Ford says Hatchbacks Rising from the Dead

USA Today

It's easy to come up with a list of things that most Americans hate. Dandruff, mosquitoes, liverwurst, income taxes, room-temperature beer, shiny polyester, to name a few. Then there are hatchbacks, which Americans used to like, but now generally hate. But that could be changing.

Ford reports that 60% of the buyers of its new Ford Fiesta minicar are opting for the five-door hatchback. By contrast, Ford says that only 8.3% of all cars sold last year were hatchbacks. Could the stubby-car look be on its way back?

It's not just Ford. Other automakers are creeping cars without traditional trunks into their market with some success. Kia Soul for instance is hot. Or Honda Fit, the car that Ford set out to beat with Fiesta.

In Europe, hatchbacks remain popular along with station wagons, another body type that Americans have spurned. Ford says it's also going to take a chance on the next Ford Focus, and offer a hatchback version here as well.

"American car buyers have grown accustomed to the convenience of hatch body styles after years of owning SUVs and crossovers," said George Pipas, Ford sales analyst.

As Ford continues to roll out global vehicle platforms like Fiesta and the next-generation Focus, the company is investing in flexible plant capacity. The flexibility will ensure Ford is able to react quickly to changing tastes, providing a vehicle mix – hatchback or sedan, base model or fully loaded – to serve varied consumer demands around the world.

Also heartening for Ford, the automaker says buyers are opting for more options in the smallest of cars, odd given that the sour economy would usually lead buyers to take fewer options. Half of Fiesta buyers, for instance, want leather upholstery.

Fiesta is just getting started in sales after a setback involving a production slowdown at the Mexican plant where they are made due to a quality-control problem. Ford never disclosed what the issue involved.

So we'll see. Once Fiesta sales start to roar, hatches may go pop.

Is Exporting the Best Way for Small Businesses to Expand

USA Today

Dozens of international explorers gathered recently at a hotel here. But they didn't want to talk about climbing Mount Kilimanjaro or biking through Namibia.

Instead, the group wanted to figure out how to expand their products and services to foreign markets — how to take their businesses global.

"We're a small, financially sound family-owned business, and we're treading water during these (tough economic) times," said David Newton, president of Newrent, a trailer sales and rental firm in Kearny, N.J. His U.S. sales are on the decline, and he thinks there might be a market for selling refrigerated trailers overseas. But he is at a loss about what to do.

"Who do we call? Who do we talk to?" he said.

Newton knows that new revenue streams — partially from foreign markets — could help keep alive the company that his father founded as a trucking firm. So he headed to the "matchmaking" summit, the first in more than 15 years sponsored by the U.S. Small Business Administration. It offered exporting financial advice, as well as tips on shipping, product compliance and cross-cultural business practices.

"I'm just walking around here asking guys questions," said Newton, who was among more than 150 attendees.

Newton was sheepish about his lack of exporting knowledge, but government officials are thrilled that he and other businesses owners are considering the practice.

During a Sept. 16 meeting with his newly founded President's Export Council, President Obama said that boosting exports was a top priority. "The more American companies export, the more they produce," he said. "And the more they produce, the more people they hire — and that means more jobs." He also reiterated his goal of doubling U.S. exports during the next five years through a new National Export Initiative.

In 2009, the U.S. exported about $1.57 trillion in goods and services such as food, technology and health equipment. The goal: at least $3.14 trillion by 2015.

About 280,000 — or just over 1% — of U.S. small businesses currently export. Of those, 59% export to just one country.

"We think businesses can do more," Joseph Hurd, Department of Commerce senior director of export promotion and trade policy, said last Monday.

With nearly 96% of the world's population and two-thirds of purchasing power outside the U.S., Hurd and other government officials want small and midsize businesses to think beyond U.S. borders.

Jennifer Schroder says her employer, Galison, has had success with foreign sales. "Our international business has been growing much faster than our U.S. business," she says. The firm produces stationery under its company name and educational games under the Mudpuppy label.

But she and colleague Lisa Ann Frisone came to the SBA summit in search of partners who could help them streamline their exporting strategy.

Exporting to foreign markets comes with an array of issues, such as completing mounds of paperwork and deciphering often-complicated customs rules.

"You have to understand all the nuances of exporting to other countries," says Luz Hopewell, director of the Small Business Administration's Office of International Trade. "Sometimes if (a firm) doesn't get the right license or doesn't have the right paperwork, the product can be returned from the shipping docks."

It's not that easy

For smaller firms that don't have many resources, the idea of sending goods overseas can be daunting.

One in three small-business owners say fears about not getting paid prohibit them from exporting, according to a 2010 survey among exporting and non-exporting members of the National Small Business Association and the Small Business Exporters Association. Nearly the same proportion said exporting would be too costly.

Amit Roy, who founded the information technology firm Proviatek in 2004, is well aware of exporting hurdles. His company started doing IT work but in 2008 began to export biomedical equipment to India and Singapore.

Since then, he has hit one stumbling block after another. For instance, some of his exported products must be kept at -5 degrees Celsius while in transit. At first, Roy thought he could do this by using dry ice but soon discovered that in some international areas, dry ice is considered a hazardous material. He then had to opt for more expensive gel packs to keep his products cool.

"The learning curve has been expensive," he says.

Hurd, Hopewell and other speakers at the summit spoke openly about the troubles that budding exporters face.

"We don't make it easy to export," Hurd admitted.

Government officials at the SBA, Department of Commerce and other agencies hope to change that with more conferences like the one in Jersey City.

Those groups are also promoting resources such as the country's 19 export assistance centers, websites such as www.export.gov and the 800-USA-TRADE (800-872-8723) help line as tools that can help entrepreneurs export.

"Business can really be totally ignorant about exporting," Hopewell says. Her goal is to "prepare the business ... and make certain that they are well informed of the benefits as well as the risks" of exporting.

"A business is not by itself on the road to become an exporter," she says.

Besides hoops, Hill inspires as Filmmaker

USA Today

A different kind of work consumed Grant Hill this offseason. It wasn't rehabilitation for the formerly oft-injured Phoenix Suns forward, and the lights, cameras and action were focused, for a change, on someone else.

Last weekend, executive producer Hill presented at Duke, his alma mater, a private, rough-cut screening of Starting at the Finish Line: The Coach Buehler Story. It's Hill's first venture into film, joining him with teammate Steve Nash as documentary producers.

Hill's is about legendary Duke track coach Al Buehler [pictured], who coached either cross country or track there for 45 years and was manager for three U.S. Olympic teams.

Little is known about the role of Buehler, 79, in forging integration at Duke and the all-white Atlantic Coast Conference — or how he invited LeRoy T. Walker, a future U.S. Olympic Committee president who was track coach at historically black North Carolina Central, and his athletes to train with Buehler's team.

Neither is much known about Buehler paving the way for future women's All-American Ellison Goodall to compete in track, nor how his three men's track scholarships went for women's field hockey.

With producer-director Amy Unell, Hill hopes to complete the project soon so it can premiere at festivals and find a network for distribution.

"My role has increased," says Hill, who also narrates the documentary. "The closer we've gotten to the finish line, I've been more involved."

Unell, a 2003 Duke graduate, began working on the project almost a year ago. Hill was entrenched in the regular season and playoffs as his Suns made a surprising run to the Western Conference finals.

An art enthusiast since college, Hill has staged 20th-century African-American art exhibitions. Now, he has the bug for film.

"I like inspiring stories. There's a number of them out there. I was talking to a 10-year-old. He talked about (The) Blind Side. He also talked about Glory Road. The stories behind them connect with people," Hill says. "To try and bring those stories to life, it would be kind of fun. It's just finding the right project and figuring out your game plan."

The Suns have regrouping to do, too, despite winning 54 games last season. They lost All-Star power forward Amar'e Stoudemire to free agency, then added Hedo Turkoglu, Josh Childress and Hakim Warrick. "We have a lot of depth," says Hill, who averaged 11.3 points and 5.5 rebounds. "It's going to take time to figure out."

No matter how successful this documentary turns out, Hill, who has his 38th birthday next week, vows it won't send him into retirement.

"As long as I'm healthy, regardless of what goes on with films or anything else, basketball is the most important thing," he says. "This might be the last year of my contract, but I don't look at it as the last year of my career."

