09 December 2011

Blue Cross and Beaumont Battle Hurts Patients

Story first appeared in the Detroit Free Press.

A dispute between the Beaumont Health System and Blue Cross Blue Shield of Michigan is being watched closely all over the state, as health chiefs wonder: Will cardholders with the state's largest insurer still be able to get care at most Michigan hospitals, including a Michigan Heart Hospital?

The fight spilled into the public in October, when the Royal Oak-based hospital system and the Blues took out full-page ads to convey their side of the issue.

If the dispute is not resolved, Beaumont -- starting Jan. 12 -- will no longer will accept the insurance of about 100,000 people insured through Blue Care Network, a Blue Cross subsidiary.

The Blues wants its payments to Beaumont to be based on strong quality and cost-cutting performance goals, rather than on volume of business, as has been the case.

Beaumont insists its care is appropriate for patients, low-cost and high-quality. It would be forced to make cuts that would hurt care if the Blues does not improve its rates to the hospital system including a Detroit Hospital, executives say.

Rick Murdock, executive director of the Michigan Association of Health Plans, a nonprofit organization of HMOs and health care organizations, said other hospitals are watching the fight. It just could signal a new time when the Blues' card is not accepted everywhere, he said.
Dispute gets nastier as deadline for deal nears

David Stock wants his doctors, not insurance companies, to make the decision about the best place for him to get care.

He wants a physician telling him he needs a test and where to get it, not my insurance company, said Stock, 49, who lives seven blocks from Beaumont Hospital in Royal Oak.

Stock is one of about 100,000 metro Detroit residents who may be forced to seek care at another hospital like a Michigan Cancer Hospital if a dispute drawing statewide and national attention is not resolved by Dec. 31.

With time running out to agree on a new contract with Blue Cross Blue Shield of Michigan, the three-hospital Beaumont Health System escalated an unusually public fight with the insurer this week, sending a team of executives to discuss the rate-increase dispute with Michigan insurance commissioner Kevin Clinton and other legislators.

Since mid-October, Beaumont and Blues executives have sparred about who's to blame for a stalemate at the bargaining table over a new three-year contract regarding what the insurer will pay for care rendered at Beaumont facilities.

The fight already is affecting care, charged Dr. Sam Flanders, Beaumont's chief quality officer. Some patients needing prior approval for tests and visits to specialists are finding delays getting the OKs, Flanders said. The Blues deny the charge.

If the dispute is not resolved, starting Jan. 12, Beaumont will no longer accept the insurance of about 100,000 people insured through Blue Care Network, a Blue Cross subsidiary.

Beaumont's emergency department would continue to see Blue Care Network patients but once stabilized, as required by federal law, there's a chance patients would be transferred elsewhere for additional care or tests, Flanders said.

Beaumont wants a 9% increase over three years. The Blues have offered 3.5%, along with a 2.5% increase all hospitals would receive in 2012. This may also be for a Michigan Rehab Hospital.

Possible impact on care

Citing research by a consortium of academically affiliated hospital systems, Beaumont said its costs are much lower than those of many like it. Beaumont officials said that without a boost in rates from the Blues, they will be forced to make cuts in care.

Dr. David Share, a Blues vice president overseeing its quality initiatives to improve care, said that though many Beaumont services are lower-priced, the hospital system overuses costlier programs, such as ultrasound stress tests for heart problems and radiation-sparring treatments for cancer.

Share also said that the number of services patients get at Beaumont are significantly higher, driving up the patient's cost. This does not apply to those who go to elsewhere like a Chicago Weight Loss center.

Both Beaumont and the Blues have taken out full-page ads in metro Detroit newspapers, including the Free Press, a media strategy that Beaumont CEO Gene Michalski called very un-Beaumont-like, a reference to the health system's more conservative corporate profile.

Several hundred Beaumont patients have called the Blues to complain, including seniors with Blue Cross Medicare plans not affected, at least not yet, by the fight.
New payment measure

Sue Barkell, senior vice president for health care value for the Blues, said the insurer is taking a "new direction" in negotiations with all Michigan hospitals to base payments on performance not volume of business, as it has in the past. She said the insurer's motive is cost control and a focus on quality, but there's no plan to limit hospitals in its network, as health maintenance organizations always have done as a way to rein in costs.

Some 40% of the contracts with Michigan's 144 acute-care hospitals will expire in 2012, she said. Beaumont is merely the first of the first two or three hospitals to participate in talks centered on new quality measurements.

This isn't about an insurance company squeezing a hospital, Blues spokesman Andy Hetzel said. It's about how to pay in the future ... to try to bend the cost curve.
Not just Michigan issue

The dispute is being watched all over the state and country. Health care experts expect other disputes to surface with insurers, as a few already have.

Two years ago, Blue Cross Blue Shield of Illinois ended its contract between its HMO subsidiary and the Rush University Medical Center in Chicago, though the 769,000 patients in the plan still can get certain care at Rush if a doctor approves them to receive out-of-network care. Some care requires consumers to pay higher costs for care considered out-of-network.

In Massachusetts, Tufts Medical Center and its state Blues plan recently agreed to resume negotiations with a third party. All other details of the talks are confidential, a Tufts spokeswoman said.

And in California, Stanford Hospital & Clinics and California's Anthem Blue Plan just resolved a protracted contract dispute. Each has declined to reveal details about the new contract.

