31 July 2010

Pontiac Movie Studio Moves Past the Idea Stage

The Detroit Free Press

Linden Nelson, A. Alfred Taubman, John Rakolta and others from Raleigh Studios will break ground Tuesday on an $80-million movie studio at a former Pontiac truck plant.

Two years after Gov. Jennifer Granholm and state leaders introduced the nation's most lucrative film incentives, Raleigh Michigan Studios is among the first to have brick and mortar results.

The involvement in the project of Raleigh and William Morris Endeavor Entertainment -- which have extensive television experience -- has led to optimism that Michigan could attract more TV projects.

"They are stamps of credibility," said Chris Baum, head of Film Detroit, which markets the region for production work. "We think this will be a positive step to make us a legitimate film center."

Carrie Jones, the incoming head of Michigan's Film Office, said: "This puts us in a better position to land more TV series."

The studio -- at a shuttered General Motors plant on the Center Point campus -- was the brainchild of Nelson, who runs a local development firm.

Besides remodeling the existing plant, the partnership will build a 200,000-square-foot building and hire 3,000 people within three years.

Nelson is chairman and CEO of the studio and pulled together the team.

Putting together a movie studio in the wake of the 2008 global credit meltdown was daunting, Taubman said.

"It's been the most difficult deal I have ever done," said the 86-year-old billionaire developer, who marveled at the 300-plus documents associated with it.
There at the beginning

The Raleigh studio was among three Granholm talked about when she first broached the idea of Michigan becoming a center for filmmaking.

One in Allen Park is still evolving with Detroiter Jimmy Lifton as a tenant. The other, in Detroit, didn't materialize.

Nelson's group won tax incentives from the state and from federal recovery zone facility bonds. Included was $28 million in bonds from the Oakland County Economic Development Corp.

Since April 2008, when the incentives began, 96 movie or TV productions have been filmed in the state. Michigan allows companies to file for refundable tax credits worth up to 42% of a film's production costs. That means if the tax credit is more than the tax bill, the company gets the difference in cash from the state.

Critics say the incentives are so lucrative that the state can never break even. Promoters counter that projects like Raleigh's will lead to more investments with long-term benefits.

"This will be the catalyst for a lot of jobs, ones that will hopefully keep more young people here," Nelson said.

Construction on the sprawling studio should be complete by early 2011, Nelson said.

When the studio is completed, more post-production work will be done here.

As Detroit Stars in TV Cop Shows, Officials Worry about City's Image

The Detroit Free Press

From reality TV shows to a new, fictional ABC crime drama, Detroit is getting the Hollywood treatment lately -- but not everyone is enjoying the spotlight.

Mayor Dave Bing already ended the Detroit Police Department's two-year relationship with A&E's "First 48" -- a reality show highlighting the first hours of homicide investigations. Last week, he said he was stunned when he saw a teaser featuring then-Police Chief Warren Evans promoting a proposed reality TV series, "The Chief."

But it isn't just reality shows that are raising eyebrows. City officials plan to meet Tuesday about the ABC-TV fall show "Detroit 1-8-7," a fictional series focusing on homicide detectives in the city.

"Folks in Detroit certainly have reason to be concerned," said Ryan O'Doherty, a spokesman for Baltimore Mayor Stephanie Rawlings-Blake.

Baltimore and its police department served as backdrop for the acclaimed HBO series "The Wire." The last episode of the five-year series aired in 2008. But O'Doherty said the city still is battling some negative perceptions it helped create.

"There's no question that 'The Wire' has created negative perceptions about the city of Baltimore that are unfortunate," O'Doherty told the Free Press.

Bing said Evans' decision to participate in "The Chief" promo was among the reasons why he insisted that Evans resign last week.

"I was upset because, No. 1, I was blindsided by it," Bing said. "I knew nothing about it. And I didn't want our city depicted like that."

The footage showed the chief holding an assault rifle and declaring he would do whatever it takes to clean the city's streets. Evans hasn't been available for comment since he resigned, but previously has said that transparency was his goal in allowing news media access.

Ralph Godbee, appointed by Bing as Detroit's interim police chief, said a national, police-focused think tank soon will help evaluate departmental policies and procedures, including whether participation in such TV projects is wise.

A&E has followed detectives in 16 cities, including Birmingham, Ala., for "First 48," according to the cable network's Web site.

Johnny Williams, a sergeant with the Birmingham Police Department, said public response has been overwhelmingly positive to the show.

"It's highlighting how hard our detectives work and what they have to go through to solve cases," Williams said.

Critics of Detroit's participation have said that officers may be showboating for the cameras. They point to the use of a flash-bang grenade in some raids, including the one early May 16 that left 7-year-old Aiyana Stanley-Jones dead from a police officer's bullet.

After that incident, Bing nixed the A&E tagalongs.

Williams said showboating isn't a problem in his department.

"Our chief wouldn't tolerate it, and our detectives know that," he said.

Bing said he isn't trying to sugarcoat Detroit's troubles by nixing reality TV crime shows. "I know we have problems," he said. "Crime is a major issue here. But I don't want to promote that."

29 July 2010

Enbridge Michigan Line Stays Shut as Oil Spill Spreads to Kalamazoo River


Enbridge Energy Partners LP, the Houston-based pipeline company, has crews working to clean up an oil spill from a pipeline in southern Michigan that spread from a creek to the Kalamazoo River, affecting birds and fish.

The leak on line 6B, part of Enbridge’s Lakehead System, was detected at about 9:30 a.m. yesterday when pressure on the line dropped, the company said.

An estimated 19,500 barrels of crude oil spilled into a creek near the company’s Marshall, Michigan, pump station before valves on either side of the leak were shut down, Enbridge Chief Executive Officer Patrick Daniel said on a conference call today.

“Oil entered the Tallmadge Creek and found its way to the Kalamazoo River,” Daniel said. “Teams have been working through the night and day working on the containment and clean up.”

Oil has already traveled about 16 miles (26 kilometers) downstream from the spill site, he said. The Kalamazoo River flows into Lake Michigan. The spill is “the second- or third- largest for the company,” Daniel said.

Line 6B is a 30-inch pipeline that can transport 190,000 barrels a day of light synthetics and heavy and medium crude oil to Sarnia, Ontario from Griffith, Indiana. The cause of the leak is under investigation, Daniel said.

Skimmers, Vacuum Trucks

Enbridge has crews using a temporary dike, containment booms, oil skimmers and vacuum trucks to gather oil and stop the spill spreading, he said.

The pipeline serves refineries in areas including Toledo, Ohio, Detroit and Sarnia, Daniel said. These include plants in Toledo run by BP Plc and Sunoco Inc., refineries in the Detroit area including Marathon Oil Corp.’s plant and Sarnia facilities run by Imperial Oil Ltd., Suncor Energy Inc., and Royal Dutch Shell Plc.

“Line 6B is shut down and we can’t estimate when it will restart,” Daniel said. The company previously forecast the line would be repaired in time to be restarted tomorrow.

Enbridge’s Line 5 also serves the refineries and that remains in service, Daniel said.

So far, refineries served by the line remain unaffected by the supply disruption. Suncor’s spokesman Dany Laferriere said there was no significant impact on its operations at the company’s Sarnia plant.

“Marathon’s Detroit refinery does receive some supply from the Enbridge line,” said Robert Calmus, a company spokesman. “Operations are normal.”

Kristina Zimmer, a spokeswoman for Shell’s refinery in Sarnia, said the plant wasn’t expecting the pipeline disruption to affect operations.

Air and water quality in the affected area is being monitored and containment specialists trained to handle wildlife coated in oily residue are on site, Enbridge said.

“Enbridge will do what it takes to clean this up and to restore the natural beauty of this area,” Daniel said.

Obama Plan to Fund $300 Billion of Small-Business Loans Faces Senate Vote


President Barack Obama visited a New Jersey sandwich shop to bolster support for his plan to create $300 billion of small-business loans and more jobs as the Senate neared a vote on the package.

“When you listen to the struggles that small business owners are still facing, it is obvious we need to do more,” Obama said today at the Tastee Sub Shop in Edison, where he met with business owners.

A vote may come as early as this evening if agreement on amendments can be reached, according to Richard Carbo, spokesman for Senator Mary Landrieu on the Small Business and Entrepreneurship Committee. The package includes $12 billion in tax breaks and $30 billion of capital for community banks to promote small-business lending. Banks could leverage that sum into $300 billion of loans that create jobs, according to a Senate summary.