Hot tickets: NBA owners contend they lost more than $370 million last season and need to reduce the percentage of revenue for player salaries in the next collective bargaining agreement. Yet a report in SportsBusiness Journal said the league set a record with more than $100 million in new full-season ticket revenue for 2010-11.

As of Sept. 22, clubs had added more than 50,000 full-season tickets, a 40% jump from the same date last year. With single-game tickets, the Miami Heat alone sold more than 20,000 for home games Tuesday, the highest one-day total in franchise history.

Michigan Teen Kills 448-pound Black Bear with Arrow

Associated Press

A 17-year-old Michigan girl began her big game hunting career with a bang - or rather a whoosh - by killing a 448-pound black bear with a bow and arrow from 16 yards away.

High school senior Jessica Olmstead of Battle Creek shot the bear during a hunting trip last month in Oba, Ontario.

She told the Battle Creek Enquirer for a story published Tuesday that the bear was the first animal she killed with the new bow.

"As soon as my dad got it for me I was immediately comfortable and I was ready to use it the next day," Jessica said.

"When I go out hunting, it's really exciting," she said. "Whenever I see a bear I just want to go at it. When you're hunting, your heart is racing, your blood is pumping, and you feel that adrenaline rush. I really love to hunt."

Her father, Tim Olmstead, told The Associated Press that his daughter eats the animals she hunts, including the bear, and does not kill just for fun.

He told the paper he's been teaching others to hunt for more than 30 years and that he's never had a student pick up the fundamentals as quickly as his daughter.

"I'm not just saying this because she's my daughter," he said. "But she's probably one of the best listeners I've every taught. With the bear she showed a lot of patience. She tracked the bear, killed it, and gutted it like a pro."

Jessica's hunting exploits range beyond the wilderness. Earlier this month, she caught a 20-pound salmon in Lake Michigan, near Holland.

"Fishing is a lot like hunting in a lot of ways," Olmstead said. "But I think that with fishing, it takes a lot more strength and a lot more patience to be successful."

GMAC Drew `False Testimony' Sanction Years Before Eviction Halt

Bloomberg

Ally Financial Inc.’s GMAC Mortgage unit, which suspended evictions in 23 states last week after finding employees didn’t verify foreclosure documents, was sanctioned in 2006 for similar practices, court records show.

GMAC gave “false testimony” when it justified foreclosures by submitting sworn affidavits signed by a mortgage executive who later said in a deposition she didn’t actually review the loan documents or sign in the presence of a notary, according to a 2006 court order filed in Duval County, Florida. In response to the sanctions, GMAC Mortgage directed employees to “read and fully understand” court documents before signing.

“Do not sign unless you have that comfort level,” said a policy directive from GMAC Mortgage’s James Barden, then- associate counsel for the legal staff. “It is the integrity of our cases that is at stake and we cannot afford anything less than full accuracy.”

GMAC Mortgage is facing new allegations in court documents that it evicted homeowners without verifying that borrowers actually defaulted or whether the firm had legal standing to seize the homes. Ally, the Detroit-based auto and home lender, said this week it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true.

Loan Industry

Ally declined to say how many loans may be affected. The firm, formerly known as GMAC Inc., ranked fourth among U.S. home-loan originators in the first six months of this year with $26 billion, and fifth among loan servicers, with a $349.1 billion portfolio, according to Inside Mortgage Finance, an industry newsletter. It’s also the beneficiary of more than $17 billion in U.S. bailout funds.

Servicers conduct billing and collections on mortgages, sometimes for other firms that actually own the loans, and handle foreclosures when borrowers default.

Gina Proia, a spokeswoman for Ally, confirmed that a policy directive was issued in 2006, “but we recently became aware of a breakdown in the process. The process has since been addressed and the prior practice is no longer taking place.”

Mark Paustenbach, a spokesman for the U.S. Treasury Department, which owns 56.3 percent of Ally, declined to comment. Kim Fennebresque, a director named by the Treasury to serve as an independent board member, didn’t return calls.

In a statement earlier this week, Proia said “the entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” and that “there was never any intent on the part of GMAC Mortgage to bypass court rules or procedures.” Florida was among the 23 states where evictions have been halted.

Verification

Lawyers defending borrowers have accused mortgage firms including GMAC and JPMorgan Chase & Co. of foreclosing on homeowners without making proper efforts to verify the accuracy of the documents. In foreclosure cases, companies typically file affidavits to start court proceedings. Affidavits are statements written and sworn in the presence of someone authorized to administer an oath, such as a notary public.

The 2006 case stems from a GMAC Mortgage foreclosure that began in August 2004 on a home owned by Robert and Lillian Jackson. The filing included an affidavit signed by a GMAC officer laying out the amount owed on the loan.

Florida Circuit Court Judge Bernard Nachman sanctioned GMAC in May 2006, saying that the company “submitted false testimony to the court in the form of affidavits of indebtedness.” The company was ordered to submit an explanation and confirmation that the policies were changed, and told to pay defendants’ legal costs of $8,135.55.

Legal Directive

GMAC’s legal department issued a statement afterward that told employees “not to sign verifications on court pleading documents unless you have independently reviewed and checked the facts.” The policy, distributed in June 2006, also stated in italics and boldface that employees should sign documents only in the presence of a notary. GMAC told the court four years ago that the policies were “being corrected.”

In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed about 10,000 affidavits and other foreclosure documents a month without verifying their accuracy. The employee’s supervisor is the same executive sanctioned in the 2006 case.

GMAC’s internal review discovered the new discrepancies “a few months ago” and halted the practice, according to Proia’s statement earlier this week. Barden, who wrote the 2006 directive, and the two employees still work at GMAC, Proia said. Barden didn’t return a request for comment left on his work phone.

GMAC Impact

“They’re acting like this is a new problem,” said O. Max Gardner III, a bankruptcy attorney at Gardner & Gardner PLLC in Shelby, North Carolina, who isn’t directly involved in either GMAC case. “It’s the exact same thing,” Gardner said. “This is not just a GMAC problem. This is an industry-wide problem.”

Deborah Rhode, a Stanford University law professor and director of the school’s Center on the Legal Profession, said GMAC Mortgage’s behavior may amount to misleading the court.

“It’s not ‘technical’ when people attest under oath to knowledge they don’t have, and it doesn’t matter that in fact there isn’t actual error or discrepancy,” Rhode said. “Any court would take this very seriously.”

Judges could decide to dismiss the foreclosures, sanction the attorneys and company or levy a “substantial” financial penalty that would “get their attention,” she said.

The U.S. took control of Ally as part of a larger effort to prop up auto manufacturers. On a national level, regulators and lawmakers are trying to persuade bankers to avert foreclosures as seizures of homes by banks set records. Bank repossessions climbed 25 percent in August from a year earlier to 95,364, according to RealtyTrac Inc., the Irvine, California-based data provider.

Exelon Plans Debt Sale to Buy Deere Wind-Power Unit

Bloomberg

Three wind projects set to begin in Michigan

Exelon Corp., the largest U.S. producer of nuclear power, plans to sell $900 million of 10- and 31-year debt to fund its purchase of a Deere & Co. wind-power unit.

The bonds may be issued as soon as today through Exelon Generation Co. according to a person familiar with the transaction. John Deere Renewables LLC will cost $860 million with an additional $40 million if Deere starts constructing three projects in Michigan, Exelon said today in a regulatory filing that didn’t specify the debt offering’s size or timing.

Exelon’s acquisition marks the Chicago-based company’s first foray into owning and operating wind projects, it said in an Aug. 31 statement. The 735 megawatts of wind capacity, enough to power as many as 220,000 homes in eight U.S. states, will add to 2012 profit and advances Exelon’s 2008 promise to reduce carbon-dioxide emissions, according to the statement.

“We took this deal to the rating agencies well in advance of doing it,” Bill Von Hoene, Exelon’s executive vice president for finance and legal, said at a conference on Sept. 15. “They concluded, as did we, that it was credit neutral.”

The notes may be rated A3 by Moody’s Investors Service and BBB by Standard & Poor’s, said the person, who declined to be identified because terms aren’t set.

The acquisition will make Exelon the 13th-biggest wind generator in the U.S., Von Hoene said in the call.

Task Force: Michigan Ready for Plug-In Vehicles

The Detroit News

Members of the Michigan Plug-in Electric Vehicle Preparedness Task Force said today that Michigan is ready for the first plug-ins to roll off assembly lines this fall.

