to make our borders more secure,” said Land. “This is the common-sense solution we have been working for years to achieve for the people of Michigan.”

Land made her remarks at a Tuesday press conference calling the enhanced driver’s license a convenient, affordable and flexible option which will meet tougher federal document requirements scheduled to kick-in on June 1. Enhanced driver’s licenses are equipped with the latest technology to speed up border crossings and deter fraud.

“This is a very positive development for Michigan,” said Richard Blouse Jr., president and CEO of the Detroit Regional Chamber. “Convenient border travel strengthens our economic partnership with Canada and is a benefit that should be extended to all border states throughout the nation.”

Due to the relative expense and difficulty of obtaining passports — which cost $100 and take four to six weeks to receive from the U.S. State Department — Land and many other government and business leaders were concerned the requirement would deter many people from traveling across the border of business and tourism.

The two-way trade relationship between Michigan and Canada averages more than $1 billion a week.

Enhanced drivers licenses are available to Michigan residents who are also U.S. citizens. The application process is relatively easy for those who already have a current driver’s license — requiring proof of a valid Social Security number and U.S. citizenship.

The enhanced driver’s licenses are equipped with the latest technology designed to speed up border crossings.

AG Cox Urges Carmakers To File Bankruptcy In Michigan

Story from the Detroit Free Press

Michigan Attorney General Mike Cox has urged chief executives of General Motors Corp. and Chrysler LLC to consider filing for bankruptcy in Michigan rather than Delaware or New York because it would be more convenient for creditors in Michigan.

“I am gravely concerned about the impact of any bankruptcy filing in a jurisdiction outside Michigan,” Cox wrote in separate letters to GM CEO Fritz Henderson and Chrysler CEO Bob Nardelli.

Cox goes on to say that the financial health of both companies and Michigan have been intertwined for decades.

• PDF: Cox's letter to GM

• PDF: Cox's letter to Chrylser

The state is a significant creditor for each of the troubled automakers through the Michigan Business and Single Business Tax obligations, workers’ compensation claims, unemployment insurance and environmental regulations.

“The costs for many of these creditors (in Michigan) to participate in a New York or Delaware bankruptcy is overwhelming and would undoubtedly lead to unjust bills,” Cox said.

“It’s easier for those people to get in line, if it’s here,” said John Selek, a spokesman for the attorney general.

While Cox does not say that either company should file for bankruptcy, neither does he acknowledge that they might not need to if they meet certain criteria set by the U.S. Treasury Department.

“If you ultimately decide to choose bankruptcy as the vehicle to a stronger (company), I respectfully ask that you and your representatives meet with me before any filing is made,” the letter concludes. “Please feel free to contact me at any time, day or night, to discuss this matter.”

CNBC Video: The Survival Status Of GM

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What We Are Not Manufacturing In Michigan

Story from the Auto Channel

SHANGHAI, CHINA - April 21, 2009: The Buick Business Concept, a new concept vehicle designed to showcase Buick’s future vision of “business class on the road,” made its global debut today at Auto Shanghai 2009.

The multi-purpose vehicle (MPV) was developed in China by the Pan Asia Technical Automotive Center (PATAC), a design and engineering joint venture between General Motors and Shanghai Automotive Industry Corporation (SAIC), with global design input.

The Business Concept Vehicle captures the essence of the Buick form language in a thoroughly elegant and expressive design, with its taut surfaces, double sweep spear belt line, strong front and rear identities and dynamic presence.

“The Business Concept Vehicle has a grand presence and makes a strong statement when it pulls up to the front of any establishment,” said Ed Welburn, GM Vice President of Global Design. “The Chinese market and business person have some unique requirements. Our team has responded with an elegant solution to their business and personal needs.”

Classic Influences in Modern Design
According to Cao Min, PATAC Concept Car Chief Designer, the design team set out to create a modern global design for Buick, yet include a subtle Chinese essence and influence. To achieve this balance, they sought to draw from their heritage outside the automotive industry – from classic shapes to arts and ancient relics.

The Business Concept Vehicle’s dynamic exterior surfaces and “yin and yang” interior tones are drawn from diverse inspirations including the 2008 Buick Riviera concept car, Chinese artifacts and modern electronic icons. The vehicle, inside and out, communicates an orderly elegance that transcends cultural boundaries and conveys the tranquility and power of Buick.

Exterior Design – A Sense of Presence and Buick Essence
To establish their design direction, PATAC designers took the global Buick design vocabulary of sculpturally beautiful and dynamic forms established by the Riviera concept car and successfully extended it to a tall, one-box architecture.

