30 November 2009

Ford Motor Wants More MPG From Mustang


It's the Ford Mustang against the Chevy Camaro in a race for muscle car sales dominance, and Ford is aiming to take the lead with gas mileage.

Yes, fuel economy.

Ford Motor Co's (F.N) iconic Mustang, revered for powerful race modified models over four decades, has never been known for fuel efficiency, but by 2011 it will get 30 miles per gallon on highways, according to the U.S. automaker.

The Camaro, brought back into production in 2009 after a seven-year absence, has a V-6 engine that gets 29 miles per gallon on the highway and 304 horsepower.

Ford wants to close the performance gap between base models of the Mustang and Camaro with a 2011 model year Mustang, scheduled to begin production early next year, that will have V-6, 305 horsepower engine, six-speed transmission, and get 30 mpg on the highway.

"When you are buying a sports car, you want to have that feel of performance," said Barb Samardzich, Ford's head of powertrain engineering. "At the same time, there is no reason why you should have to compromise on fuel economy."

Ford is "playing a little catch up" with the Mustang fighting for the same piece of the pie as the Camaro, IHS Global Insight analyst Aaron Bragman said.

"The Camaro took them by surprise in terms of the power and fuel efficiency of their V-6," Bragman said. "They are trying to make Mustang more competitive, and they have to ... because the Camaro is eating their lunch in terms of sales."

Through October, Mustang 2009 sales totaled 56,469 in the United States, while Camaro sales totaled 47,233. Camaro U.S. sales began in April, and it has been outselling the Mustang for several months.

"They want to get that sales leadership back," Bragman said of Ford.

The 2011 Mustang will represent a 25 percent highway mileage improvement over the current version using a new 3.7 liter V-6 engine, six-speed automatic transmission, better aerodynamics and other changes.

Ford also added features to the V-6 Mustang that had been found on the more expensive versions of the car, including standard dual exhausts and better brakes. The V-6 accounts for about half of all Mustang sales.

Ford has found that customers have embraced smaller engines in many vehicles, such as the Fusion mid-sized sedan where 80 percent of 2010 model year sales have been in 4-cylinder or hybrid drives.

Ford said it would keep making V-8 versions of the Mustang.

"I think we will see V-8s in Mustangs for a very, very long time," Samardzich said.

Ford has not said how much the 2011 Mustang will cost, but executives said it would remain competitive with current versions.

29 November 2009

Here's The Truth About The Detroit Daily Press Suspension

Examiner Detroit

The sudden screeching halt to the latest and most courageous Detroit enterprise has a lot of people talking this weekend, and a lot of that talk is just crap. The entire debacle has local media up in arms - although some of them have bared their arms, much to the public's loss.

Let's call them what they are: behemoth bullies. OK?

I'm talking about the unexpected suspension of the newest area daily newspaper, the Detroit Daily Press. First brainstormed last spring in response to the gutting of local media coverage by the only big games in town, The Detroit Free Press and Detroit News, its debut was just this past Monday, November 23rd. By Thursday, the cessation of its printing had both newcomers and veterans buzzing - not to mention the public, who have been yelling for a daily newspaper for months.

A nebulous entry on DDP's Facebook page had even the employees wondering what happened, especially those out chasing stories in the field who weren't in the newsroom for yesterday's noon announcement from publishers, Mark and Gary Stern. It cited problems with distribution, late press runs, lack of advertising and sales, which were "beyond our control."

Apparently what would have provided better control was DDP's own cache of gorillas who could strong-arm the competition, like the competition has been strong-arming them. Can you say "Media Mafia?"

An irrefutable source confirms that the other Detroit print behemoths actually threatened to pull their own papers from retailers such as CVS, if they kept good on their original promise to carry and sell the Detroit Daily Press.


Likewise, the same bullies pressured printers to not do business with the Royal Oak-based newspaper, and continually changed any previous agreement to print the DDP. Requirements such as cash up front for that day's work, among other out-there demands were meant to break any original agreement as well as management's back.

"Press runs ran late once, and then two of the other five days, the presses broke down," said the source.

Yeah, well, they ran late one day because THE LIONS WON AT THE VERY LAST SECOND OF SUNDAY'S GAME and everything for the paper's premier copy had to be scrapped and re-arranged. That's the newspaper biz for you.

On the other occasions, DDP's drivers, who have been criticized by the behemoths' bullies for not being union members, didn't wait for the papers.

What does that mean for the public? For one thing, fewer working people.

And, no distributors + an aura of threats = no choice for potential readers who really WANT a daily paper.

Meanwhile, for two weeks, some media couldn't wait to talk crap about the DDP, faulting everything from its dedication to covering what they deem as old news (nice, considering most of the behemoths' writers never even leave the comfort of their desk chairs to chase a story down), to picking apart the new layout and snarking about how employees wouldn't be paid.

Grow UP.

Detroit Daily Press employees expected that type of barrage of sludge from the comp, but overall they thought it would disappear in time, as they earned their chops.

So, here's a question for the morons: If the Detroit Daily Press was so uselessly silly and didn't pose a threat to the Media Mafia - who has had everything tied up for years in an incestuous excuse for news coverage in one of the country's major cities - then why are you working so hard to destroy it, even before it gets on its feet?

Well, guess what, bullies? Detroit Daily Press employees were promptly paid today, and they are waiting on the callback to work in January.

Assuming, of course, that Tony Soprano and his crew can be hired out of retirement to guarantee the safety of someone else with an opinion who can practice freedom of speech in the Motor City.

Detroit's "other" media should be ashamed of itself. You are not harbingers of free speech, but suppressors and oppressors.

And, that's the new news.

Detroit Daily Press Suspends Publication Until 2010

Crain's Detroit Business

The Detroit Daily Press, Detroit's newest daily newspaper, said today it has suspended publication until 2010, citing a lack of advertising, circulation and other problems.

The Press, first unveiled in June and the brainchild of veteran publishing brothers Mark and Gary Stern, was aimed at readers who wanted a meto Detroit newspaper home delivered every day -- taking advantage of displeasure over the decision by the owners of the Detroit Free Press and The Detroit News to limit home delivery to three and two days, respectively, as a cost-cutting measure.

At a Nov. 13 press conference at the newspaper's Royal Oak office, the Sterns announced that retail sales would begin Nov. 23 and home delivery on Nov. 30.

The Nov. 23 launch was plagued by circulation, delivery and printing problems. CVS, a major distributor, failed to get the Press' bar code information programmed propery, according to Mark Stern, resulting in headaches for buyers.

The Press' official Facebook page had this announcement posted Friday afternoon: "Due to circumstance beyond our control, lack of advertising, lateness of our press runs and lack of distribution and sales, we find it necessary to temporarily suspend publication of the Detroit Daily Press until after the 1st of the year. Once we can fix these things, we plan to be back stronger and more organized when we return. This is just a bump in the road and not the end of the Detroit Daily Press."

An e-mail seeking comment was left for the newspaper's managing editor, Bruce McLaughlan, a former Detroit News editor and veteran auto marketer.

The Press had about 60 employees, including 30 in the newsroom that included a number of veteran journalists from Detroit's two established newspapers.

Media Onlookers Ready To Take Notes On Detroit Daily Press


When brothers Mark and Gary Stern announced a new daily newspaper in Metro Detroit, it seemed there was only one question on everyone's mind.

"Can it be done?"

Two-newspaper towns were already becoming a thing of nostalgia before the current economic crisis. After the recession, four cities -- Albuquerque, Seattle, Denver and Tuscon -- all saw joint operating agreements dissolve as one of two major papers dissolved.

Still holding onto their JOA, The Detroit News and Detroit Free Press cut operating costs by reducing home delivery to Thursdays and Fridays. This is the Press' selling point; the brothers want to offer a third option delivering three days a week.

Other than potential subscribers, perhaps no one is more curious about this endeavor than journalists and other media analysts -- all wondering if an economically depressed area which already has two papers with declining circulation can support a third.

Here's what's buzzing in the Web about the prospects of the new Detroit Daily Press, which makes its debut on Monday:

"What I think the Daily Press has going for it: It's locally-owned, rather than being a corporate arm. Most dailies were family-owned up through the early 1990s when the vast majority of them were sold to one media conglomerate or another. One of the most maddening pieces about the current newspaper business is how the lack of self-determination harms most publications. Gannett, for example, which owns the Free Press (among many, many others), reported record profits last year. And yet, it continues to order more and more layoffs. This is appalling, and shows what happens when a company with zero stake in the community (Gannett is based near Washington, D.C.) takes control of media with the sole intention of building profit. Not coincidentally, the brothers are both Detroit natives who maintain a residence in the area, though they live mostly in the South." - Anna Clark, blogger at isak.typepad.com.