Obama’s plan must overcome doubts among lawmakers about the cost, whether it’s a bank bailout and how many of the loans will get repaid. Maine Senator Olympia Snowe, ranking Republican on the small business panel, says the plan promotes risky loans by rewarding banks that lend more and punishing those that don’t.

The goal is to create jobs and bring down the 9.5 percent jobless rate. Entrepreneurs create 64 percent of new jobs, according to the Small Business Administration.

Job Creation

“There’s nothing more important to our economic expansion now than getting small businesses and entrepreneurs in a position where they are investing and hiring,” Gene Sperling, counselor to Treasury Secretary Timothy Geithner, told reporters on a conference call yesterday.

The plan calls for the U.S. Treasury Department to buy preferred stock with a 10-year term in lenders that have assets of $10 billion or less. The shares will pay an initial dividend of 5 percent, dropping to 1 percent if the banks increase small- business loans or rising as high as 7 percent if the loans stay the same or decrease. For all recipients, the dividend resets after 4-1/2 years to 9 percent to encourage repayment.

Democrats are pushing for final approval this week before the Senate’s August recess, according to Carbo. The panel has heard banks aren’t lending to healthy firms, he said.

While the fund is no “silver bullet,” it will help get money to creditworthy firms, said Todd McCracken, the National Small Business Association’s chief executive officer.

‘Good Businesses’

“There may be some businesses right on the line that banks don’t feel comfortable lending to right now that might get funds when this goes into effect,” said McCracken, whose Washington- based lobby says it represents 150,000 firms. “These are good businesses, not dead businesses, which are going by the wayside due to record-tight credit.”

Snowe sees a “red flag” in linking lending to the dividend rate. “If the bank fails to increase its small- business lending, the interest rate it pays could rise to a more punitive 7 percent,” Snowe said in an e-mailed statement. “Banks would make risky loans to avoid paying higher interest rates.”

Snowe cited a May report from the Congressional Oversight Panel, which said the incentives may spur lax lending practices. “As evidenced by recent events, imprudent lending activity may in turn inflate a small-lending and commercial loan bubble,” the report said.

Risk Assessment

Congressional supporters say the program will make a profit, and the limited term of the investment will encourage banks to avoid losses, according to the Treasury.

“Banks will ultimately need to repay this money in full to exit the program,” Sperling said in an e-mailed comment. “They should have a strong incentive to make sure the loans they make with that capital will eventually be paid back.”

The program also faces a “TARP Stigma” because of its resemblance to government’s Troubled Asset Relief Program that may limit participation, according to the report. Community bankers complained that healthy banks were tarred when funds were used to save faltering lenders, and about TARP’s restrictions on pay and retroactive rule changes. The small- business program doesn’t do that, according to Carbo, and the bill sets minimums for profit, reserves and liquidity.

Supporters include The Independent Community Bankers of America, whose Washington-based lobby represents almost 5,000 lenders, and the American Bankers Association, which represents some of the largest financial firms.

Cash Needs

“If I had cash, there are people ready to work,” said Geoffrey Lenart, 47, owner of Eastpointe, Michigan-based Seven Seas Travel. Lenart said his 5-person firm was denied a loan in 2009 to improve its exterior. “I’m not the exception by any means,” he said.

Frank Sorrentino III, CEO of the North Jersey Community Bank, said his company didn’t take TARP money and won’t use this program, either, citing concern about rule changes.

“Nowhere in the TARP program did anyone realize they would be subject to compensation rules,” said Sorrentino, whose Englewood Cliffs, New Jersey-based bank has $560 million in assets and seven branches. “What will be in this program and what will you be subject to? A bank tax? God knows what.”

26 July 2010

Lead-Poisoned Kids left Untreated in Detroit

The Detroit Free Press

Sue Hill, whose son Christian Matthews, now 20 months, had a lead level in May of 18 micrograms per deciliter of blood -- too low for the city to inspect her home under guidelines established in March. Within a couple of weeks, Christian's lead level shot up to above 33, which could lead to permanent developmental problems. (PATRICIA BECK/Detroit Free Press) 

Detroit's anti-lead program -- beset with alleged shakedowns and bogus treatments, missing files, incompetence and mismanagement -- was upended last year after such scorching claims were reported in state and federal investigations.Among the sweeping reforms was a new standard, announced in March, setting sharp boundaries for what could be done for stricken kids based on the level of lead in their blood. Instead of starting nursing care at 10 micrograms per deciliter the new threshold was set at 20, creating a huge care gap for more than three-quarters of Detroit's lead-poisoned children care, critics said.

In an effort to gain control of the troubled program, critics say, decisions were made with an eye more toward efficiency than children's health.

So children such as Christian Matthews were turned down for treatment and suffered lasting damage.

The city's March standards focused too narrowly on a small percentage of children with the highest exposure and left "over 80% of all lead-poisoned children in Detroit ineligible for services," said Mary Morrow, director of the Wayne County Prosecutor's Office's lead enforcement advocacy division.

Just three months later, the standard was rolled back to 10 micrograms per deciliter after the opposition by the Prosecutor's Office.

William Ridella, deputy director of the city's Department of Health and Wellness Promotion, said the decision to again give the wider array of services to children with lower lead levels was based on a review of resources and input from other agencies in the anti-lead fight.

He said no one was "ignoring those kids" with lower lead levels, but now the wider array of services "will be focused on all kids all the time."

Too late for some lead-poisoned kids

When tests showed Christian had a lead level of 18 micrograms per deciliter of blood in May, his mother, Sue Hill, turned to the City of Detroit for help.

"But they said they couldn't come out at that level," Hill, 40, said of her call to the city's Department of Health and Wellness Promotion.

Within a couple of weeks, Christian's lead level shot up above 33 -- a dangerous level that could lead to permanent developmental problems -- and city inspectors and health workers rushed to assist Hill and her 19-month-old son.

But by then, the damage was done. Once a person is poisoned with lead, there is no cure.

The frightening scenario played out in a three-month window when the city's anti-lead leaders said that the all-out response for direct intervention would go to kids with lead levels of 20 and above -- Christian's reading fell 2 points short.

Today, though, Hill wouldn't have to wait.

On June 17, after weeks of wrangling with the Wayne County Prosecutor's Office -- and inquiry by the Free Press -- the city' health department scrapped the controversial treatment standards that some experts said shortchanged kids such as Christian.

Now, nursing care, parental education, home inspections and other services once again will go to children with lead levels of 10 micrograms per deciliter of blood, said William Ridella, the city's deputy health director.

Under the short-lived March protocols, families with children who had levels of 10-14 got only advice and information by mail. And kids with lead levels of 15-19 weren't seen by nurses unless the levels stayed elevated for a month or more -- delaying intervention, experts said.

Dr. Bruce Lanphear, a leading expert on lead poisoning who did pioneering research in Cincinnati, said officials "are missing a tremendous opportunity to help kids" when they don't start more intensive treatment at lower levels.

Now at Simon Fraser University in Vancouver, British Columbia, Lanphear said that "10 is now the recommended level of concern."

And treating lower levels is cost effective, Lanphear said. Every $1 spent on affected kids at an early age saves $17 to $220 over a lifetime in educational and medical costs.

Worried about the damage already done to her son, Hill said she didn't realize the danger lead-laden dust -- not just larger lead paint chips -- presented.

"When I learned how real serious it is, I broke down and cried," Hill said. "They should have been yelling like they did with H1N1" about the dangers, she said of public health officials.

No child should have to wait like Christian for help, said Mary Morrow, director of the Prosecutor's Office's lead enforcement advocacy division that enforces local and state anti-lead laws.

"We are pleased that the (Detroit health department) has decided to reinstate services to all lead-poisoned children and are cautiously optimistic that this policy will result in a reduction in the number of Detroit children who suffer this devastating disease," she said.

No safe level

With its large stock of older homes with lead paint and environmental contamination from decades of heavy industry, Detroit is among America's most lead-afflicted cities.

Lyke Thompson, director of Wayne State University's Center for Urban Studies, said 5,000 Detroit addresses have been identified by Michigan home inspectors where two or more children have had elevated lead levels in their blood. Some of those addresses are occupied and may represent an ongoing risk.

Another 10,000 addresses have been identified where at least one child had an elevated lead level, Thompson said.

Lead poisoning is dangerous to all, but it is especially devastating to young children, experts said. There is no safe level.

Even at low levels, lead can cause brain and neurological damage and can harm hearing and kidney functions, lead experts said. Increasingly, lead exposure is linked to speech, learning and behavior problems. Very high levels can cause seizures and death.

Lead permanently injures hundreds of Detroit kids every year. And even after lead levels drop, the damage of the exposure remains.