The Business Concept Vehicle develops the Buick form language further and incorporates elements of Chinese culture and artistic influences into the details. It takes the Buick design treatment to a new level of sophisticated boldness.

The famous Buick waterfall grille takes on a bolder treatment. Intricate detailing gives it an even more prominent look. The backlit Buick tri-shield logo leads into the distinctive mid-hood crease prevalent in classic Buicks and consistent across the new Buick line today.

The prominent LED headlamps show influences of popular Chinese liuli glass through three-dimensional transparent and multifaceted surfaces. Liuli is a Chinese crystal sculpture art form that incorporates cultural and modern references. It has become a popular symbol of modern Chinese prosperity. The elongated, jewel-like headlamps are connected to the body shoulder line through a strong chrome accent that flows the length of the vehicle from the hood to the body sides, accentuating a strong double sweep spear design until it finally comes to rest wrapped around the taillights. This is the most distinctive design element of the Business Concept Vehicle, as it offers a modern approach to the classic Buick double sweep spear. Familiar Buick portholes are gracefully integrated into the chrome strip extending from the headlamps.

This distinctive double sweep spear shape not only provides expressive dynamism to the vehicle profile, it is also functionally important. It defines the window line from the body sides and incorporates the rail guides for the power sliding doors. Additionally, it lowers the rear passenger sightline and adds significant shoulder room to the rear compartment.

“This vehicle was inspired by the grace and gesture of great Buicks. PATAC designers have cleverly incorporated other design cues from traditional Chinese art, such as applying a huiwen motif on the turn signals and fog lamps,” Cao Min said.

The Zitan Purple exterior color was chosen to elicit the right level of attention and respect. The color is found in rare zitan wood used for sculptures and fine Chinese furniture. This deep burnt-purple color perfectly highlights the concept’s grandeur.

Power sliding doors with no B-pillar were selected for their ability to showcase an expansive view of the interior and ease of entrance and egress.

The Business Concept Vehicle sits on 20-inch, 9-spoke forged aluminum wheels, with a polished mirror finish, and low-profile tires. The outside mirrors incorporate turn signals with the huiwen motif.

Interior Design – Functionality and Soothing Serenity
Serenity and advanced functionality come to mind when entering the vehicle. The use of deep burgundy suede and subtle creams, representing earth and wood themes, are conveyed through high-quality leather bucket seats, plush vehicle carpet and a luxurious padded steering wheel. Completing the tranquil feel is a roof comprised of two full-length sunroofs that offer a celestial connection for occupants.

“Through deep burgundy suede carpet, high-quality leather interior decoration with liuli and soft, ice blue ambient lighting, we wanted to create a mobile VIP lounge for passengers,” Cao Min said.

Interior trim and features befitting Buick prestige abound such as a power central console with a deployable tablet for writing or to hold a laptop computer. The console can be moved up and down the two rows of rear seats. The second row of power captain’s chairs slide on hidden rails and swivel 225 degrees, enabling them to be adjusted to an infinite combination of orientations. Traditional huiwen patterns are embroidered onto the seats and seat backs, bringing harmony to the entire design theme.

The three-dimensional instrument cluster reaches across the entire width of the front panel and features a multi-layer information display. The instrument cluster design reflects the liuli art influence but is utterly modern in design. It is complemented by a central console with touch pad controls on either side of a cylinder-shaped roller mouse. A large LED display crowns the central console. Once again, the huiwen motif shows up as details on the wings of the instrument panel.

The OnStar security telematics feature is easily accessible on the rearview mirror, with three prominently yet tastefully displayed call buttons.

“The design of the vehicle inherits Buick’s vision for business class on the road, creating a sense that space means possibility,” Cao Min said.

Next-Generation GM Hybrid System
PATAC designed the Buick Business Concept Vehicle to accommodate the next-generation GM Hybrid System, which will be introduced in China in the near future.

The next-generation GM Hybrid System will build upon the successful belt-alternator-starter hybrid technology currently available in the Buick LaCrosse Eco-Hybrid. An advanced lithium-ion battery will help make the next-generation GM Hybrid System more powerful than the current system, improving fuel economy of vehicles with this system by up to 20 percent, depending on engine and vehicle application.

The next-generation GM Hybrid System helps optimize fuel efficiency and reduce emissions by:

# Turning the engine off at idle

# Offering brief electric-only propulsion

# Using a more powerful electric motor to enhance engine efficiency

# Extending fuel cutoff during deceleration

# Extending regenerative braking to recapture more energy

# Performing intelligent hybrid battery charging

“Developing and launching the Business Concept Vehicle in China underscores the diversity, strength and depth of GM’s global design network,” Welburn said. “It also reflects PATAC’s growing role within the GM design family and China’s significance as the world’s largest Buick market.”

