Maintenance-Free Luxury

The Wall Street Journal

Lots of Cars Have Leather Seats and iPod Jacks. Now Pricey Brands Want to Reel You In With Brake Pads at No Cost

 

 

 

The hottest new luxury car feature for 2011 isn't a sound system or another 50 horses under the hood. It's something you'll appreciate best when you're not driving: "no-cost" maintenance.

General Motors Co.'s Cadillac, Ford Motor Co.'s Lincoln and Tata Motors's Jaguar have declared in announcements during the past few weeks that they'll offer no-cost maintenance to customers who lease or buy new cars. Lincoln says its offer ends Sept. 7. Cadillac and Jaguar say their no-cost maintenance plans start with 2011 models, which start arriving later this summer.

These brands are jumping on the no-hassle maintenance bandwagon that BMW AG has been riding for more than a decade, and Volvo Cars began promoting last year. There's fine print to be considered—more on that in a minute. But the flurry of no-cost maintenance deals reveals something about the state of the luxury car business.

Luxury cars aren't created equal when it comes to technology and quality, but they're getting very close to that ideal.

Long ago, the simple things that used to distinguish a luxury car from a plebeian Ford or Chevrolet lost their exclusivity. Leather seats? You can get those on a Chrysler minivan. Tech-savvy connections for your phone and iPod? One of the slickest systems in the business is available on a Ford Focus subcompact. Navigation systems? Sure, the fancy systems built into luxury cars and SUVs are nicer than a Garmin or a Tom Tom. But those portable navigation systems can deliver a lot of information.

The ride quality, handling precision and power available from a BMW 3 series or a Cadillac CTS-V coupe aren't to be found in a run-of-the-mill mass market car. But the gaps in capability among the leading contenders in the main luxury segments—compact sedans, sport utilities, performance coupes—are narrower each year.

Luxury car makers now must compete not just over hardware, but over the "soft," human dimensions of the customer experience.

Among the first Cadillacs to come with the new maintenance offer will be the 2011 Cadillac CTS and CTS-V coupes—cars directly aimed at BMW's high performance franchise. "You don't just buy a car, you buy everything else that goes along with the brand," says Cadillac spokesman Nick Twork.

This is where "free maintenance" comes in. Luxury car buyers—especially newcomers to elite European brands—had reason to fear that maintenance could put a nasty dent in their checking accounts. The more technologically marvelous luxury cars become, the scarier the thought of paying to fix that technology if it gets glitchy.

"For years, the research has been definitive," says Dan Creed, vice president of aftersales for BMW North America. "It's nice to know you will not see a bill for four years or 50,000 miles except for gas and tires. It's both a clincher and it overcomes reluctance" to buy.

Still: "From a customer perspective my cost of ownership is known to a degree," says Chris Sutton of J.D. Power and Associates, a market research firm.

In other words, anyone wealthy enough to buy a BMW or a Cadillac or any other luxury car knows the maintenance isn't really "free." The cost is wrapped into the price of the car, as a kind of insurance.

One reason BMW and some other manufacturers are opting to eliminate out-of-pocket maintenance costs is that they want the cars kept up properly —by their dealers—so that when they come back for resale at the end of a lease, they fetch top dollar as certified pre-owned cars. BMW dealers sold 114,423 cars under its certified pre-owned program in 2009, up 9.5% from the year before and a new record. Sales of these well-maintained, three- and four-year-old cars are a significant source of profit for BMW dealers, and help support resale values for all BMW vehicles.

Not all no-cost maintenance offers are the same. BMW, as Mr. Creed says, covers all maintenance, including brakes and wipers.

Cadillac's "Premium Care Maintenance" offer doesn't cover brakes, and is limited to "scheduled oil changes, tire rotations, replacement of engine and cabin air filters, and a multi-point vehicle inspection."

Volvo has a "Safe + Secure Coverage Plan" which covers the first eight scheduled maintenance services for five years or 60,000 miles—including oil and filter changes, and replacement of brake pads and rotors and windshield wipers.

Lexus covers just the first two rounds of scheduled maintenance. Audi prefers to sell customers a maintenance plan separately, with a list price of about $790. Mercedes-Benz followed BMW in 2000 and began offering no-cost oil changes, fluid and filter replacements. But dealers began encountering unhappy customers confused about what was and wasn't covered, Mercedes spokeswoman Donna Boland says via email. Now, Mercedes offers pre-paid service packages dealers sell or roll into leases. "The sky didn't fall," Ms. Boland said.

Tesla Motors Shares up 40% after Initial IPO

USA Today

DETROIT — In what may be a 1990s-like blip of irrational exuberance, investors sent shares of unprofitable electric-car maker Tesla Motors soaring more than 40% Tuesday even as the overall stock market fell sharply.

Shares were issued at $17 for the initial public offering and quickly rose to about $19 when trading opened. By midafternoon, the price started climbing again to close at $23.89.

"It says a lot about opening-day speculation and hysteria," says John O'Dell, senior editor for Edmunds' Green Car Advisor blog. "It doesn't say a lot about Tesla. And I'm not sure it says a whole lot about the collective wisdom of the market."

The company raised $188.8 million, according to a filing with the Securities and Exchange Commission, after IPO expenses. The original stockholders — folks allowed to buy shares before they hit the Nasdaq market Tuesday — earned $22.5 million.

There is much skepticism that Tesla can be an automaker. In two years, the company has sold just 1,000 two-seat, high-performance Tesla Roadsters, which start at more than $100,000. It has just one prototype of its Model S sedan, aimed to be more mainstream at about half that price. The Model S is planned to go on sale in 2012, an ambitious timeline even for established automakers, let alone a maker of cars that run on batteries.

Tesla hasn't made money in its seven years in business and has just 12 dealerships nationwide.

CEO Elon Musk told CNBC Tuesday that if the company weren't trying to expand and weren't investing in the Model S sedan, it would be profitable selling the Roadster.

"People need to appreciate that if we were just making the Roadster, we'd be profitable," Musk said. "But we're in massive expansion mode.

"I think people at this point ought to be a little more optimistic about the future of Tesla," he said. "We've confounded the critics at every turn. At a certain point, people have to get tired of being wrong."

The U.S. government is betting that Tesla will beat the odds: It awarded the automaker a $465 million loan to help develop the roadster.

"It remains to be seen if American car buyers will be interested in a sedan with a claimed range of just 160 miles in an environment where car battery-charging is still a lengthy process and battery-charging infrastructure is very limited at best," says Jack Nerad, executive editorial director and executive market analyst at Kelley Blue Book's kbb.com. "Tesla Motors should get high marks for its progress so far, but the future still represents a steep uphill climb."

GM Trumpets Growth in China, Says it's Solid Overseas

USA Today

DETROIT — GM told Wall Street on Tuesday that it will be the first global automaker to sell more than 2 million vehicles in China this year, portraying itself as poised for overseas growth a year after exiting bankruptcy protection.

General Motors executives are trying to convince investors that the new company, which emerged from U.S. government-led restructuring last July, is capable of making money for years to come because of its international strength and lower expenses.

The automaker, now a private company 61% held by the government, plans to sell shares to the public as early as the fourth quarter of this year.

Executives are also making the case that GM is clawing back from bankruptcy reorganization, when it needed a roughly $50 billion government bailout.

"All in all, we're the best-positioned U.S. automaker in the world's critical emerging markets," CEO Ed Whitacre told financial analysts during a presentation.

GM's market share in China is 13.3%, which it expects to rise marginally in the next few years. But GM's sales there will grow even with small market share increases because overall Chinese auto sales are expected to keep climbing, including a 20% jump this year to 16.5 million cars and trucks. China passed the U.S. last year as the world's largest auto market.

The automaker runs its GM China operation in a partnership with China's Shanghai Automotive Industry.

GM has led all automakers in sales to the Chinese the past five years, with sales up 67% since 2008, said Tim Lee, president of international operations.

GM plans to roll out nearly 70 new or upgraded vehicles in international markets by 2014, further strengthening its position, Lee said.

Buick is one of GM's most popular brands in China, and this month GM is rolling out first in China a new compact sedan, the Buick Excelle GT. It shares a design with the Chevrolet Cruze, due out this summer, but won't come to the U.S. until next year.

GM will use many car designs that will be distributed across the globe but also has vehicles that are designed specifically for markets such as South America.

Asian, European and South American units are the key to GM's sustained growth and profitability, executives said. GM also is on pace to sell more than 2 million cars and trucks in the U.S. this year. Through May, it sold more than 882,000.

Lee told analysts he is worried that competitors are building inventory in China, which may force discounts. So far GM has not had to cut prices, he said.

GM has repaid $6.7 billion of its financial aid to the U.S. government, but the remaining $43.3 billion was converted to equity. The government hopes to get at least part of the balance back in the public stock sale.

The company made $865 million in the first quarter and is cautiously optimistic that it will have a profitable year.