"It'll be a challenge for them, but a new challenge for the existing dailies. Looks as if there's going to be a lot of competition where we least expected it." - Paul Berton, editor-in-chief, London (Ontario) Free Press.

"I understand the owners have committed two months’ worth of capital to support the project. Even in a good economy, two months of capital is not enough to support a start-up publication. In a declining media market, with few advertising dollars available in the depressed market we have here in Detroit,  it appears destined for failure....Another concern about the health of this endeavor is the lack of buzz, marketing or community-building strategies. The only reason I knew about the new newspaper is because friends of mine where applying for positions with cheap rates and no benefits.  They have only offered a few traditional old school press releases," Rosh Sillars, blogger at newmediaphotographer.com.

"While 7-day-a-week home delivery is an important selling point, it should not be the end-all, be all. As with any medium, “content is king.”  And, with particular reporters geared to focus on the news of particular counties (ala the one-time Wayne, Oakland and Macomb Bureaus of their competition), it would appear they recognize the void in community news holes that currently exists as smaller, hometown papers  publish less, go online or shutter entirely. That, I would argue, is where the prime opportunities for differentiation and “making a difference” lie." - Don Tanner of local PR firm Tanner Friedman.

"I am excited for this new paper in Detroit. It will bring a new fresh look to a landscape often marked with job losses, crime and a horrible football team and desperately needs something or someone to lift its spirits. With all the jobs and people leaving the Detroit area, it is uplifting to see a new business – with 60 new jobs – move into Metro Detroit. Especially because if the Sterns do fill the void left by the News’ and Free Press’s lack of home delivery, they have an excellent chance of being successful and adding a third major paper to the area." - Mike Hoffman, student journalist at Central Michigan Life.

27 November 2009

Even Folks With Good Credit Are Still At Risk

Traverse City Record-Eagle

The foreclosure crisis likely will persist well into next year as high unemployment pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.

The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That's a shift from last year, when riskier subprime loans drove the housing crisis.

The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.

The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising. Lost jobs are the main reason homeowners are falling behind on their mortgages.

After three years of plunging prices, the housing market started to rebound this summer. That lifted hopes for the overall economy. But analysts say there are too many foreclosed homes that have yet to be dumped on the market and expect further price declines.

Among states, the worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.

One in four mortgages in Florida were either past due or in foreclosure, the most in the U.S. Nevada was close behind at 23 percent.

"There's no indication in this data that foreclosures are going to abate anytime soon," said Mark Zandi, chief economist at Moody's Economy.com, who projects that nationwide home prices will fall up to 10 percent before bottoming next fall.

Driven by rising unemployment, prime fixed-rate loans to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.

Many laid-off homeowners might be able to survive on their savings for a while, but "the longer the economic situation stays in place, the less likely they are to hold on," said Jay Brinkmann, chief economist at the Mortgage Bankers Association.

In markets where foreclosures already are high and still rising, prices likely will remain soft. That will cause developers to keep their bulldozers idle and prevent the industry from making a big contribution to the economy's recovery.

"Builders only start homes when they can make money," said John Burns, an Irvine, Calif.-based real estate consultant. "In a lot of areas, until prices go back up, construction doesn't make any sense."

The crisis has struck people like Betty Wilson of San Diego. She was laid off a year ago from her job at an insurance company.

Since then, Wilson has managed to pay her $1,090 mortgage bill from collecting unemployment benefits, renting out a room and dipping into savings. But money is running low. She fears she won't make her payment for December.

Wilson, 56, said she has tried to get her mortgage company, GMAC Mortgage, to lower her 6.25 percent interest rate or give her a temporary break from payments. Many mortgage companies will let a borrower skip up to six months of payments, though they require that the money be paid back eventually.

After The Associated Press inquired about her case, a GMAC spokeswoman said Thursday that the company would offer Wilson reduced payments for four months, "while we continue to review her financials for a permanent solution."

After a typical recession, foreclosures peak about six months after the unemployment rate does. But the process could take longer this time, in part because loan-modification programs and new state laws have prolonged the process. Unemployment, now at 10.2 percent, isn't expected to peak until next spring or summer.

Another unknown is the effectiveness of the Obama administration plan to attack the foreclosure crisis. As of last month, about 20 percent of eligible borrowers, or more than 650,000 people, had signed up. But most of those enrolled have been chosen for trials lasting up to five months.

About 4 million homeowners were either in foreclosure or at least three months behind on their mortgage payments as of September, according to the mortgage bankers group. Even if some of them manage to stay in their homes, the market is likely to absorb a wave of new foreclosures. Those properties are concentrated in states like Florida and other already beleaguered areas.

Subprime loans with adjustable rates have fallen to 16 percent of new foreclosures, from 35 percent a year earlier. Loans backed by the Federal Housing Administration also show rising signs of trouble. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure.

The Mortgage Bankers Association's quarterly survey of 44.6 million loans is considered the most authoritative report on mortgage delinquencies. A separate report, issued monthly by foreclosure listing service RealtyTrac Inc., is based on courthouse filings.

Northern Michigan Brothers Have App-Titude

Traverse City Record-Eagle

From left, Nikiforos "Nik" and George Stamatakis, developers 
of the OctoPod audio recording application for the iPhone and 
iPod touch, at Lake Michigan near Sleeping Bear

TRAVERSE CITY -- George Stamatakis is a session musician in Los Angeles. Nikiforos "Nik" Stamatakis is a software engineer in New York.

So when the brothers decided to work on a project together after a visit back home to Traverse City last Christmas, they put two and two together and came up with eight.

"His expertise is in music, mine is in software development. It was just a perfect combination," said Nik, 31, who with his brother developed the OctoPod audio recording application for the Apple iPhone and iPod touch.

The OctoPod, whose mascot is a purple octopus holding different instruments to show that you can record anything with the application, is one of more than 85,000 games and other "apps" that let iPhone and iPod touch users do more with their devices. Musicians -- and would-be musicians -- can download the software for a one-time fee of $2.99, then use it to practice and record vocals and instrumentals.

"It's like a mini recording studio," said George, 33, a guitarist who studied at Interlochen Arts Camp and the University of Southern California's Thornton School of Music. "You can record music on your iPhone and it has drums built in."

He said the application is among only a handful of multitrack audio recording apps and features 72 drum grooves, 12 song styles and several speed variations. Users plug the iPhone stereo headset into the iPhone, start up the program, select their preferences and record into the iPhone microphone.

"The really cool thing is the mic that comes with (the iPhone and iPod touch) is actually good quality," said George, who has recorded music -- although not on the iPhone -- for CDs, commercials, video games and film soundtracks including "Beauty Shop" with Queen Latifah and "Lucky You" with Drew Barrymore. "When you hear it, it sounds very professional."

The application took nine months to develop, including weeks of study and research squeezed between regular jobs. George, who also teaches music privately and at a music store, designed the graphics and produced the drum grooves while Nik, a software engineer for the NFL, did the programming.

"It was kind of uncharted territory for us," said Nik, whose previous work had all been on the IBM-Microsoft Windows platform. "I had to learn how to write software for the iPhone, for Macs, I had to read books. Everything was different. I had to learn from scratch basically."

The result is an elegant, simple and easy-to-use interface that has "the best-sounding drum grooves out there," he said.

The project brought the brothers closer than they've been since moving to the U.S. from Greece in 1993 and settling on opposite coasts. Besides getting together last summer at the family home on Bass Lake -- mom Marvine Stamatakis is coordinator and instructor of English as a Second Language at Interlochen Arts Academy -- they chatted or video-conferenced almost every day using iChat and Webcams.

"It's been so great to work with my brother," said Nik, who spent his last two years of high school at Traverse City Central and then attended the University of Michigan while George was at USC. "We shared a room as kids. It's been tough (being apart) because we grew up always playing together, doing everything together."

Application development on the iPhone has been one of the highlights of the device since its inception. Developers are encouraged to design and sell their own applications in the App Store, which operates like a consignment shop. Apple keeps a third of the price of any application sold, while the developer gets the rest.

While Apple does not disclose how much revenue it derives from App Store sales, it has posted over 2 billion downloads of games and other applications that allow users to do everything from navigate to watch NBA games live. Developers whose applications work their way to the top of the paid application charts can strike it rich.