Consumer Reports: Lawn Care

Story from Main Street

Almost half of those who answered our latest lawn poll said they'd be spending more time in their outdoor spaces this year. Although entertaining and personal enjoyment are high on their list of activities, spending time and money aren't.

The good news is that a better lawn with less work and money aren't mutually exclusive. Our experts and turf specialists can help you trim an hour or more off the average six hours per week people spend mowing and gardening. You can also save $100 or more this season and get a better-looking lawn. But that's only the beginning.

Our latest mower and tractor test shows that the easiest-to-use, best-mowing machines often cost hundreds and even thousands less than their competitors. Not in the market for new gear? Our insider's tips can help you keep the mower and tractor you own humming along. We also offer safety tips for riding mowers and tractors. And if you're one of the 27 percent of people who told us their yard is damaged or needs repair, our low-cost yard makeovers can make the neighbors green with envy.

1. Fertilize less
Fight the urge to fertilize your lawn as soon as the weather starts to warm up. A strong dose of spring fertility will green up lawns quickly, but it also makes turf vulnerable to weeds, disease, and summer heat, says Martin Petrovic, professor of turf-grass science at Cornell University. It also means more mowing.

Instead of stocking up on fertilizer, clear out yard debris and test your soil. You'll find out your soil's pH, any missing nutrients and how much of each is needed, and when to apply them. A soil test could save an overeager feeder $50 or more in materials plus several hours of labor per year. It can also help keep phosphorous and other unnecessary chemicals from leaching into the local water supply.

Insider's tip: Cheap, do-it-yourself soil testers, sold at garden stores and home centers, didn't deliver accurate-enough results based on our tests. You're better off paying $10 or so for your local cooperative extension service to do the analysis for you.

2. Maintain your mower
While you're waiting for your soil-test results, spend a few hours (or $50 to $150) getting your mower or tractor in shape (see Lawn Mower Maintenance). More than a quarter of the people we polled admit they've never even sharpened their mower's blade. Dull blades stress grass, making it more susceptible to diseases. A sharp, balanced blade also cuts faster and cleaner, so you'll get a nice, even cut and reduce mowing time. Along with oil changes and basic engine maintenance, sharp blades can reduce fuel costs by up to 25 percent.

Insider's tip: Sharpen and balance blades three times during the growing season and invest in a second blade ($15 to $20) to use while the other is being serviced.

3. Thicken your turf
Nature abhors a vacuum. For lawns, that means weeds will quickly fill bare patches. Unless your lawn is filled with weeds or has huge bare spots, seeding over the existing grass will help build up turf. Choose grass suited to your climate, soil conditions, and lifestyle. Your local cooperative extension should have a list of recommended species and varieties, including those that need the least fertilizing and watering. For instance, tall fescue is a good, low-maintenance alternative to Kentucky bluegrass and perennial rye in the Northeast. Buffalo grass is a hassle-free favorite west of the Mississippi, and zoysia and seashore paspalum are popular newcomers in the South.

Always check the seed label to see precisely which varieties you have. Also look for a germination date that's less than a year old. And buy "weed free" seed.

Insider's tip: Cover seed with a fine layer of soil, compost, or peat moss. Add starter fertilizer and gently pack the soil down with the back of a hoe or shovel. Seeds do better in lightly compacted soil.

4. Mow less
Cutting the grass short might seem like a time-saver, but it weakens roots and is not optimal lawn care. Never remove more than one-third of the blade's total height. Also be sure to raise your mowing height and mow less frequently as the mercury rises because that's when grass growth slows. You'll be promoting a deeper root system and preventing crabgrass and other warm-season weeds from emerging. "If you keep mowing cool-season grass during extreme stress periods, you're just asking to kill it," Virginia Tech turf specialist Mike Goatley says. Also leave the grass a bit long in shady areas to maximize the plant's photosynthesizing leaf area.

Insider's tip: If your lawn develops a whitish hue, you're probably taking too much off the top.

5. Add compost
Applying a quarter-inch of top-dressing compost once or twice a year promotes healthy turf by improving the soil and eliminating pests and diseases, and it is all natural lawn care. It also saves money by reducing the need for fertilizer and water. Put it down after your lawn has greened up, ideally with lawn aeration to help mix the organic matter in with the soil. You can buy compost in stores, but you can sometimes get it free from municipal compost sites. Apply it with a tow-behind spreader attached to your tractor. If your yard isn't too big, sow it by hand.

Insider's tip: A compost bin provides a ready supply of compost for your lawn and lets you recycle nonanimal food waste. Smith & Hawken's Biostack Composter, a CR Best Buy, was excellent for convenience and durability and cost $130. Or you could start a compost pile free.