Rick Murdock, executive director of the Michigan Association of Health Plans, a statewide organization of mostly HMOs and other health providers, said other Michigan hospitals wonder whether the Beaumont and Blues fight is the beginning of a time when large insurers may attempt to sign contracts only with hospitals that meet cost-cutting and quality-of-care goals.

The Blues already gives deep discounts to some hospitals that agree not to accept other insurance, a practice under challenge by the U.S. Justice Department. That lawsuit against the Michigan Blues is pending in federal court in Detroit. The insurer, which considers the case groundless, has lost its attempts to dismiss the case so far.
Hazy patient situation

Until more hospitals publicly post prices -- now only Oakwood Healthcare in Dearborn and Spectrum Health in Grand Rapids routinely do in Michigan -- consumers won't be able to understand whether a hospital charges too much or whether an insurer is denying them access to a hospital because it's too costly, said Lody Zwarensteyn, the longtime CEO of Alliance for Michigan.

The alliance is a Grand Rapids-based health planning group responsible for a landmark federal ruling that led to more competitive pricing there in the 1990s.

Massachusetts Sues Banks For Holiday Foreclosures

Story first appeared on CNNMoney.

The Massachusetts attorney general sued some of the nation's biggest banks on Thursday, accusing them of unlawful and deceptive conduct in the foreclosure process. This is currently not involving a Birmingham Foreclosure Lawyer.

The statement described the state court lawsuit as the nation's first comprehensive lawsuit against the five major national banks regarding the foreclosure crisis.

The AG's lawsuit seeks accountability for the banks' unlawful and deceptive conduct in the foreclosure process, including unlawful foreclosures, false documentation and robo-signing ... and deceptive practices related to loan modifications, the statement said.

MERS runs a database created in the 1990s to digitize and centralize the paperwork surrounding the bundling and selling of the loans.

The Massachusetts suit alleges that the database was used by the big banks to transfer ownership of mortgage debt without paying government registration fees and properly recording the transactions. The system also concealed the identities of the holders of mortgage debt from borrowers, the suit claims. It does not appear to have any relevance if owners had Homeowners Insurance.

MERSCORP, parent company for Mortgage Electronic Registration System Inc., said the Massachusetts complaint hangs on ambiguous language and has no applicability to MERS' business model.
Fannie Mae, banks halt foreclosures for the holidays. A Rochester Hills Foreclosure Lawyer said this was a nice gesture.

The banks, meanwhile, say negotiations they are conducting with a group of state attorneys general toward a settlement over their handling of foreclosures are a more promising means of resolving the issue than lawsuits.

Bank of America spokesman Lawrence Grayson said the firm believes that collaborative resolution rather than continued litigation will most quickly heal the housing market and help drive economic recovery.

Chase echoed those comments, saying it was disappointed with the suit, as did GMAC Mortgage, which said it would vigorously defend its actions in court.

Citi said in a statement that it had not yet reviewed the lawsuit, but that the bank believes they have operated appropriately in compliance with existing laws. Wells Fargo also denied the allegations, adding that the suit will do little to help Massachusetts homeowners or the recovery of the housing economy in the state.

Settlement talks fraying: Coakley told reporters Thursday that the suit had come about in part because settlement talks with the banks, which have dragged on for more than a year, appear unlikely to yield a fair result.

Attorneys general from California, New York, Delaware and Nevada have also distanced themselves from the settlement talks and are pursuing their own investigations.
Will FHA be the next big government bailout?

The talks are stalled at present, but have focused on a settlement in the range of $20-25 billion in total from the firms involved in exchange for release from liability for all conduct related to foreclosures, according to sources familiar with the matter. Of this total, roughly $10-15 billion would come in the form of credit for loan modifications. A Wayne Foreclosure Lawyer is watching the case closely.

Iowa Attorney General Thomas Miller, who is coordinating talks on behalf of the states, said in a statement Thursday that Coakley had pledged to evaluate the joint state-federal settlement they are negotiating, which they hope to reach soon.

Is the State Of Michigan Taking Over Detroit?

Story first appeared in USA TODAY.

The idea is extreme, even in a city accustomed to fighting for survival: Should the state of Michigan step in to run Detroit?

The governor has taken steps in that direction, proposing an unprecedented move that could give an appointed manager virtually unchecked power to gut union contracts, cut employee health insurance and slash services. But city leaders bristle at the notion.

If it happens, Detroit would be the largest American city ever taken over by a state. Michigan has seized control of smaller struggling cities, but until now Detroit was always off-limits.

That changed this week, when Republican Gov. Rick Snyder's administration said it would begin a review of Detroit's precarious finances. If the governor concludes that the city's economic situation constitutes an emergency, he could dispatch a manager who could push the mayor and city council to the sidelines.

It's not clear how everyday services like trash pickup and bus routes would be affected, but the fixer's mission would be clear: Do whatever it takes to stop the bleeding.

Democratic Mayor Dave Bing says Detroit doesn't need the help. He insists the city is reducing a $150 million budget deficit and easing cash-flow problems on its own.

The financial review starts Tuesday and may last up to 90 days, meaning a takeover could be under way by the end of February.

The same fate has befallen other cities.