GM is also in the midst of restructuring its European operations, which long have been a money loser. Mark James, vice president and chief financial officer of Opel/Vauxhall Europe, said GM expects to break even in Europe by 2011 and be profitable going forward.

James said the company plans 8,300 layoffs that should be completed by the end of 2011, including 7,000 manufacturing workers. It also is seeking employee concessions worth $322.9 million per year, including wage freezes, benefit reductions and elimination of bonuses.

No Plea Deal in John Stamos Extortion Case

USA Today

 

DETROIT — A northern Michigan man charged with conspiring to extort $680,000 from John Stamos said Tuesday there was nothing illegal about his plan to sell unflattering photos of the actor.

The government contends that no embarrassing photos ever existed. Scott Sippola, however, insists the FBI lost or destroyed the pictures that he planned to peddle to magazines if Stamos didn't buy them.

Sippola offered his defense in a court filing on the same day that a co-defendant's deadline for a plea bargain expired. A federal judge had given lawyers until Tuesday morning to iron out an agreement with Allison Coss, but a spokeswoman for prosecutors said nothing happened.

Sippola and Coss are scheduled for trial July 12 in Marquette in Michigan's Upper Peninsula on charges of conspiracy and other crimes.

The FBI says they threatened to sell photos of Stamos unless he paid them off. Coss and Stamos have known each other since meeting in Florida in 2004.

In his filing, Sippola said he had a legitimate deal — not extortion — in the works and the FBI lost or destroyed the valuable photos after nine agents searched his home last year.

Without the photos, his lawyer, Sarah Henderson, asked U.S. District Judge R. Allan Edgar to dismiss the charges or tell jurors they could consider the lack of photos a strike against the prosecutor's case.

"Without the photographs, the government's case becomes much easier to prove and the defendant's defense much more difficult," Henderson wrote.

Assistant U.S. Attorney Maarten Vermaat said Sippola was raising a "standard defense in blackmail cases."

House Fails to Pass Jobs Bill, Unemployment Extension

Reuters

 

Republicans in the House of Representatives on Tuesday blocked a Democratic effort to extend unemployment benefits for the long-term unemployed.

Democrats brought up the measure under special rules that require a two-thirds majority for passage. But they failed to win sufficient support from Republicans, who expressed concern about the measure's $33 billion cost to the federal treasury.

The bill would help as many as 1.7 million people whose unemployment insurance benefits have run out. It would extend an emergency unemployment compensation program through November 30.

Democrats said the spending was justified to help the unemployed pay their bills and to boost the economy.

"When you provide unemployment insurance to people, they spend it," House Ways and Means Committee Chairman Sander Levin said. "If Republicans are worried about growth and consumer demand, they should work to put money in the pockets of people who are desperate, who are out of work, who are looking for work."

The U.S. unemployment rate, currently 9.7 percent, has remained stubbornly high even as the economy has begun to recover from deep recession sparked by the financial crisis.

The government is due on Friday to report the jobless rate for June. Analysts are expecting a slight increase due to temporary U.S. government census workers being laid off.

But Republicans said the $33 billion price tag was too much to add to an already bloated federal deficit.

"Look around the world. Countries are sinking in debt," said Representative Dave Camp, the top Republican on the Ways and Means Committee, adding that "this reckless spending cannot go on forever."

The $1.4 trillion deficit and $13 trillion debt are becoming issues in the run-up to the November U.S. congressional elections in which Republicans hope to make substantial gains against the Democrats, who control Congress.

The extension of jobless aid for the long-term unemployed has run into solid Republican opposition in the Senate as well. A measure was attached to a bill that would extend popular business tax breaks, which stalled last week over Republican concerns about deficit spending.

Detroit Children's Museum to Reopen with Facelift

Associated Press

 

The Detroit Children's Museum, which was shuttered last year amid cost-cutting by the city's school district, has reopened with revamped exhibits, a new preschool area and more of its thousands of artifacts on display.

Hands-on components are now incorporated into all exhibits, museum director Julie Johnson said. Newly displayed items include the skull of an extinct mammal Andrewsarchus, masks and Civil War artifacts.

The museum previously was run by the cash-strapped Detroit Public Schools, which closed it last August. It's now being operated by the Detroit Science Center under a 10-year agreement that is expected to save the state's largest district $11.9 million. The museum reopened June 26.

"We didn't lose this gem," Johnson said. "It's been here since 1917. This is a very important part of Detroit."

The district still owns the museum, which has more than 100,000 artifacts. New acquisitions will belong to the Science Center, which has brought in some if its displays such as a towering model Tyrannosaurus rex.

"The Detroit Children's Museum was not a core part of our operations," Robert Bobb, the district's state-appointed emergency financial manager, said in statement. "The museum needed to be given the stability of not being in the annual school budget cycle."

The 93-year-old museum houses dinosaur bones, dioramas, costumes and dolls from around the world. It also has an extensive collection of rocks, fossils and crystals, some of which are being presented in new displays.

The new preschool area will include a puppet theater and live turtles. And some of the museum's mainstays remain, including a stuffed Bengal tiger named Champ in an expanded animal exhibit and the horse sculpture "Silverbolt" outside.

In the main exhibit hall, more than 500 items are on display - about twice as many as a year ago, Johnson said. In one display, a large doll house that sits behind glass is paired with another where children can play with dolls.

The museum - not affiliated with the Detroit children's hospital - mostly had been used for field trips, Johnson said. Those will continue, with programs available for schools, daycare groups and community centers, but the Science Center also plans to promote the museum for family visits.

Michigan gets $155M to Target Foreclosures

The Detroit News

Michigan is ready to distribute nearly $155 million to fund foreclosure prevention programs, money the White House hopes will curb the state's flood of foreclosures.

Dubbed the "Hardest Hit Fund," $1.5 billion has been earmarked for five states -- Michigan, Arizona, California, Nevada and Florida -- where home values have decreased, on average, 20 percent or more. This first round of funding will be followed by a second that will give $600 million to five states with areas of high unemployment, including Ohio.

The money comes as the Commerce Department on Wednesday reported a bleak 33 percent fall in new home sales during the month of May, the result, experts said, of a phase-out of the popular first-time homebuyers tax credit that gave up to $8,000 for qualified buyers.

Robert Rahal, president of Birmingham-based Shore Mortgage, said the tax credit helped give the market a boost. While the new round of funding from the feds won't directly spur sales, Rahal said, it could help keep the market from tanking further.

"The fewer houses we have in foreclosure the better," he said. "Anything that can help stabilize that and get the appreciation process going is very welcome."

The states in the first round have consistently topped lists tracking housing value declines and foreclosures. Metro Detroit has been one of the hardest hit, with home values plummeting as workers have fled the state seeking opportunities elsewhere, leaving behind a market with a glut of cheap real estate.

The Michigan State Housing Development Authority will administer three programs with the federal money. It submitted plans for the programs in April for approval by Treasury Department officials.

To qualify for all of the programs, the homeowner has to remain living in the house and paying the mortgage for five years after receiving money; otherwise the money would have to be paid back.

MSHDA's three programs:

• $99.8 million will go to the Unemployment Mortgage Subsidy, which will pay for up to half of the monthly mortgage for unemployed workers while they're looking for a new job, up to a maximum of $750 monthly.

• $15.5 million will go to the Loan Rescue Program, which offers grants of $5,000 to homeowners needing help to catch up on their mortgages.

• $30.4 million goes to the Principle Curtailment Program, which puts up $10,000 in matching funds for homeowners who need to refinance mortgages in which they owe more than their homes are worth.

Losing Federal Money Could Hurt Michigan Budget

Associated Press

 

LANSING, Mich. — Michigan's budget problems will become significantly worse and state programs will be put at risk if Congress doesn't revive a federal spending bill, Democratic Gov. Jennifer Granholm said Friday.

The legislation killed by a Republican filibuster on Thursday includes more than $500 million in federal Medicaid money that Granholm and state lawmakers were banking on for their spending plans for the fiscal year starting Oct. 1. The legislation also would have extended federal jobless benefits for unemployed workers. Thousands of laid-off Michigan workers will begin to lose benefits in July, Granholm said.

The governor said failing to revive the bill would have a "devastating" effect in Michigan and other states relying on help from the legislation. Granholm said she was "amazed" by what she called "obstructionism" of U.S. Senate Republicans who blocked passage of the plan.

"They're not dealing with consequences here on the ground in the states," Granholm said. "This means jobs to people, it means health care to our citizens and it means food on the table for those who are unemployed."

Granholm is among the governors who plan to lobby for Congress to revive the measure.

Medicaid covers roughly 1.8 million of Michigan's nearly 10 million residents. Granholm said one possible budget option would be further reducing reimbursement rates to doctors who treat Medicaid patients. But she worries that would prompt doctors to stop accepting Medicaid patients.