6. Mulch clippings
Don't believe the myth that grass clippings lead to thatch. Mulching instead of bagging returns natural nutrients to the soil, saving time, bags, and as much as 30 percent on fertilizing costs. "Think of clippings as a slow-release fertilizer that doesn't cost a thing," Goatley says. But don't mulch if the lawn is in the middle of a major disease outbreak.

Insider's tip: Hose down mower blades and the underside of the mower's deck after each use for better mulching and a neater cut.

7. Water smartly - lawn watering tips
Our surveys have found that most people overwater or water at the wrong time. That can waste more than 25,000 gallons of water per year, according to the Environmental Protection Agency. Proper watering saves money and helps prevent disease and pests. Water deeply and infrequently: 1 inch per week is the rule of thumb, although you might need to water more heavily and often during hot spells. And don't be afraid to let the lawn go dormant during a dry spell; it will green up again once the rains return. To tell dormant from dead, tear a stem in half: It's dormant if it's fleshy white and strong, dead if the stem disintegrates.

Insider's tip: Water in the early morning, before the hot sun and wind prevent water from reaching the roots. Evening watering promotes mold.

8. Improve sprinkler-system efficiency
Irrigation systems save you the hassle of watering the lawn, but some are more efficient than others, so you'll want to make the most of good lawn watering tips. For bushes and plants, drip irrigation systems earn the highest marks because they deposit water directly to the root system, where it can't be lost to wind, runoff, and evaporation. On existing sprinkler systems, install a rain sensor so that it will turn on only when the air is dry, or a soil-moisture sensor so that it will turn on only when the ground is dry. On new systems, advanced control technologies use local weather reports to determine hydration schedules.

Insider's tip: Even if you're using plain old sprinklers, check for even distribution by placing plastic cups throughout the lawn while you're watering. And be sure you're not watering walkways or the driveway.

9. Think beyond grass
Lush, wall-to-wall lawns look great in ads but won't grow everywhere. Consider shade-loving ground covers, ornamental grasses, and plants instead. Don't forget about trees, flowers, and shrubs, which attract birds and other species, creating a balanced ecosystem. Choose native species if possible because they're already adapted to your area.

Insider's tip: Put shrubs and plants with similar watering needs together. Also plant flowers and bushes susceptible to pests near plants that repel them for a natural method of pest control. Most cooperative extensions offer companion-planting information through their Master Gardener programs.

10. Do a weekly walk-around
If you leave footprints in the lawn, the grass needs more water. Keep an eye out for stressed plants and turf. They are the most vulnerable to pests and disease, which can then spread to healthy areas. Remove sick plants and transfer stressed plants to a more suitable location. Look for bare spots, which invite crabgrass and other weeds. Spot-weeding weekly can make the chore more manageable. Check for compacted soil with a screwdriver; if it won't go in easily, the soil is compacted and should be aerated. Rent a machine for about $65 to $75 per day.

Insider's tip: Early morning is the best time to inspect. The dew in the grass will highlight signs of damage and stress. If you still are not completely satisfied with your lawn, hire a reputable and reliable lawn maintenance company.

Henry Ford Health System Builds Female-Only Unit

Story from the Detroit News

What do women want? Henry Ford Health System thinks it knows.

When the new $360-million Henry Ford West Bloomfield Hospital opens next month, it will debut a 16-bed unit for female patients only, hoping to study whether gender-specific floors improve patient care, or at least, make women more comfortable during their hospital stays.

"That's really one of the things we want to test," said Christine Zambricki, the hospital's chief operating and nursing officer. "Is this an unspoken wish and need of our patients right now?"

The all-women's unit is one of many innovations revealed Wednesday by Detroit-based Henry Ford at a preview of its new Oakland County hospital, an expansive 300-bed structure set to open March 15. The stone and brick building is attached to the existing medical center Henry Ford opened in 1975. The new hospital has a ground-floor retail area with small-town style storefronts and a look more in line with the feel of a northern Michigan lodge than a sterile medical building.

Along with its cozy resort-style look and all-private patient rooms, the hospital will have robot-assisted surgery, a one-stop care center to treat seniors with neurological illnesses, and a wellness center with day spa services and personal health coaches.

The female-only unit for Michigan women's health -- a ground-breaker in Metro Detroit, according to Henry Ford officials -- is on the hospital's third floor beside pediatrics and maternity. It will differ from a typical women's health center, where hospitals tend to group women's services, such as maternity and OB/GYN, because it will accommodate women with more generalized medical needs, such as recovering from surgery, Zambricki said.