Atlantic City agreed in 2010 to let New Jersey take over its finances in an arrangement that allowed the city to spread a $9.5 million deficit over five years, sparing homeowners and businesses a significant property tax increase.

In Pennsylvania, Gov. Tom Corbett signed a law in October enabling a takeover of Harrisburg.

New York City had a brush with bankruptcy in the mid-1970s, but the rescue package put together by then-Gov. Hugh Carey stopped short of a full state takeover.

An emergency financial manager would have the power to privatize utility departments, as well as the bus system and other agencies. A manager also could sell off city-owned parking lots and even Belle Isle, Detroit's popular island park.

In a 2001 report, LaFaive wrote about Detroit's burgeoning fiscal problems and recommended privatization, contracting out services and ways to generate revenue.

Last month, Bing declared the city government "broken" and said the public's checkbook would be short by $45 million next year unless Detroit starts saving money fast. In an attempt to ward off an emergency manager, he proposed laying off 1,000 employees — 9 percent of the workforce — and negotiating 10 percent pay cuts with unions.

If Lansing believes our plan isn't strong enough, I'd like to hear their suggestions for what they can improve, the mayor said. He suggested the state help by supplying millions of dollars that he says the city was promised in a decade-old tax overhaul. Detroit has also sought help collecting its income tax.

But even after a number of threats from the mayor, organized labor barely budged. Now that a state takeover looks more likely, adversaries have become partners.

A Michigan-based corporate turnaround specialist, James McTevia, said there would be potential pitfalls for any Detroit manager. Pay cuts ordered without negotiation, he said, could make the city's workforce boil.

Detroit has struggled for years after the auto industry collapsed, leaving the city with a much-reduced tax base and a dwindling population of 713,000, down 25 percent in just the last decade.

Managers already oversee Flint, Pontiac and Benton Harbor, as well as the Detroit public schools.

As Benton Harbor's emergency manager, Joe Harris has ordered firefighter cross-training for police officers, which reduced public-safety costs by a third.

He also negotiated new collective-bargaining agreements with many unions, forcing Benton Harbor employees to pay 20 percent of their health care premiums and contribute 10 percent of their wages to pensions.

In Pontiac, emergency manager Lou Schimmel dismissed the city clerk, the city attorney and the head of public works. He's also taken smaller steps, such as removing parking meters that cost too much to maintain. And he hopes to save $3 million by having the neighboring community of Waterford take over fire protection.

The Citizens Research Council, a nonpartisan group that studies government at all levels, analyzed Detroit's finances in 2010 and warned that the city "must be restructured." The city, it noted, owns a small airport, has its own health service, regional water agency and streetlight department, and uses city employees, not contractors, to pick up trash.

Sheila Cockrel, a city council member for 16 years until 2010, said long-term relief is unlikely until the city changes the pension system to a 401(k)-style defined-contribution plan and puts more health insurance costs on employees and retirees.

Google Gets AdMeld Acquisition Approval

Story first appeared in USA TODAY.

The Justice Department approved Google's acquisition of online advertising service Admeld after concluding the deal wouldn't diminish competition in one of the Internet's most lucrative marketing niches.

The decision announced Friday clears the way for Google (GOOG) to take control of Admeld six months after the companies agreed to the deal. Google said it plans to take control of Admeld within the next few days, although the two companies' products will remain separate for a while longer.

It's the fourth time since 2007 that that the U.S. government has taken a close look at a Google acquisition to determine if it would stifle competition or drive up prices. Google has gained regulatory approval in each instance. In 2008, though, Google backed out of a proposed partnership with Yahoo (YHOO) to avoid a legal battle with the Justice Department.

The Justice Department is still reviewing Google's proposed takeover of cell phone maker Motorola Mobility Holdings (MMI). That $12.5 billion deal is the biggest in Google's 13-year history.

The Federal Trade Commission is in the midst of a broader inquiry into whether Google has been abusing its dominance of Internet search to make it harder for people to find rival services and apply pressure on advertisers to pay higher prices. Google has consistently predicted that investigation will be resolved in its favor.

Google hasn't disclosed how much it is paying for Admeld, a New York company that works with websites to help them figure out how to make the most money from the amount of space they have available for display ads. It's a steadily growing field of advertising that emphasizes photos, video and illustrations instead of Google's specialty of distributing text-based commercial links alongside search results.

The Justice Department said that privately held Admeld, formed in 2007, raised about $30 million in 2010 to help fund its operations.

Google generated revenue of about $29 billion last year and analysts expect it to surpass $38 billion in revenue this year. Most of Google's revenue still comes from search advertising.

In an attempt to diversify beyond search advertising, Google bought DoubleClick for $3.2 billion in 2008. That deal is turning display advertising into a major moneymaker for Google, but the company's market share in the segment still lags behind Facebook and Yahoo, according to the research firm eMarketer Inc.

That apparently helped sway the Justice Department to approve the Admeld deal.

Web Tools for Michigan's Unemployed

Story first appeared in The Detroit News.

Gov. Rick Snyder sees a disconnect between what Michigan's employers need and what's available to them in the state's work force. And his plan to fix it drew positive early reviews after its unveiling Thursday.

To improve Michigan's work force development efforts, Snyder outlined a plan that includes everything from a new one-stop website for prospective employers and employees, to proposed changes for unemployment benefits, to calls for change on immigration caps and new goals for the state's welfare to work efforts.