But Detroit's fight was hampered by a stunning array of problems laid bare in two inspections last year.

The Michigan Department of Community Health said Detroit's health department "was not capable of delivering the lead program to city residents." The review found that staff was poorly trained and supervisors were inattentive or failed to provide basic oversight.

A federal Centers for Disease Control and Prevention audit last fall found "a very serious lack of performance and coordination" and that "the extreme deficiencies noted are serious and represent an egregious act."

Additionally, federal agents were investigating corruption allegations. In May, Donald M. Patterson, a city lead inspector, was indicted on federal charges of bribery, wire fraud and making false statements.

Patterson is awaiting trial on charges that he got payments for bogus remediation treatments of a lead-contaminated property where a child was found with a lead level of 156 -- a reading that astonished local officials.

Going too far

After the two blistering reports, the city refocused and redesigned its program -- such as taking the responsibility of home inspections from the health department and transferring it to the Buildings and Safety Engineering Department -- to secure private and government funding. And it hired Ronald Levi to help attack the lead problem.

Levi did not have medical or public health experience, but he brought a sharp business background honed over more than 20 years at IBM, including program management.

The Kresge Foundation, which provides hundreds of thousands of dollars for lead-fighting measures, wanted the leader in the lead fight to have a direct line to the mayor's office. Although Levi is now in the health department, the foundation said it has been assured that the fight is under the eye of Kirk Lewis, Mayor Dave Bing's group executive for corporate and civic affairs, and who was the boss at Bing's former auto parts firm.

Under Levi, new treatment protocols were put in place in March, with resources focused on the most severe cases. The protocols were a sharp departure from previous standards for treatment that had children with lead levels of 10 eligible for nursing care.

Morrow, the prosecutor, said that major reforms were needed to address incompetence and possible corruption, but the March protocols went too far in the wrong direction and were endangering rather than helping children with lower levels of lead poisoning.

"Why revamp the program if 80% of the kids are being abandoned?" she said.

According to 2009 Detroit health department reports, 832 children younger than 6 had lead levels of 10 or higher. Of those, only 153 had readings above 20, which would have triggered intervention.

WSU's Thompson agreed that the dangers of low-level exposure are becoming more apparent.

Treatment, he said, can seem costly.

"But the cost of doing nothing is something we can't afford," he said.

Putting Nurses in Local Schools


Nurses searching for a job may start looking somewhere besides hospitals, and that could benefit your children.

In all of the Calhoun County school districts, there are only two schools with full-time nurses, but that's about to change.

Statewide the school nursing shortage is sobering.

“In the State of Michigan we have roughly one nurse for 7,000 students,” said Jim Rutherford, Calhoun Co. Health Dept. “We need to catch up.”

In Calhoun County, the numbers aren't as bad as they are statewide. Officials estimate the ratio there to be about 4,000 students for every one school nurse.

That's primarily due to school budgets, where dwindling funds have forced some districts to eliminate the school nurse altogether, while other districts have one school nurse that travels to all the schools in that district.

Teachers and secretaries are generally the ones who pick up the medical slack.

“For teachers and secretaries to be asked to do that is impossible,” said Theresa Dawson of KCC School of Nursing.

Now, the Calhoun County Health Department is one of three health departments in the State of Michigan that part of a one-year, $300,000 pilot program to place school nurses in every one of the county's elementary, middle, and high schools.

“This may be the only option where this may be the only health care these kids are getting,” said Rutherford.

While placing a nurse in every school in Calhoun County may sound like a big feat, Kellogg Community College is also taking on the cause and will be rotating their 140 students pursuing a nursing degree into area schools in 2011.

“Our intention is to have all our student nurses spending time in the schools,” said Dawson.

The health department plans to hire a half dozen nurses to be placed in schools by 2011.

25 July 2010

Real Estate: IRS to Lease Space in Detroit Tower

The Detroit Free Press

The federal government has signed a 10-year lease in the One Detroit Center office tower in downtown Detroit to house Internal Revenue Service workers.

The IRS will occupy 81,413 square feet, or about four floors, of the tower at Woodward and Congress near the Coleman A. Young Municipal Center. The lease rate is $19.78 per square foot, or $1.6 million a year, said David Wilkinson, a spokesman for the government's General Services Administration regional office in Chicago.

The IRS workers will move from the McNamara Federal Building on the west side of downtown. The move frees up space for FBI staffers to expand within the McNamara building.

Wilkinson said earlier plans to move the FBI out of the McNamara building into a new building to be built somewhere in or near downtown have now been canceled in favor of this new arrangement.

23 July 2010

States get set to Resume Unemployment Benefits

USA Today

State unemployment agencies are gearing up to resume sending unemployment payments to millions of people as Congress moves to ship President Obama a measure to restore lapsed benefits.

After months of increasingly bitter stalemate, the Senate passed the measure Wednesday by a 59-39 vote. Obama is poised to sign the measure into law after a final House vote scheduled for today.

It's a welcome relief to 2½ million people who have been out of work for six months or more and have seen their benefits lapse.

Under best-case scenarios, unemployed people who have been denied jobless benefits because of a partisan Senate standoff over renewing them can expect retroactive payments as early as next week in some states.

In other states, it will take longer, possibly as long as six weeks.

State unemployment and labor agencies have been preparing for weeks for Congress to restore jobless payments averaging $309 a week for almost 5 million people whose 26 weeks of state benefits have run out. Those people are enrolled in a federally financed program providing up to 73 additional weeks of unemployment benefits.

About half of those eligible have had their benefits cut off since funding expired June 2. They are eligible for lump-sum retroactive payments that are typically delivered directly to their bank accounts or credited to state-issued debit cards.

The Senate continued debating the measure a full day after a GOP filibuster was defeated by a 60-40 vote. Senate rules required 30 hours of debate.

Democrats tout the economy-boosting effect of unemployment checks because most beneficiaries spend them immediately, and they say that paying for them with cuts to other programs dilutes the stimulative effect.

"Extending unemployment insurance isn't just the right thing to do. It's also the smart thing to do for our economy," said Sen. Sherrod Brown, D-Ohio.

Economists say the measure will likely have a modest beneficial effect on the economy. It represents less than one-quarter of 1% of the size of the $14.6 trillion economy and is far smaller than last year's $862 billion stimulus legislation.

Republicans have blocked Democratic add-ons, such as aid to state governments, that could have meant a greater economic boost.

22 July 2010

Ford to Offer Hybrid at same Price as Gas Model

Associated Press

For the first time, an American automaker plans to sell a hybrid car for the same, lower price as its gas-powered counterpart, removing at least one obstacle for drivers who want a greener ride.

At a little more than $35,000, the 2011 Lincoln MKZ sedan won't be cheap, but the decision by Ford to match the prices of the two styles could lead competitors to follow suit with future models.

The hybrid MKZ, debuting this fall and running on both gas and electric power, will be a bargain after factoring in savings at the pump. It gets more than double the mileage of the traditional version in city driving.

While automakers won't reveal what they spend to install a hybrid system in a car, the final product usually costs several thousand dollars more than a gas-powered version of the same car.

The Lexus HS 250h, the MKZ's closest competitor, costs about $2,500 more than the Lexus IS, a similar, small, gas-powered sedan. Ford charges $8,840 more for the hybrid version of its Ford Escape SUV.

The MKZ can still make money even if Lincoln doesn't charge more for the hybrid, said Erich Merkle, president of the consulting company Autoconomy.com. Luxury cars are sold at a significant premium, he said, ensuring a profit for Ford.

Lincoln can also borrow the hybrid system from the Ford Fusion, its corporate twin, and save on development costs.

"Conventional wisdom is that the hybrid should be priced higher, but there's not really anything to say that a hybrid has to command a higher price," Merkle said.

Besides, Ford had to keep the price down, said Jessica Caldwell, an analyst for Edmunds.com. If it had sold for more than $40,000, it would have faced tougher competition from luxury cars like the Mercedes E-Class or the Audi A6, she said.

"It's going to take moves like this one to break into the luxury market," she said.

Other automakers may not try to match Lincoln's move if it is limited to the MKZ, but they will have to take notice if Lincoln uses the same strategy with future hybrid models, said Aaron Bragman, an analyst with IHS Automotive.

John Felice, Lincoln's marketing manager, said pricing strategy is an opportunity to get buyers interested in the Lincoln brand. Even after a complete revamp of its cars in the past few years, Lincoln still lags behind other luxury brands. Lincoln sales were up 7.5 percent in the first six months of this year, compared with 17 percent industrywide.