"We may find women are more comfortable getting out of bed, walking, sitting in a day room" with just other women around, Zambricki said.

Studies show post-surgical patients heal better when they're able to stretch their legs and walk around, she added.

"We may find it's a healthier environment," she said.

While not necessarily a new concept, female-only areas aren't common because most hospitals group their admitted patients according to their illness or medical needs, such as cardiac care or oncology units.

"I haven't heard of any, but that doesn't mean they aren't out there," said Matt Fenwick, a spokesman for the American Hospital Association.

Genders separate until '60s

Gender-specific wings used to be the norm, though, and it wasn't until the 1960s that hospitals integrated their inpatient floors -- placing women alongside men, said Dr. Dee Fenner, director of gynecology at the U-M Health System in Ann Arbor.

Before, men and women were kept separate because hospital beds were arranged in open halls with little privacy. But with the advent of private and semi-private rooms, hospitals began grouping patients according to their illness or complexity of the care to ensure medical expertise is concentrated in one area, Fenner said.

Stays in Henry Ford's female-only unit are optional and won't cost more, hospital officials said. And while the majority of the unit's staff also will be women, men aren't banished from the unit's corridors, where the walls are deep blue with nothing distinguishing the unit as something for women only. Male doctors and visitors will be permitted to see patients there.

In the 1990s, the idea of an all-women's unit -- or so-called "women's pavilion" -- resurfaced after market research showed the majority of family decisions regarding hospitals were made by women, said Dr. Janice Werbinski, a founding president of the American College of Women's Health Physicians and a doctor of obstetrics and gynecology in Kalamazoo.

"Usually if you are able to get the loyalty of the women, the rest of the family will follow," Werbinski said, noting that Borgess Women's Health in Kalamazoo, where she works, is considering an all-women's unit.

But the idea fell largely out of favor by the decade's end as many hospitals realized that having all-women sections wasn't as profitable as anticipated, especially with insurers reimbursing less for medical services. The logistics were also a challenge, because many nurses and hospital staff are trained to specialize in certain medical areas, not to provide general care.

As for any health benefits of women's wards, Werbinski isn't so sure. There haven't been enough women's hospitals or pavilions for researchers to determine their effects, Werbinski said, although, she added, any benefits would likely be minimal.

"I do think it's nice, but I call it sort of window dressing," she said.

Experiment may be tweaked

Hospital officials say they are well-aware of the challenges in grouping different medical needs on one floor but the practice is becoming more common.

And not all female patients who request the women-only unit will be admitted, because doctors may determine they would be better served in another department, Zambricki said.

Rather, she said, the hospital is looking to experiment with the concept and tweak it as needed.

"It's not the 1990s," she said. "We know a lot more about integrated medicine. We know that women respond differently to disease than men."

And does Henry Ford know what men want?

"We are going to start with women," Zambricki said, and depending on how that goes, "we may expand it to men."

BCBS of Michigan Raises The Price For Individual Health Coverage

Story from the Detroit News

As more Michigan residents flock to Blue Cross Blue Shield of Michigan to buy their own Michigan health insurance, the state's largest insurer is replacing several types of individual policies with plans that will cost up to $600 a year more -- and come with higher co-payments and other out-of-pocket costs.

The new insurance plans -- with monthly premiums ranging from $51 to $292 per a person -- are on sale now and take effect Wednesday.

On March 27, Blue Cross stopped enrolling new consumers in several older plans, including Value Blue, a catastrophic coverage policy, and its no-deductible Individual Care Blue. The changes don't affect Blue Cross members enrolled in those plans. Instead, the new rates will apply to newly unemployed residents seeking to replace workplace coverage by buying their own insurance from Blue Cross. The new plans also differ from those for which Blue Cross is seeking state permission to raise rates and would not be affected if that request is approved.

With the rollout of these new plans, Blue Cross has introduced a lengthy application that includes optional health questions and ties insurance agents' commissions to the medical condition of new enrollees.

The changes are so drastic that some insurance agents say Blue Cross is deliberately making its money-losing individual policies less attractive to slow sales. Blue Cross contends that it's simply keeping up with market trends, as well as the rates and plan offerings of its private-sector competitors.

As the state's insurer of last resort -- a responsibility tied to its tax-exempt status -- Blue Cross must cover all Michigan residents, regardless of their medical history. But that arrangement, Blue Cross officials say, leaves them with the state's sickest and costliest members. Last year, Blue Cross lost $133.2 million on individual insurance policies, dragging its bottom line to a $144.9 million loss for 2008.