Snyder said times have been tough in Michigan. He added that we have failed to think strategically about the relationship between economic development and talent. Job creators are finding it challenging to grow and develop without the right talent, and job seekers are struggling to connect with the right opportunities that leverage their skills.

He added that today, too few workers have the skills needed to meet the demands of employers in the new economy. Despite an unemployment rate of 10.6 percent, thousands of jobs remain unfilled in Michigan.

At the heart of Snyder's plan is the Internet site Pure Michigan Talent Connect, which he described as a "Web-based talent marketplace."

For those seeking work, it will provide information on education opportunities, areas of job growth and openings. For businesses searching for help, it will connect them with possible hires.

To further help businesses hold on to valued workers, Snyder will push for changes to the unemployment system. He proposed allowing work sharing, where companies can scale back worker hours and then the employees would get partial unemployment benefits.

This allows the employers to retain their talent and ensures that a business can begin growing again immediately once demand returns to normal levels.

It benefits employees because they retain employment and fringe benefits.
Lawmakers' OK needed

The change to unemployment would have to be approved by the state Legislature.

He also wants to eliminate caps on the immigrants with master's degrees or higher levels of education. It's a move that would require action in Congress and Snyder encouraged those in attendance Thursday to contact their elected officials on the subject.

Two state programs drew particular scrutiny from Snyder. Michigan's Jobs, Education and Training program is designed to help low-income families. Those receiving federal and state unemployment assistance will be encouraged to use work-participation programs.

In Michigan, Snyder said, the participation level is unacceptable.

He promoted a new effort between several state agencies to boost those levels above standards set by the federal government.

Lindsay Chalmers, vice president of Goodwill Industries, attended the governor's speech and agreed with much of what he heard concerning improvements to the two programs. Goodwill provides training and services aimed at putting people back into the workforce.

Michigan Works!, the state's doorway program to job training and employment opportunities, must be changed as well, Snyder said.

The program will shift to a "demand-driven strategy," and the program's executive director welcomed the challenge.

Snyder also focused on the role of the state's universities and community colleges in promoting a focus on computers, engineering and mathematics skills — areas that have seen a decline in student interest in recent decades.

But simply pushing colleges in that direction won't be enough, said an economics professor at Michigan State University.

UAW Continues Negotiations

Story first appeared in the Detroit Free Press.

The UAW is continuing to negotiate with a General Motors supplier owned by the Ambassador Bridge's Moroun family, but union leaders are considering whether to protest or even strike the supplier's operations inside GM's Orion Township plant.

The union had planned to protest LINC Logistics on Wednesday morning, but called off those plans ahead of a renewed effort to make progress in contract negotiations. Talks continued into the evening Wednesday, said Pat Sweeney, president of Orion's UAW Local 5960. This would be the LINC employees' first union contract, Sweeney said.

The outcome will determine whether the UAW takes any action. A strike could disrupt production of the Chevrolet Sonic subcompact or the Buick Verano compact, which are built at the GM plant. LINC's employees, who work inside the GM factory, voted unanimously in June to strike if UAW leaders call for a walkout.

Negotiations have dragged on for months between the UAW and LINC, which organizes and distributes parts at automakers' plants. LINC workers currently make less than $10 an hour.

The Orion Township factory restarted production this year after getting a reprieve from GM's plan to close it as part of its 2009 bankruptcy. GM now employs about 1,600 hourly workers in Orion -- about 60% at the $28-an-hour first-tier wage and the rest at about $16 an hour. A couple of suppliers also have employees working inside the GM factory, in part thanks to space freed up by the plant's redesigned body shop.

Separately, the Orion Township factory had a small fire around 8 a.m. Wednesday in its body shop. GM called the fire department as a precautionary measure and evacuated the body shop, but restarted production by 9 a.m. The fire did not impact production and no one was injured.

29 November 2011

Should Hemp Growing Be Legal?

Story first appeared in USA TODAY.

It hasn't gotten the attention of medical marijuana, but a growing number of states have passed laws authorizing the growth of hemp and are attempting to get the federal government to make it legal nationwide.

Hemp can be cultivated for fiber or oilseed, and it is used to make thousands of products worldwide, including clothing and auto parts. From 1999 through last year, 17 states have enacted measures that would either permit controlled cultivation or authorize research of industrial hemp, according to the National Organization for the Reform of Marijuana Laws (NORML).

Colorado was the most recent to authorize research in 2010. Maine, Montana, North Dakota, Oregon, Vermont and West Virginia have passed laws authorizing cultivation, according to NORML.

Hemp and marijuana are different varieties of the same species of plant, Cannabis Sativa. Industrial hemp has lower THC content, the primary psychoactive component of marijuana.

The federal government classifies all cannabis plants as marijuana and places strict controls on the cultivation of hemp. Industrial hemp was an American staple in colonial times. The output peaked during World War II.

Advocates say American farmers are being shut out of a lucrative market. More than 30 countries grow hemp as an agricultural commodity, and hemp-planted fields in Canada — which legalized cultivation in 1998 — increased to 26,815 acres in 2010. Opponents say the arguments in favor of hemp-growing represent little more than a smokescreen for legalizing marijuana and other illegal drugs.?