Members of the task force, which formed earlier this year and includes representatives from the automakers, state, utilities, nonprofits and environmental groups, as well as electrical inspectors and contractors, said that work jointly accomplished behind the scenes should make it easy for Michigan residents to drive and charge their plug-ins.

Special plug-in charging rates have been set for Consumers Energy and Detroit Edison customers, and there are utility incentive programs to help defray the cost of a charging station and installation.

Automakers also are helping with charging stations. Ford Motor Co., for example, will provide free home charging stations and installation for the first 5,000 customers who buy the plug-in Ford Transit Connect, said Charles Gray, chief engineer of hybrid programs for Ford.

At the state level, the House of Representatives is considering a bill that would provide those who pay the Michigan Business Tax and install a public charging station a MBT credit of up to 30 percent of the cost and installation.

And modifications to the state building code to allow home charging stations to be installed on a separately metered circuit are before the Joint Committee on Administrative Rules, said Michigan Public Service Commission Chairman Orjiakor Isiogu.

"The goal is to have the code amended and effective before (plug-ins are) commercially available," he said.

ArtPrize Draws Tons of Tourists to Grand Rapids

The Detroit News

 

 

Roberto Chenlo was handing out business cards on the street, because you never know when someone will need a bronze sculpture.

Melissa Dunn of Byron Center took two and handed one to her 5-year-old daughter, and Emily looked at it like it was a chip from the ceiling of the Sistine Chapel.

This is a good few weeks to be an artist in west Michigan, even if you don't win cash in the second annual ArtPrize competition. It's a better few weeks if you do win; the $250,000 for first place will buy a lot of brushes.

The $7,000 for fourth through 10th also will go a long way toward yanking the word "starving" from in front of "artist." But even if your chances of winning are as slim as a coat of paint, it's homecoming week and you're the quarterback on the football team.

Jonathan Carlson of suburban Chicago was standing in front of Van Hoecks Shoes, hands in the pockets of his tan cargo shorts, discussing the use of color on the pastel streetscape in the window.

"You're so talented," said a passer-by in an ArtPrize T-shirt. "I love your work."

Carlson, a waiter, can barely draw a circle. He sort of looked like an artist, though, and that was enough.

There are plenty of reasons why ArtPrize, which opened Wednesday, is a splendid concept. It's good for tourism, with several hundred thousand visitors expected to stroll the 3-square-mile core of downtown. It's good for the image of the city, and good for Marissa Mewitz, 22, who owns the Big James Steak Sandwiches cart in front of the Grand Rapids Art Museum and went through 30 pounds of beef Thursday when she normally tops out below 10.

But the beauty of it is this: In Grand Rapids, at least through Oct. 10, art matters.

ArtPrize was dreamed up by Rick DeVos, 28, who has probably earned the right to not always be identified as the grandson of Amway co-founder Richard DeVos. What would happen, he wondered, if downtown Grand Rapids was turned into an art gallery?

Very good things, it turned out. For the first ArtPrize last year, 1,262 artists participated, and the Big O' Cafe where sculptor Chenlo was displaying his bronze horse and cowboy had three consecutive weeks of record sales.
1,713 artists, 192 venues

"It's a one-city stimulus package," said Big O' owner Bernie Kersten, and this time around it has 1,713 artists.

Their works are being shown at 192 venues ranging from a tattoo parlor to a lot across from Van Andel Arena -- named for the other Amway co-founder -- that's big enough to hold a man on a pedestal posing as a statue, an 8-foot-tall roller skate, a 30-foot-tall greeting card and an airborne 55-foot-long wood-and-Styrofoam pig.

Jurors will determine $5,000 winners in each of five genres, but the big prizes will be awarded through the votes of registered visitors.

For information on voting, artists, locations, shuttles and other essentials, see www.artprize.org. For tips on how to prepare for a day at ArtPrize, see Tammy White.
ArtPrize draws fans

She's a 40-year-old bank employee from Paw Paw, and rather than spell her last name, she explained that it's "White, like the crayon."

Last week was her vacation, and she was sick for every accursed day of it. "I'm living my entire vacation today," she said, and she struck out into the sunshine carrying a camera, a big purse and a parasol. Her sunglasses were pushed back atop her red (like a crayon) hair.

While she hustled to make up for lost time, Brian Maas and Steven Thayer of Grand Rapids spent a leisurely lunch hour eating street-side pizza and strolling the exhibits.

They both work in quality improvement for Spectrum Health, and they both plan to become ArtPrize regulars. "It's my favorite time of year," said Thayer, 53. "I can catch fish right off of Sixth Street, and I can come out here and catch art."
Something for everyone

There's something at ArtPrize to snag everyone, regardless of taste, tenure or transportation.

Women in sensible shoes crossed the street alongside girls with pierced lips. A bicyclist in a green T-shirt sped along with an orange snake around his neck. Some stood transfixed by the giant pig, some dismissed it as a gimmick.

The team behind the porker put a 110-foot-long sea serpent in the Grand River in 2009. It placed sixth. For all the glitz, pointed out Marco Riolo, "last year, an oil painting won."

Riolo, 29, an artist and rugby player from Grand Rapids, has a large oil painting hanging at a wine bar called Bar Divani. He was taking pictures of pictures with his cell phone, and planned to ultimately see every one of the 1,713 pieces.

"There's treasures," he said. "Hidden magical treasures, everywhere you look."

After a while, reality and art become indistinguishable. Photographer Megan Major, 25, of New Hudson was working the second day of ArtPrize at the museum, sitting at the side entrance in a black cocktail dress and writing down visitors' ZIP codes. By lunchtime, she had come across visitors from Canada, Australia and Peru, Vt., just down the road from Jamaica.

A few yards away from her tall chair, one of the inside panes of glass surrounding the museum's courtyard had fractured, leaving a pattern of swirls and spider webs across the glass.

"People keep asking me if that's art," Major said. She answered them all gently, because expanded horizons are better than narrow ones, and you don't want to be discouraging.

Up the block, at a hot dog joint called the Dog Pit, Melissa Dunn was marveling at her daughter's creativity, the way parents are supposed to.

Emily was the girl who'd stared at the card from the 73-year-old sculptor who crafted a mounted cowboy in a wide-brimmed hat. She had borrowed a small notepad from her grandmother, and caught up in the moment, she'd drawn a rainbow.

Her mother told her it was wonderful and she should draw some more, because art matters.

Jalopnik: Obsessed with the Cult of Cars

Workers from a Detroit Chrysler plant visited by President Obama two months ago were busted today for drinking and smoking pot on their lunch break. Although they're now suspended, a former employee tells us it won't change a thing.

The Jefferson North Assembly Plant is Chrysler's flagship manufacturing facility. The plant, home to production of the all-new 2011 Jeep Grand Cherokee, was visited by President Obama in July — just five days before an investigation by Fox 2 Detroit began that unveiled auto worker's engaging in the blue collar equivalent of the three martini lunch. When President Obama visited this plant that's supposed to represent the "new" Chrysler, he told America

    "I believed that if each of us were willing to work and sacrifice in the short term — workers, management, creditors, shareholders, retirees, communities — it could mark a new beginning for a great American industry. And if we could summon that sense of teamwork and common purpose, we could once again see the best cars in the world designed, engineered, forged, and built right here in Detroit, right here in the Midwest, right here in the United States of America."

Unfortunately, a few of their employees look to still be stuck in old school stereotypes about organized labor.

The investigative report found a dozen employees were taking the 30-minute shift break they have at 11:00 am to drive to a public park and pound 40-oz beers, smoke weed, or do both at the same time. They then get in their cars, drive back to the plant presumably under the influence, and continue manufacturing cars.

Chrysler's Senior VP of Manufacturing, Scott Garberding, told Fox 2 saying they've suspended workers without pay pending the outcome of an investigation:

    I want to make it clear that we at Chrysler take it very seriously. For us this behavior is totally unacceptable and will be dealt with swiftly. In fact, we've already identified a few of the people involved in this incident. Each of them has been suspended indefinitely, without pay, pending further investigation.

Unfortunately, this may not do much to change the culture of auto workers, says one longtime auto worker who spoke to us about the video.

"The problem is not really the drinking per se. The problem is when it happens the UAW turns a blind eye," says the Detroit resident who used to work in automobile manufacturing but wished to not be identified because of his close family ties to the United Auto Workers and friends still in the industry.