Since releasing OctoPod in late September, the Stamatakis brothers have sold copies all over the world, including England, France, Greece, Italy, Spain, Singapore, Malaysia, Venezuela, Australia and Mexico. "It's not millions yet, but it takes time," George said, adding that the pair are marketing the application online primarily through Twitter, Facebook and MySpace. "We're selling copies every day. We're hoping it's going to snowball and get more and more and more popular in the coming months."

Meantime, their Fantastocrats company is already working to make improvements, from adding more music styles to increasing the number of tracks to record on.

"For the time being we're going to concentrate and make updates to this one," said George, who is splitting the proceeds 50/50 with his brother. "Down the line if it does prove successful and if it makes sense to do more applications, I would love to do it."

OctoPod is available at the App Store or at iTunes.com. For more information, see www.octopod.me.

What you can do with OctoPod

-- Use it for practicing: Record yourself or someone else playing chords, then practice singing, scales, improvisation, a song you're learning, whatever you want. Or just use the drum grooves as a drum machine to keep you in time.

-- Record a song with your band: Select "no drums" from the drum groove wheel, hook up your iPhone or iPod touch to a mixer with a Camcorder AV cable and use mics, headphones, speakers, any audio gear you have to record your next big hit.

-- Use OctoPod to record your ideas when you're on the road. Or if you need some inspiration, pick a drum groove, start jamming and see where the music takes you.

-- Record a cover song and show off your vocals: Pick the drum groove that fits, have a friend play guitar (keys, synth, etc.), add a bass line and then sing or rap over it. Wi-Fi Export to your computer, drag and drop into Garageband (or similar software) and add reverb, auto tune, delay or any other effects you want.

Veteran Publishing Brothers To Start Daily Newspaper In Detroit

AP Story

ROYAL OAK, Mich. — Two veteran publishers said Friday they are prepared to launch a daily newspaper serving the Detroit area, where the two largest newspapers have reduced home delivery to survive in a struggling industry.

Brothers Mark and Gary Stern said Friday they'll start publishing the Detroit Daily Press on Nov. 23, selling it for 50 cents daily and $1 on Sundays. Home delivery starts Nov. 30 in Wayne, Oakland and Macomb counties.

The paper's 60 full-time employees, many with experience at Detroit newspapers, are using the former offices of The Daily Tribune of Royal Oak, which moved to the offices of sister publication The Macomb Daily.

"We are affordable, both to the advertiser and the reader," Mark Stern told The Associated Press before a news conference.

He said he and his brother called themselves out of retirement when they learned of the Detroit newspapers' plans to scale back home delivery. The brothers also said they seek to start more daily newspapers in other metro areas, focusing on places where papers have shut down or scaled back.

The Sterns ran daily newspapers in Detroit in 1964 and 1967; New York in 1978; and Minneapolis in 1980 when workers at those cities' major newspapers went on strike.

Mark Stern, 64, published weekly dining and entertainment publications for 22 years in Fort Lauderdale, where he now lives. Gary Stern, 67, now lives in the Atlanta area. The Sterns, both Detroit natives, say they will also maintain a residence in the area.

The Detroit News and Detroit Free Press in March reduced home delivery and increased electronic offerings. The idea was to cut printing and distribution costs while retaining full service on the days most popular with print advertisers.

The Sterns said their venture is privately funded but declined to reveal the size of their investment.
They announced plans for the Daily Press in June and hoped to be publishing within 60 days. Getting there was more difficult than they anticipated because of technological hurdles, Mark Stern said.
The Daily Press arrives at a time of broad declines for newspapers. Average daily circulation dropped 10.6 percent in the April-September period from the same six-month span in 2008, according to figures released last month by the Audit Bureau of Circulations.

The average daily circulation of the Detroit Free Press, which reduced its home delivery to three days a week, declined 9.6 percent to 269,729. Circulation for The Detroit News, which dropped its home delivery to two days, dropped 5.9 percent to 167,849.

Two suburban dailies, The Oakland Press and The Macomb Daily, both saw circulation increases during the period. Their publisher, the Journal Register Co., emerged from bankruptcy protection in August after six months.

The Sterns say they can weather many financial struggles because they don't have overhead costs such as delivery trucks, pension funds or facilities. Advertising and editorial and production employees work for the paper, but not press operators or many in circulation. The Sterns have said they need 150,000 to break even and on Friday said they aim for 100,000 home-delivered copies and 100,000 in single-copy sales.

25 November 2009

Is A Recovery Without Jobs Really A Recovery?

Business Week

Attendees at a job fair in Livonia, Mich., try to get their 
résumés into the right hands Paul Sancya/AP Photo

Could it take as long as five years for the economy to replace all of the 8 million jobs lost since the Great Recession began? The most bearish economists think so.

Job creation is proving to be painfully slow, and Washington is starting to panic. With unemployment at a 26-year high of 10.2% and climbing, the Democrats are scrambling to rev up the economy before the midterm elections next November. The latest effort is a "Jobs Summit" set for Dec. 3 at the White House. The idea, said President Barack Obama after a Nov. 23 cabinet meeting, is that the gathering of business leaders, nonprofits, academics, and labor will "explore how we can jump-start the hiring that typically lags behind economic growth."

That may well prove an impossible goal since the White House is battling an ominous economic trend that has been gathering in strength and severity for decades. The U.S. economy, once the greatest job-creation machine in the world, has taken longer and longer to replace the jobs lost in recent recessions—never mind creating the additional jobs needed to absorb new workers into the market. Back in the '70s and '80s, it took as little as a year after a recession ended to add back the jobs that had disappeared. Yet after the eight-month downturn that ended in March 1991, it took 23 months. And following the 2001 dot-com bust, 39 months passed before the U.S. returned to square one on the jobs front.

This time, things could be even worse. U.S. payrolls peaked at 138 million in December 2007; today they stand at roughly 130 million. Stuart G. Hoffman, the chief economist of the PNC Financial Services Group thinks it could easily take another four years to regenerate all those jobs, assuming, as many economists do, that the recession ended in June of this year. David Rosenberg, the former top North American economist for Merrill Lynch, now with the Canadian investment firm Gluskin Sheff + Associates, is even more pessimistic. Convinced that the U.S. has now entered "the mother of all jobless recoveries," he believes it will take at least five years to recover all those jobs. "And that's a conservative estimate," he adds.

What accounts for the growing lag times? The speed and extent to which GDP bounces back after a downturn is one crucial factor. Martin A. Regalia, chief economist for the U.S. Chamber of Commerce, points out that as the U.S. recovered from earlier recessions, GDP often grew for several quarters at around 7%—roughly four points above the economy's long-term potential. Such spurts, fueled by strong pent-up demand among consumers and businesses, helped many unemployed Americans find jobs. Not this time: With both households and businesses stepping back from spending levels that were artificially pumped up by debt, demand is weak. Most economists project GDP growth to stay at or below 3% for the next to years. "If you don't have growth well above your long-term potential, you can't reabsorb people, so it takes a lot longer to get back to where you were," says Regalia.

It's not just a matter of regaining lost ground: There are also all those young people just entering the labor force to put to work. Simply to keep the jobless rate from rising, the U.S. needs to add a net 150,000 jobs a month. While the slashing of U.S payrolls appears to be slowing, no one expects the economy to generate anywhere near the growth needed to generate that many new jobs anytime soon. That's why Harvard University economist Kenneth Rogoff believes the unemployment rate could peak at over 11%. "The U.S. would need to add a good 11 million jobs to bring the unemployment rate back to where it was at the start of the crisis, and over 9 million jobs just to get unemployment back to 6%," he says. As for the unemployment rates of 5% or lower that the U.S. boasted between 2005 and 2007? "We might not see that for a decade," says Rogoff.

Slower growth only partly explains the shift toward jobless recoveries. Goldman Sachs (GS) senior economist Ed McKelvey argues that over the last decade globalization and deregulation have forced companies to focus far more on controlling costs to remain competitive in world markets. Sharply higher productivity is allowing companies to get far more out of the workers they have, while factory automation is wiping out assembly line work and information technology is making many white- and pink-collar jobs extraneous. Meanwhile, companies are moving other operations abroad to take advantage of cheap labor in places like China and India. Such pressures from globalization are only increasing. "With most of the motivations and mechanisms for the jobless recovery still in place, we see no reason why most firms would behave differently this time around," McKelvey wrote in a recent note to clients.