Michigan lawmakers already are debating how to eliminate a projected deficit of roughly $1.5 billion from next fiscal year's state budget. They may be forced to look at cuts in all aspects of the state budget if they have to trim another $500 million on top of that.

There's a projected surplus in the state's school aid fund, but some Democrats don't want to raid that money to fill holes in the general fund. Democrats have discussed selling off another portion of future tobacco settlement money for cash up front, but many Republicans oppose that idea.

Matt Marsden, a spokesman for Republican Senate Majority Leader Mike Bishop, said the nonpartisan Senate Fiscal Agency is being consulted to look at possible options if the money doesn't come through.

More than 400,000 unemployed Michigan workers are currently receiving either state or federally funded unemployment benefits. Michigan's unemployment insurance agency estimates that 87,000 people would exhaust their benefits by July 3 without an extension. That number could double by the end of July.

Fight Lies Ahead to Save the Great Lakes

Port Huron Times Herald

 

The ongoing oil spill in the Gulf of Mexico has been called the worst environmental disaster in American history. That might be true, but it is also subjective.

The list of American environmental tragedies is both long and sad. Other candidates for the "worst" label might include the modern practice of mining coal by blowing the tops off mountains and bulldozing the rubble into the valleys.

In the past 20 years, mountaintop removal has devastated an area of Appalachia larger than Delaware. It has destroyed hundreds of miles of trout streams and despoiled some of the finest hardwood forests on the planet.

Another contender for the "worst environmental tragedy" is emerging in Chicago, where an Asian carp has been found on the wrong side of an electric barrier meant to keep the voracious fish out of the Great Lakes.

A 20-pound, 30-inch bighead carp has been found in Calumet Lake in south Chicago, just 6 miles up a murky shipping canal from Lake Michigan.

Ontario and the Great Lakes states, with the notable exception of Illinois, have been pleading with the federal government to close the man-made canals that divert water from Lake Michigan into tributaries of the Mississippi River.

These canals are superhighways for Asian carp, which needed only 20 years to become the dominant fish species in the Mississippi watershed. If they reach the Great Lakes, they threaten to destroy a sports fishery valued at $7.5 billion a year.

They also will destroy one of the planet's most unique ecosystems, truly an environmental disaster of epic proportions.

Illinois strongly opposes closing the canals, saying it would cost the Chicago area as much as $4.7 billion in commerce in the next 20 years. Its chamber of commerce, with its parochial mindset, conveniently makes no mention of the $150 billion the wider region stands to lose.

Michigan lawmakers once again are calling on President Barack Obama to close the locks. "This was so tragically predictable," U.S. Rep. Candice Miller, R-Harrison Township, said of the latest news.

Thus far, the president has sided with the interests of his hometown, Chicago. His administration supports the U.S. Army Corps of Engineers' decision to protect shipping interests. It also supports the U.S. Supreme Court, which repeatedly has refused to hear the case for closing the locks.

If the Great Lakes ecosystem as we know it is lost, our friends in Chicago surely will shrug and say it was inevitable.

Perhaps it is inevitable, but losing such a treasure without a fight is worse than folly. It is cowardice. It is avarice. It is madness.

Lions President Tom Lewand Apologizes after DUI Arrest

The Detroit Free Press

He took charge of the franchise in December 2008

Lions president Tom Lewand was arrested on suspicion of drunken driving Friday night in Roscommon County.

"I am deeply sorry for my actions and take full responsibility for them," Lewand said in a statement released by the team Saturday night. "As a person in active Michigan alcohol rehab, I am committed to taking all necessary steps to insure nothing like this ever happens again."

Lions spokesman Bill Keenist confirmed the incident and said that Lewand had been released from police custody. Lewand did not return a phone call from the Free Press Saturday night.

It is not clear what, if any, disciplinary action Lewand will face from team ownership or the NFL, or if they were aware of any alcohol addiction treatment.

Lewand has worked in a variety of roles with the Lions for 16 years. He became the team president in late December 2008, succeeding Matt Millen, who had been fired during the season.

Lewand, who has three degrees from the University of Michigan, oversees the team's day-to-day operations. He reports to owner William Clay Ford, according to the team's Web site, "on all business, organizational and NFL matters."

The Lions' site also says: "Lewand's fundamental principle is to consistently present the Lions as a first-class organization with a clear sense of mission and direction."

Lewand has deep roots in Michigan. He has earned undergraduate, business and law degrees from U-M. His father, F. Thomas Lewand, was the chief of staff for Gov. James Blanchard, and his grandfather, Joseph B. Sullivan, was the deputy mayor of Detroit in the 1960s.

3 Wind Farms to Open in State

The Detroit Free Press

 

John Deere Wind Energy said Friday that it plans to open three new wind farms, two of which will be the largest in the state. The announcement is a major boost for the future of wind energy in Michigan.
The new projects -- in Lenawee County and Michigan's Thumb -- are expected to increase the state's wind power capacity by 61% to 374 megawatts. That would generate electricity for more than 84,000 households.

Michigan has lagged other states in developing wind power even though it has several areas ideally suited for it.

The three wind farms are to provide power to Consumers Energy beginning in 2012. They are:

• Michigan Wind 2 in Sanilac County (90 megawatts);

• Blissfield Wind Energy in Lenawee County (81 megawatts);

• Harvest II in Huron County (59.4 megawatts).

John Deere Wind Energy, based in Johnston, Iowa, already also owns the state's two existing large wind farms.

"We intend to lead the nation in making our nation energy independent," said Gov. Jennifer Granholm, who lauded the projects in a speech at the Michigan Energy Fair, which began Friday at the Rock Financial Showplace in Novi.

The wind farms and a new landfill gas-electric generation facility in Lenox Township that is to be developed by Waste Management Renewable Energy will enable Consumers Energy to obtain 6.2% of its power from renewable-energy sources by 2012, up from the current 4%. Under Michigan law, it must reach 10% by 2015.

Granholm also announced that nine Michigan companies will get $20 million in clean-energy manufacturing grants -- money that comes from the federal stimulus program.

The companies are: Amptech in Manistee ($573,000), Great Lakes Industry in Jackson ($2.5 million), Grid Logic in Metamora ($5 million), Heat Transfer International in Kentwood ($2.8 million), Innotec in Zeeland ($1.2 million), KC Jones Plating in Warren ($300,000), Polar Seal Window in Grand Rapids ($200,000), URV USA in Rochester ($4 million) and Ventower Industries in Monroe ($3.5 million).

Granholm and U.S. Sen. Debbie Stabenow, D-Mich., who also attended the event, stressed the importance of making sure that new clean-energy products and technologies are made in the U.S., particularly in Michigan.

"We have to incentivize manufacturing it here," Stabenow said.

Of the 8,000 parts in a wind turbine, "we can make every one in Michigan," Stabenow said. "For me, the magic word is manufacturing."

2 Guilty in $23M Michigan Medicare Fraud

Associated Press

Detroit -- A federal jury in Detroit has convicted two people of health care fraud and conspiracy.

The Justice Department said they billed Medicare for $23.2 million in fake therapy services.

Tuesday's verdict was against Bernice Brown and Daniel Smorynski. The government said Brown owned Wayne County Therapeutic Inc. in Livonia, a physical and occupational therapy clinic. Smorynski was vice president.

The government said they billed Medicare for physical and occupational therapy services in 2002-06 that the company didn't provide. It said Medicare paid more than $6 million in Medicare reimbursements between June 1, 2005, and May 31, 2006, according to one court filing.

The verdict stemmed from a $50 million Medicare fraud case unveiled by the federal government last year in which Metro Detroit was at the center. The fraud case involved 53 defendants -- 40 in local sweeps conducted June 24, 2009 -- and included four doctors. At the center were physical therapy and injection or infusion therapy clinics.

Federal court records filed in 2007 show federal agents seized more than $250,000 in cash and a 2006 Ford van from Brown in connection with a Medicare fraud investigation involving alleged billings for fictitious patients.

The charges carry up to 10 years in prison and a $250,000 fine.

Smorynski lawyer Thomas Warshaw declined comment. Phone and e-mail messages were left for Brown lawyer Fred B. Walker after business hours Tuesday.

Aluminum Bottoms With Ghosn Predicting 11% Car Growth Benefiting Deripaska

Bloomberg

Billionaire Oleg Deripaska’s forecast for a potential aluminum shortage and record global car output predicted by Carlos Ghosn mean the world’s second most- used metal may be about to rebound.

Smelters will shut this quarter because about 70 percent are unprofitable after aluminum fell as much as 27 percent in two months, said Deripaska, chief executive officer of United Co. Rusal, the largest producer. Ghosn, CEO of Renault SA and Nissan Motor Corp., expects car production to gain about 11 percent this year. Transportation is the biggest use for aluminum.

The executives are more bullish than Wall Street, where the median in a Bloomberg survey of 19 analysts is for the metal to average $2,100 a metric ton in the fourth quarter, 7.1 percent more than now. Harbor Intelligence, the researcher which correctly predicted a 2009 closing price above $2,200, forecasts prices as high as $2,500 before the end of this year.