"My first week on the job I was teaching some classes at this plant, and the breaktime bell goes off to wake up the guys so they can take a break," he explains. "The trailer [I was in] was parked up right next to the plant window and I see this head go by, and it was this guy snorting coke back there. That was my first experience."

Like many Detroit residents, his two uncles and father were all UAW members and auto workers. But whereas his dad and older uncle were well respected, his younger uncle would constantly show up to work intoxicated or not show up at all. Because of the respect other workers had for his dad and uncle he was never seriously punished or even sent to drug rehab for his own protection.

"Once my uncle passed away, my youngest uncle said 'I better retire' because he knew his older brother wouldn't be there to stick up for him."

"I remember seeing people get fired and would be shocked, and be like 'Oh my God' and some of the people who have been there longer are like 'don't worry, they'll be back,'" He told us. "Usually it was a few day suspension to put on a dog and pony show. They just turn a blind eye after a while.What some of these guys need is alcohol treatment programs."

The UAW, to its credit, issued a statement disapproving of the activity. Unfortunately, it also didn't offer to do anything about it or seem in any way regretful for the worker behavior:

    The UAW strongly opposes the use of controlled substances or alcohol use on the job. This type of behavior jeopardizes the health and safety of all employees. We also recognize that, unfortunately, these behaviors exist in our society.

    The UAW and the Chrysler Corporation work together to keep our workplaces drug and alcohol free, and to encourage employees with substance abuse problems to get the treatment they need. The employees involved in this situation do not represent the vast majority of workers at Chrysler who do a great job making high quality vehicles in some of the most productive manufacturing facilities in the United States.

Sure, yeah, it does represent a danger to the other workers, but what about the people driving Jeeps built by drunk/high workers?

Like a lot of people in the industry, the former employee who spoke to us said he supports the UAW and the Big 3 but recognizes there's a major problem.

"I love the auto inudstry, i love everything about it... I grew up eating/sleeping breathing cars. I really just would like to see things change."

Just as the three-martini lunch is sadly no longer accepted in white collar America, so too, the pot-and-beer lunch is no longer accepted for blue collar America.

Michigan Legislators compromise to get Retirement Deal Done

Detroit Free Press

 

LANSING -- For months, Democratic Gov. Jennifer Granholm and Republican lawmakers pushed for an early retirement plan for state workers, similar to what public school teachers were offered this year.

Labor unions warned Democrats not to go along with the state worker plan, calling it an affront to collective bargaining.

The stalemate threatened to push the Legislature once again to the brink of an Oct. 1 budget deadline, or even a government shutdown.

But after several false starts, the House and Senate came to terms late Thursday night and approved a retirement plan they said will save the state general fund $80 million next year.

The Democratic House voted 60-45 to approve the measure -- largely with support from 42 Republicans -- and the Senate moments later voted 20-14 in favor of it.

No Senate Democrats supported the bill. Only 18 Democrats did in the House.

Without Democratic support, the Senate failed to get the needed two-thirds majority to give the retirement plan immediate effect. That could happen next week, when the Legislature is expected to put finishing touches on the rest of the 2010-11 budgets and erase a looming $484-million deficit.

House Speaker Andy Dillon, D-Redford Township, said the retirement agreement will shake loose the votes for aid to state universities and revenue sharing for cities, townships and counties and human services. Those budgets were locked up in the politics of the retirement bill.

Dillon said limiting to three years the extra money remaining state employees would have to pay for their health insurance -- 3% of their wages -- broke the stalemate.

He said that idea was proposed by one labor union, which he would not name.

An earlier proposal to phase in the 3% health insurance copay was opposed by Republicans. Democrats would not accept a permanent copay. The Legislature could change the provision at any time to either eliminate it or make it permanent.

Dillon said he preferred to phase in the copay and let the next Legislature and governor deal with the issue.

Some House members remained at the Capitol after the vote to work on the five remaining budget bills. Lawmakers have been under pressure to enact a full state budget by Oct. 1, the start of the new fiscal year, and avoid the kind of stalemate that resulted in a brief government shutdown in 2007 and 2009.

Granholm signed six more budget bills Thursday, including money for the State Police and aid to 28 community colleges. The Legislature has approved most of the overall budget, including the big-ticket budgets for school aid, Medicaid and corrections.

The transportation department budget was mired in a dispute over whether to build a second, publicly financed bridge over the Detroit River. The second span is opposed by the owners of the Ambassador Bridge, who plan to build their own second span next to the existing bridge.

State aid to 15 public universities is on hold because of a Republican proposal to require those that do stem-cell research to make detailed annual reports of the research -- a requirement Granholm and fellow Democrats oppose.

Budgets for the Department of Natural Resources and Environment and the Department of Human Services also must be approved.

Earlier this week, the Legislature sent to Granholm final budget bills for state prisons and the Department of Community Health -- a $14-billion budget behemoth that includes Medicaid.

The community health bill benefited from $650 million in onetime federal stimulus money, which prevented $49 million in cuts to mental health programs and reinstated dental, vision and podiatry care for Medicaid patients.

That onetime federal infusion, along with federal money used for public schools, will create a budget hole of $1.5 billion or more in 2012, when the money runs out.

State Attorney General Sues Blue Cross, Regulator over Rates

Detroit Free Press

The Michigan attorney general’s office has sued Blue Cross Blue Shield of Michigan and a state regulator over rate changes for some customers who buy insurance coverage to supplement Medicare.

The lawsuit filed today in Ingham County Circuit Court says the Office of Financial and Insurance Regulation should have held a public hearing. Attorney General Mike Cox calls the changes “illegally raising rates.”

Blue Cross and the regulator say the rate changes stem from elimination of a discount on so-called Medigap policies for people who don’t live in Michigan or do get help from employers in buying coverage.

The commissioner of the regulating office in June ordered an end to the discounts. Blue Cross says it’s complying with the order.

Study: Film Aid Costs State

The Detroit News

Michigan paid nearly twice as much money in film incentives as the industry brought into the state the past two years, according to report released Friday by the Senate Fiscal Agency.

The incentives cost taxpayers more than $190,000 per direct full-time job created last year, the report found.

"The nature of the credit and the resulting activity is such that under current (and any realistic) tax rate the state will never be able to make the credit 'pay for itself' from a state revenue standpoint, even when the credit generates additional private activity that would not have otherwise occurred," according to the report.

The study, a compilation of data presented at Senate and House hearings over the past two years, says Michigan spent $137.5 million to generate $80.6 million in private sector activity.

The report didn't shake Gov. Jennifer Granholm's faith in the program.

"We stand by the film incentive program and its ability to create good-paying jobs," spokeswoman Liz Boyd said.

"We're working every day to diversify our economy," she said. "This is a brand-new sector which continues to grow. And we are pleased with what we've seen so far."

The program subsidizes the direct cost of the production of movies and television shows by up to 42 percent.

Since the Legislature passed the incentives, movie and TV filming has been a growing industry in Michigan. It has led to the creation of studios, spawned college programs to teach movie jobs and brought a number of big-name stars to the state. It's also given the national media a positive story to write about a state wracked by job loss and outmigration.

The report analyzed the impact of the film industry incentives on the state budget and does not take into account additional money the movie and TV productions have contributed to local governments and businesses, such as restaurants and hotels.

"I've said all along that any industry that the state decides to pay 42 percent of their costs is going to come to Michigan," said Gary Olson, executive director of the Senate Fiscal Agency. "It doesn't mean there aren't other benefits. Is it worth it? That's up to the people who are elected."

The agency is a nonpartisan government office that analyzes legislation for the Senate.

The film credit was created in 2008 to attract film productions to Michigan. Since then, 105 film projects have been shot in the state.

According to the report of Detroit movie accounting services, in 2009 there were 355 direct full-time jobs created by the tax credit at a cost to taxpayers of $193,000 each. Adding indirect jobs, 1,542 have been created at a cost of $44,000 each.

The number of jobs created was much higher, but because they are temporary, the numbers shrink when converted to equivalent full-time, 12-month jobs.

The film industry does provide a net financial benefit to the private sector, according to the report, but that benefit is less than the net cost of the program to the state.

Michelle Begnoche, communications advisor to the Michigan Film Office, said the industry is still taking root in the state.