In theory, American workers should be able to shift gears and perform higher-value-added work at home, and some have. But many Americans aren't equipped for the jobs of the future. A telling sign of the mismatch between workers' skills and employers' needs is that according to the U.S. Bureau of Labor Statistics, there were almost 2.5 million job openings in September that employers were actively trying to fill. While that was down from a peak of 4.8 million in 2007, it was still a stunningly high number considering that there were over 15 million people unemployed that month. Julian L. Alssid, executive director of the Workforce Strategy Center, says that schools, including many community colleges, still aren't producing graduates with the kinds of skills that employers demand.

The weak labor market has left many workers far more idle than they'd like. That means companies have plenty of room to boost hours for part-timers before they need to add more people to the payroll. In a Nov. 16 speech, Federal Reserve Chairman Ben S. Bernanke pointed out that the number of part-time workers who want a full-time job but cannot get one has more than doubled since the recession began. The average workweek for production and nonsupervisory employees has fallen to 33 hours, the lowest level of the postwar period. "The best thing we can say about the labor market right now is that it may be getting worse more slowly," Bernanke added.

Which leads to another key reason why unemployment is likely to rise even as layoffs fade from the picture: New hiring will probably remain sluggish. That may seem an obvious point, but Michael Feroli, an economist with JPMorgan Chase, (JPM) points out that the recent jobless recoveries didn't occur because layoffs continued longer than during a traditional recession. A far more critical factor was that businesses waited longer to start hiring again than had historically been the case.

It all adds up to an enormous economic and political challenge for President Obama and his advisers—and one for which they have only limited ammunition. Count on the President to keep reminding everyone how much worse things would have been without the stimulus and the bailout of the banks. While there's talk of boosting infrastructure spending and offering tax credits to employers who create new jobs, the soaring deficit is likely to prevent ambitious new programs from being adopted. "There aren't a lot of easy options," warns Gregory Valliere, chief policy strategist for institutional broker Soleil Securities. "Those that make the most sense will cost a lot of money, which voters have adamantly rejected. So it's hard to see what they can get done." The real question may be whether the summit gives the Administration and its congressional allies some political breathing room.

23 November 2009

Ford Fusion: Motor Trend 2010 Car Of The Year

Vancouver Sun

Ford Motor Co’s Fusion mid-size sedan was named Motor Trend magazine’s 2010 "car of the year" on Tuesday, adding to the perception that changes to the No. 2 U.S. automaker’s vehicle lineup are gaining traction.

The Fusion was chosen best of 23 new or significantly upgraded vehicles and the full range of Fusion models impressed the judges, from the four-cylinder entry level vehicles to the all-wheel drive sport and hybrid versions, Motor Trend Editor Angus MacKenzie said.

"Ford has proven its resilience in these tough times by delivering to market a car with broad appeal to a broad range of customers," MacKenzie said.

The Fusion, which has become one of the top 10 selling vehicles in the United States, was redesigned for 2010. Ford launched the Fusion in 2006 and it set its previous annual sales peak in 2007.

"What a proof point, to be named car of the year by one of the most rigorous tests in the world," Ford Chief Executive Alan Mulally told reporters at Ford headquarters after MacKenzie announced the award.

Motor Trend tested the vehicles on acceleration, braking, handling, noise and responsiveness under various road and traffic conditions. It also considered design, fuel efficiency, safety and value.

Ford posted a nearly $1 billion third-quarter profit this month that surprised Wall Street analysts and is the only large U.S. automaker not to reorganize in bankruptcy with U.S. government support in 2009.

The automaker has said it expects to return to a solid profit in 2011 with a gradual recovery in the auto industry in the United States and key regions internationally.

U.S. auto sales peaked at nearly 17 million vehicles in 2005 and have been falling since. Ford expects 2009 U.S. auto industry sales of about 10.6 million units including medium and heavy trucks, or around 10.3 to 10.4 million light vehicles.

"We are cautiously optimistic that we are near the bottom right now," Mulally said of the U.S. auto market.

Ford’s shares reached a more than two-year high on Tuesday, a day after billionaire investor George Soros’ hedge fund disclosed taking a 7.3 million share stake in Ford during the third quarter.

U.S. 2009 sales of the Fusion were up 15 percent through October at 148,045 but trail Toyota Motor Corp’s Camry and Honda Motor Co Ltd’s Accord in the mid-size sedan segment, one of the key areas in the U.S. market.

Dearborn, Michigan-based Ford has looked to set itself apart from U.S. rivals General Motors Co and Chrysler Group LLC, which reorganized under government-funded bankruptcies this year, and increasingly uses Toyota and Honda as benchmark competitors.

Sales of the Fusion have helped keep Ford’s U.S. sales declines for 2009 slower than the overall drop in the industry. Through October, Ford’s U.S. sales are down 20.4 percent for the year, while the industry is down 26 percent.

Ford shares were up 15 cents, or 1.7 percent, to $8.86 in Tuesday afternoon trading on the New York Stock Exchange. Earlier on Tuesday, the stock reached $9, a more than two-year high that is also a nearly 29 percent increase since Ford posted its third quarter profit in early November.

19 November 2009

McCain, Steele Oppose Auto Bailouts, Blame Unions

from mLive
Opinion: Rick Haglund

The Republican Party has long been known as the party of business.

But we're learning that not all businesses are welcome to the party, including:

• Companies with unionized work forces.

• Corporations that receive more money in federal loans from a Democratic administration than from a Republican presidency.

• General Motors Co. and Chrysler Group LLC.

Those are the only explanations I can offer as to why two of the nation's most prominent Republicans, Arizona Sen. John McCain and party Chairman Michael Steele, recently dumped on the recovery efforts of the two Detroit automakers.

McCain, speaking at a NASCAR race, no less, got all mavericky with reporters last Sunday, saying he was opposed to the federal bailouts of GM and Chrysler (after he was in favor of them), and predicted Chrysler would fail.

And Monday, Steele said GM's third-quarter loss of $1.2 billion is "further proof that President Obama's economic experiments are wrong for America."

Steele failed to mention, though, that Republican President George Bush started the experiment by approving $13.4 billion of the $50 billion loaned to GM.

GM said Monday it's doing well enough to start repaying some of it unused federal loans in December, years ahead of schedule.

The statements by Steele and McCain were, of course, calculated to build political support for their party by those who are opposed to organized labor and government intervention in the economy.

They also were misleading and an affront to the hundreds of thousands of men and women who are working to rebuild GM and Chrysler following bankruptcy reorganizations last summer.

McCain said the government had to lend GM and Chrysler $80 billion because the United Auto Workers union wouldn't renegotiate their "very generous contracts" to trim costs.

"It was all about the unions," McCain said, according to the Detroit News.

But the UAW did renegotiate its contracts with GM and Chrysler, taking what amounts to a $7 per hour cut in wages and benefits, and giving up the right to strike until 2015.

The union also agreed to accept large equity stakes in the company instead of cash to fund retiree health care benefits.

Rather than lend money to GM and Chrysler, McCain said the federal government should have let them go bankrupt and reorganize the way most troubled companies do.

Here's the problem: The near collapse of the banking industry in the fall of 2008 dried up the credit markets, making it virtually impossible for GM and Chrysler to find needed bankruptcy financing.

Their only option was to obtain so-called "debtor-in-possession" loans from the federal government. Otherwise, GM and Chrysler likely would have been liquidated.

Auto industry analysts said the liquidation of the two probably would have taken down the entire domestic auto industry, including Ford Motor Co.

Even the plants of nonunion Asian automakers in the South could have been shut for extended periods for lack of parts, some analysts concluded.

Is that the outcome McCain and Steele would have preferred?

VC-Backed U.S. Firms Dominated By Software, IT Services

from mLive

Hiring at U.S. companies backed by venture capital funds is overwhelmingly clustered within the software and IT services industries, according to one measure used by the National Venture Capital Association Wednesday.

The trade association culled its data from its partnering jobs board StartUpHire, which posts openings at venture-backed companies. It found that the two sectors accounted for more than 48 percent of the nearly 11,000 job openings listed nationwide as of Oct. 27.

Software jobs accounted for 29.5 percent of the openings, followed by IT services at nearly 19 percent. Health care services and business products and services tied for third at 7.5 percent each, followed by cleantech/energy at nearly 5 percent.

Life science jobs represented a combined total of 6.9 percent but were broken into two categories – biotechnology (4.2 percent) and medical devices (2.7 percent).

As reported here Tuesday, there are 100 job openings in Michigan with venture-backed firms listed on StartUpHire.

"Those industries that hold a concentration of venture-backed jobs today are strong indicators of what sectors will be poised for growth over the next 10 years and beyond," Mark Heesen, the trade association's president, said in a statement.