Insurance agents say the new rates will make it harder to sell the plans. New members aren't going to want to pay more in premiums for higher out-of-pocket costs, especially if there are better deals offered by other insurers.

"It's not good for the consumer," said Patrick Pennefather, president of the Michigan Association of Health Underwriters, which represents Michigan health insurance company agents and buyers for employer groups. The new plans, he added, are going to slow down sales for Blue Cross, a move that could help stem the rising tide of losses on individual policies.

Some agents are likely to stop selling Blue Cross' individual policies altogether because the commission structure lowers incentives for enrolling sickly customers into its individual plans, Pennefather added.

Blue Cross's new incentive structure offers a 15 percent commission to agents who sign up healthy members and only 2 percent for signing new enrollees with severe medical problems. A 2 percent commission could translate into only a couple of dollars a month on some policies, say insurance agents, and is much lower than the 8 percent commissions previously offered by Blue Cross on all policies, regardless of the applicant's health status.

Blue Cross said the tiered commissions better match incentives offered by their rivals in the individual insurance market.

"It may drive a lot of agents out of the individual insurance business. In fact, many have said they plan to get out of it," Pennefather said, noting that agents can make 20 percent with other private insurers.

Some Blue Cross critics, including Michigan Attorney General Mike Cox, have questioned why Blue Cross is collecting health information, since that is at odds with the company's mission as the state's insurer of last resort. Cox's office has said it's investigating whether the changes are lawful.

Answering the questions about health status, however, is voluntary and won't affect consumer eligibility or rates, but will help applicants qualify for lower co-payments, Blue Cross officials said.

Blue Cross also points out that it still pays at least some portion of the commission to agents for all applicants. Most other insurers pay no commission if they end up rejecting the applicant, said Helen Stojic, a Blue Cross spokeswoman.

As for the new plan prices and coverage, Stojic said Blue Cross hopes to better reflect the marketplace, where deductibles and higher out-of-pocket maximums are common.

The insurer also contends its rates are still better than most plans for people with serious medical conditions.

"Our plans are aligned more closely with those in the market, with one important difference: We still don't medically underwrite and we are still the insurer of last resort," Stojic said.

Unlike rate hikes for existing customers, state regulators don't require Blue Cross to seek public input before introducing new plans or closing new enrollment in existing policies.

Blue Cross is seeking rate hikes on its existing individual policies that cover about 400,000 members. It's asking for an average rate hike on three types of policies: a 56 percent increase on individual plans, 42 percent on group conversion coverage (which extends benefits from a former employer) and 31 percent for Medigap plans.

Battery Manufacturing Plant to Open In Holland

Story from BizJournals.com

Johnson Controls Inc. announced plans Tuesday to build its first U.S. manufacturing facility for lithium-ion hybrid batteries.

Subject to final state and local incentives, the company, through a joint venture with France-based Saft SA, will use an existing Johnson Controls facility in Holland, Mich.

“Battery technology is strategically important to the future of the U.S. automotive industry and the economy at large,” said Alex Molinaroli, president of the power solutions business for Glendale-based Johnson Controls.

The plant will have about 500 employees.

Johnson Controls-Saft is a global provider of hybrid battery systems. The company opened the world’s first lithium-ion manufacturing facility for hybrid electric vehicles in 2008 in Nersac, France, where it is currently in production for the Mercedes S-Class hybrid, which will be available to consumers later this year.

Johnson Controls-Saft also will supply the lithium-ion hybrid battery system for the BMW 7 Series ActiveHybrid available in 2010, Azure Dynamic’s Balance hybrid electric for commercial vehicles available in 2010, and Ford’s first plug-in hybrid electric vehicle available in 2012.

“This Michigan facility will allow us to serve our strategic global customers and specifically the production contracts we have with Ford and Azure Dynamics. It will also allow us to serve other important customers as the hybrid and electric vehicle industry continues to gain a foothold in the United States,” said Mary Ann Wright, who leads the Johnson Controls-Saft joint venture and is vice president and general manager of Johnson Controls’ hybrid business.

The cost to renovate the Holland, Mich., facility for lithium-ion automotive battery production is approximately $220 million. It will have an initial capacity of 15 million lithium-ion cells.

Johnson Controls-Saft will receive a combination of tax credits and incentives from the state of Michigan totaling $148.5 million as part of the state’s strategy to become the “advanced battery capital of the world.” Michigan Gov. Jennifer Granholm announced that the Michigan Economic Growth Authority has awarded Johnson Controls-Saft a package in support of lithium-ion battery cell manufacturing.

“Johnson Controls is an important Michigan employer with a successful long-term relationship with the automakers,” Granholm said in a statement.