Lincoln is also trying to make up for the sales it is losing by phasing out its Mercury brand, which includes two hybrids.

The MKZ is one of most popular Lincoln models, but its sales have fallen 5 percent so far this year.

The MKZ will get 41 mpg in the city and 36 on the highway. That beats the Lexus HS 250h, which gets 35 mpg in the city and 34 on the highway. The gasoline version of the Lincoln MKZ gets 18 mpg in the city and 27 on the highway.

The new hybrid system isn't the Lincoln MKZ's only nod to the environment. Its wood trim comes from well-managed forests, while the leather seats use a chromium-free tanning process that makes them easier to recycle, Ford said.

Lincoln MKZ buyers are not eligible for federal tax credits for alternative-fuel vehicles. Federal law limits the credits to the first 60,000 buyers of a company's hybrids, and Ford hit that number on March 31.

Ford is the first U.S. automaker to offer a hybrid and conventional version of a car at the same price. Industry analysts say they are unaware of a foreign automaker doing it, either.

Even if Ford were to lose money on the MKZ hybrid, it would probably be willing to make the trade in exchange for marketing value for the Lincoln brand, said Bruze Belzowski, assistant research scientist at the University of Michigan Transportation Research Institute.

"Lincoln might say, 'We're going to take a hit on this,'" Belzowski said. "They may say something like 'We're willing to take a hit on this because the marketing value is going to outweigh the cost.'"

General Motors to buy AmeriCredit Corp. for $3.5B‏

Associated Press

General Motors Co. will buy AmeriCredit Corp. for $3.5 billion, a deal that allows the automaker to expand loans to customers with poor credit and offer more leases, key areas where GM must grow to accelerate its car sales.

But the acquisition of the independent auto financing company also means that GM, which is 61 percent owned by the U.S. government, is getting back into the business of making risky loans. GM said it advised the U.S. Treasury Department of the acquisition, although government approval was not required.

GM executives have said for months that they were missing sales opportunities due to lack of credit for lease deals and financing for subprime buyers, those with credit scores below 620 on a 300-to-850-point scale. About 40 percent of U.S. customers have below prime credit scores, said Chris Liddell, GM's chief financial officer.

"Clearly there's an opportunity to bring more people into our showrooms and help them with finance," he said after the deal was announced on Thursday.

Customers should now expect more lease deals from GM, which gets just 7 percent of its sales from leases, compared with 21 percent for the industry, he said. Only 4 percent of GM's sales come from subprime buyers, which the company hopes to expand with the acquisition. Liddell said even a modest increase in subprime buyers from 4 percent to 5 percent would be significant. GM sold just over 1 million vehicles in the U.S. during the first half of the year.

Mike Jackson, CEO of AutoNation Inc., the largest auto dealership chain in the U.S., said he was thrilled with the acquisition because it will help his dealers increase sales.

"This is a big, strategic deal for General Motors. They absolutely needed to add this segment of the market to meet the needs of the customers coming into our dealerships," he said.

The deal allows AmeriCredit to expand into more GM dealerships, while continuing to offer financing to the more than 11,000 dealerships it has relationships with across the U.S.

The two companies have had a financial relationship for years. AmeriCredit, which already works with about 4,000 GM dealers, now gets about one-third of its business from financing new and used GM vehicles, GM said. Overall, the auto financing company has about 800,000 customers and $9 billion worth of auto loans on its books.

Under the $3.5 billion deal, GM will pay $24.50 in cash for each share of AmeriCredit. That's a 24 percent premium over the company's closing price on Wednesday.

Investors were happy with the news, pushing up shares of Ft. Worth, Texas- based AmeriCredit by $4.32, or 22 percent, to $24.02 in late morning trade on Thursday.

GM expects the deal to close in the fourth quarter.

The automaker says that its partner, Ally Financial - formerly known as GMAC Financial Services Inc. - will continue to finance GM's dealer inventory and make loans to buyers with good credit. GM says it is not considering a purchase of Ally's auto financing unit. GM sold controlling interest in GMAC in 2006. The company eventually had to be bailed out by the U.S. government because of problems with its home mortgage loan unit.

Liddell said the AmeriCredit acquisition is helpful, but not essential for GM's planned public stock offering, which may take place in the fourth quarter. The sale would help the government get rid of at least part of its ownership stake in the company.

"I'll describe it as another useful building block in the foundation for the IPO," Liddell said.

21 July 2010

With End of Federal Stimulus, Tough Times for Public Colleges

USA Today

WASHINGTON — Most state governments depend on federal stimulus money to keep public colleges and universities afloat, a new report says. But these funds may be drying up as the new fiscal year begins.

Thirty-nine states used stimulus money to support higher education in the past year, compared to only 14 states the year before, according to the report by the National Conference of State Legislatures. To receive federal funds, states were required to keep higher education funding at or above 2006 levels.

As a result, public funding for higher education increased an average 2.3% last year. Without stimulus money, it would have fallen 2.5%, according to the report.

Public funding for colleges and universities still fell in 23 states, despite the overall increase. Hawaii made the most drastic cuts, at 26%, and Michigan and Louisiana each reported reductions of over 5%.

Experts say it won't be long before stimulus dollars disappear for good, forcing state colleges and universities to raise tuition, cut enrollment, or lay off faculty — trends already apparent at institutions across the nation.

"Higher education funding will continue to take significant cuts in most states," said William Zumeta, a public affairs and education professor at the University of Washington. "Very little of the federal stimulus is left for this fiscal year, and it looks unlikely that there will be any more for higher education."

Since colleges and universities can raise tuition to compensate for reduced state funding, any extra stimulus money will likely go to Medicaid and other state services, Zumeta predicted.

"Higher education is the only state function that can look to its customers to pay more," he said.

Tuition at public institutions already has risen, climbing 6.5% last year at public four-year colleges and universities, and 7.3% at two-year colleges.

This year, tuition rose 32% in the University of California system. Hikes are also expected for Michigan college.

The recession is "a double whammy for students," said Don Heller, director of Pennsylvania State University's Center for the Study of Higher Education. "Students and parents have fewer resources to pay for college during recession, and at the same time, tuition is going up."

To make matters worse, he added, many states have reduced funding for financial aid programs.

Dustin Daniels, student body president at Florida State University, where tuition will increase 15% next year, said some students are struggling financially.

"I don't think we've gotten to the point where we're pushing a lot of students that can't afford tuition to the wayside, but I think we're getting there really fast," he said.

Last year, FSU laid off 21 tenured and 34 tenure-track professors after state support fell by $82 million.

Such drastic moves may become a trend, experts say. Concerns about the deficit mean Congress is unlikely to approve more stimulus spending this election year. And problems with higher education funding may not end with the economic crisis.

Jim Palmer, editor of Grapevine, an Illinois State University publication that tracks state tax support for higher education, said current methods for funding higher education are outdated and need to be revamped if the country is to meet President Obama's goal of having the world's highest proportion of college graduates.

"Our aspirations for higher education have outpaced our funding systems," he said.

Big Is Back For American Auto Buyers


Two years after gasoline prices hit a record high of more than $4 a gallon, size matters again for many American drivers.

New or used—pickup trucks, SUVs, crossovers, even minivans—Americans want to drive big.

“The further we get past the gas crisis, the less people remember it,” says Jessica Caldwell, senior analyst for Edmunds.com.

The renewed popularity of the light-truck segment comes as the global auto industry enters the second year of a modest and at times tentative recovery.

“The American consumer likes size and functionality,” says George Magliano, director of North American auto research, at IHS Automotive.

Though the current market has much it common with the pre-crisis one, there are differences.

For one, annual sales—after falling to under 9 million a year in 2008, are running around 11 million for 2010, a far cry from the 15-17 million in the pre-crisis years.

Crossover SUVs look a lot like the SUV of the past but they're built on a car base, not a light truck one. These vehicles, along with the new and improved F150 light-truck line from Ford Motor [F  11.771    0.021  (+0.18%)   ] are also slightly more fuel efficient.

Sales of crossovers are up 24.2 percent this year through June. At the same time, however, midsize SUVs (with the traditional base) are up 22.8 percent, outpacing the gain of the midsize car category.

The small car category is up 14.2 percent, while the small SUV one is actually down—15.0 percent.

“When gasoline was above 4 dollars a gallon people wouldn’t even buy a crossover,” says Magliano. “Demand for smaller cars goes away when fuel prices drop. Hybrids are even worse. Consumers don’t want to pay the premium.”

Now And Then

A look at sales data then and now clearly reflects such consumer behavior.