The National Venture Capital Association is one of several partners in StartUpHire, along with Comerica Bank's Technology and Life Sciences division.

The NVCA and StartUpHire are publishing data on job opportunities at venture-backed companies each day this week as part of Global Entrepreneurship Week.

Disabled Riders Want Former Transit Provider Back

Detroit Free Press

People with disabilities and senior citizens called on Detroit leaders Wednesday to reverse an apparent decision to switch providers of specialized MetroLift rides that serve those who have trouble using regular buses.

The city announced earlier this month that Veolia Transportation would no longer be a provider of paratransit services. Officials said Veolia terminated its contract with the city Nov. 6.

But Veolia officials said Wednesday that the city stopped making payments in February, started contracting with other companies and has refused to discuss the issue. Veolia has provided paratransit services for the Detroit Department of Transportation since 1999 and was contracted through 2011.

Veolia has sued the city in U.S. District Court in Detroit, seeking nearly $10 million for breach of contract.

At a news conference Wednesday, representatives from Veolia and groups including the Council of Baptist Pastors of Detroit & Vicinity and the RainbowPUSH Coalition urged Mayor Dave Bing to reverse DDOT's decision on Veolia.

"We're hoping Mayor Bing will call a meeting, bring the parties together and try to resolve it," said Isaac Robinson, political director for the Michigan Teamsters Joint Council No. 43, which represents Veolia drivers.

Bing's office released a statement saying the city will continue to provide paratransit service but not commenting on Veolia's allegations.

"The City of Detroit is required by Federal Transit Administration regulations to provide paratransit service. Veolia was one of the vendors who provided this service until Nov. 6, when Veolia terminated their contract," Edward L. Cardenas, Bing's spokesman said. "Representatives of DDOT, including members of the mayor's staff, have had several meetings with Veolia and its lawyers in an attempt to resolve this dispute. The matter is now in court.

"There has been no interruption in services as DDOT continues to provide paratransit service to nearly 1,200 riders daily through licensed and certified vendors operating over 400 vehicles."

Robinson said 125 unionized drivers will lose their jobs if the city stands by its decision, and the people they served in senior housing in Wayne County, worry that the new contractors aren't providing service that meets Americans with Disabilities Act mandates.

Quintin Williams, 49, of Detroit, who is paraplegic and a disability volunteer coordinator for the Michigan Welfare Rights Organization, said riders have been complaining about bad service.

"The program is not meeting the needs of the disability community or the senior citizens who use it," Williams said.

18 November 2009

Ex-CEOs Lend Struggling Companies A Hand

Wall Street Journal

John "Jack" Krol, who was named last week as outside chairman of auto-parts maker Delphi Automotive LLP, exemplifies a growing boardroom trend: former chief executives taking an active role steering troubled companies.

Mr. Krol, 73 years old, is a retired chief executive of DuPont Co. He says he will quickly dive into operating plans and strategy at Delphi, which emerged from bankruptcy-court protection last month.

Other recently installed hands-on chairmen, all former CEOs of other companies, include Edward Whitacre Jr. at General Motors Co., Richard D. Parsons at Citigroup Inc., C. Robert Kidder at Chrysler Group LLC, Harvey Golub at American International Group Inc. and Philip Laskawy at Fannie Mae. Each of those companies has received a federal bailout, and government officials participated in the process of selecting new chairmen.

"These chairmen are strategic equal partners of the CEO because they already demonstrated a successful 'in the trenches' style of management," says Dennis Carey, a senior client partner at recruiters Korn/Ferry International. He helped recruit Mr. Krol as part of a board shake-up after several Delphi lenders and GM, its prior parent, acquired most of Delphi's assets.

Gauging Potential Risks

Mr. Krol says he has worked on Delphi matters daily for the past two weeks, and plans to advise Delphi CEO Rodney O'Neal on his 2010 and 2011 operational plans before Mr. O'Neal formally proposes them to the board next month. The new chairman will lead a board review of corporate strategy, including potential acquisitions and spinoffs. Mr. Krol also hopes to soon meet with each division head to gauge potential risks to the business.

Mr. O'Neal views the new chairman "as a partner and coach," a Delphi spokesman says.

The trend of strong outside chairmen is most pronounced at troubled companies. But more big businesses are installing independent chairmen who previously were CEOs elsewhere. The Corporate Library, a governance research firm, says 46 former CEOs are now chairmen of other companies, up from 14 in 2004.

At GM, Mr. Whitacre, a former CEO of AT&T Corp., has appeared in television commercials for the struggling auto maker, and played a key role in persuading fellow directors to keep, rather than sell, GM's Opel brand and European operations. He has met with employees at all levels, stressing the need to improve GM's results.

Across town at Chrysler, Mr. Kidder is learning to walk a fine line to avoid meddling with management. The former CEO of Duracell International Inc. and Borden Chemical Inc. has led the board since June, when the auto maker emerged from bankruptcy-court protection and sealed an alliance with Italy's Fiat SpA.

Mr. Kidder spends an average of three days a week at Chrysler, discussing strategy with executives, including CEO Sergio Marchionne. But he is careful not to give marching orders to the CEO's deputies. "That would be micromanaging," Mr. Kidder says. "I don't want that person to think they have two bosses."

Mr. Golub, the AIG chairman, is working six days a week on issues such as executive pay, strategy shifts and Washington relations to help ease the workload of new CEO Robert Benmosche. "To the extent I can help take some of those tasks off Bob's plate, we will get a better result overall," Mr. Golub says.

The former CEO of American Express Co. was named chairman of the New York insurer in August, just after relinquishing that post at Campbell Soup Co. and just before doing so at Reader's Digest Association Inc. He recently moved into a headquarters office near Mr. Benmosche's—at the CEO's request, says a person familiar with the situation.

But Mr. Benmosche may ultimately tire of the arrangement. At some point, he will say, "Harvey, I need to be on my way to run this shop," another informed individual predicts. The CEO declined to comment.

Conflicts Are Possible

Leadership experts say involved chairmen can assist troubled companies through tough times, but may also lock horns with CEOs.

In 2006, Stephen R. Hardis, a former head of Eaton Corp., was named chairman of Marsh & McLennan Cos. Late the next year, he was influential in the board's decision to seek a successor for CEO Michael Cherkasky, recalls a person familiar with the matter. At that time, Mr. Hardis said the board acted because of poor financial performance and powerpoint presentation management. He declined to comment further.

At gadget retailer Sharper Image Corp., Chairman Jerry Levin and CEO Steven Lightman clashed during 2007. Mr. Levin, a turnaround specialist who previously led American Household Inc., became chairman and temporary CEO in September 2006. He remained chairman after Mr. Lightman joined as CEO six months later.

Mr. Levin "didn't allow me to run the company," Mr. Lightman complains. "He controlled everything except the day-to-day operations." The CEO lasted 11 months.

Mr. Levin says he didn't fully grasp the retailer's worsening problems as Mr. Lightman struggled to raise capital. "I didn't get adequate information," Mr. Levin says. "I am taking some blame."

Sharper Image filed for bankruptcy in February 2008, days after Mr. Lightman quit. The concern closed its stores, then sold the remaining assets through an auction.

17 November 2009

State Legislation To Protect Seniors

AO Newspapers of Michigan

Through their work, active community involvement, and the role they play in raising their families, our senior citizens serve a vital purpose in our communities.

They paved the way for you and I, and we now follow in their footsteps raising our own families and working on our own careers. We owe Michigan’s senior citizens our gratitude and our help to ensure that their golden years are safe, productive and happy.

It is our job to make certain that our seniors are treated with respect and care, and that they are both physically and financially safe. To do this I have introduced Senate Bill 907, which would impose tougher penalties for crimes committed against the elderly.

Sadly, there are an estimated 73,000 victims of elder abuse in Michigan. Abuse can include anything from physical abuse to financial exploitation, and can happen at the hands of those entrusted with their
care: health care workers, guardians, and even family members.

In 2005, Governor Granholm created the Michigan Task Force on Elder Abuse to look into ways that we can better protect Michigan’s senior citizens and provide Michigan health insurance. During the last legislative session, my Democratic colleagues and I introduced the “Save Our Seniors” package of bills that would have implemented recommendations in the task force report. That legislation was sent to the Senate Committee on Government Operations and died in committee at the end of the 2007-2008 legislative session.