“We see a long, steady climb for aluminum,” said Andrew Karsh, who helps manage $4.8 billion for the Credit Suisse Total Commodity Return Strategy team in New York. “We’ve been having a reactionary market instead of one that is driven by the fundamentals. The fundamentals are still strong.”

The U.S. will grow the most in six years in 2010 and China, the biggest aluminum consumer, will expand at three times that pace, according to as many as 67 economists surveyed by Bloomberg. Manufacturing is leading the rebound in the world’s largest economy, rising for a 10th month in May, while construction spending in April added the most since 2000. One in every five tons of aluminum is used in building.

Indebted Nations

The growth is coinciding with concern that Europe’s most indebted nations will derail the region’s recovery as governments shrink budget deficits. Western Europe accounts for about 15 percent of aluminum demand. The Standard & Poor’s GSCI Index of 24 raw materials fell 19 percent in the three weeks to May 25 and as much as $7.7 trillion was wiped off the value of global equities from mid-April to the end of last month.

Aluminum fell $1 to $1,944 last week, while the Standard & Poor’s 500 Index gained 2.4 percent, erasing this year’s loss. The S&P GSCI Index advanced 3.5 percent.

Aluminum for delivery in three months closed 0.9 percent higher at $1,961 in London after China signaled it will relax the yuan’s fixed rate to the dollar, boosting optimism for increased sales in the world’s third-largest economy.

Shares Rally

Shares of Rusal gained 5.8 percent in Hong Kong, paring the decline since they listed in January to 34 percent. Alcoa Inc., the third-largest producer, rallied as much as 9.1 percent in New York, closing up 5.5 percent at $11.72 and leaving the decline since January at 7.9 percent. Rio Tinto Group, the second-biggest, jumped 5 percent in London, erasing this year’s loss.

“The price drop that we’ve seen is something that we view as a shorter-term correction because fear is increasing above normal levels,” said Jesus Villegas, an analyst at Laredo, Texas-based Harbor. “Historical evidence has shown that in years when demand grows pretty quickly, like we are expecting in the next two years, production increases tend to lag,” he said, predicting the biggest supply shortfall in five years in 2011.

Smelters may shut facilities that can make 2 million to 3 million tons in the second and third quarters, equal to about half of annual North American demand, Deripaska said in an interview June 9 in Hong Kong.

Capacity Offline

In March 2009, 7.3 million tons of capacity was offline, Barclays Capital estimated last year. Prices had slumped 62 percent in seven months from a record $3,380.15 in July 2008. Aluminum rallied 95 percent from February 2009 to April this year, boosting earnings for Rusal, Rio Tinto and Alcoa. It fell to $1,828 on June 7.

The consensus among analysts has been too pessimistic before. A year ago, their median forecast for this year’s average was $1,700, according to estimates compiled by Bloomberg at the time. The actual average this year has been $2,173.

Part of their sentiment is explained by the near-record stockpiles held in warehouses monitored by the London Metal Exchange. Inventory of 4.47 million tons is five times the average since 1980 and more than Europe makes in a year.

LME-monitored reserves are little changed from a year ago and about 80 percent is tied to transactions, making it behave as a “financial asset rather than an industrial feedstock,” said Daniel Brebner, an analyst at Deutsche Bank AG in London. Projections for interest rates to remain near record lows in the next 12 months mean the metal may not return to the market any time soon, he said.

‘Not an Impediment’

“High exchange stocks will not be an impediment to higher prices as long as most of this material remains tied up in long- term financing deals,” said Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London, who expects a second-half average of $2,450. His forecast for 2010 demand growth of 13 percent compares with Barclays’s projection of 12 percent, the fastest pace in at least a quarter-century.

Ghosn of Yokohama-based Nissan, Japan’s third-largest automaker, told investors a month ago that while 2010 would be a “challenging” year, “the worst of the crisis is behind us.” His forecast for record global car sales of 70 million compares with 63 million last year and the previous all-time high was 68.5 million in 2007, Renault’s press office said in an e-mail. Nissan forecast May 12 that profit will more than triple this fiscal year. Its shares dropped 15 percent in Tokyo trading this year.

Auto Sales

U.S. auto sales rose to 1.1 million in May, the eighth straight monthly increase, as General Motors Co., Ford Motor Co., Chrysler Group LLC, Nissan and Hyundai Motor Co. exceeded analysts’ delivery estimates. On average, 8.6 percent of a North American car’s weight is made up of aluminum, according to the Arlington, Virginia-based Aluminum Association’s Aluminum Transportation Group.

Demand from the airline industry may weaken. Production of commercial jetliners will drop to 882 units this year, from 960 last year, according to December estimates from Fairfax, Virginia-based aviation consultant Teal Group. Boeing Co. says a typical 747 uses about 66 tons of aluminum alloy.

A slower global recovery may curtail the rally. Group of 20 finance chiefs meeting in South Korea this month said the rebound faces “significant challenges” and International Monetary Fund Deputy Managing Director Naoyuki Shinohara warned June 9 of more risks. U.S. housing starts fell in May by the most since March 2009, Commerce Department data show.

Surplus Production

China, accounting for 40 percent of global output, exported more of the refined metal in April than it imported for the first time since the end of 2008. China will produce 510,000 tons more than it needs this year, Barclays estimates.

A rally would mean fewer unprofitable smelters, limiting shutdowns and encouraging mothballed plants to reopen. Prices at $2,200 or more would probably encourage capacity to come back on line, said Julian Kettle, a London-based analyst at researcher Brook Hunt, a Wood Mackenzie company. Barclays expects output to rise 11 percent to 42 million tons this year, worth about $98 billion at the five-year average price of $2,328.

Cutbacks have yet to appear. Global output rose to a record daily average of 112,500 tons in April, according to the London- based International Aluminium Institute, which says steel is the most-used metal. It was 112,300 tons a day in May.

European Premiums
Rising production is not being reflected in availability. European premiums, or the fee added to the price of metal for immediate delivery on the LME, will probably be as much as $115 a ton this month, compared with $60 in January, because of a scarcity of available metal, according to London-based researcher CRU Group. Premiums in Japan more than doubled in a year.

Capacity is also being added in regions where power costs are lower. Globally, energy accounts for about 39 percent of total costs, according to Bank of America Merrill Lynch.

New smelters in Abu Dhabi and Qatar and Chinese plants will add capacity this year, Barclays said in a report this month. That will be partly offset by Europe, where about two-thirds of plants “are in danger of closure” before the end of 2013, the European Aluminium Association says.

Energy may stunt the growth of output in China, where the government is raising power surcharges by as much as 100 percent for some energy-intensive companies starting this month.

Supply could also be kept off the market by exchange-traded funds backed by the metal. Rusal said in April it was in talks to supply metal to banks for possible ETFs.

Swing to Profit

Deripaska’s company said in May it swung to a first-quarter profit from a loss. Rio, based in London, will more than double earnings per share to $6.82 this year, according to the mean estimate of 17 analysts surveyed by Bloomberg. Alcoa, based in New York, will post earnings per share of 30.3 cents this year, compared with a loss of $1.06 last year, the estimates show.

“You aren’t going to see a lot of downside risks from here,” Deutsche Bank’s Brebner said. “It will probably start to hurt in the $1,900 to $2,000 region and now we are below that so there is probably pressure growing.”

Highest MPG List Has Some Surprises

The Detroit Free Press

It was only a couple of years ago that gasoline prices peaked at more than $4 a gallon. Even though prices receded, few doubt that high-priced gas could eventually be with us again. In light of that, you'd think that the landscape would be filled today with 40-m.p.g. cars. Well, it isn't.

The surprise comes from a list the U.S. Environmental Protection Agency put together of the most fuel-efficient vehicles in the past 25 years.

Few are from today. Most are from many years ago. For all the talk today about hybrids, electrics and greater fuel efficiency from conventional engines, the list underscores how little progress we've made toward weaning ourselves off oil.

No wonder that hyper-milers like Louis Hudgin of Gilbert, Ariz., were driving old cars like Hudgin's 2001 Honda Insight when we interviewed them a couple years ago.

Modern cars didn't get as much mileage as the older ones, a big problem for those who squeeze as many miles out of every gallon of gas as Hudgin does.

Hudgin was routinely getting more than 100 m.p.g.

Granted, a lot of those high m.p.g. cars of yore were pretty lousy. In the past, it was uninspiring cars like the Geo Metro and Chevy Sprint leading the gas mileage race, making a 2010 Toyota Prius look like a luxury car in comparison.