In February 2009, for example, sales of crossovers fell almost 33 percent month over month and slightly less year over year. During that same period, the Ford Escape—one of the hot SUVS now –posted monthly and yearly declines of 28.9 and 27.3 percent, respectively.

By contrasts, in May 2010—one of the industry’s best months this year— Escape sales jumped 17.3 percent, while those of crossover SUVS rose 16.6 percent.

The crossover SUV segment—which Toyota launched with the RAV4 in 1995—is now a large and competitive one

"Crossovers have become so mainstream," says Caldwell. "I think people are being more realistic about how they use their SUVs. They're more of a car substitute, not an off-road vehicle."

In the first half of 2010, four models had unit sales of 50,000 or more; another four had sales between 35,000 and 45,000. The eight vehicles were made by seven different manufacturers.

The current sales pattern is much the same for pick-ups and to a lesser extent vans.

Ford’s F150 truck is once again the top-selling vehicle in America. General Motors’ Silverado is close behind.

Light-duty trucks sales in June were up 20.1 percent over a year ago and are up 17.2 year to date. F150 sales were up 29.5 percent and i33.8 percent, respectively; GM's Silverado, 25.1  and 11.2 percent.

But back in June 2008, with prices closing on the $4 level, total light truck sales tumbled 37-percent. For all of 2008, F-Series sales plummeted 25-percent in 2008; Silverado’s 28 percent.

"That segment is absolutely solid. Talk about bang for your buck," says Kelley Blue Book'a Juan Flores, who is among the many who applauds Ford's 2009 redesign, which includes greater fuel efficiency.

Like many things, however, fuel efficiency and gas prices are in the eye of the buyer.

Ford bills the F150 as 8 percent more fuel efficient. In most models that's a difference of a mike or two a gallon. At its best, the new vehicle mpg grid is 15 city, 21 highway.

"Just enough to justify it in a person's mind," says Hossack.

There's no denying the average price for a gallon of gasoline is significantly lower than the crisis period high of $4.11 on July 17, 2008, but it is still historically high.

Over the past 12 months, the price has remained in a pretty narrow range ($2.65 -$2.85). Nevertheless, even at its current level ($2.71), it is well above the 2009 average ($2.37).

“It’s not so much what fuel prices are, but what they may become,“ says Hossack. “When gasoline was $4.00 a gallon, people feared $5.00. They feared $6.00. Now, prices have been holding at $2.75 a gallon, so people think, maybe gasoline goes to $3.25 or $3.50.”

History suggests that may be the case. In August 2008, even as the trend is in gas prices was decidedly lower, sales of light trucks continued to plummet. Gas prices fell 10 percent for the month; truck sales 24 percent.

Given the weak state of both the U.S. and global economies, and barring any major geopolitical event, it's unlikely gasoline prices will move up much in the next couple years. If so, that will support recent sales trends.

Analysts say cash-strapped automakers will continue to give American consumers what they want. The so-called aspirational truck buyer may be gone for good, but a small-car nation is hardly around the bend, even now that cars once again represent 50-plus percent of the market,

"Washington will have to wake up and orchestrate it," says Magliano. "It will have to either incentivize people to buy smaller or companies to sell smaller."

Prescription Drug Abuse a Growing Problem in State

UP Source
A new government study finds that in the past ten or so years, there has been a 400% increase in the number of people admitted to treatment for abusing prescription pain medication

MARQUETTE -- It's the nation's fastest-growing drug problem, and to become addicted, you don't even have to leave your house.

Prescription drug abuse is now the second-most prevalent form of illicut drug abuse in the country, and here in the U.P., the problem is growing.

All you have to do is turn on the television to see ad after ad of various prescription medications.

"Society has a very cavalier attitude about taking medications," says Great Lakes Recovery Center Primary Counselor Christine Swanson.

The GLRC in Marquette has seen a significant increase in the amount of prescription drug abuse clients, even surpassing the number of alcoholism clients.

Medications manager Cathy Warren says it's important to remember that not every prescription drug abuser is a criminal.

"Unfortunately some of our clients do come by their addictions honestly, they've either had some type of accident or injury and they are in pain," Warren says.

But there are those abusers who have had their run-ins with the law.

The majority of breaking and entering offenders, the most common offense related to prescription drug abuse, are between the ages of 17 and 25.

"Certainly we see them with a great deal more frequency now than we used to," says Marquette County Prosecutor Gary Walker.

Either way, the possession of narcotics without a proper prescription is a crime.

Counselors at the GLRC help clients to see that there are alternatives.

"They come into Michigan drug rehab with generations of alcoholism, drug addiction, legal problems, and to tell them that there is a different way to live, they know that someplace, in a small place in their mind, but they don't understand how to get there," Swanson says.

So what's the solution?

Warren advises, "Try to go around the addictive medications, or at least educate the clients about the dangers of the medication."

20 July 2010

Michigan Equity Firm could Finance Hugh Hefner's Playboy Takeover

NZ Herald

Hugh Hefner, the famous lothario and founder of Playboy magazine, was last night fighting to keep control of the business empire he created more than five decades ago.

Hours after the iconic impresario offered to take Playboy Enterprises private in a $185m takeover deal, the owners of rival Penthouse magazine said they would launch a higher bid, setting the scene for a battle between the two titans of soft porn.

In a thunderous letter to the board of Playboy, the 83-year-old Hefner, who is still the company's "editor in chief and chief creative officer", vowed not to sell his controlling stake to anyone. Instead, he planned to offer to buy the 30.5 per cent of the company he does not own, out of concern for the brand, the editorial direction of the magazine and his personal legacy.

A Michigan-based private-equity firm called Rizvi Traverse Management has agreed to finance Hefner's bid. At $5.50 per share, the offer values Playboy at a 40 per cent premium to its stock-market price last week.

Playboy shares surged twice yesterday, first in response to news of Hefner's offer and then when it was reported that the owners of Penthouse, FriendFinder Networks, were planning a counter-bid, which could be tabled overnight.

FriendFinder's chief executive Marc Bell said Hefner's offer "dramatically" undervalues Playboy.

Hefner launched Playboy in 1953 with Marilyn Monroe on the cover, and last month celebrated the 50th anniversary of the nightclub chain bearing the Playboy name, staffed by bunny girls mimicking the logo of the magazine.

The company has also expanded into television and, latterly, internet entertainment, but has suffered because of competition from the vast quantities of cheap or free pornography available on the internet.

The magazine, too, has suffered from falling sales, scaling back publication from 12 issues to 10 per year. Overall, the company has lost more than $200m in two years, and its revenues fell by 17 per cent last year.

Christie Hefner, the founder's daughter, who had been chief executive of the company for two decades, quit late in 2008 and her replacement, Scott Flanders, has been examining ways to hitch the brand to new licensing ventures. He has also been cutting costs, and said last month that redundancies had saved the company $3m annually.

The company has also pursued talks to sell itself to Iconix Brand Group, a company that licenses clothing brands such as Joe Boxer, but opposition from Hefner is believed to have been an obstacle to a deal.

The Playboy board, which is chaired by David Chemerow, an executive of the media measurement firm Rentrak, said it would form an independent committee to examine Hefner's bid when it is formally tabled.

19 July 2010

Home, Garden Oases in Detroit

The Detroit Free Press

Tom Blaser has lived in his North Rosedale Park home since October 1960. He has seen Detroit's political- and private-sector luminaries come and go from the prominent west-side neighborhood.

But he was surprised to see Mayor Dave Bing, named honorary chairman of the North Rosedale Park Home and Garden Tour, in his backyard Saturday afternoon.

"This is the first one," he said about hosting a mayor.

As Detroit neighborhoods struggle against foreclosures, blight and crime, many, like North Rosedale, East English Village, University District and Boston-Edison, are promoting their neighborhoods this summer with home and garden tours and other events to attract new residents and retain existing ones.

Most important, North Rosedale residents and city officials say these events have a significant impact on neighborhood stabilization efforts that could serve as a model throughout the city.

More than 125 people preregistered to attend the tour and luncheon -- a fund-raiser for the North Rosedale Park Civic Association -- at $15 per ticket, said Meredith Drain, co-chair of the North Rosedale Park Garden Committee. The group advertised the event in newspapers and on the radio.

Drain, who has lived in the neighborhood 34 years with her husband, Wayne County Circuit Judge Gershwin Drain, said the event shows "that we're still a very vibrant, wonderful neighborhood."

The community boasts the city's only privately owned community center and park, paid for and maintained by association fees, a community garden and a theater group. There is a committee that monitors boarding up homes and a private security patrol.