"We always knew it would take some time before seeing the benefits seen in other film-friendly states," she said.

State Sen. Nancy Cassis, R-Novi, a longtime critic of the program, said she plans to hold hearings on the report.

"There are better economic alternatives than this film incentive giveaway," Cassis said. "These films are like cotton candy -- they're sweet when they're in your community, but there's no longterm nutrition.

"I think there is a chance to do something before the end of the session. And if not, we will be laying the groundwork for the new administration to review the film policies and get them in line with our revenue."

Republican gubernatorial candidate Rick Snyder is not surprised by the report's findings, spokesman Bill Nowling said.

"This is just a tax incentive that is just not financially feasible over the long term," Nowling said.

Democratic gubernatorial candidate Virg Bernero's campaign could not be reached for comment.

Peter Karmanos looking to reduce Stake in Hurricanes

Associated Press

Peter Karmanos is looking to sell part of his NHL Carolina Hurricanes.

Karmanos, co-founder and chief executive officer of Detroit-based Compuware, told the Raleigh News & Observer he's confident he can find new partners by the end of the year.

"This isn't a fire sale," Karmanos told the newspaper. "Things have gone well. This is the process I anticipated. It's not tough. There's a lot of interest. We've talked to a bunch of people. We're just trying to sort through different issues about ownership."

Forbes magazine estimated the Hurricanes to be worth $177 million.

Karmanos announced in May he was seeking to sell a portion of the team, possibly as much as 49 percent.

Karmanos also owns the Plymouth Whalers (Ontario Hockey League).

Stimulus Money was Misspent

Associated Press

When President Barack Obama signed the American Recovery and Reinvestment Act, he promised that the $787 billion stimulus package would create or save 3.5 million jobs over two years, mostly in the private sector.

Without the spending called for in the law, the administration predicted, the unemployment rate would reach 8.6 percent. Today, the U.S. unemployment rate is 9.6 percent. What happened?

We spent a great of money. But if we wanted to spend it to benefit the states with the highest unemployment rates, we failed. Out of the total $787 billion, the federal government so far has allocated one-third, or $275 billion, in grants and contracts to shovel-ready projects. So far $190 billion of that amount has been spent, according to government figures.

With a few exceptions, the data show little correlation between the level of unemployment and stimulus spending. In fact, the opposite is true. The federal government has given far fewer stimulus dollars to states with high unemployment than it has to states with low unemployment.

Does it make sense that the state with the highest unemployment rate, Nevada (14.3 percent), is getting roughly half the per-capita amount ($561.55) of the state with the lowest, North Dakota ($1,059.95)? Michigan is getting $648.91 per capita.

What's going on here? For one thing, these are raw numbers that reflect only the amount of stimulus money spent.

What they don't do is tell us anything about the reasons it was spent.

After running a series of analyses, I found no correlation between unemployment levels and stimulus spending.

So if state unemployment levels weren't the basis on which the federal government allocated these funds, what was? To me, it looks like it was just one: speed.

Back in February 2009, for all the talk about creating jobs, the administration wasn't focused on distributing money to high-unemployment states, which, in theory, were the ones hurting the most. It was just trying to spend a massive amount of money as quickly as possible.

To achieve that, the stimulus bill distributed money among the states through existing channels -- such as the federal Departments of Education and Transportation -- whose main functions aren't to address unemployment levels.

The Obama administration was wildly successful if its objective was to spend a lot of money in a short amount of time.

Whether that money has done or will do anything for the people that need it most has proven far more elusive. As the saying goes: You can have it fast, you can have it good, or you can have it cheap -- pick two.

Sadly, we only got one.

Motown Becomes Movietown

The Wall Street Journal

Michael Imperioli stars as Det. Louis Finch in ABC's new crime drama 'Detroit 1-8-7'

Hollywood has a new favorite location. The Motor City is luring films and TV shows with tax breaks and red-carpet treatment. Was that Demi and Ashton at the Tigers game?

Across the street from a landscape of vacant houses and overgrown front yards, homicide detectives gather to investigate a murder. They analyze clues and debate how best to interrogate the key witnesses. Then, the director yells "Cut!" and everyone heads to a catered lunch of shrimp scampi and beef tenderloin.

The set of the gritty cop show "Detroit 1-8-7" is one of more than 100 film and television productions that have flocked to Michigan in the last two years, the result of generous tax rebates. Producers have spent nearly $350 million in the state so far, a figure expected to reach $650 million by year's end, up from $2 million in 2007, according to the Michigan Film Office. About 80% of these shoots take place in and around this iconic but much-maligned city, sprinkling a little stardust, optimism and controversy along the way.

Workers who used to build cars are learning to build sets. The entertainment sector is "a lifeboat as the auto industry adapts and restructures," says Wayne County Executive Robert A. Ficano.

Signs of activity are everywhere. Hip-looking film-school grads on bicycles run errands in an empty warehouse that once served as a Chrysler distribution center and is now a cavernous 166,000-square-foot production studio for "Detroit 1-8-7." Sets for the show, premiering on ABC Sept. 21, include a city morgue and a homicide unit with cluttered police desks and corkboards covered with mug shots.

The dilapidated Michigan Central Station, once a transportation hub, with marbled floors and Corinthian columns, has served as a symbol of urban ruination for years. It's now a key location for productions including "Transformers 3" and HBO's "Hung." On Tuesday "Hostel: Part III" and "Vamps," a horror-comedy with Sigourney Weaver, both shot in the city's neo-Gothic Masonic Temple. When "Harold and Kumar 3" finished a scene this summer that required turning a downtown street into New York City at Christmas, set designers left the fake subway entrance intact, knowing another production would soon need it.

Want to blow up a building, or burn it down? Detroit is happy to help. Wayne County officials, sitting on countless empty homes and factories, ask only that producers pay for demolition and clean-up. "Stone," a thriller opening Oct. 8 and starring Robert De Niro, Edward Norton and Milla Jovovich, burned two houses to the ground. Location scouts found them on the county's online "land bank," which lists thousands of abandoned properties.

Regional filmmaking has been on the increase for decades, as southern California became more expensive to work in and overexposed on screen. New Mexico, Louisiana, Georgia, New York, Canada and others have wooed the lucrative entertainment business with tax-incentive packages. The revenue and jobs are welcome, and sometimes buttressed by a little brand-building, perhaps attracting tourists or investment.

For Michigan, which by most measures offers the country's steepest rebates, the stakes are higher. It's a shot at redemption, a chance to shrug off wearisome images of high crime, racial turmoil, urban decay—even a bad football team. From Motown Records to Elmore Leonard, the city is rich in cultural legacy. No one expects a return to the glory days when Detroit was a symbol of entrepreneurialism and the automobile business helped make the U.S. the world's greatest economic power. But proponents say any jump-start can lift depressed spirits as well as spur lasting economic improvement.

"Without being too romantic and starry-eyed, this is a dream weaver industry and if storytellers can't bring hope to a region, no one can," says Scott Putman, executive producer/unit production manager on "Hostel: Part III."

The film incentive program offers up to a 42% tax rebate on any in-state expenses from rental cars, housing and food, or the cost of building a soundstage. Louisiana, by contrast, offers up to 35% in its highly popular program. After filming is completed, producers file a tax return, which is audited, and a check is sent out. Producers like to say that every dollar they spend in the state turns into $1.42.

 Movies have their wrap parties and move on, but Detroit is hoping that some of its legions of laid-off auto workers will become skilled crew members who can get steady work. Television shows provide regular employment. Permanent infrastructure can take root: This summer, Los Angeles-based Raleigh Studios broke ground on a $75.8 million studio built on a 22-acre site in nearby Pontiac. It once served as offices for back-office employees at a nearby assembly plant which manufactured GM full-size pickup trucks.

In July, 15.2% of people in the Detroit metropolitan area were unemployed, more than five percentage points higher than the national average, according to the Michigan Department of Energy, Labor and Economic Growth.

Since the tax rebates went into effect in 2008, institutes aimed at retraining laid off auto workers have sprung up. The state's No Worker Left Behind initiative and Trade Adjustment Assistance, a federal program that assists people whose jobs have moved overseas, subsidize tuition for displaced workers to take classes in set carpentry, prosthetic makeup and electrical. So far, the entertainment industry has produced 7,000 production jobs, though many of those are part-time and without benefits.