Because elder abuse is such an important issue and demands our attention, my colleagues and I are starting to introduce these bills again this session. Senate Bill 907, which I introduced as SB 1295 in the previous session, would implement some of the recommendations from the governor’s task force. Senate Bill 907 was referred to the Senate Committee on Judiciary, where I hope it will receive prompt and deliberative action.

Senate Bill 907 would impose tougher penalties for crimes committed against the elderly. The bill specifically targets crimes, such as interfering with an investigation, committed within licensed and unlicensed adult care facilities. Senate Bill 907 is important because critical evidence can be lost in abuse cases when someone obstructs an investigation. When that happens, justice is delayed and a successful prosecution of a case is made that much more difficult. By levying severe penalties for these crimes, I hope that we can discourage elder abuse and fraud. We need laws like this to protect our seniors with punishments that fit the crimes and send those who prey on the elderly to prison for a very long time.

A number of recent elder abuse cases across Michigan show the need for this kind of legislation.

In Ottawa County, a woman was sentenced to only four months in jail for neglecting her 87-year-old father and leaving him in unfit living conditions that ultimately caused his death. And right here in Wayne County, an 82-year-old man had $240,000 withdrawn from his account by his daughter, but he was told by police that he would have a tough time pressing charges since she was authorized to access the account.

Abuse and exploitation of any kind simply cannot be tolerated.

Legislators and communities are obligated to work together to protect the elderly and keep their best interests in mind whether we're talking about senior living in Dearborn or throughout the state. Through this legislation, I look forward to making Michigan a safer, more secure place for senior citizens and their families.

Sen. Hunter represents the 5th district, which is comprised of Northwest Detroit, Dearborn Heights and Inkster.

Pontiac Disappointed With Silverdome's Final Sale Price

Detroit News

Nearly 35 years after taxpayers spent $55.7 million building the Pontiac Silverdome and a year after a $20 million sale fell through, city officials have sold the arena once called the most desirable property in Oakland County.

The price: $583,000.

"This was a giveaway," said David J. Leitch, a broker with an Auburn Hills based realty firm.

"The property alone, at $10,000 an acre, should have gone for more than that. And you have the Silverdome, its contents, and the infrastructure already in place. I had estimated it would probably go for between $1.2 million and $3 million. I can't believe it."

Such sentiments weren't uncommon Monday, after city officials unsealed bids showing the property that was home to the Detroit Lions was sold at auction to an unnamed Canadian company that plans to bring a soccer league to the stadium. The company's name will be released when the sale is finalized within 45 days, said Fred Leeb, the city's emergency financial manager. Leeb acknowledged the sale "is not a windfall," but said the Silverdome's $1.5 million upkeep drained the beleaguered city's finances.

"We had hoped it would have brought more, but now the city can be freed of its upkeep and get it back on the tax rolls," Leeb said. Pontiac Mayor Clarence Phillips said he was "disappointed" but knew the city had to shed the costly structure. Councilman Everett Seay said he expects someone -- possibly a prospective buyer turned down in recent years -- to file a lawsuit to block the sale.

"The citizens of Pontiac deserve better," Seay said. "This is pennies on the dollar (of what it cost). It goes to show how bad times are ... Worse, we don't even know who bought it."

The company, which Leeb described only as a Toronto-based group of real estate investors and a "family-run business," was one of four bidders considered during an auction at the Marriott Hotel. Others bidders were not identified and most left without talking to reporters. One, Mickey Shapiro, a Farmington Hills developer, was rushing to catch a plane.

"We tried a bid, but it wasn't good enough," shrugged Shapiro, who declined to reveal his offer. "You win some, you lose some."

Dan Courtemanche, senior vice president of marketing and communications for Major League Soccer, said the league wasn't in discussion with any group on placing a team in the Detroit area.

"We have not had any recent discussions about having an expansion team in Detroit," Courtemanche said.

"We've had very preliminary talks in years past, but nothing in the last six to 12 months of substance."

An official for the Canadian Football League said the CFL has focused its efforts on Canada and not expanding into the United States.

The 80,300-seat stadium opened in 1975 and has largely remained empty since the Detroit Lions left for Ford Field in 2002. The sale included 127 adjacent acres.

16 November 2009

Money Being Put Together For Zug Island Wind Turbine

Crain's Detroit Business

Keith Cooley, the CEO of NextEnergy, has put together a consortium of industry heavyweights and lined up about $56 million in matching-fund commitments as it awaits word on a $45 million U.S. Department of Energy grant to build an engineering facility on Zug Island that would develop and test drivetrains for what could easily be the world's largest wind turbine.

The facility would be called NextWind and test powertrains that can generate 15-20 megawatts of energy. The world's current most powerful wind turbine, which is in Germany, generates seven megawatts, enough to power about 1,800 U.S. households for a year. The diameter of its rotors is 413 feet. Most commercial wind turbines generate one to 2.5 megawatts.

“Clearly, we'll have a chance to share knowledge, share information, share expertise and share history,” said Cooley of the consortium partners.

Cooley said industry partners already on board with $35 million in commitments include such major turbine manufacturers as Atlanta-based GE Energy, Clipper Windpower Inc. of California, and Belgium-based Hansen Transmissions International NL and such engineering, testing and supplier firms as Ricardo Inc. of Van Buren Township; AVL North America Inc. of Plymouth; LMS of Troy, a business unit of Belgium-based LMS International NV; Munro & Associates Inc. of Troy; and Burke E. Porter Machinery Co. of Grand Rapids.

State of Michigan commitments total $19.2 million, including brownfield remediation help from the Detroit Economic Growth Corp., the Michigan Department of Environmental Quality and Wayne County; infrastructure improvements by the Michigan Department of Transportation; access to bonding from the Michigan Department of Energy, Labor and Economic Growth; and funding from the Michigan Economic Development Corp.

Commitments from the University of Michigan, Michigan State University, Western Michigan University and NextEnergy total about $2 million. Also on board are Sandia National Laboratories in Albuquerque, N.M., the National Renewable Energy Laboratory in Golden, Colo.; and the National Renewable Energy Center in Spain.

Cooley told Crain's he hopes to learn in mid-November if NextEnergy wins the grant against competing bids from organizations in at least six other states.

“While we think we have the best chance, in terms of having sent in the best proposal, you just never know,” he said. He said Michigan's 110-year history of drivetrain testing and development, its roster of partners and matching funds that far exceeded the bid's requirement of $29 million should help.

Cooley is ready to hit the ground running. He said funds should start flowing in January or February, and the project could be up and running in 12-18 months.

He said worldwide demand for 20 megawatt turbines could be in the tens of thousands over the coming decades: “That's enough to keep this area busy for decades.” The DOE grant is for five years.

Cooley said he hopes the testing facility would spark development of an industrial park on the island. He said it would make sense for wind-turbine suppliers to manufacture prototypes in adjacent buildings.

“We hope to attract suppliers and an OEM or two,” he said. “That's an area that's certainly in need of redevelopment.”

Such a move — R&D attracting an OEM — is what's needed to foster a broader impact through creation of a supply chain, said Greg Main, the MEDC's CEO.

“If we bring in a turbine manufacturer, which we don't have right now ... that sets up the opportunity for Michigan suppliers to diversify into those sectors.”

NextEnergy, the Detroit-based nonprofit that aims to accelerate the state's role in clean and alternate energies, hired Albert Kahn Associates Inc., Detroit, to draw up plans for a 50,000-square-foot testing facility, which would house two dynamometers, each capable of generating 10 megawatts of power.

In theory, Cooley said, they could be coupled to test wind-turbine drivetrains capable of producing 20 megawatts of power, though 15 megawatts may be a more realistic target.

“China is working on a 10 megawatt turbine. No one else is doing anything approaching 20 megawatts,” he said.

“The key to wind-turbine scale-up is drivetrain reliability. It needs to last as long as you say it will,” he said. “If you've never seen a wind turbine tear itself apart, it can be spectacular. It just flies apart. No wonder people say, "Not in my backyard.' Manufacturers claim they have 20-year life spans, and they break up in 18 months, so you've got to be able to prove drivetrain reliability.”

In automotive testing facilities, engines or powertrains are connected to dynamometers to test the energy or power created, typically 100-400 horsepower. NextWind's would be dynamometers on steroids.

The goal is for the facility to be used by manufacturers around the U.S. and the world to test drivetrain components, such as gearboxes, hubs, generators and controls.

The NextWind project dovetails with one of NextEnergy's big thrusts. Cooley said that over the past two years, NextEnergy officials have talked with more than 1,000 auto suppliers in Michigan about getting into wind energy.