Johnson Controls also plans to apply for a grant through the federal American Recovery and Reinvestment Act.

GMAC Waiting to Issue Debt

Story from the Wall Street Journal

More than three months after turning itself into a bank, GMAC LLC is still waiting for the green light from regulators to issue debt crucial to its funding plan.

GMAC, the former financing arm of General Motors Corp., is seeking the go-ahead from the Federal Deposit Insurance Corp. to sell cheaply priced debt insured by the FDIC as part of the Temporary Liquidity Guarantee Program.

This program has allowed an array of financial institutions, ranging from Citigroup Inc. to General Electric Co.'s General Electric Capital Corp., to raise financing when they were otherwise shut out from repaying or refinancing debt as a result of the credit crisis. Qualifying financial firms have so far raised $238.2 billion of government-backed bonds or surety bonds since this program was announced in October, according to data provider Dealogic.

GMAC has $30.6 billion of debt maturing in 2009, including $11.8 billion of unsecured debt. Gaining access to cheap capital through TLGP was a major driving force behind the cash-strapped lender's bank registration in December.

"Despite becoming a bank, GMAC is squeezed for capital," says Mark Wasden, an analyst at Moody's Investors Service. GMAC unsecured debt is rated the lowest of 19 credit rankings by Moody's, just a step up from default. Moody's outlook on this rating suggests it could be bumped up.

The ability to issue FDIC-backed debt would "represent real liquidity. GMAC needs that today," Mr. Wasden says. The lender could raise as much as $12 billion through the TLGP, according to Moody's initial estimates using FDIC guidelines. "It's a potentially sizable amount," Mr. Wasden says. The amount GMAC may issue could differ based on the FDIC's decision.

"We have an application pending with the FDIC," says Gina Proia, a GMAC spokeswoman. "We are in the process of responding to requests for additional information."

An FDIC spokeswoman said GMAC's application "is currently under review," while declining to comment on specific details.

To be sure, GMAC does have access to other forms of federal funding: It got $5 billion under the U.S. Treasury's Troubled Asset Relief Program. GMAC Bank, as of the end of 2008, had used up $10 million of a $4 billion credit line from the Federal Reserve. The lender also is exploring ways to tap the government's Term Asset-Backed Securities Loan Facility, or TALF, aimed at reviving lending to consumers.

In addition, deposits at GMAC Bank grew by one-third, to $19.2 billion, as of Dec. 31, 2008, compared with a year earlier. The lender also shored up its capital base through a $38 billion debt exchange in November.

But concerns persist around GMAC's finances because of continuing potential losses at its auto-finance and mortgage units; its hefty debt burden; restrictions on its lending practices because of its new status as a bank; and debt and capital levels the lender must comply with as a bank.

GMAC is jointly owned by GM and an investor group led by private-equity firm Cerberus Capital Management LP. The auto maker and the investor group will significantly scale back their ownership in GMAC as a condition of the lender becoming a bank-holding company.

Family Fights Insurance Industry Autism Policies

Story from HometownLife.com

Val McFarland isn't getting help from the insurance companies in paying for treatments for her 5-year-old son with autism.

It costs about $100,000 annually, which includes physical, occupational and speech therapy seven days a week, at home and at William Beaumont Hospital's Center for Human Development in Berkley.

“Either families are going further and further in debt or children are not receiving care,” said McFarland, of Commerce Township.

Two local lawmakers are trying to help families like the McFarlands. State Reps. Lisa Brown (D-West Bloomfield) and Vicki Barnett (D-Farmington Hills) launched a campaign Wednesday to support the growing number of families struggling with the costs of autism care by requiring health insurance companies to provide coverage for the treatment of the disorder. Autism is a complex brain disorder that inhibits a person's ability to communicate and develop social relationships.

Many Michigan health insurance companies cite unproven treatment methods when denying coverage for therapy. In support of National Autism Awareness Month, Brown and Barnett also launched an online petition for residents who would like to show their support for the plan and raise autism awareness.

“It is simply unacceptable for a Michigan health insurance company to refuse coverage and let the quality of life of these children be an afterthought,” Brown said. “While health care companies cover prevalent diseases like cancer and diabetes, they continue to discriminate against autism. We can't stand on the sideline as these companies turn their backs on autistic children who may never reach their full potential without treatment.”

The Centers for Disease Control and Prevention have called autism a national public health crisis whose cause and cure remain unknown. But research shows that early, intensive intervention can help.

The disorder effects 1 in 150 children, and boys are four times more likely than girls to be diagnosed. According to the Autism Society of America, Michigan has the highest rate of diagnosed autism cases in the U.S., with 12,166 children between the ages 3 and 21 effected.