Initially, producers flew in crew from L.A., but the state offers only a 30% incentive on costs related to out-of-state workers.

"Quite frankly, it has taken them a while to trust us," says Jack Grushko chief operating officer of the Center for Film Studies, which works with the United Auto Workers and other unions to retrain displaced workers.

Murray Mullins, 43, lost his job building axles two years ago and lived off unemployment insurance. Last year he signed up for a class at the Center for Film Studies and landed a set-designer internship on the Pierce Brosnan movie "Salvation Boulevard." "It ain't manufacturing, but the skill sets go together," he says.

Casting offices that once focused on finding models for car shows now locate extras who get paid about $100 a day to fill out a street or stadium. Tiffany Jones, 34, did corporate training videos and auto-show hospitality for Ford Motor Co. before the work dried up. She recently played a cop on "Detroit 1-8-7." "It's not something I ever thought about doing living in Detroit," she says.

Aspiring actor and failed restaurateur Gary Brunner was broke, waiting tables at the Coach Insignia steakhouse on top of the GM Renaissance Center when director Michael Bay came in for a dinner. Ten days later, Mr. Bay offered him a small role in "Transformers 3," says Mr. Brunner, who is 40 years old with slicked-back hair and a gruff baritone voice. The experience makes him feel "like a washed-up prizefighter with another shot at the title."

The rebate has sparked criticism among lawmakers who argue the tax subsidy does not help the state bridge a $500 million budget deficit for fiscal 2011. Upcoming elections could threaten to reduce or even eliminate the incentive. Others argue that the nomadic film industry is not the best way to build stable, long-term growth.

Advocates counter that this argument misses the larger economic impact on small businesses like Just Delicious, whose scones were popular with Clint Eastwood and the crew on the set of "Gran Torino." Or Small Plates, a chic restaurant in downtown Detroit that sees its business spike by 30% each time a production shoots downtown.

"Detroit 1-8-7" is the city's first prime-time network drama, and therefore a possibility to run for many years and provide long-term employment. The show plans to spend $27 million locally on the first 12 episodes, including the cost of building the set, and about $50 million if the series is picked up for a full 22-episode season, producers say. "Everyone feels like there's more at stake than just making a good show," creator Jason Richman says, standing in front of a giant backdrop of the downtown skyline.

The show and others depict the Detroit area as it is, from the Lake St. Clair shoreline in Grosse Pointe to the fabled cruising strip of Woodward Avenue and the old Polish enclave of Hamtramck (now increasingly Middle Eastern and South Asian), blue-collar neighborhoods and burned-out ones.

 Director Tony Goldwyn says his movie "Conviction," with Hilary Swank as a woman in an 18-year battle to get her brother out of prison, could not have been made elsewhere on a $12.5 million budget. But it was the area's aesthetic that sealed the deal. "Our key location is a broken-down poor farm in a bucolic area," Mr. Goldwyn says. The area has "that nice blue-collar feel." Nevertheless the film, which opens Oct. 15, is set in New England.

For the coming movie "The Double," starring Richard Gere, Los Angeles-based location manager Ernest Belding turned a street in Detroit's Harmonie Park into a block in Paris. His team paid storeowners to vacate their businesses, replaced storefronts and street signs with French signs and scoured the state for Peugeots and Citroëns. The movie also made the city a stand-in for Soviet Russia, Switzerland and Washington, D.C.

Of course, Detroit must endure the usual litany of stereotypes. The opening credits of "Detroit 1-8-7" flash images of the GM building, working-class neighborhoods and graffiti. "Detroit, Michigan, birthplace of Motown and once the heart of the automobile industry—now it has one of the highest murder rates in the country," a voice-over intones.

"Everything's falling apart, and it all starts right here in Detroit, the headwaters of a river of failure," says high-school coach turned male prostitute Ray Drecker in the opening minutes of HBO's dark comedy "Hung."

"The city tells a story that's emblematic of the American story," says "Detroit 1-8-7" star Michael Imperioli on a break from playing homicide detective Louis Fitch. "You could just take a camera and drive through the city and you'd have something."

Detroit has mixed feelings about its cinematic allure. The city council protested "Detroit 1-8-7" saying it cast the city in a negative light. Local politicians asked ABC to change the name since "187" is police code (and urban slang) for murder. It didn't help when cops being followed around by a crew from a reality show accidentally shot and killed a 7-year-old girl during a raid, raising questions about whether the camera's presence fed the incident. The city banned camera crews from shadowing police.

Its sky-high vacancy rates are a sensitive issue, too, despite the aggressive demolition program here. "We don't want to send the message that if you need to blow up a house, come to Detroit. That's not the kind of imagery the city needs," says Sommer Woods, the mayor's film, culture and special-events liaison.

A glamorous premiere party for "Detroit 1-8-7" last week at the MGM Grand Detroit hotel and casino let city councilmen hobnob with L.A. celebrities. For a coming episode producers hired a local youth group to play one on TV. The teenagers cleared a vacant lot in a scene's background. The show employs about 200 local cast and crew each day and as many as 146 extras.

"They could've easily portrayed Detroit however they wanted and shot it in Toronto," says Mikey Eckstein, whom producers hired to help relocate actors—a job that includes everything from finding a math tutor and trumpet instructor for Mr. Imperioli's children to finding an apartment that can accommodate large dogs. "I paid off my mortgage before they even started shooting."

Unlike jaded denizens of Los Angeles and New York, Detroiters are enjoying celebrity sightings. Last month, Ashton Kutcher and wife Demi Moore, in town to shoot her new movie "LOL," attended a Tigers game. Around the same time, Ms. Moore and actor Gerard Butler, who was in town shooting "Machine Gun Preacher," were spotted at a local bowling alley. Hugh Jackman stopped by the polar bear exhibit at the Detroit Zoo. "That all helps reshape our image and show people we're turning the corner," says Carrie Jones, director of the Michigan Film Office. Local eateries, car rentals, and Detroit movie accounting services are all seeing an uptick in business.

Driving through the city's historic Corktown district near Rosa Parks Boulevard, Mike Mosallam, an actor and director who moved back to Detroit to head film initiatives for Wayne County, proudly points out the train station and Slows Bar BQ, a popular spot with the film and TV set.

Even with the burgeoning new sector, the landscape of dilapidated buildings and shuttered storefronts looks bleak. "We're done being sad," he says. "We're trying to build a new industry."

He can only hope the cameras will keep on rolling. "Hollywood follows the money," says Mr. Belding, the location manager. "If Ohio had a 50% rebate, we'd all head 100 miles south and find Paris there."

Marthon Oil Project set to create Construction Jobs in Detroit

Detroit Free Press

After a lengthy delay, Marathon Oil plans to significantly ramp up work next summer that will expand its oil refinery in southwest Detroit, creating more than a thousand new construction jobs.

The Houston-based oil company is on track to complete the $2.2-billion refinery expansion by the fourth quarter of 2012, said Gary Heminger, Marathon’s executive vice president of downstream operations.

Currently, 650 Michigan concrete contractors are working on the project but those numbers will rise to 1,800 to 2,000 by next summer. The company also has started the process of hiring 135 new employees for the refinery, half of whom will be contract workers.

The expansion of Michigan’s only oil refinery was originally supposed to be completed in this year’s fourth quarter. But in October 2008, Marathon delayed the project because of the downturn in the economy. The refinery supplies 20% of Michigan’s gasoline.

When Michigan concrete construction is complete, the refinery will be able to process 120,000 barrels of oil a day, up from the current 106,000 barrels. But in a major change, most of the oil will be heavier crude from Canada’s oil sands rather than light crude from the Gulf of Mexico, Oklahoma and other areas.

Bill Advances on 4-Year Community College Degrees

The Detroit Free Press

LANSING – Community colleges could offer four-year degrees in nursing, under legislation passed by the House and now headed to the Senate.

Four-year degrees could also be obtained at community colleges in culinary arts, and maritime and cement technology.

The proposed expansion has sparked an intense turf war between community colleges that say it would make four-year degrees more accessible, especially to older students, and four-year universities that view it as an expensive encroachment on their academic realm.

About 10 community colleges would probably take advantage of the expansion to four-year degrees, said Mike Hansen, president of the Michigan Association of Community Colleges.

“This bill is about access and affordability,” Hansen said.