Most fuel-efficient cars of the past 25 years

Mileage figures are city/highway/combined

2000 Honda Insight ... 49/61/53
2010 Toyota Prius ... 51/48/50
1986 Chevy Sprint ... 44/53/48
1990-94 Geo Metro ... 43/52/47
1986-87 Honda
Civic CR-X ... 42/51/46
1994-95 Honda
Civic HB ... 39/50/43
2006-10 Honda
Civic hybrid ... 40/45/42
1985 Pontiac Firefly ... 39/47/42
1985 Suzuki SA310 ... 39/47/42
2010 Honda Insight ... 40/43/41


Source: www.fueleconomy.gov

Ford, Edison and the Cheap EV That Almost Was

WIRED

 

That Henry Ford and Thomas Edison were good friends late in their lives is well-known. They camped together, presented each other with lavish gifts, even owned homes adjacent to each other.

Many Ford enthusiasts also know Ford, when he first drove his Quadricycle on the streets of Detroit in 1896, worked for Edison at Detroit Edison Illuminating Company. And historians know Edison, when introduced to Ford some months later and shown Ford’s plans for a gasoline automobile, encouraged the budding industrialist to pursue those plans.

What is far less known is Edison and Ford worked together on an affordable electric vehicle.

This is the story of what happened and why the car never came to be.

At about the time Ford Motor Co. was founded in 1903, Edison had made inroads with battery technology and started offering nickel-iron batteries for several uses, including automobiles. Later that year, he announced plans to convert four large touring cars to electric power (using his own batteries, of course), a plan that reeks of a publicity stunt to sell batteries but was enough to get him listed in the Standard Catalog. And though he prodded Ford into producing gasoline cars, he was soon denouncing them:

    Electricity is the thing. There are no whirring and grinding gears with their numerous levers to confuse. There is not that almost terrifying uncertain throb and whirr of the powerful combustion engine. There is no water-circulating system to get out of order — no dangerous and evil-smelling gasoline and no noise.

Ford, however, still high on Edison’s encouragement, not only left Detroit Edison and rigorously pursued the gasoline-powered car, he ordered the development of a flywheel magneto system for the Model T specifically to avoid using batteries. (One story I’ve read, possibly apocryphal, is that the battery in Ford’s pre-production Model T overturned during a camping trip, ending his jaunt and prompting him to ban batteries from his new low-priced car.)

Ford began to change his mind, however, and by early 1914, word spread that he was working on a low-priced electric car. Reports appeared in the Wall Street Journal, in trade magazines and in newspapers as far away as New Zealand regarding Ford’s foray into EVs. Ford confirmed the rumors in The New York Times on January 11, 1914:

    Within a year, I hope, we shall begin the manufacture of an electric automobile. I don’t like to talk about things which are a year ahead, but I am willing to tell you something of my plans.

    The fact is that Mr. Edison and I have been working for some years on an electric automobile which would be cheap and practicable. Cars have been built for experimental purposes, and we are satisfied now that the way is clear to success. The problem so far has been to build a storage battery of light weight which would operate for long distances without recharging. Mr. Edison has been experimenting with such a battery for some time.

Ford may have fibbed when he said “multiple” experimental cars, but at least one was built in 1913. That’s it outside Ford’s Highland Park plant in the main photo.

The EV was tiller-steered with an unusually swoopy frame and batteries under the seat. The man operating it, Fred Allison, was an electrical engineer from Detroit charged with designing the motor. Ford Richardson Bryan notes in his book, Friends, Families, & Forays: Scenes From the Life and Times of Henry Ford, the car’s electrical system and overall design were the work of Alexander Churchward, who was at the time vice president of Gray & Davis. General mechanic’s duties were assigned to Samuel Wilson, a former Cadillac employee. Churchward had, one year earlier, written a paper on the standardization of the electric car (he argued, among other things, for a 25 mph maximum speed). Wilson had experience with Cadillac’s self-starter program.

Work continued into 1914, as we can see in the photo above of Allison perched atop a second experimental EV. This one used a Model T frame, suspension and front axle, a Model T steering wheel and a worm-drive rear axle. The latter indicates the motor, mounted behind the driver in the first prototype, was up front in the second, near an additional bank of batteries. Bryan notes in his book Henry’s Lieutenants that Eugene Farkas was responsible not only for the worm-drive rear axle that was later modified for use in the EV, he was responsible for the car’s chassis.

Rumors, stoked by Ford’s secretary, Ernest Liebold, swirled in the automotive press for the remainder of 1914. Edsel Ford was said to have been put in charge of the Edison-Ford. Henry Ford was said to have bought an electricity-generating plant in Niagara Falls and a site off Woodward Avenue in Detroit specifically for the production of the Edison-Ford.

As the year wore on, the rumor mill had the EV coming in 1915, then 1916. Details varied: It would cost somewhere between $500 and $750 (between $10,000 and $15,712 today) and would go somewhere between 50 and 100 miles on a charge. Even today, reports vary as to whether the car would have a brougham or cabriolet body. Edison, in an interview with Automobile Topics in May, 1914, divulged no details and made his best “It’s coming, just be patient” speech of the kind General Motors has perfected in recent years with the Chevrolet Volt:

    He called attention to the fact that a new automobile, especially one embodying such radical features as a $500 or $750 electric pleasure car naturally must have, cannot be designed and constructed in a few weeks.

    “Mr. Henry Ford is making plans for the tools, special machinery, factory buildings and equipment for the production of this new electric. There is so much special work to be done that no date can be fixed now as to when the new electric can be put on the market. But Mr. Ford is working steadily on the details, and he knows his business so it will not be long.

    “I believe that ultimately the electric motor will be universally used for trucking in all large cities, and that the electric automobile will be the family carriage of the future. All trucking must come to electricity. I am convinced that it will not be long before all the trucking in New York City will be electric.”

Edison, by the way, was himself no stranger to electric cars. Bryan noted in Friends, Families and Forays that Edison built a battery-powered front-wheel-drive electric in 1895, and the industrialist owned some of the very expensive electric cars then in production.

We’ve so far seen no evidence that the press of the day ever got its hands on photos or other solid evidence of the experimental EVs. Eventually, the media seemed to forget about the Edison-Ford altogether. Some conspiracy theorists believe the oil cartels got to Ford and Edison and prompted them to abandon it. These theorists offer as evidence the “mysterious” fire that nearly destroyed Edison’s workshops in West Orange, New Jersey, in December, 1914. Besides the fact all work on the EV took place in Dearborn, Michigan, (and Edison had the entire place rebuilt by the next spring), The New York Times noted on December 10, 1914, that the fire skirted the two buildings in which any work on the electric car would have taken place:

    It was seen that the only important buildings that could be saved were the experimental laboratory and the storage-battery building, and all attention was given to them.

    Mr. Edison was in the experimental laboratory when the fire began. He helped in the salvage work, and when that was finished he went to the storage battery building and directed the protection of that structure.

Rather, as Bryan wrote, the downfall of the Edison-Ford electric car came about because Ford demanded the use of Edison’s nickel-iron batteries in the car and would have no other battery powering the car. Edison’s batteries, however, were found to have very high internal resistance and were thus incapable of powering an electric car under many circumstances. Heavier lead-acid batteries, which would have made the car too ponderous, were substituted behind Ford’s back. When he found out, he went ballistic. The program quickly fell by the wayside as other projects demanded Ford’s time. According to The Ford Century, Ford invested $1.5 million (almost $31.5 million today) in the electric-car project and nearly bought 100,000 batteries from Edison before the project fell apart.

Churchward, who had already racked up dozens of patents and would be issued dozens more, returned to Gray & Davis and for a time also served as vice president of A.B.C. Starter Company, which later employed Allison as chief engineer. Of the patents granted to Allison that we’ve found, one (1,225,558, dated May 8, 1917) was assigned to the A.B.C. Starter Company, while two others (1,478,196, dated December 18, 1923, and 1,508,377, dated September 16, 1924) were assigned to Ford Motor Company, so Allison very well may have leveraged his experience with the electric car to a career at Ford. Both men were instrumental in Ford’s adoption of the electric starter and electric lighting systems in 1919.

And now we come full circle. Ford says it will invest $135 million in electric-car development and 10 to 25 percent of its fleet will be electrified in some way by 2020.

Here’s hoping, Henry.

To Save Itself, Detroit is Razing Itself

NY Times

DETROIT — For generations, residents of this hollowed-out city hoped that somehow Detroit could be reborn — its population would return and its crumbling core would be rebuilt. No idea was more heretical than widespread demolition of thousands of derelict buildings.

But a new momentum has taken hold here that embraces just that: shrinking the city in order to save it.

“There’s nothing you can do with a lot of the buildings now but do away with them,” said Mae Reeder, a homeowner of 35 years on the southeast side, where her bungalow is surrounded by blocks that are being reclaimed by nature, complete with pheasants nesting in vacant spaces where people once lived.

The residential vacancy rate in Detroit is 27.8 percent. This is up from the 10.3 percent rate found in 2000 by the United States census.

“People are deciding we can’t live like this anymore,” said Steven A. Ogden, executive director of a nonprofit group, Next Detroit Neighborhood Initiative, which works to help stabilize communities. “It is my contention that we can’t afford to wait a single day without a strategy.”