"It definitely builds a sense of community," said Councilman James Tate, who has lived in the neighborhood four years and grew up in neighboring Rosedale Park. "We are doing things that the city could never do for us."

Marilyn and John Porth have lived on Scarsdale for 22 years. Their lush garden with two ponds was a tour stop.

Noting that as many as nine vacant homes once lined their street, John Porth said, "Every community has empty houses. ... It becomes a cancer." But he has seen an improvement.

"We recycle," he said about the city's pilot recycling program. "I feel suburban."

Steve Ogden, director of the nonprofit Next Detroit Neighborhood Initiative, said there are 650 vacancies in the 1,800-home neighborhood.

To stabilize neighborhoods, the city must gain control over vacancy, he said. The plan is to use federal stimulus money appropriated to the Neighborhood Stabilization Program to acquire targeted vacant houses, placing them in the Detroit Land Bank until the market can sustain their sales, perfom home rennovation on some and spot-demolish others.

From the featured garden at Gloria Robinson-McKiney's home on Westmoreland to Marsha Bruhn's sunken garden on Shaftsbury to Edith and Ron Colston's tropical-theme garden on Gainsborough, Bing was equally impressed with each home and the neighborhood involvement.

"We can't forget these people," Bing said. "This is the fabric of the city."

Curb Ramps being Redone in Detroit to Comply with Federal Law

The Detroit Free Press

After years of city noncompliance with the federal Americans with Disabilities Act, Michigan concrete contractors are aggressively installing curb ramps and fixing ones that were done incorrectly. The city says that by the end of the year, nearly 32% of the 87,000 ramps will have been installed. (WILLIAM ARCHIE/Detroit Free Press)
Nearly five years after a federal judge ordered the City of Detroit to comply with the Americans with Disabilities Act by installing curb ramps at intersections, several streets still have not been fitted with properly constructed access ramps.

That's because hundreds of curb ramps that enable physically disabled or impaired people to cross city streets were improperly installed and are now being redone.

By the end of the year, $41.2 million will have been spent on getting the city in compliance with the federal act.

And because of the past errors, the work is being monitored by a federally appointed consultant. Also keeping tabs on the progress are advocates for people with disabilities.

"The law is clear as a bell that curb ramps have to be installed at every intersection," said Mark Finnegan, an attorney representing the Michigan Paralyzed Veterans of America who sued the city in 2005 for not having the curb ramps.

Department of Public Works Director Al Jordan said the city will have installed more than 12,000 ramps by the end of the year.

"Clearly, we have to comply with the court order," Jordan said.
Crossings hoped to be safer for people with disabilities

Since suffering a spinal injury in a car accident in 1996, Lisa Franklin has lived her life from the vantage point of a wheelchair.

But the simple act of crossing the street can be perilous for her -- or anyone who uses a wheelchair or is blind. Now that Detroit is in the process of fulfilling a federal requirement that street corners have access ramps, Franklin and others with disabilities hope they will see an improvement in their mobility.

"If you don't have a curb cut ... you never realize how important it is unless you're in that situation," Franklin, president of the advocacy group Warriors on Wheels, said of the curb ramps.

But after years of noncompliance with the federal Americans with Disabilities Act's requirement to have curb ramps for disabled people -- and a federal court settlement -- the City of Detroit is aggressively installing new curb ramps and replacing some that were improperly installed.

Al Jordan, city Department of Public Works director, acknowledged past installation problems, but said nearly 32% of the 87,000 ramps will have been installed by the end of the year.

"It's our obligation. If it's not right or if it wasn't right, we're taking the position that we will make it right," Jordan said.

There were 15,000 ramps installed through 2009. By the end of 2010, there are to be 2,031 newly installed ramps in the 5 square miles of downtown, as required by the court settlement, and 10,390 ramps installed elsewhere in the city.

Under the ADA mandate, the ramps are to be installed even at intersections in desolate parts of the city where few live or travel. Even advocates for disabled people who have sued the city admit the folly of such installations. They say they are willing to negotiate with city officials and are waiting for the city to present them with a policy to modify the settlement.
Ramps had problems

Ann Arbor attorney Mark Finnegan sued Detroit in 2005 on behalf of advocacy groups for disabled people for lack of compliance with the ADA. He said that since 1992, contractors with the city had been installing the curb ramps incorrectly. In some cases, the slopes were wrong, in others, the ramps' coral-colored inserts -- called detectable warnings -- were made with concrete instead of rubber. In 2006, the city agreed to fix the problems in a court-approved settlement.

The 2005 suit led U.S. District Judge Gerald Rosen to appoint an Ohio-based construction consultant firm, H.R. Gray and Associates, to consult with the city and monitor its progress for the court. The firm's 2008 report detailed the city's noncompliance and provided a strategy to get the project done.

"This is the only lawsuit that I've been involved in in a matter that needed a special monitor," Finnegan said.

H.R. Gray found that only 126 ramps in a 5-square-mile downtown area met federal standards.

Finnegan, who represents the Michigan Paralyzed Veterans of America and Center for Community Access, frequently meets with city officials as part of the settlement.

Still, there remains disagreement as to where the curb ramps should go.

"They're leaving out a bunch of curb ramps they should be installing," Finnegan said.

He also said the city is not installing ramps on all sides of some intersections. Jordan, of the DPW, contends installing curb cuts along major streets, including where there is no crossing signal, would make it more dangerous for a person with disabilities because it could be interpreted as if it is safe to cross the street at any point, not just at crossing signals.
Settlement is negotiable

The installations are being paid for with two sources: money dedicated to street repairs from Detroit's tax on gasoline and federal surface transportation funds. Four firms are working on the project in downtown Detroit, one of which is Detroit based. Three firms are working on the project throughout the rest of the city. Because the ramps are a federal project, the City of Detroit cannot stipulate that local companies get the contracts.

For this year, $24.2 million will be spent on the ramps, in addition to the $17 million spent through 2009 to install the detectable warnings inserts that appear as braille in the ramps.

Yet the city can't pick and choose where the ramps are installed. All residential areas have been designated to receive the ramps, even areas where there are more abandoned homes and vacant lots than there are people.

"Here's why we want to be as effective with the resources we have available to us," Jordan said, referring to the fact the city is to install curb ramps even in areas with few habitants.

Finnegan said he is aware of the problem of having to install ramps in desolate areas and is willing to modify the settlement if the city can come up with a fair policy addressing the issue.

"I'm glad to hear that (Finnegan) is willing to negotiate," Jordan said. "We are having the discussion to establish some acceptable terms."

At least one transportation expert says making some allowances for Detroit's desolate areas would be helpful.

"It's a big impact ... especially when you start talking about municipalities like Detroit," said Tim Colling, senior research engineer with the Michigan Tech Transportation Institute at Michigan Technological University in Houghton, who advises municipalities on managing issues such as ADA compliance.
'They have come a long way'

Franklin and Michael Harris, president of Michigan Paralyzed Veterans, said the city is doing a much better job installing the curb ramps.

"They really are working on this, and they're very responsive to our requests," Franklin said. Harris, whose group was part of the 2005 suit, says the lack of curb ramps is a problem throughout the state. Left a paraplegic by a 1986 car accident, Harris said he once toppled out of his wheelchair at an improperly installed ramp in Lansing.

Harris lives in Westland but comes to Detroit to work and for sporting events.

"They have come a long way," Harris said about the curb ramp installation in Detroit. "I have nothing but good things to say."

Raymond Roberson, 82, of Dearborn is blind and comes to the city almost daily to volunteer with the Detroit Department of Transportation local advisory council.

But Roberson doesn't enter the street from the inclined curb ramps that have raised bumpy surfaces, which are designed to alert visually impaired people to the street's edge, because the ramps can send him in the wrong direction. Instead, he taps his cane around the ramp to align him with the edge of the sidewalk.

"I still look for the curb so I can figure out which way the traffic is going," he said.

16 July 2010

Jet Development in China creating Jobs in Michigan

NPR MI Radio

A new commercial jet being developed in China is creating jobs in Michigan.

The C919 is being developed by the state-owned Commercial Aircraft Corporation of China, or Comac. The plane could be a big step forward for the aviation industry in China, and a possible competitor to Boeing and Airbus.

But to make it happen, Comac is relying on a number of joint ventures with American companies, and that includes the aviation division of GE, which is headquartered in Grand Rapids.

George Kiefer heads up GE Aviation's Grand Rapids office. He says about 200 engineers are being recruited to work on the C919.