Rep. Ron Paul, R-Texas, has introduced a bill that would effectively legalize hemp-growing by excluding low-THC cannabis from the Controlled Substances Act each of the past four legislative sessions, including this year, but the legislation has never progressed to a committee hearing.

In October, Democratic California Gov. Jerry Brown vetoed a measure that would have created a pilot program for cultivating industrial hemp in four counties. In his veto statement, Brown criticized Washington's position on hemp and called for the law to allow cultivation nationally.

Rep. Dan Lungren, R.-Calif., wrote in a June 20 letter to a constituent that he supported the Drug Enforcement Administration's argument that commercial cultivation would increase the likelihood of covert production of high-THC marijuana and send the wrong message to the American public concerning the government's position on drugs.

North of the Vermont-Canada border, Christian Boisjoly says he is growing 23 acres of hemp in Lanoraie, Quebec, northeast of Montreal. Some farmers in his region are switching from tobacco to hemp, he says.

The crop is regulated closely there. The government checks growers' criminal records and mandates that hemp cultivars test for less than 0.3 percent, according to a fact sheet issued by Health Canada. A minimum of 10 acres is required for a permit, according to Canada's Department of Justice.

By some estimates, hemp is used in more than 25,000 products worldwide.

23 November 2011

Michigan Economy on the Rebound

Story first appeared in the Bloomberg News.

Michigan’s sink-or-swim automotive economy is swimming again and taking Toby McGowan with it.

McGowan makes $15.78 an hour as one of 280 production workers hired in the past two months at General Motors Co.’s Lake Orion assembly plant as the state’s carmakers increase sales and add personnel. He lost his last job at a print shop thanks to slow business.

Michigan lost 860,000 jobs from 2000 to 2009, almost half in the final two years. One of every five residents receives Medicaid assistance, and Detroit is in peril of state takeover. Since 2008, however, its economy fared better than that of any other state, except for oil- booming North Dakota, according to the Bloomberg Economic Evaluation of States. The index calculates growth by examining job creation, personal income, tax revenue, housing prices, mortgage delinquencies and the stock performance of state-based companies.

Republican Governor Rick Snyder, 53, said in an interview in Ann Arbor that the index confirms that Michigan is the value place to be.

Snyder, who cut $1.5 billion in spending, said finances are more stable and a slimmed-down auto industry can better withstand downturns.

Hinging on Building

The question is whether the surge, enabled by the Obama administration’s auto-industry bailout, will return Michigan to its prerecession state.

Dearborn’s Ford Motor Co. reported a third-quarter profit of $1.65 billion Oct. 26. The next day, Chrysler Group LLC, the Auburn Hills carmaker majority owned by Fiat SpA, raised its forecast for its first annual profit to $600 million.

GM’s U.S. sales climbed 15 percent this year through October from the same period a year earlier, according to Autodata Corp. Deliveries rose 11 percent at Ford and 23 percent at Chrysler, the Woodcliff Lake, New Jersey, researcher reported.

Newer and Cheaper

GM, Ford and Chrysler will hire or retain 42,300 employees nationwide over four years thanks in part to a new United Auto Workers contract that continues to pay rookies such as McGowan less than the $28 per hour that senior workers make, according to the Center for Automotive Research. Also, those higher-paid employees receive no raises under the four-year contract.

Such hiring helped Michigan’s October unemployment rate drop to 10.6 percent from 11.1 percent in September, according to the Bureau of Labor Statistics. That’s one percentage point lower than a year ago, though higher than the 9 percent national rate.

Tough Search

Jeffrey Hickmott, 26, graduated with a mechanical engineering degree from the University of Michigan-Dearborn in 2009. He’s still hunting for a job and lives with his parents in Taylor, a Detroit suburb. Last year he had two interviews. This year he has had 20 or 30 contacts over the phone. They said they were impressed, but they wanted someone with more experience.

His prospects may improve: A University of Michigan report last week predicted 0.8 percent job growth in the state next year and 1.4 percent in 2013.

Michigan’s rebound from the 18-month recession that ended in June
2009 gives it a higher BEES ranking -- in part because it fell so far.
Compared with a decade ago, the state’s economic health has fallen
25.4 percent, ninth-worst among states.

During 2010 and the first quarter of 2011, though, Michigan’s economic health improved by 8.8 percent, second to North Dakota.

The state still suffers from free-falling property values, which have starved its municipalities of property-tax revenue. Statewide real and personal property values declined about 20 percent from 2007 to 2011, according to the state Treasury Department.

Detroit in Danger

Oakland County, with Michigan’s second-highest median household income of $62,626 in 2009, lost almost one-third of its overall property value in that time, according to Robert Daddow, deputy county executive.

Last week, Detroit Mayor Dave Bing said the city faces a $45 million shortfall by June, on top of a $155 million long- term deficit, and he said he would eliminate 1,000 city jobs in February. He warned that without union concessions, the city may face state takeover.

Snyder said economic growth needs a stable political and tax environment. The state this year cut business taxes by $1.7 billion and balanced its budget without temporary fixes.

In July, Fitch Ratings revised Michigan’s credit outlook to positive from stable, citing a balanced budget and improved economy. Moody’s rates Michigan’s general-obligation bonds Aa2, third highest, and both Fitch and Standard & Poor’s rate the state AA-, fourth highest.