He noted a study led by Lt. Gov. John Cherry that called for four-year degree programs at community colleges to address shortages in some professions, such as maritime training and nursing degrees. He said the nursing and maritime professions now require four-year degrees.

A two-year maritime degree now is offered only at Northwestern Michigan College in Traverse City. A two-year degree in cement technology is offered through Alpena Community College.

But the state’s 15 public universities oppose the measure, saying it will water down academic standards especially for nursing programs. Many community colleges offer two-year nursing programs, but the universities argue that four-year programs would drive up the cost and result in inferior training.

“There will be a lot of duplication than we should have,” said Mike Boulus, executive director of the Presidents Council State Universities of Michigan, which represents the state’s 15 four-year public universities.

“We’re meeting all unmet needs,” he said.

Boulus said the expansion could jeopardize collaboration between the Michigan universities and community colleges. He said nearly 15,000 university students are enrolled in 300 four-year programs through local community colleges.

Boulus said the universities will work to defeat the two bills in the Senate.

Said Hansen: "We think we have the votes in the Senate to get this done. We hope."

GM's IPO Shows Ally Could Afford to Repay $17 Billion Bailout

Bloomberg

 

Ally Financial Inc., the recipient of more than $17 billion in U.S. aid, may be able to repay its bailout in full with a profit for taxpayers if General Motors Co. is right about the value of its stake in the auto lender.

GM, Ally’s former parent, pegged the value of its 6.7 percent holding at $1.14 billion, according to a prospectus for the automaker’s initial public offering. That implies a $17 billion price for all of Ally’s common shares and would make the 56.3 percent U.S. stake worth $9.6 billion. Taxpayers could come out ahead if the government sells its $14.1 billion of preferred securities in Ally, formerly known as GMAC Inc.

“The valuation of the equity looks realistic,” said Kirk Ludtke, senior vice president for CRT Capital Group LLC in Stamford, Connecticut. “They’re getting close” to being able to fully repay the bailout, he said.

Ending U.S. assistance could ease pressure on President Barack Obama, who’s facing calls to withdraw support from the private sector, and let Detroit-based Ally shed the stigma of a government bailout. The Congressional Oversight Panel, which acts as a watchdog for the Troubled Asset Relief Program, predicted a $6.3 billion to $10 billion shortfall from Ally last March, saying the government may “squander” bailout funds.

Chief Executive Officer Michael Carpenter, 63, has said an IPO could happen as early as next year. GM’s offering may come in November, people familiar with the matter have said.

Ties to GM

Ally was the in-house finance arm of Detroit-based GM under the GMAC name. The unit was sold to a private-equity group led by Cerberus Capital Management LP in 2006. The company almost collapsed after subprime loans made by the Residential Capital mortgage unit soured. Ally, which is still the primary lender to dealers at GM as well as Chrysler Group LLC, benefited from three U.S. bailouts totaling $17.2 billion.

“Treasury’s consistent goal has been to protect the taxpayers’ investment,” David Miller, the chief investment officer at the Treasury Department’s Office of Financial Stability, said in a statement. “We expect that management will continue to build on the progress they have made thus far.”

Ally bolstered its funding by attracting deposits to its Internet bank, using above-average interest rates and an advertising campaign that shows competing bankers cheating little children. The company has been profitable this year after a loss of more than $10 billion in 2009.

Ally’s five-year credit-default swaps, which insure investors against bond defaults, fell 10 basis points to 430 basis points today, the lowest level since Aug. 10, according to data provider CMA. A basis point is 0.01 percentage point.

Possible Shortfall

GM’s calculations of Ally’s value match the estimate of Francis Gaskins, president of IPOdesktop.com in Marina del Rey, California, who said the lender is likely to command a market capitalization of $17 billion to $20 billion. The low end could vault Ally into the ranks of the 10 biggest U.S. commercial banks.

In addition to its common stake, the Treasury holds $11.4 billion in preferred shares convertible into common and $2.67 billion of trust-preferred securities. On top of that, the government has received $1.63 billion in dividends, according to a Sept. 10 report from the Treasury. Cerberus’s 14.9 percent stake in Ally is worth $2.54 billion, according to GM’s filing. Tim Price, a spokesman for Cerberus, declined to comment.

Ally’s repayment could fall short if GM’s stock sale isn’t well-received, analysts said. The automaker will try to raise as much as $16 billion in what would be the second-largest IPO in U.S. history behind Visa Inc., which raised more than $19 billion in 2008.

Too Soon

“The GM offering is critical,” said David Menlow, president of Millburn, New Jersey-based IPOfinancial.com. “You could see a shaving off of between 15 to 20 percent on the valuation of Ally” if the GM IPO goes poorly, he said.

CreditSights Inc. analyst Adam Steer and Kathleen Shanley, a senior bond analyst at Gimme Credit LLC in Chicago, said it’s too early to place a value on an Ally IPO. The lender’s success at transforming into a deposit-based bank and the end to losses tied to home loans are still unproven, they said.

“Ally faces unique issues such as the resolution of its ResCap business, as well as funding and regulatory challenges over the next few years,” Shanley said in an e-mail. Losses at ResCap exceeded $10 billion.

‘Big Player’

An IPO that places Ally in the upper ranks of banking companies “doesn’t strike me as crazy,” said Steven Kaplan, professor of finance at the University of Chicago’s Booth School of Business. “They are a big player.”

Gaskins based his analysis in part on the price paid by GM in July when it purchased subprime auto lender AmeriCredit Corp. for $3.3 billion, or about 1.4 times book value.

Over the past five years, companies paid a median of 2.05 times owners’ equity on five deals in the auto-finance industry, according to Bloomberg data. Ally reported $20.8 billion in shareholders’ equity at the end of June.

The AmeriCredit deal led Carpenter to proclaim that Ally could be worth as much as $30 billion.

“I love the AmeriCredit deal,” Carpenter said on the company’s conference call Aug. 3. “I don’t have any doubt about our ability to repay.”

GM's OnStar service to become Facebook friendly

USA Today

DETROIT — General Motors' OnStar telecommunications service plans to expand from a safety and security feature into a system that also includes entertainment features and will provide new ways to link drivers to their cars.

Details — including an introduction date and fees — are being finalized, but the new-generation OnStar should allow drivers to do such things as update Facebook status and listen to text messages read aloud while driving.

The idea is to compete directly with Ford Motor's popular Sync system — introduced in 2007 and now, Ford says, installed on about 70% of its vehicles. At the same time, OnStar would continue offering safety and security features that have been its signature since its debut in 1996.

Sync, meantime, has been moving to incorporate OnStar-like safety features, such as using the driver's cellphone to automatically call 911 if the car's air bags deploy. Ford is adding voice-controlled mapping and directions from the navigation system.

Car owners usually must pay extra to have Sync or OnStar. Ford says its studies show that people are three times more inclined to buy a Ford Motor vehicle once Sync is explained to them.

"It's an extremely profitable business, but clearly the space is changing," says Chris Preuss, head of OnStar.

When it was launched, OnStar offered drivers the ability to talk to operators who could, much like a hotel concierge, make restaurant reservations or give verbal directions. It grew into a safety and security system aimed at drivers who wanted the reassurance of knowing there was someone who could help unlock the car if a child was trapped inside or would alert 911 if the car was in an accident.

The updated OnStar will let drivers connect with their vehicles through a smartphone application. That would allow drivers to start the car remotely, unlock or lock it from afar, and check for mechanical or electronic problems.

GM is opening OnStar to independent software developers, encouraging them to create applications that could be uploaded into vehicles. The catch is that the apps must work with voice controls.

Distracted driving is a safety hot-button. Voice-activated OnStar and Sync can help keep a driver's hands on the wheel and eyes on the road. But the systems also are criticized as simply more distractions.

Preuss says the new OnStar will help, not hurt, "if we can make this crisp enough and easy to use."

Toyota and Tesla's first Electric Car: a RAV4 EV

USA Today

Ever since Toyota signed a deal with Tesla Motors to jointly develop an electric car, speculation has run rampant about what the first collaboration will be. A Yaris subcompact? A version of the Tesla roadster?

Well, get ready to be underwhelmed. The pair's initial effort will be an all-electric drivetrain version of the RAV4, which will debut at the 2010 Los Angeles Auto Show in November. Toyota announced the move yesterday via Twitter. Why underwhelmed? Because by hauling around all the weight of an SUV, it's hard to imagine will a RAV4 electric vehicle will have much in the way of range or performance. But, hey, surprise us.