"We're actually recruiting some locally," he says of the hiring process. "And we're also going internationally to hire, to China, as well as the UK and then throughout the United States."

Kiefer says many of the engineers will work in Grand Rapids. But some are also being sent to China, and some to Clearwater, Florida.

States Can’t Count on Bailout, Obama Appointees Say

Bloomberg / Business Week

States can’t count on the federal government for more budget bailouts, the heads of President Barack Obama’s debt commission told governors.

States expecting Congress to authorize more assistance are “going to be left with a very large hole to fill,” said Erskine Bowles, co-chairman of the National Commission on Fiscal Responsibility and Reform. States including New York and California have urged Congress to extend stimulus spending authorized to combat the recession, including extra Medicaid funding and money to pay public school teachers.

“I don’t think we can count on the federal government again,” Bowles, White House chief of staff under former President Bill Clinton, said yesterday at the National Governors Association meeting in Boston. “They just do not have the financial resources.”

While the economy has been expanding, states have yet to recover from the longest recession since the Great Depression. The rout cut into tax collections and led them to raise taxes and slash spending on schools, social services and other expenses. States have projected total budget deficits of $127 billion through 2012, according to a report last month by the governors association and the National Association of State Budget Officers.

Call for Help

The governors of New York, Pennsylvania and Michigan on June 30 led states pressing Congress to extend higher financing for Medicaid, the health-care program for the poor whose use surged during the economic crisis.

David Paterson of New York, Edward Rendell of Pennsylvania and Jennifer Granholm of Michigan and three other governors, all Democrats, traveled to Washington to appeal for funds after the Senate failed to approve $16 billion in extra financing for Medicaid and extended jobless benefits. Congressional Republicans opposed the measure’s cost.

“We need more help from Washington to protect against job cuts and health-care cuts,” Illinois Governor Pat Quinn, a Democrat, said on July 10 at the Boston gathering. “If we don’t do that, we’re following Herbert Hoover economics.”

Earlier this year, 47 Republican and Democratic governors urged Congressional leaders to extend the Medicaid help, signing a letter asking for a six-month extension. Fewer are demanding a bailout now because the stimulus is unpopular, West Virginia Governor Joe Manchin said in an interview yesterday.

“People are concerned that the amount of debt we’ve incurred hasn’t really stimulated the economy,” said Manchin, a Democrat.

Recommendations Due

Forty-three percent of voters think the American Recovery and Reinvestment Act hurt the economy while 29 percent think it helped, according to a national telephone survey of 1,000 likely voters conducted July 1 by Rasmussen Reports, which has a margin of error of plus or minus 3 percentage points.

After championing deficit spending to counter the economic downturn, Obama this year formed a commission to recommend ways to reduce the federal debt, which is projected to reach 90 percent of the U.S. economy by 2020. The panel’s recommendations are due Dec. 1, after the midterm elections in November.

Former Republican Senator Alan Simpson of Wyoming, the panel’s other co-chairman, told governors yesterday that the depth of the federal government’s spending imbalance is “shocking,” which limits the help it can provide for strained state budgets.

“The pig is dead,” said Simpson, referring to so-called pork-barrel spending that Congress directs to states. “There’s no more bacon.”

Tax Collections Drop

State fiscal woes will be “just as tough” next year because the economy is on pace to grow at a “lackluster” rate of about 3 percent a year, Yolanda Kodrzycki, an economist at the Federal Reserve Bank of Boston, told governors July 10 at the gathering. The budget pressure will be compounded by the need to help cities and towns faced with a drop in property-tax collections, she said.

Property-tax collections fell in the first quarter for the first time since the onset of the real-estate market’s crash, to $107.7 billion from $108.4 billion a year earlier, the Census Bureau said on June 29.

South Carolina Governor Mark Sanford said the “worst is yet to come” for the states because the economy is bound to fall back into a recession as government spending contracts both in the U.S. and elsewhere.

Kodrzycki said researchers at the Fed have become “much more sensitive” to the prospect of a so-called double-dip recession. She said the economy needs to grow at an annual average rate of about 4 percent in order for the unemployment rate to fall back to 5 percent by 2015.

“The road to economic recovery is a long one,” she said. “It’s a sobering picture.”

15 July 2010

Ficano Goes to China, Brings Back Jobs

The Detroit Free Press

Wayne County Executive Robert Ficano first traveled to China in 2005 and will make his sixth visit in November, to court companies and investors interested in doing business in the jobs-starved Detroit region.

It's taken awhile for Ficano's efforts to pay off on a major scale, but last week's news that a Chinese group will buy the $2.1-billion-a-year, 6,200-employee Nexteer auto parts operation from General Motors is a big step forward.

Tempo Group, a Beijing-based auto supplier and key player in the Nexteer deal, was the first Chinese company Ficano lured to Michigan after meeting its owner, Tianbao Zhou, on that first China trip in 2005. Tempo opened a research center in Canton Township two years later.

Ficano told me last week that Zhou apologized to him because the Nexteer acquisition is in Saginaw, not Wayne County. "I said, 'Hey, don't worry about it. It's in Michigan,' " Ficano said.

Another significant aspect of the Nexteer deal is a concessionary labor contract with the UAW that paved the way for the sale. The five-year pact, ratified by Saginaw workers a week before the sale deal was struck, calls for a cash payment to UAW workers in return for giving up raises promised earlier, and a buydown provision to lower the wages of skilled trades workers.

When Ficano first talked with Tempo officials years ago, they were mulling whether to invest in Michigan or in Canada. "They were concerned about Michigan's negative labor reputation," Ficano said.

After Ficano told them Canada had strong labor unions, too, he arranged a meeting between Tempo executives and UAW Vice President Jimmy Settles. Settles convinced them that the union was flexible and could do what was necessary to deliver the productivity Tempo needed, at a wages-and-benefits cost that would enable them to compete.

Four years after that conversation, a big unionized Michigan auto plant is about to become Chinese-owned.

GM's Nexteer steering column operations will be sold to Pacific Century Motors, a joint venture between Tempo and E-Town, the investment arm of the Beijing municipal government. A ceremonial signing is planned Monday at GM's Renaissance Center headquarters; the deal is to close later this year. Purchase price was estimated by Bloomberg News at $450 million.

Last year, Tempo was a joint-venture partner in the $100-million acquisition of Delphi's brakes and suspension business, along with the Beijing government and another Chinese firm, Capitol Iron & Steel.

After a virtual halt to buzz about Chinese investment in the U.S. during the economic upheaval of 2008 and 2009, deals are now getting done, said Peter Theut, founder of China Bridge, a new Ann Arbor consulting firm focusing on trade and investment.

China has capital to invest, at a time when lots of U.S. companies are having a hard time getting bank loans.

It's funny how old hangups, whether they be about Michigan's labor climate or China's currency manipulation, can fade away when two sides need what the other's got.

Putting Michigan First in Royal Oak

Hometown Life

Pink Pump, with a store in Royal Oak, is “putting Michigan first” and supporting the communities in which they operate a brick and mortar business.

This summer, Pink Pump stores will be selling limited edition T-shirts unique to each store location to help that particular zip code's school district. Coordinating zip codes (48009, 48301, 48067, 48104) will be printed on each shirt so that you can represent you city and support a cause. For each T-shirt purchased, Pink Pump will donate $10 to the public school district of the corresponding city.

This will lead up to the Special Edition Detroit tee shirts that will be sold at all locations to support Detroit Public Schools.

What a scream

Ice cream loving Kroger customers can beat the heat and win free ice cream for a year as part of Kroger's expanded “From Michigan. For Michigan.” program. Kroger is teaming up with Hudsonville Creamery & Ice Cream Company, based in Holland, to sponsor the contest during National Ice Cream Month, which continues through July, which is National Ice Cream Month.

Customers may register online to win one free 56 oz. container of ice cream each week for a year at www.WinWithKroger.com. Participants must have a Kroger Plus card and must fill out the online questionnaire to register, with all participants eligible to win only once. Consumers who do not have a Kroger Plus card may apply for a card at any Kroger location.

Building on the success of its 2009 “Michigan-Grown Fresh” campaign, Kroger's Michigan Division is expanding the “From Michigan. For Michigan.” program to offer Michigan-raised and processed products in its stores during 2010.

Big Price Drop Coming for Electric Car Batteries? Prez says Yes.


HOLLAND, Michigan - The cost of the high-powered batteries needed for a coming wave of electric cars is projected to drop by as much as 70 percent over the next five years, according to a U.S. government forecast.