‘Ready to Explode’

Doug Rothwell, president and chief executive of Business Leaders for Michigan, which includes 80 executives of the state’s largest companies, said most are more optimistic about Michigan’s economy than they are about the U.S. as a whole. Rothwell said there is pent- up demand for cars and services.

Doug Gaylor, 53, a New York-based municipal fixed-income portfolio manager for Principal Global Investors LLC, said he’s delayed replacing his 2001 Oldsmobile Silhouette minivan, which has 133,000 miles. He said he’ll look to buy a U.S. car first, when the next minivan repair costs too much.

Gaylor, who once oversaw a Michigan bond portfolio, said he’s impressed by the state’s handling of its finances and its positioning for more high-tech jobs in the future.

27 October 2011

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Elder law is becoming more important as baby boomers approach their golden years. Elder law is a distinct practice, designed to assist the elderly in protecting their assets from probate expenses, federal estate taxes and nursing home expense.
The Elder Law professionals at Jordan Balkema Elder Law Center (JBELC), are dedicated to providing intelligent, compassionate and timely information about estate planning, probate, Medicaid and all other issues pertaining to elder law.
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18 October 2011

Property Tax Bill Would Ease Family Property Transfer

Story first appeared in the Traverse City Record-Eagle

Measure aims to cap tax when land passes to relative
Homeowners could more easily pass their homes to their heirs or sell them to their relatives under a bill that would ease the property tax burden of such transaction.

Rep. Peter Pettalia, Presque Isle, introduced the bill to cap property tax when homes and land are passed between relatives. Heirs would pay less taxes than currently paid by family members that inherit land.

Since Proposal A passed in 1994, taxes on a homestead property cannot rise more than 3 percent a year, no matter how much property values rise.

But when someone sells their property, the buyer pays taxes on the newly assessed worth, lifting the 3 percent cap. This bill would keep the cap for family-exchanged properties.

Many times, Pettalia said, people inherit a piece of land from their family such as lakeside cottage and cannot afford to keep it because the property is now worth more than the previous family member was taxed.

“It’s a family heritage; they have no intentions of ever selling it, but they can’t keep it because the property tax has now become too much of a burden upon them, “Pettalia said.

If approved, the law would become a good estate planning tool, said Brad Ward, director of public policy and legal affairs at the Michigan Association of Realtors. “It would be an incentive to create more of those internal family sales.”

But the bill could create headaches for local assessors.

“I think some of these legislators have to think about the reality and the complexity of what we have and how it can be handled,” said Laurie Spencer, equalization director of Grand Traverse County. “They are asking an awful a lot of assessment administrator, in my opinion.”

Assessors would have to see proof of family as far as third cousins, a potentially difficult task because last names are different and proof is hard to come by.

"Are we going to start doing DNA tests to see if they meet the criteria?” Spencer said.

The bill would require assessors to go back through old deeds. The bill would affect all land transactions to December 8, 2006.

“If you want it done according to what this bill says, we definitely would have to put on more staff,” Spencer said.

The Michigan Assessor Association does not yet have a position on the bill, said Swayne McLachlan, president of the group. The organization typically opposes such exemptions because local governments want the additional revenue created by sales or property owners’ deaths.

“It gets into the question of fairness and inequality,” McLachlan said.

But Pettalia said that it is the large tax burden on a family inheritance that is unfair.

“It’s Michigan’s family heritage to keep these properties with families,” he said.

06 October 2011

Ferris State University Offers Technology Degrees

Story first appeared on CBSDetroit.com.
Ferris State University is one of those schools that isn’t afraid to let its nerd flag fly. Especially with their Michigan Honors Programs.
Its roots are in a private vocational school, and it’s still in the two-year associate’s degree business in some technologies that are important to society but rarely degreed — rubber engineering technology, for instance.
My visit to Bulldog Country started with a presentation from Carl Shangraw, professor of surveying engineering. He walked me through all the stuff people know surveyors do — establishing legal boundaries — to the stuff people have no clue surveyors do, from setting up a local geocache to position offshore oil rigs to manage sophisticated geographic Information systems to helping design everything from tall buildings to freeways to railroads. They offer a considerable amount of Michigan Honors Courses, as well.
Surveying can be used to remote-control farm and road building machinery — something that Shangraw said has not yet taken off in Michigan but apparently has elsewhere.
Of particular interest to Ferris is hydrographic mapping — surveying the bottom of bodies of water. Gone are the days of guys in small boats with weighted ropes measuring depths. These are the days of stereoscopic sonar. Ferris is working with Northwestern Michigan College in Traverse City to create a hydrographic surveying system out of NMC’s maritime academy boat.
Shangraw said he and a couple of Ferris students spent last summer for the National Park Service, mapping the bottomlands between Sleeping Bear Dunes and the Manitou Islands. Among their discoveries — what appears to be an ancient river bottom in Good Harbor Bay, marking a river that emptied into a smaller ancient Lake Michigan when the shoreline was several miles farther west than today’s lake. This can be a part of Michigan Honors Classes, as well.
Shangraw said the Ferris surveying engineering degree program now has 75 students, down from 125 a few years ago. He blamed the state’s poor economy. But even so, he said the program gets three offers for every graduate, with starting salaries all above $50,000. Most of them, though, have to leave Michigan.
The next presenter, Joel East, a senior in surveying engineering, related how he worked surveying a particle accelerator, the Thomas Jefferson National Accelerator Facility, in Newport News, Va.
East said he and his crew were brought in to make sure the accelerator’s huge racetrack still lined up as the atom smasher prepared for a power upgrade from six billion electron volts to 11.
My next presentation came from Brian Holton, a professor of heating, ventilation, air conditioning and refrigeration at Ferris. These days, he’s working on something called the Legacy HVAC Equipment Field Evaluation and Performance Testing research project. These projects can be part of Michigan Honors Programs.
This U.S. Department of Energy funded effort aims to bring scientific rigor to quantify just how quickly appliances and heating and cooling systems lose their efficiency. It’s such a new idea that Ferris had to develop its own testing equipment and methodology to do the work.
Holton said the effort should give the federal government an idea of how much efficiency a 10-year-old furnace originally rated at 90 percent efficiency has lost. That will guide the government’s recommendations on replacing old appliances.
There’s also a second federal contract that will test energy-saving retrofit measures for their cost-effectiveness.
They will take three test homes, one control and the other two experimental, install different retrofit measures, and test them, to determine their cost effectiveness.
And that means designing algorithms and new technologies to simulate human occupancy of a house — everything from lights going on and off to refrigerators opening and closing to ovens going on and off to thermostats going up and down. Interesting stuff for Michigan Honors Programs.