Strategies are now coming from every corner, with community groups and nonprofit organization and trade groups producing frameworks.

The burst of creativity is partly a function of desperation. For the sixth decade in a row, this year’s census will bring bad news: the population, already sparsely distributed over a vast 139 square miles, has declined again, to an estimated 790,000 residents, down from 951,000 people in 2000 and a high of almost 2 million in 1950. Population loss was hastened in the last few years, experts said, by the twin blows of the foreclosure crisis and jobs lost to the recession.

Detroit has already struggled through 55,000 foreclosures since 2005 and is expecting another wave to hit soon as temporary moratoriums, meant to stabilize the nation’s housing markets, are lifted. That will mean even more vacancy, emptiness and blight.

After decades of mostly ignoring its hemorrhaging population, the city government earlier this year began using federal money to demolish 10,000 empty residential buildings, with a goal of bringing down the first 3,000 structures by the end of the year.

But only 784 demolitions have been completed so far, and Mayor Dave Bing, whose predecessors were chastised at the mere mention of large-scale demolition, has been criticized not for embracing the idea but for failing to articulate a long-term vision.

“They haven’t really thought this through,” said Kurt R. Metzger, an urban affairs expert and demographer who directs an independent agency, Data Driven Detroit, which is given money by foundations to create a demographic, real estate and infrastructure database about the city. “You don’t have any real direction given by anybody.”

The group released a lot-by-lot survey in February showing that, on average, 20 to 30 percent of the city’s lots were vacant.

In February, Community Development Advocates of Detroit, a nonprofit trade group of local development organizations, offered a framework developed after 15 months of study that suggests classifying each part of the city into one of 11 neighborhood types like green zones, homestead sectors, village hubs and traditional residential sectors, to name a few.

High-density neighborhood hubs and downtown business and civic centers would be connected by green thoroughfares — low-maintenance, naturally landscaped traveling corridors that could help Detroit handle one of its main challenges: that its strongest areas are on the fringes, with weaker patches scattered throughout the core.

An urban homestead — one of the more popular parts of the plan — would be tantamount to country living in the city, the plan says, with homeowners enjoying an agricultural environment and lower taxes in exchange for disconnecting from some city services like water.

Another community group, Detroit Declaration, has developed a land-use policy that proposes setting up urban farming and reducing the size of lots for building to encourage housing development known as in-fill.

Yet another proposal has come from Mr. Ogden’s group, Next Detroit Neighborhood Initiative, which calls for an intensive intervention to prop up the city’s strongest areas, the city’s tax base and community anchors, which are just starting to suffer after weathering decades of storms.

“It’s really about reorganizing our land to make a more livable city,” said Tom Goddeeris, an architect who lives in the vibrant northwest part of the city and is a longtime advocate of rethinking Detroit. “I don’t know that it’s ever been done before on our scale, but we’ve got to get started.”

Despite the energy poured into rethinking the city by a half dozen groups, there are limits to how much those outside government can accomplish. There are both political and financial obstacles to putting any of the plans into effect.

For instance, though many of the plans presented to the city for consideration aim to create density in viable neighborhoods by consolidating and relocating residents from dying or dead neighborhoods, most do not go so far as to say which areas they would choose for destruction. Those decisions, group leaders said, are for the city to make.

“What we believe is that it should be data driven, in collaboration with residents,” said Anita Lane, director of programs at Community Development Advocates of Detroit. Any process for redesigning the city, she said, “needs to have all the stakeholders coming together to take ownership for this.”

Her organization’s idea to designate 11 types of neighborhood does not have a price tag yet, and it is hard to gauge how much the total remodeling of a city would cost, especially on the scale of Detroit, which is already on life support from the federal government and philanthropic organizations. As a point of reference for the cost of a larger project, the city is expected to spend $20 million on demolitions alone this year.

“This is by far the biggest city that has faced this challenge in this country,” said Frank Popper, a professor of planning and public policy at Rutgers University. “Some of the thinking has been that Detroit would be the model.”

That hope has taken a hit.

“My sense is while there may be plans on the ground, the situation is so fluid that everybody’s winging it,” Dr. Popper said. “I’m trying to follow it day to day, and I get the feeling of improvising all the way. But doing nothing is a prescription for dwindling away, if not dying.”

There are skeptics of large-scale change, to be sure.

The Michigan Citizen, a local alternative newspaper, has likened neighborhood change and possible resident relocation to “a modern-day ‘Trail of Tears’ for Detroiters.”

Adele Nieves, a public relations specialist who moved to Detroit from New Jersey three years ago, said she suspected something akin to a land grab in the works.

“It’s in the government’s interest to continue the perception that everything is abandoned and destroyed, or that Detroit needs to be flattened,” she said.

“The reality is a different story,” Ms. Nieves said as she extolled the virtues of her neighborhood in the Cass Corridor, where she grows her own food in a garden and has access to an increasing number of stores and restaurants.

No official strategy exists, beyond a nascent planning process. City officials said it was likely to take 18 to 24 months to develop a framework for moving forward, perhaps incorporating ideas from existing proposals. So far, members of the so-called land use summit have met once, in early May. Public-participation sessions are scheduled next month.

Under the city’s demolition plan, 2,216 buildings have to be taken down by Dec. 31. What comes next is anyone’s guess. Mayor Bing declined several requests to be interviewed for this article.

“We have a lot of history of things being promised, land being taken,” said Janet Jones, a bookstore owner in the Cass Corridor, who is skeptical about the new proposals. “We have to be vigilant about everything. We have to be on guard.”

Many residents agree, however, that doing nothing is a recipe for continued, unplanned shrinkage and misery in the housing market.

“Those dreams of going back to two million — no one believes that anymore,” said Mr. Goddeeris, the architect. “We’ve had a tumultuous couple of years.”

Early Chevrolet Volt Buyers may get Free Home-Charging Kit

USA Today

DETROIT — Early buyers of the Chevrolet Volt electric car could receive a free home-charging station through a U.S. Department of Energy program, General Motors said.

The Volt goes on sale late this year, and 4,400 customers will be eligible for a 240-volt charge station from ECOtality or Coulomb Technologies. In many cases, it will include the cost of home installation.

It's all being paid for through the American Recovery and Reinvestment Act.

"Many owners will plug their Volt into a normal 120-volt electrical outlet, charge overnight and drive to work in the morning using only car battery power," Tony DiSalle, product and marketing director for the Chevrolet Volt, said Thursday in a statement. "For Volt owners who want to install a faster 240-volt charge station, we expect the Department of Energy project to save $1,000 to $2,000."

The program will collect data from customers to learn about average charge times and time of use so that the Energy Department can better understand how electric vehicles are used.

GM has said the Volt will be able to go 40 miles on an electrical charge alone. After that, an onboard gasoline generator will provide power to recharge the automotive batteries and keep the vehicle going.

Tony Posawatz, Volt vehicle line director, said a 240-volt charger will recharge the car in about four hours.

He said some of the program's engineers already have installed 240-volt outlets to charge test versions of the Volt at home.

"These guys would never use any gas on the weekends unless they would drive the Volt up north," he said. "We're learning through the whole process that the charging experience is important to us."

Meanwhile, electric and hybrid vehicles are expected to help increase the sale of global alternative-fuel vehicles by 28% this year compared with last, according to a new report by J.D. Power and Associates. That outpaces an expected 8% industrywide increase this year.

As U.S. sales rebound, J.D. Power expects the U.S. market to account for 55% of hybrid sales in 2015.

Unemployment Rate for May: Down in 37 States, Up in 6

USA Today

 

 

A majority of states saw their unemployment rates drop in May. But the widespread declines were mainly because people gave up looking for work and were no longer counted.

The unemployment rate fell in 37 states and the District of Columbia, the Labor Department said Friday. Six states had increases and seven experienced no change.

Forty-one states and the District of Columbia saw a net increase in jobs. But that reflected national data showing a huge gain because of government hiring of temporary census workers.

Nevada now has the highest jobless rate in the country, marking the first time in more than four years that Michigan did not hold that distinction. Nevada's rate climbed to 14%. Michigan's fell to 13.6%.

Nationally, the unemployment rate dipped to 9.7% in May from 9.9% in April. But the drop was largely because hundreds of thousands of jobless people stopped searching for work.

A total of 431,000 new jobs were added across the country in May, the biggest gain in a decade. Still, the surge came from 411,000 temporary census jobs. Private-sector job growth slowed significantly.

Big states led all others in job growth. Texas saw a net gain of 43,600 jobs, California was up 28,300 and New York rose by 21,000.

Nevada's jobless rate rose from 13.7% in April. That state has been hurt by the collapse in housing and a downturn in tourism.

"Tourism is always one of the areas hardest hit during a recession," said David Wyss, chief economist at Standard & Poor's in New York.