The forecast was released as President Barack Obama attended a groundbreaking ceremony for a battery plant being built in Holland, Michigan by a U.S. unit of South Korea's LG Chem(051910.KS) and funded by the U.S. Department of Energy.

The Obama administration has provided more than $5 billion in grants and low-cost loans to battery manufacturers and auto companies to support projects intended to spur the development and sale of rechargeable electric cars and plug-in hybrids.

But the high cost of the lithium-ion batteries to power those vehicles has been seen as one of the biggest barriers to their widespread adoption.

The U.S. government had never set a target for the kinds of cost reductions it expected to see in the fast-developing industry it is attempting to jump-start with taxpayer funding.

"Because of advances in the manufacture of these batteries, their costs are expected to come down by nearly 70 percent in the next few years. That's going to make electric and hybrid cars and trucks more affordable for more Americans," Obama told an audience of politicians, business leaders and representatives of the 300 workers building the new plant.

The battery price declines projected by the Obama administration, which has set a target of putting 1 million plug-in hybrids on the road by 2015, run deeper and faster than most forecasts by outside analysts.

LG Chem Chief Executive Bahnsuk Kim told Reuters his company sees a 50 percent drop in battery prices by 2015, and he expected that would be enough to drive increased demand.

"In the next five years we see the prices in half. Our target is half," Kim said on the sidelines of the Holland, Michigan event.

In the terms tracked by the emerging electric vehicle industry, the Department of Energy said it expected battery costs per kilowatt hour to drop from about $1,000 in 2009 to $300 in 2015 and $100 in 2030.

Major U.S. automakers have set a long-term target of reducing costs on that basis to near $250, a price that would be in line with the cost to produce batteries for laptops and cell phones.

The lithium-ion battery that powers Tesla Motors Inc's (TSLA.O) $109,000 Roadster cost more than $33,000, according to the Department of Energy report.

The smaller battery LG Chem is supplying for the upcoming Chevrolet Volt from General Motors [GM.UL] cost $13,000 last year but will drop to $4,000 by 2015, the report said.

Both GM and Tesla have received Energy Department funding.

LG Chem's Compact Power unit has won deals to supply batteries for the Chevy Volt and the upcoming all-electric version of the Ford Motor Co (F.N) Focus.

It said that it had also been selected to supply batteries for hybrid systems which Eaton Corp (ETN.N) is developing for commercial trucks and buses.

Compact Power's Holland plant will have the capacity to supply batteries for up to 250,000 electric vehicles once completed and will employ 400 workers, the company said.

LG Chem and the U.S. Department of Energy split the costs of building the $303 million plant. The Korean chemical and battery maker invested $151.5 million and $151.4 million came from a U.S. government grant.

White House economists estimate that the United States accounted for 2 percent of global production of batteries for electric cars and hybrids in 2009. That share is expected to rise to 40 percent of global production by 2015.

14 July 2010

Intrigue Idles Soviet-Era Jet In Michigan

The Wall Street Journal

MARQUETTE, Mich.—One morning last July, a Russian-made military plane landed at an airport near this Lake Superior town.

Nine men with foreign accents disembarked. Some went off to eat and shop. When they returned, a flock of federal agents and local police were waiting. Five men were taken to jail.

The plane, an Ilyushin IL-78, had come from Texas, bound for Pakistan. "All of us were trying to figure out what they were picking up or smuggling," says Cheryl Hill, assistant prosecutor of Marquette County. Capt. David Lemire of the Marquette County Sheriff's Office says, "People to this day still ask, 'What's up with that plane?"'

Not much. Nearly a year later, the 231-ton Cold War leftover remains at Sawyer International Airport, leaking fuel and luring birds.

It's an albatross of sorts for this Upper Peninsula county, which owns the airport and went months without being paid almost $4,000 for storage and maintenance.

Ms. Hill and others here still aren't sure why the plane wound up in their backyard, but now, she says, "I can't get rid of the damn thing."

The Soviet Union used similar Ilyushins in its 1980s war with Afghanistan. The tankers are equipped to refuel jets in midair and can be converted for carrying cargo or fighting fires.

The aircraft stranded in Michigan was built in 1988, says Gary Fears, a Boca Raton, Fla., entrepreneur whose family trust controls Air Support Systems LLC, which bought the Ilyushin for about $4 million in 2005.

Mr. Fears, 64 years old, has helped develop casinos in Illinois and Florida and has been involved in real-estate development, steak houses and an auto-body repair business. He envisioned retooling the Ilyushin for fire fighting after living in fire-ravaged California in the early 2000s.

The plane is "breathtaking in terms of its capabilities," he says, adding that it can spread fire retardant "across five football fields in one pass."

The plane sat idle at a Grayson County, Texas, airport for three years without a job. Last year, North American Tactical Aviation Inc., a privately held concern in Newark, Del., that buys and sells used military aircraft, leased the plane.

NATA planned to fly it to Pakistan and court the military as a customer, company president Dwight Barnell says.

On July 16 last year, the Federal Aviation Administration granted a "ferry permit" for the plane to leave Texas. The next morning, the Ilyushin took off with a crew of Ukrainians and others hired by NATA.

Originally, the plane was to fly directly to Iceland and stop briefly before proceeding to Pakistan. But it left Texas without securing U.S. Customs and Border Protection permission to leave the country. It stopped in Michigan to finalize that, Mr. Barnell says.

The Ilyushin landed on Sawyer's 2.3-mile-long runway, set amid vast stands of jack pine. The airport, about 17 miles south of Marquette, is itself a Cold War relic, a former Air Force base built in the 1950s to defend against Soviet attack. Budget cuts closed it in 1995, but it reopened as a commercial airport and today handles about 400 flights a month.

Airport officials snapped photographs as the Ilyushin swooped in. The crew had called ahead to order more than $45,000 of fuel.

A different call came to the county Sheriff's Office: A Texas lawyer claimed the Iluyshin had been stolen, police say. Documents showed a Texas judge had ordered the plane grounded because Mr. Fears' company owed $62,400 to a maintenance firm for fuel, repairs and storage at the Texas airport.

Mr. Fears disputes owing anything to the firm, Air-1 Flight Support Inc., and says he and the crew were unaware of the judge's order.

Air-1 owner Victor Miller says he informed Mr. Fears and the crew of the order. After the plane left Texas, Mr. Miller tracked it on the Internet and had his lawyer call Michigan. "If that airplane left the country, I was never going to get anything out of it," he says.

Up in Michigan, Ms. Hill, the prosecutor, told police they lacked jurisdiction; the plane could buy fuel and go. But most of the crew had scattered to nearby stores and restaurants.

Chatting with two crew members who spoke English, Sheriff's Detective Lt. Stephen Kangas learned the plane was going to Pakistan. But the men weren't clear on what they planned to do there, Lt. Kangas says. He called the local FBI.

Soon the airport was swarming with agents from the FBI, FAA and Transportation Security Administration, while Immigration and Customs Enforcement agents drove over from Sault Ste. Marie, Mich.

Inside the plane, police saw gauges marked in Cyrillic script, packages of ramen noodles, an American flag and a stringer of dried fish. Nero the drug-sniffing dog found nothing illegal.

Sometime after midnight, Customs Enforcement agents cuffed five Ukrainian crew members and took them to jail for having expired visas. Several days later, the men were allowed to return to Ukraine. The others, including two U.S. citizens, left town.

Efforts to interview the crew members were unsuccessful.

At the airport, gawkers cruised the perimeter seeking a glimpse of the plane. One man wrote on a television news website, "I wonder how these bozos can have free access to U.S. airspace with a heavy aircraft, and I am not allowed a few simple carry-on items?"

While the feds investigated, a Marquette County Circuit judge and Customs and Border Protection separately ordered the plane held. Workers blocked it with dump trucks and a snowplow. When fuel started leaking from the wings, Ms. Hill worried winter snow and ice might collapse a wing and cause a costly spill.

Customs and Border Protection released the plane in February and fined Mr. Fears' company $2,500 for lacking a license to take the plane out of the country. The Marquette judge awarded the Ilyushin to Air-1, the Texas maintenance firm.

Last Friday, Mr. Fears' attorneys asked the judge to put yet another hold on the plane, alleging Air-1's Mr. Miller recently sold it to Temco Industries Inc. of Wilmington, Del., for $60,000, "a fraction of what the Aircraft is worth." Temco couldn't be reached; Mr. Miller didn't respond to calls or emails Monday.

Starlings are nesting in the Ilyushin's tail and pigeons flutter in and out of an engine. Ms. Hill says she'd love to see the plane leave Michigan, although, "If they want to donate it to us, we'll take it."