GM's Opel Rescue Meeting With Resistance


General Motors Co. must overcome resistance from German workers and politicians as it eliminates jobs to save the Adam Opel GmbH division from bankruptcy after calling off a planned sale to Magna International Inc.

The Detroit-based company’s board voted yesterday to keep Opel rather than sell a majority stake to Magna and Russian partner OAO Sberbank, reversing a September decision. Klaus Franz, Opel’s top labor leader, called it a “black day” and Roland Koch, the prime minister in Opel’s home state of Hesse, said he was “angry” and concerned about protecting jobs.

GM may need to trim about 10,000 jobs from Opel’s 50,000- strong workforce, persuade unions to agree to 265 million euros ($390 million) in concessions accepted under the failed Magna deal, and repay a 1.5 billion-euro loan from Germany. The automaker is still banking on European governments to fund a 3 billion-euro restructuring of Opel.

“Failure to reach the needed restructuring would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved,” said Karin Kirchner, a spokeswoman for GM in Zurich. “The plan is to secure the bulk of financing from European loan guarantees,” she said, without giving details.

In canceling the sale to Aurora, Ontario-based Magna, GM’s board is seeking to rescue an unprofitable division that provides the company with critical small-car technology and a local presence in Europe.

‘Negative Experiences’

“In light of the negative experiences of past years with the corporate policy of GM, I have serious concerns about the future of the company and its jobs,” Hesse’s Koch, a senior member of Chancellor Angela Merkel’s CDU party, said today in a statement. About half of the Opel workforce is at four plants in Germany, while 5,000 people are employed by the manufacturer’s Vauxhall brand in the U.K.

Ulrich Wilhelm, a spokesman for Merkel, said the government regrets that GM decided against “the convincing industrial logic” of the Magna proposal. Germany wants GM to repay the 1.5 billion-euro emergency loan by the end of the month.

Opel employees will seek to “close ranks” with European governments, labor chief Franz said in a statement. Workers plan to stage warning strikes tomorrow and demanded the immediate payout of deferred wages.

‘Fewer Chances’

Without worker support and Magna’s assistance in technology development and expansion, Opel will “have fewer chances to survive,” Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, said in a Bloomberg Television interview. “It’ll be a mess for General Motors.”

Magna’s proposal called for 4.5 billion euros in aid, which Germany had agreed to provide. Following concerns from the European Union, Germany told GM that the financial support wasn’t reserved solely for Magna, opening the door for GM to reconsider an agreement that would have left the U.S. automaker a 35 percent stake in Opel.

The Canadian auto-parts manufacturer’s proposal was more expensive than GM’s planned restructuring because it foresaw expanding Opel to Russia and other markets. Opel workers supported the deal, which offered them a 10 percent stake and the opportunity to take part in decisions.

Franz said that the Kaiserslautern and Bochum plants in Germany, with a combined 8,600 employees, could be closed under a GM restructuring plan. Magna, which was considering cutting 4,000 jobs in Germany, had planned to keep all four German plants in operation.

‘Delighted’ Britons

The German resistance contrasts with reaction in Britain, where workers called the decision “fantastic” and predicted fewer job cuts at English plants.

“I’m absolutely delighted with this news,” Tony Woodley, general secretary of Unite, Britain’s biggest trade union, said today in a statement. “It’s fantastic news for the U.K. and right that GM does not break up its family and retains ownership of Vauxhall.”

Spanish trade union CCOO said in an e-mailed statement that agreements reached with Magna to cut production and eliminate jobs are no longer valid.

Opel needs to eliminate about 10,000 jobs in order to cut capacity and become viable, Carl-Peter Forster, GM’s top executive in Europe, said yesterday in Berlin. The restructuring could include the closure of as many as three factories, with the Antwerp plant the most vulnerable, he said at an auto industry conference prior to GM’s decision.

Belgian Reaction

“General Motors has lost its credibility,” Eddy De Decker, an official at the ACV Metal union, said by telephone from Antwerp today.

“First they told us we could build the new Astra, then they promised us an SUV model as a replacement,” De Decker said. “The SUV production would eventually move to China and it’s no secret that Antwerp would close down under GM’s original restructuring plan.”

GM wanted to keep Opel but was restricted in devoting U.S. bailout money to operations overseas, said Mike Tyndall, a London-based automotive specialist at Nomura.

“The real clue was that RHJ was the preferred bidder, and RHJ was the one most likely to keep it intact, allowing GM to buy it back in the future,” he said.

Brussels-based RHJ International, which holds some former assets of Ripplewood Holdings LLC, the New York-based private equity firm started by Timothy C. Collins, made an offer for Opel that GM executives called “simpler” than Magna’s. RHJ said in October it was no longer interested in purchasing Opel.

GM Directors

GM’s board, changed since a U.S. rescue of the bankrupt company, cited an improving economy and the Opel brand’s strategic importance in setting aside the Magna agreement.

Retaining ownership of Ruesselsheim-based Opel marks the second shift in GM’s post-bankruptcy plan for unloading unprofitable divisions. GM said Sept. 30 it would wind down the Saturn brand after a sales agreement with retailer Penske Automotive Group Inc. fell through.

Fred Irwin, chairman of the trust created by the German government in June to supervise Opel, said in a statement that he hoped GM’s decision would lead to new business “stability” at the unit.

Thomas Schaefer, who represents Germany’s Opel manufacturing states in federal government-led talks with GM, said Germany expects the automaker to present its restructuring plan “very quickly.”

Government Aid

“No one can make any commitment on aid until the restructuring plan is available,” Schaefer, deputy finance minister of Hesse, said today in a phone interview.

Opel’s cash position has exceeded targets for the past few months, GM’s Forster said, declining to comment on when the carmaker might run out of money.

“Where GM is going to get the money to fund the Opel restructuring is still something of a mystery,” said Aaron Bragman, an analyst at IHS Global Insight. “But from a strategic standpoint, keeping Opel was the right thing.”

GM’s Kirchner said GM will pay back the German loan if asked and needs to complete financing “as soon as possible.”

Opel’s market share declined to 7.6 percent in the first nine months of 2009, compared with 8.0 percent a year earlier, according to figures from the European Automobile Manufacturers’ Association.

Consumers probably will shrug off the latest twist in the Opel saga, Jaap Timmer, chairman of the European Opel dealers’ association, said in a telephone interview.

Some Opel dealers were “shocked” by GM’s reversal, Timmer said. “The main consequences will be for the workers and the plants.”

Nomura’s Tyndall said GM’s change of heart is a good sign for the industry.

“It’s broadly positive because it reflects the rapid recovery that GM is seeing,” he said. “In terms of broad-brush sentiment, it means the auto industry is through the worst.”

Marchionne Says Chrysler Recovery Underway

Wall Street Journal

Chrysler Group LLC vowed to return to profitability by 2011 and pay back billions of dollars in U.S. bailout loans by 2014, an ambitious set of targets for a company that exited bankruptcy protection just months ago.

At the end of a day-long presentation of its long-awaited turnaround plan Wednesday, the company said it is counting on a slew of new models to spark a surge in sales over the next five years and drive its revival.

Chrysler—which has seen its sales plunge by half in the last few years—predicted revenue will rise about 20% a year, from $42.5 billion in 2010 to $67.5 billion in 2014, and said it would break even in 2011.

"Today is the first day of a new Chrysler. We have laid out our plans and we have become publicly accountable for the delivery," Chief Executive Sergio Marchionne said at corporate headquarters in Auburn Hills, Mich.

The forecasts—more bullish than many people expected—suggest the Obama administration's investment in the company could yet pay off. The government saved Chrysler with $9 billion in loans and pushed it into bankruptcy and an alliance with Italy's Fiat SpA in hopes of saving American jobs and an icon of U.S. industrial might.

"Some of you have [assumed] that we are losing money. This is not true,'' said Mr. Marchionne, who also is Fiat's CEO.

He and other executives said Chrysler already is seeing a significant improvement in its financial performance.

It broke even in September, has taken in more cash than it spent in the last few months and doesn't expect to use up cash even as it spends to develop and launch models based on Fiat technology.

As a result, Chrysler ended September with $5.7 billion in cash, up from $4 billion at the end of June, Mr. Marchionne said. On the sidelines of the presentation, the company's chief financial officer, Richard Palmer, said that "going forward we don't expect to consume cash."

Before Chrysler was ushered into bankruptcy April 30, it was burning more than $2 billion in cash a month. In bankruptcy court, Chrysler shed billions of dollars in debt, slashed its labor costs, shed hundreds of dealers and closed plants.