04 October 2011

Internet Secret Lairs

Story first appeared in USA TODAY.
From the outside, the Gothic brick and limestone building a few blocks south of downtown almost looks abandoned.
Plaques identify it as a landmark completed in 1929, a former printing plant that once produced magazines, catalogs and phone books. The sign over the main door says "Chicago Manufacturing Division Plant 1."
There are hints, though, that something is going on inside. Cameras are aimed at the building's perimeter. A small sign at the back entrance says "Digital Realty Trust."
Sturdy gates across the driveway keep the uninvited out.
There's good reason for the intentional anonymity and security: The Internet lives there.
Editor of Data Center Knowledge, which tracks the industry, and, senior vice president of portfolio management for Digital Realty, which owns the 1.1 million-square-foot former R.R. Donnelley printing plant, say it is the world's largest repository for computer servers.
He won't identify its tenants, but he says the building stores data from financial firms and Internet and telecommunications companies. The 'cloud' that you keep hearing about … all ends up on servers in a data center somewhere.
There are about 13,000 large data centers around the world, 7,000 of them in the USA. Growth stalled during the recession, but estimates show about $22 billion will be spent on new centers worldwide this year.
The need for data centers is increasing as demand for online space and connectivity explodes. Some are inside generic urban buildings or sprawling rural facilities. For all of them, security is paramount. Inside, after all, are the engines that keep smartphones smart, businesses connected and social networks humming.
Some data centers have "traps" that isolate intrusions by unauthorized individuals, technology that weighs people as they enter and sounds an alarm if their weight is different when they depart, bulletproof walls and blast-proof doors.
When Wal-Mart opened a data center in McDonald County, Mo., a few years ago, County Assessor says she signed a non-disclosure agreement promising she wouldn't discuss anything she saw in there. She hasn't.
Although the rapid growth of data centers has diminished their ability to hide in plain sight many owners and occupants are very secretive and … sensitive about the locations.
That makes sense. "hese facilities are critical to the financial system and the overall function of the Internet.
Making new use of the old
Some data centers — sometimes called carrier hotels because space is leased to multiple companies — are in large urban buildings where they can tap into intersecting networks.
Old manufacturing facilities such as Chicago's Donnelley printing plant often are repurposed because they have high ceilings and load-bearing floors to support heavy racks of servers.
They are interesting examples of the new economy rising up in the footprints of the old.
Giant companies such as Google, Facebook, Apple, Yahoo and Amazon often build their data centers in rural areas. They're looking for cheap power and cheap real estate. While the number of private centers grows, the federal government is consolidating. It has more than 2,000 data centers and this summer announced plans to close 373 by the end of 2012.
Communities such as Quincy, Wash., population 6,750, and Catawba County in western North Carolina want to become data center hubs. Catawba and neighboring counties dubbed themselves "North Carolina's data center corridor.
Apple last fall opened a 500,000-square-foot, $1 billion facility in Catawba County. Google and Facebook have data centers in nearby counties and more are under construction.
Catawba County is building a second data center park in hopes of attracting more. Because data centers don't require many employees, most of the permanent jobs are created by contractors who provide electrical, cooling or security support. About 400 people work at the giant Chicago data center; many employ far fewer.
The Apple data center is pretty secretive. No signs indicate what the building holds, but everybody knows what it is.
James Lewis, a senior fellow in technology and security at the Center for Strategic and International Studies, a public policy research group in Washington, D.C., compares the evolution of data centers to changes in the way electricity is generated.
A century or more ago, he says, factories and other companies operated their own electric plants to power their lights, elevators and other functions. Those with spare capacity began to sell it to their neighbors.
Instead of maintaining computer servers in their own facilities for rapidly growing data storage needs, some businesses locate their servers or backup servers in data centers, he says. They can save money because the centers minimize energy consumption, ensure security and allow computers to share tasks. Data centers also give companies places to store backed-up data that is crucial to their businesses.
The amount of data in the world doubles every couple of years and people … are willing to pay for it to be stored.
He doesn't think it's essential to conceal the centers' locations, though, because hackers won't try to come in through the front door. The main source of risk isn't physical, it's cyber. If hiding the location … is all that they're doing, they're not doing enough.
Tall building, low profile
Keeping a low profile is just the beginning of the security measures at Digital Realty Trust's massive Chicago data center.
The exterior is embellished with terra cotta shields depicting printers' marks. The building occupies almost a full block, is nine stories tall and has a 14-story tower. Inside, there are visible and unseen protections, some of which the company won't talk about publicly. There are guards at both entrances, cameras inside and out, motion sensors and much more. To access the rooms where rows of servers live, a card must be scanned and a fingerprint recognized.