Unemployment in Michigan, a state hurt by the troubles in the auto industry, fell from 14% in April. Michigan had had the highest monthly unemployment rate in the country since April 2006.

Wyss said the new report did not show any major changes overall in state trends.

"In general, the band of states between the Mississippi River and the Rocky Mountains are doing relatively well while the worst hit states remain the housing bubble states and manufacturing states around the Great Lakes," he said.

North Dakota continued to have the lowest unemployment rate in the country at 3.6%. It was followed by South Dakota (4.6 percent) and Nebraska (4.9 percent).

By region, the West reported the highest regional jobless rate at 10.9%, unchanged from April. The Northeast had the lowest rate at 8.9%, also the same as the previous month.

Unemployment in the South stood at 9.4% in May, down from 9.6% in April. The jobless rate in the Midwest was 9.7%, an improvement from 10% in April.

U of M Solar Car Tops Out at 105 MPH

cNet

 

The 2010 American Solar Challenge isn't until next week, but records may have already been broken. In testing, the University of Michigan Solar Car Team's Infinium clocked speeds of more than 100 mph for 30 seconds at Ford Motor Co.'s Michigan Proving Ground, achieving a top speed of 105 mph.

"No one we have spoken to has ever heard of a solar car reaching 100 mph, and a U-M car has never reached it," said Rachel Kramer, the team's project manager. "Our goal for the 2010 American Solar Challenge is to win Michigan's sixth North American championship. We hope to win an unprecedented third consecutive title."

While the high speed should theoretically help the team reach the finish line first, all drivers must obey all posted speed limits in the 1,100-mile competition, which begins in Tulsa, Okla., to near Chicago. This week the solar-car team is competing in the Formula Sun Grand Prix, the qualifying event that leads up to the race on June 20.

The Infinium is the tenth vehicle built by the UM solar-car team. Last year UM placed third place with this car at the 2009 Global Green Challenge (formerly the World Solar Challenge) and this year hopes to take first place.

Five of the university's vehicles have won the American Solar Challenge (formerly the North American Solar Challenge) in the open class, and four have placed as high as third in the Global Green Challenge, but no American team has won it since General Motors in 1987.

Detroit Invites Bids for Tiger Stadium Site

Bloomberg Business Week

 

 

Bidder up! Detroit is officially seeking bids for the former Tiger Stadium site.

The Economic Development Corp. said in a statement Thursday that the 9.5 acre site at the corner of Michigan Avenue and Trumbull has no specific restrictions on potential uses but city officials anticipate a mixed-use project.

The statement says all proposals "must include a substantive financial plan."

The site is exempt from most state and local taxes for 12 years.

Applications are due by Aug 2. The EDC will hold a mandatory pre-submittal meeting on July 14.

Tiger Stadium opened in 1912 as Navin Field. The Tigers left for Comerica Park after the 1999 season. The last portion of the stadium was demolished last September.

Group Pursues New $400M Detroit River Train Tunnel

Bloomberg Business Week

A public-private coalition has been formed to lead the effort to raise money and build a new rail-only tunnel under the Detroit River.

The Continental Rail Gateway group seeks to replace a century-old tunnel between Detroit and Windsor, Ontario. The new $400 million tunnel also would be built to accommodate double-stacked containers and multilevel rail cars used by shippers and automakers.

The coalition was formed when the Windsor Port Authority joined Canadian Pacific Railway and Borealis Infrastructure, part of the Ontario Municipal Employees Retirement System.

Backers hope to open the tunnel by 2015 pending environmental and other reviews.

A tunnel allowing double-stacked trains was built and opened in the 1990s between Port Huron and Sarnia, Ontario.

From CBC News

The push is on to build a new rail-only tunnel under the Detroit River connecting Windsor, Ont., and Detroit, Mich.

The newly formed Continental Rail Gateway Coalition wants to replace a century-old tunnel connecting the two cities.

The group is a public-private coalition made up of the Windsor Port Authority, Canadian Pacific Railway and Borealis Infrastructure created to raise the $400 million needed to build the tunnel and lead the construction effort.

The current tunnel, built in 1909, carries approximately 350,000 rail cars every year. But it cannot handle double-stacked containers and some newer multilevel rail cars used by shippers and auto manufacturers.

The tunnel was expanded in 1994 but cannot be enlarged again, the coalition said in a news release Thursday.

The group argues that by building a new tunnel, it will make the Windsor-Essex and Detroit-Wayne County region more competitive as a logistics hub. A larger tunnel would allow container trains to cross over the border, creating a direct link from the Port of Montreal through Toronto, Windsor, Detroit and Chicago.
Construction would create jobs

"A larger replacement rail tunnel is critical to creating jobs and turning Windsor-Detroit into one of the most significant logistics hubs in the Midwest," said David Cree, president and CEO of the Windsor Port Authority.

The group said it expects the tunnel project will create more than 2,200 direct and indirect jobs.

"A cross-border approach to regional economic development is long overdue," said coalition member Marge Byington. "This agreement reflects the close ties between the United States and its largest trading partner, as well as the shared interests of rail and port operators."

Backers hope to open the tunnel by 2015 pending environmental and other reviews.

A tunnel allowing double-stacked trains was built and opened in the 1990s between Port Huron, Mich., and Sarnia, Ont.

New UAW Chief Says Organizing Toyota a Top Priority

Reuters

 

The new head of the United Auto Workers on Thursday vowed to "pound Toyota" as part of a stepped-up campaign to bring union representation to factories operated by Asian automakers in the United States.

UAW President Bob King vowed to bring protesters, including retirees, to picket outside Toyota dealerships with banners charging that the automaker puts "Profits Before People."

"We're going to pound on Toyota until they recognize the First-Amendment rights of workers to come into the UAW," King told over 1,000 union delegates at a convention in Detroit.

Toyota and the UAW are at odds because of a decision by the Japanese automaker to close a Fremont, California plant that it had been operating in partnership with General Motors Co.

That plant, where workers had UAW representation, had produced the Corolla and Tacoma models for Toyota.

In a move that further angered the union, Toyota announced on Thursday that it would shift production of the Corolla sedan to a still-unfinished plant in Mississippi.

King said Toyota was looking to cut labor costs and free itself from union representation. He said the UAW would lobby to have the decision on Corolla reversed at the same time that it pushes to organize other Toyota factories.

"It's outrageous," King said of Toyota's decision to shift Corolla production to Mississippi. "If they're going to act that way, we're going to respond."

A Toyota spokesman could not be immediately reached for comment.

NO RECORD OF SUCCESS

The UAW has never succeeded in organizing a major U.S. auto factory apart from those run by the domestic manufacturers -- General Motors, Ford Motor Co (F.N) and Chrysler.

A push to organize Toyota's flagship U.S. factory in Georgetown, Kentucky fizzled in 2007. The union also failed on four separate votes going back to 1989 to win support for a union at a major Nissan factory in Tennessee.

"The only luck we've had has been bad luck," King said.

Toyota's emergence as the largest global automaker in recent years heightened the stakes for the union and its recent safety crisis made it appear vulnerable, union officials say.

King said the UAW would push ahead with a bid to organize Toyota whether or not a bill that would make it easier to establish unions known as the Employee Free Choice Act clears Congress.

Asian auto brands led by Toyota now represent about 46 percent of U.S. auto sales, a larger slice of the market than the Detroit Three combined.

King said that without expanding its base to include workers at Asian "transplant" factories run by the likes of Toyota, Honda Motor Co and Hyundai-Kia, the UAW could no longer safeguard pay for U.S. auto workers.

During the debate over the U.S. government bailout for GM and Chrysler, Republican Senators pushed the union to agree to pay and benefit levels that would be no higher than those offered by Toyota at its U.S. factories.

As part of sweeping concessions granted to the U.S. automakers under a 4-year contract up for negotiation in 2011, the UAW allowed Detroit autoworkers to hire new workers starting at $14 an hour, equivalent to about $29,000 per year.

That wage is about half of the pay for veteran assembly line workers. Both Ford and Chrysler have begun to add new workers at the lower wage rates.

King said he understood rank-and-file frustration after five years of concessions at a time of mounting financial problems for the U.S. auto industry.

But he said the union would not put the U.S. automakers at a competitive disadvantage with an upcoming round of contract demands. "It's not possible to get everything back that we've given up," he said.

UAW membership peaked at near 1.5 million in 1979 and dropped below 400,000 workers last year.

ABC Drama 'Detroit 1-8-7' to be Filmed in Michigan

Detroit Free Press

ABC’s new fall drama “Detroit 1-8-7” is not just using the city’s name. The entire series is going to be filmed here, producers say.

Today, the show’s creators and its writing team were wrapping up a visit and clarified that the character-driven crime series, based around the lives of a Detroit homicide unit, will be fully produced here, the first-ever network series to be shot completely in Detroit.

Shot during the winter, the show's pilot was filmed in Atlanta. There were previous news reports stating that the entire series would be filmed there or Los Angeles, but Atlanta was never a consideration, producers said.