Mr. Palmer said the company expects to repay all its U.S. loans by 2014.

To hit its financial targets, Chrysler expects to double its world-wide sales, from 1.3 million cars and trucks in 2009 to 2.8 million in 2014, and predicted its U.S. market share will rise from about 6% in 2009 to 11% in 2014.

But Chrysler has based prior turnaround plans on big increases in sales only to be disappointed.

Earlier this decade, when it was owned by Daimler AG, Chrysler pledged to boost sales by one million vehicles, from about two million a year to three million, over 10 years. After a few years of gains and profits, growth stalled, losses mounted and Daimler gave up a majority stake in Chrysler in 2007.

Chrysler is facing considerable skepticism in automotive and government circles. Last week, the Government Accountability Office questioned whether the U.S. can recoup its investments in car makers.

Industry analysts who sat through the presentation of the company's turnaround plan said Chrysler's survival still depends heavily on whether the U.S. economy bounces back and car sale rise from their current historically low levels.

"Everything is in the market—that's the big kahuna. Next year is critical," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. Mr. Cole said if the U.S. market returns to annual sales of 12 million vehicles next year, Chrysler will fare well.

Mr. Cole also pointed out that Chrysler doesn't have many new products coming out in the next year.

Mr. Marchionne's team is undaunted. "We are confident we can weather the storm," said Mr. Palmer, who recently joined Chrysler from Fiat.

Chrysler received a significant endorsement after its presentation. Michael J. Jackson, chief executive of AutoNation Inc., a large dealership chain, said he was impressed by the plan and is now interested in acquiring additional Chrysler stores.

"AutoNation is a buyer as of tomorrow," Mr. Jackson said.

As part of Chrysler's comeback plan, the company aims to boost its Ram truck sales by 50% over the next five years, increase global Jeep sales by 60% and more than double U.S. sales of Chrysler-brand vehicles.

It will add small vehicles to its Dodge car brand and eliminate several Jeep products in favor of new models jointly developed with Fiat. By 2014, about half of Chrysler's engines will be based on Fiat technology.

New products are vital to creating consumer buzz to drive sales. Chrysler's sales continue to suffer more than its competitors'. In October, the auto maker's U.S. sales fell 30% while both Ford Motor Co. and General Motors Co. notched increases.

Chrysler also vowed to improve the quality of its vehicles, which have often scored poorly in customer-satisfaction surveys.

"We get it. We are not in denial," said Doug Betts, Chrysler's top quality executive. "We've got an issue to deal with both in terms of what people think of our quality and the reasons behind what they think."

Don Metzner, president of Armory Automotive, a dealer in Albany, N.Y., said he was encouraged to hear that Chrysler has positive cash flow.

"Not only was it a surprise, it's the essential ingredient needed to bring the exciting new product pipeline to fruition. My confidence in Chrysler is greatly enhanced," said Mr. Metzner, who attended the presentation.

Chrysler said it plans to invest $500 million in its dealer network over the next five years, including $120 million in 2010.

15 November 2009

How Ford Motor Is Making Its Comeback

Wall Street Journal

A year ago, Ford Motor Co. steered clear of the auto industry's version of the "public option." You know, a government-funded bankruptcy. Maybe the decision wasn't entirely altruistic. Plan B, as in bankruptcy, would have ended more than a century of Ford family control.

Whatever the motives, Ford chose a private solution for regaining its corporate health, and today the patient is walking without a government crutch. Last week Consumer Reports gave the company quality ratings comparable to those of Honda and Toyota. On Monday, Ford reported its second consecutive quarterly profit—and more impressively, a swing from a $7.7 billion cash burn a year earlier to positive cash flow of $1.3 billion in the just-ended third quarter, helped by but not due to Washington's cash for clunkers program. The company gained a percentage of market share in the first 10 months of this year, no easy feat in an ultra-competitive market.

In fact, there's almost too much good news coming out of Ford's Dearborn, Mich., headquarters these days. In the often-bizarre world of labor relations in Detroit, good news can be bad news in dealing with the United Auto Workers union. Exhibit A is the UAW's recent rejection of contract amendments at Ford to parallel the provisions that the government imposed on GM and Chrysler. The implications aren't pretty for Ford and they're even worse for the union itself.

Before parsing those implications, though, it's worth examining Ford's recent spate of good news because there has been precious little of that from Detroit in recent years. The company's turnaround actually began three years ago with decisions that amounted to zagging every time that General Motors zigged, which was remarkable for a company whose strategy for decades was to follow GM.

When General Motors kept its CEO (the recently deposed Rick Wagoner) a few years ago, Ford brought in a new one, Alan Mulally from Boeing. While GM kept its unwieldy assortment of eight brands, Ford sold Jaguar and Land Rover, cutting its brand lineup down to a manageable size. (Another Ford brand, Volvo, appears close to being sold.)

The zig-versus-zag pattern continued when General Motors bet big on home mortgages through GMAC and then sold control of the financing unit, which now is on government welfare, just like General Motors itself. Ford avoided home mortgages and held onto its finance arm, Ford Motor Credit, choosing instead to mortgage all its assets to raise money to fund its turnaround effort.

In the often-bizarre world of labor relations in Detroit, good news can be bad news in dealing with the United Auto Workers union

Ford's self-help strategy carries a cost: The company now has much more debt than GM, about $27 billion to $17 billion, because the General had some three-fourths of its borrowings washed away in bankruptcy court. But controlling its source of dealer and consumer financing is a huge advantage for Ford, and the company is shoring up its balance sheet by swapping some of that debt for new equity.

What's more, shedding brands and shunning the mortgage business has helped Ford focus on quality, where it had slipped badly early in this decade. Consumer Reports said last week that 90% of Fords, Mercurys and Lincolns rate average or better in quality, right up there with Honda and Toyota. When the economy recovers and car sales increase, Ford could be in great shape. That presumably will happen by 2011, when the company says it expects "solid profitability."

It's sadly ironic, then, that the rain on this parade came the very same day that Ford reported its stellar financial results. Monday also brought the news that the UAW rejected contract amendments to freeze the pay of new hires, to forgo strikes for the next six years, and to reduce the number of job classifications in Ford factories.

The 70% vote against those changes was a stinging setback for the UAW's leadership, which had accepted similar provisions at GM and Chrysler in return for the government bailouts of those two companies. Obviously, Ford isn't desperate enough in the eyes of the union's rank-and-file, even though the company barely avoided bankruptcy, and its bond ratings remain deep in junk territory. UAW President Ron Gettelfinger tried to contain the damage by telling Automotive News that the proposed contract changes would have saved Ford "only" about $30 million a year anyway.

But that statement has more spin than Mariano Rivera's cut fastball. Forget about the wage freeze and the no-strike clause. Factory wages aren't Detroit's problem, and strikes are very rare in the auto industry nowadays. The real issue is the job classifications.

Ford's UAW contract has lots of them, governing who can and who can't perform specified tasks on the factory floor. So if a machine breaks down, an assembly line can come to a halt while everyone waits for the worker with the proper classification to arrive at the scene. If other workers nearby are perfectly capable of fixing the machine, well, that doesn't matter. The number of job classifications is less than it was a decade ago, but it's still far too many to maximize a factory's efficiency.

The classifications and attendant work rules are enforced by union bureaucracies—members of each plant's shop committee, grievance committee, health and safety committee, etc. They're all paid by the companies, as are their legions of corporate counterparts. One man's feather-bedding is another man's job.

All this begs a fundamental, and uncomfortable, question. Can a UAW-represented car company compete effectively, long term, with its nonunion competitors? At the very least, companies organized by the UAW have lots of extra costs to bear at their factories located in the U.S.

It's interesting, then, that Consumer Reports rates the quality of the four-cylinder Ford Fusion higher than the Toyota Camry and Honda Accord, and the Lincoln MKZ higher than its Acura and Lexus counterparts. The Fusion and MKZ are built in a factory without job classifications because it's in Hermosillo, Mexico, and isn't represented by the UAW. If Ford targets future expansion in Mexico, the recent contract vote will spell further decline for a union that, like Detroit's car companies, badly needs cultural change.

Ford's shares jumped more than 8% Monday on the company's earnings news. But investors should understand that in buying Ford stock they're also buying the company's relationship with the UAW, with all its implications.

Mr. Ingrassia is a former Dow Jones executive and Detroit bureau chief for this newspaper. His book "Crash Course," about the recent bankruptcies and bailouts of General Motors and Chrysler, will be published by Random House in January.