At least a new RAV4 EV will have nostalgia value. A bunch of the old electric RAV4s from Toyota's initial step into the electric-car world in the 1990s are still driving around in Southern California. Unlike General Motors, Toyota never scrapped its EV fleet, a move much appreciated by EV advocates. Now a new electric RAV4 is on the way.

The company also said it could have another two hybrids in the U.S. market by 2012, and plans to have six hybrid vehicles in its global lineup by that time.
The automaker is also plans on going head-to-head with General Motor's Chevy Volt by adding a plug-in version of the Toyota Prius that will be priced $13,000 below the Volt.

Toyota expects to sell the plug-in version, which can go 13 miles on battery alone, by June 2012. The Volt will be priced at $41,000, minus government rebates, and the all-electric Nissan Leaf will go for about $32,000.

Recharging Michigan's Economy

Livingston Daily

About two years ago, Brian Martin found himself unemployed after working for 25 years in the automobile industry as the state’s economy only continued to worsen.

For the next 18 months, Martin, who made plastic parts for injection-molding machines, was among the ranks of Michigan’s unemployed formerly in the auto industry

His luck changed when Recupyl Battery Solutions LLC, which recycles alkaline batteries, opened for business in Green Oak Township in June.

Today, Martin, a Wixom resident, is a shift supervisor at the plant.

“In Michigan, there’s not much. You kind of base your life on automotive, and when the bottom fell out here two years ag, it was real hard to get back on your feet,” he recalled.

“I was kind of excited when all of this came up, kind of something new to get into,” Martin added.

Most employees at the Green Oak recycling operation formerly worked in the auto industry, said General Manager John Herschelman.

In a June radio address, Gov. Jennifer Granholm said Michigan is becoming a “center for advanced battery production” primed to diversify the state’s economy and create jobs.

The state has obtained millions of dollars in incentives for battery-related operations to set up shop in Michigan.

While Recupyl Battery Solutions located in Livingston County on its own, it’s one of the first new battery operations to open since Granholm’s declaration.
The operation

Recupyl Battery Solutions is a joint venture between Genoa Township-based Battery Solutions Inc. and French-based Recupyl.

The alkaline batteries are shipped to Green Oak from the Genoa facility, where they’re sorted along with a variety of other batteries taken from all 50 states.

The Green Oak facility off Kensington Road only recycles alkaline batteries, but plans to begin recycling lithium-ion batteries in November at the roughly 10,000-square-foot facility.

Green Oak Township officials in April approved a roughly $1.2 million industrial tax abatement for the operation with the expectation that at least 12 new jobs will be created in the next two years.

“We’ll always exceed that expectation,” Herschelman said.

He said there’s great potential for his company to open additional battery-recycling plants in Michigan. The facilities are up and running quickly once necessary equipment is received from France.

“This is just the beginning of battery recycling here,” Herschelman said.

“Just the utilization of what people throw in the garbage is just a nice thing,” he added.

At the plant, batteries are ground up into dust and broken down and melted into zinc, manganese and steel. Zinc and manganese are the primary products of the recycling.

Paper and plastic from the batteries are also recycled.

At the plant, the batteries are sent to a series of grinders that burn them; grind them into a fine powder; and separate them to labeled containers for zinc, manganese, steel, paper and plastic.

A control panel inside the plant can be seen in France in real time to monitor operations.

Herschelman said recycling batteries not only keeps landfills from piling up, but also protects the Earth’s natural resources.

“The more we recycle, the less we have to mine. It just makes so much sense,” he said.
Jobs solution?

It remains to be seen how much, if at all, new battery-related businesses will fill the massive void of jobs in Michigan.

Granholm in June said there are 16 advanced-battery companies building facilities in Michigan and hiring Michigan workers, representing $5.8 billion in capital investment projected to create almost 62,000 jobs.

Just before that time, it was announced that LG Chem, one of the world’s largest manufacturers of lithium-ion batteries, began construction of a battery manufacturing plant in Holland.

Also in June, the governor attended a groundbreaking ceremony in Northville Township for TSC Michigan, a company she said is “on the cutting edge” of developing new, advanced electrolyte materials, key components in the manufacturing of advanced lithium-ion battery cells.

The state has created tax credits to entice battery companies to set up shop in Michigan. The state last year received more than $1.35 billion in grants from the U.S. Department of Energy to support the manufacture and development of advanced batteries and electric vehicles

“Through our diversification and education initiatives, we’ve laid a foundation for the new Michigan economy. We’ve put in place the best policies to promote long-term economic health. A brighter future for Michigan requires that we continue moving forward on this path,” Granholm said.

Officials have said the massive, vacant Ford Wixom Assembly Plant is prime property for battery manufacturing.

Last year, Ford Motor Co. cut a tentative deal to sell the abandoned Wixom plant to two renewable-energy companies, in a $725 million industrial conversion that promised to create 4,300 new jobs.

Michigan may be a prime location for battery businesses if they serve Detroit’s Big Three automakers, said Todd Coy, vice president of Anaheim, Calif.-based Kinsbursky/Toxco, a battery recycling operation.

Coy said the funding incentives could propel the battery business in Michigan.

“It seemed to be a fit. There’s enough economic incentive being put forward,” he said. “It would seem to me a great fit, actually.”

Jobs Essential To Future Housing Market

Every Thursday the chief economist of the National Association of Realtors' reviews data he deems critical to the future housing and real state markets.

His focus is not about home prices or interest rates. What the economist finds highly important is a report reflecting new jobless claims. He views the country's employment situation as an essential factor to stabilizing the U.S. housing and real estate sectors.

"We need jobs; jobs (are) the key thing," said Lawerance Yun, the chief economist of nation's realty market. He lectured to the Economic Club of Traverse City on Friday as a guest speaker of the Traverse Area Association of Realtors.

Yun warned that an array of issues are influencing the current housing market. The challenges range from high foreclosure rates to strick lending and credit risk management practices to an over-abundance of unsold properties.

In a positive light, he also noted the country's housing market as well as overall economy is capable of a quick rebound if the job market improves. In addition, as more corporations start to invest in large sums of cash they have earned over the recession, the economic conditions can grow even stronger.

"We still have a very long way to get to full employment," said Yun, who projected up to five years before the country's jobless rates taper to pre-recession levels.

In his speech, Yun targeted the significant fall-off in the country's real estate sales in July but claimed it was not an unexpected turn of events. As the tax credit for federal homebuyers reached its expiration, interested investors flocked to their local home buyers agency to finalize purchases by late June. It wasn't unusual to see home sales drop the following month, he said.

"It's not a 'sky-is-falling' scenario," Yun said.

He projects a "pause" in sales that will continue into September but mentioned real estate sales in the fourth-quarter will be the underlying predictor of the future housing industry. If fourth-quarter real estate sales are consistent with the number in previous years, he expects the overall market for homes will continue to stabilize.

One Raleigh real estate agent, Ann Davis, who works exclusively for a buyer's only agency, has already seen improvements in sales as an emerging influx of families and individuals migrate to North Carolina for career opportunities.

"It is culmination of being in a location that is higher in demand as well as providing niche home buying services that your typical Raleigh real estate agency does not offer," Davis said. She is hopeful that sales will continue to thrive.

Yen warned listeners during his speech in Traverse City that if sales figures are measurably lower in the upcoming months, the country's economy may be headed for a "double-dip" recession.

"If the fourth quarter matches up with the prior fourth quarters, I think the worst is over," he said.

Yun pinpointed other areas of the country's economy in his talk. He touched on the spectrum of opinions regarding where the economy is headed, with some economists foreseeing risks of inflation as others are more worried about prices growing stagnant.

Positive signs do however exist in the housing market. Default rates on recent real estate and home sales have improved, and precise loan origination software has enabled lending practices to minimizing the instances in which interested buyers are purchasing homes that are far more expensive than they can afford. Such tools have also improved credit risk analysis efforts which also contribute to the financial mix of the housing market.

"I think we have to return to the old-fashioned American way ... stay within your budget," Yun said.

As for Ms. Davis and her Raleigh home buyers agency, her future sales figures will a solid source for nationwide projections. She is going to be the one to watch, for Ann is already at the forefront of the emerging real estate market trends.