“We want people to fall in love with this show and its characters and come back and visit Detroit every week,” executive producer and creator Jason Richman says, adding that there have been some misrepresentative reports since ABC announced it greenlit the show in January. “It doesn’t serve us as storytellers to slam a place,” he says.

Executive producer and show runner David Zabel (“ER”) says a studio and stage sets for “Detroit 1-8-7” are currently being constructed in Highland Park before filming commences in mid-July. A symbiotic relationship between the show and the community is a must Zabel says, adding that ABC allocated a budget that will inject more than $25 million into the local economy through production costs for its first 12 episodes. The network plans to hire 190 full-time employees here, not including countless extras.

“Hopefully this goes and goes for a bunch of year and years, Zabel adds. “This is a crime show but we will explore various nooks and crannies in the communities and within that context there’s a lot of opportunity to see what’s positive in the city and see what’s heroic about the people fighting for what’s best for the city of Detroit.”

The series is scheduled to debut at 10 p.m. Sept. 21.

King Inherits a UAW Seeking Payback for Concessions

Bloomberg Business Week

 

Bob King, the next United Auto Workers leader, inherits a union that gave up thousands of jobs and billions in benefits to save the U.S. auto industry. His legacy will rest on how workers are rewarded in the recovery.

King, 63, the nominee of the UAW bloc that has controlled the Detroit-based union since 1946, is slated to succeed two- term President Ron Gettelfinger, 65, in an election tomorrow. The electrician with a law degree, who rose through the ranks in 40 years at the UAW, is set to take over a union that has declined to 355,000 members from 1.5 million in 1979.

The UAW shift coincides with signs of recovery in the industry. General Motors Co. posted a net profit and Chrysler Group LLC made money on an operating basis in the first quarter, less than a year after each emerged from bankruptcy. The union helped convince President Barack Obama to provide an $85 billion taxpayer bailout to those automakers, taking concessions to put their labor costs on par with foreign automakers’ U.S. plants.

“Bob is facing a very, very difficult job because there will be tremendous pressure on him to roll back the concessions,” said Gary Chaison, a labor professor at Clark University in Worcester, Massachusetts. “He’s got to walk a very fine line to reverse some of what was lost and keep some in place for the promise of a brighter future.”

UAW workers have each given up $7,000 to $30,000 in concessions in the last five years, King said last month. The union surrendered raises, bonuses, cost-of-living adjustments and agreed to a two-tier wage system where new hires make about $14 an hour, half what hourly production workers are now paid.

Returning Benefits

As head of the union’s bargaining with Ford Motor Co., King filed a grievance in January after the automaker reinstated raises, 401(k) matches and tuition assistance for salaried workers. Dearborn, Michigan-based Ford has since restored tuition benefits for its 41,000 hourly workers and King is pressing for more.

“UAW members at GM, Ford and Chrysler and throughout the supplier sector have made the sacrifices to keep these companies viable,” King said at a Ford factory in Ypsilanti, Michigan, on May 24. He declined to be interviewed for this story.

UAW labor costs, including wages and benefits, have fallen from $75 an hour to about $55, equal to Toyota Motor Corp.’s U.S. workers. The union has about 113,000 members at Detroit- based GM, Ford and Chrysler, which is based in Auburn Hills, Michigan.

“Bob’s going to make sure our members are not forgotten as these companies rebound,” said UAW director Rory Gamble, who runs King’s former Detroit region and has known him 25 years. “But we’ve got to make sure these companies are viable, so there’s going to be a lot of caution in how we go after this.”

‘Vilified’ Union

Part of the caution will stem from managing the UAW’s public standing. “The current perception of the UAW is one of the lowest of any union in America,” said analyst David Cole of the Center for Automotive Research in Ann Arbor, Michigan.

A so-called jobs bank in which auto workers received almost full pay while on indefinite layoff “became the flag by which the union was vilified,” Cole said. The union doesn’t receive credit for giving up that jobs bank or other reforms, he said.

“Bob has to get out front and tell the world it’s a different union than it used to be,” Cole said. “Otherwise, it will continue to decay.”

King, the son of a former Ford industrial relations director, has been painted by challengers in the union as going too easy on the company. More than 70 percent of Ford workers rejected additional concessions in November that King endorsed. Ford earned $2.7 billion last year after three years of losses.

Critics in Union

“We can’t just take at face value when these companies cry poverty,” said Gary Walkowicz, a UAW official from King’s home factory in Dearborn, who is making a self-described symbolic run against him for president. “Workers really disagreed with giving up those concessions when Bob King asked them. It showed there’s a disconnect between the membership and the leadership.”

In the next round of contract bargaining in 2011, King has to work toward restoring raises while ensuring the automakers put new models into U.S. factories, said Sean McAlinden, economist at the Center for Automotive Research.

“As the market comes back, the automakers will be adding workers by the thousands,” McAlinden said. “If he holds the line on canceling too many concessions, he’ll get growth. Otherwise, the companies will say, ‘We’ll build up Mexico like you wouldn’t believe.’”

Business Case

King prepares business cases to show managers that hiring more workers at UAW plants can be profitable, said Bernie Ricke, president of UAW Local 600 in Dearborn, who has been at the Ford bargaining table beside King since 2003. “He’s usually very measured, though I’ve seen him pound the table a few times.”

Billionaire investor Wilbur Ross negotiated against King on a contract for his International Automotive Components Group, the world’s largest automotive carpet supplier. King studied IAC’s books and discussed findings with managers before bringing the information to union leaders and rank and file members. The new contract, which cut pay and benefits, passed by 80 percent.

“He’s the prototype for the kind of labor leader who is needed in this modern world,” Ross said in an interview. “His challenge is to preserve manufacturing in the United States at the same time maintaining a standard of living for the worker. It’s a delicate balance.”

King last year approached Ross for help in organizing auto suppliers to support the U.S. cash for clunkers program that funded government subsidies for vehicle trade-ins. They built a coalition of about 50 suppliers across the U.S., and the program eventually helped sell 677,081 cars.

From the Sickbed

King comes to the table with an “intense” work ethic, Gamble said. He’s been seen working two mobile phones at a time in Ann Arbor, where he lives with his wife and three children. (He also has two adult daughters from his first marriage). The night before stomach surgery last year, King called Gamble from his hospital bed at 11:30 p.m. to check on Ford’s plans to transfer workers among plants. After surgery King was right back on the phone, hoarse from a tube in his trachea, Gamble said.

“He could barely talk and I said, ‘Bob you need to get well, man,’” Gamble said. “He was relentless.”

He took a similar approach to his schooling. After studying religion and philosophy at College of the Holy Cross in Worcester, King graduated from the University of Michigan in 1968 with a degree in political science. He did a two-year tour in Korea with the U.S. Army and then went to work for Ford in 1970 at the Rouge factory complex in Dearborn that Henry Ford built in the 1920s. In 1972, King began an electrician apprenticeship while earning a law degree in his off-hours.

Rapid Rise

“While he was still an apprentice, the journeyman skilled tradesmen elected him as their union committeeman, which was unheard of,” Ricke said. “He had to work weekends to finish his apprenticeship.”

Raised Catholic, King draws a link between the labor movement’s mission and social justice. At a UAW convention in California in 1989, he bused reporters to a shanty town in Tijuana, Mexico, to show them the squalor surrounding U.S. companies’ border factories. He took a group of labor leaders to El Salvador in 1990 to monitor union elections.

King’s greatest challenge may be finding a way to build on his earlier efforts to increase the UAW’s ranks. While leading bargaining efforts a decade ago, he helped diversify the membership by organizing graduate students and casino workers.

Johnson Controls

King also led a strike at Johnson Controls Inc. in 2002 where he convinced the supplier to sign a neutrality agreement allowing the union to organize its other U.S. plants. Ford, one of JCI’s largest customers, also said it wouldn’t object to the UAW representing workers at the auto supplier. That set a precedent that enabled the UAW to sign up 25,000 auto parts workers that year, according to labor professor Harley Shaiken of the University of California at Berkeley.

“Bob King leveraged the good relationship the UAW had with Ford into a broader reach with its suppliers,” Shaiken said. “It was innovative and strategic.”

King also reaches out to other unions seeking new strategies for signing up members.

“He actually believes in grassroots organizing, which I think came from our organizing backgrounds,” said Leo Gerard, president of the United Steelworkers union, who consults with King on strategies for boosting membership and considers him soft-spoken but “tough as nails.”

About 350,000 of the 850,000 Steelworkers in the U.S., Canada and the Caribbean work on products that end up in autos.

The UAW can’t keep shrinking and expect to hold the clout that moved a president to rescue GM and Chrysler, Shaiken said.

“He’s facing an unprecedented crisis; the status quo is not tenable,” Shaiken said. “To survive the union has to go forward, and Bob needs to be a transformational leader.”