Currently, 10 states mandate insurance coverage for autism. In Michigan, most health insurance companies cover only screening for the disorder, leaving families with autistic children to bear the high costs of treatment on their own.

“Insurance companies basically discriminate against autism treatments,” Brown said. “Insurance companies cover the diagnosis of autism but they don't cover the treatment.”

Last week, the House passed legislation to encourage greater research into the causes and treatments of the disorder. The plan would create the Autism Research Fund to research its causes and treatments, as well as establish a new income tax checkoff box to allow Michigan residents to voluntarily designate a portion of their tax return to the fund.

“I would hope it has bipartisan support,” Barnett said. “We're talking about covering children with a specific diagnosis.”

Val McFarland and her husband, Kevin, started the Celebrities Against Autism organization to raise awareness of the disorder and help offset the cost of therapy for them and other families.

Long term, the organization hopes to open a therapeutic center, which would include horseback riding, service dogs, an indoor pool and camps for autistic individuals.

“We started this for Callahan but it has grown much larger than just our son,” Val said. “As I began networking with other families impacted by autism, I learned how difficult it is for so many to both locate and afford quality treatment and how isolated they can feel.”

Residents can sign the petition at www.housedems.com/petitions. While on the site, residents can also share personal stories about how autism has affected them and their families.

State's Center For Automotive Research Tapped by Federal Task Force

Story from Michigan Business Review

Michigan-based auto industry experts are quietly playing an influential role in the deliberations of President Barack Obama's auto task force.

Among those directly communicating with the task force is the Ann Arbor-based Center for Automotive Research, whose chairman, David Cole, previously labeled pro-bankruptcy politicians "ignorant."

At least two officials from the University of Michigan's Transportation Research Institute also have met with task force representatives to discuss various industry issues.

The task force's decision to tap Michigan's auto expertise is reflective of the influence of independent analysts in the midst of the industry's life-threatening crisis.
"I think what everyone has discovered is there weren't very many people who knew a lot about the industry," Cole said. "And we have a lot of data and a lot of facts that I think have been very helpful. Ultimately facts are really important."

The experts' accounts of their communications paint a picture of a task force eager to absorb a wide swath of information about the industry and willing to consider a variety of options for preserving the domestic auto industry.

"We've had a fair amount of interchange," Cole said. "They're sitting down, meeting with the companies and other people that know a little bit about the industry and trying to come up with a solution to the problem."

The president's task force - which is led by Steven Rattner, Ron Bloom and Treasury Secretary Timothy Geithner - has not shown a willingness to cave to the auto companies' request for continuous investment.

Obama is said to be seriously weighing the prospect of helping General Motors, Chrysler or both delve into a quick, surgical bankruptcy designed to place the companies on the path to profitability.

And GM CEO Fritz Henderson is talking openly about the possibility of bankruptcy - a prospect his predecessor, Rick Wagoner, largely shunned. "If we're not successful doing it out of court, we'll do it in court," Henderson said at a press conference.

CAR's chief economist, Sean McAlinden, recently traveled to Washington D.C. to meet for two days with task force advisers, Cole said. CAR officials have vocalized a concern that bankruptcy for GM or Chrysler could lead to a cascading implosion of the auto supplier base, which recently received $5 billion in federal loans as a lifeline of sorts.

But in a D.C. press conference, Obama maintained that helping the major automakers return to profitability "may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger."

Despite the threat of bankruptcy, Cole praised the task force's deliberations. "They're smart guys working hard," he said. "I think the comments the president made the other day were good."

Cole, who told Business Review in December that bankruptcy of one of the major automakers would "kill Michigan," has softened his stance in light of Obama's decision to guarantee warranties for new car buyers.

"You have to provide protection for consumers," Cole said. "They're spooked enough as it is because of the credit crisis."

At U-M, meanwhile, analysts Walter McManus and Bruce Belzowski met with task force representatives - who were prepared with an exhaustive series of issues to discuss, Belzowski said.

Among the issues the task force wanted to discuss was the Chevrolet Volt, an extended range electric vehicle GM is expected to commercialize in November 2010. The Volt's 400-pound lithium-ion battery pack would allow drivers to travel 40 miles on a single charge of electricity before using gasoline.

The vehicle has drawn an abundance of attention and praise from alternative propulsion vehicle proponents. But Belzowski said that during discussions with the task force he emphasized that the Volt would cost between $30,000 and $40,000 and would be produced in small quantities at first.

It will be "a lot more expensive than the average buyer is willing to spend," Belzowski said.

That sentiment was reflected in the task force's report, which said the Volt was promising but would "likely be too expensive to be commercially successful in the short-term."