The interior of the building is a mix of old and new. Because it is a landmark, its wood-lined two-story library, which has been used for photo shoots, must be kept intact. Some corridors feature stone arches overhead, and some offices are paneled in English oak.
Other hallways are sterile and silent. Inside the locked doors of the individual data centers are locked metal-grid cages and, inside them, rows of black shelving with the blinking lights of servers visible through the doors. The only sound is an electronic buzz. Cameras scan every square foot of the room.
Between the rows of servers are "cooling aisles" with thousands of round holes in floor tiles feeding cool air into the space. Over the server shelving are ladder racks that suspend "raceways" — yellow plastic casing enclosing fiber optic cables. The shelving doesn't extend to the ceiling; air must circulate above the servers to keep temperatures down.
Caron says it costs $600-$800 per square foot to build a data center and often less than $70 a square foot for a normal industrial building, including the land. The giant printing presses that once filled space in the former Donnelley building made it ideal for conversion to data center use, he says. A data center floor must be able to handle at least 150 pounds and as much as 400 pounds per square foot. By comparison, most office buildings are built for 70 pounds per square foot.
Huge amounts of electricity power all those servers, he says: 100-150 watts or more per square foot, compared with 3-5 watts for each square foot of an office building. To keep the servers running, there's more than one electrical feed into the building and backup systems and generators ensure there's never an interruption in power. The Chicago facility has 63 generators.
Digital Realty Trust, which bought the building in 2005, owns 96 properties, most of them data centers, in the USA, Europe and Asia, Caron says. There is, he says, "a lot of demand" and the company expects to spend up to $500 million this year on acquisitions. Last year it spent more than $1 billion.
'You have no idea what's here'
Not every data center is a fortress. The one owned by the city of Altamonte Springs, Fla., is a former 770,000-gallon water tank next to City Hall.
Information services director in the city of 40,000, says he relocated the city's servers after being forced by three hurricanes to pack everything up to keep them out of harm's way. The tank has 8-inch-thick walls. It did a great job holding water in so they knew it could keep water out.
Even a small-scale data center needs security, though. One is protected by video surveillance, requires dual authentication to enter and a biometric lock limits access to the server room.
It's even harder to get into the five data centers 200 feet deep in a former limestone mine in Butler County, Pa.
The facility affords a very high level of security, not only physical — armed guards, steel gates, layers of security, biometrics — but also we're protected from the elements, civil unrest, terrorist-type things, Vice president of the Underground, as it's called, for Iron Mountain, an information management company.
Except for the cars parked outsideyou'd have no idea what's here. Besides 7 million gigabytes of digital data, including e-mail, computer backup files and digital medical images such as MRIs, the Underground is home to documents, film reels and computer backup tapes owned by the U.S. Patent and Trademark Office, Sony Music and Universal, among others.
Doughty worked for years on Room 48, an experiment in making data centers more energy-efficient and reliable, and is working now on ways to utilize some of the cold water in the mine to cool the computer space without using chillers or cooling towers. He hopes to begin construction next year.
The security of data centers, Doughty says, is becoming increasingly important for companies and governments not only because of the situation in the United States with terrorism, but because of the world situation.
Lewis says one of the lessons of the Sept. 11 terrorist attacks was the importance of having data stored in more than one place. As more data centers are built, he says there will be more debate about legal issues: What happens if law enforcement has a warrant for a server that also contains data owned by other companies? Should there be standards for protecting consumers, including requirements that they be notified of breaches? Should data centers be regulated by the government?

Fiat Credit Rating Goes Down Because Of Chrysler Group

Story first appeared in USA TODAY.
Ratings agency Moody's downgraded the credit rating of Fiat today, saying it did it primarily because of risks associated with Fiats closer combination with Chrysler Group.
Fiat holds a 53.5% of Chrysler and has said it will get 5% more by year-end -- a chunk due from the U.S. government when it meets the final bankruptcy deal goal of building a high-mileage small car in the U.S.
Moody's said increased integration of the companies likely means they'd have to prop each other up if things go south, even though Fiat, under the terms of the takeover, is not on the hook for Chrysler's debts. Moody's expects "that the creditworthiness of Fiat and Chrysler will become more closely aligned over time as the strategy and operations of the two groups becomes progressively more intertwined," including sharing vehicle platforms and powertrains, Moody's lead Fiat analyst Falk Frey told the Associated Press.
In the arcane heirarchy of debt ratings, Moody's cut Fiat from Ba2 to Ba1. The real-world impact is that Fiat will have to pay more for loans. Chrysler already is lower, at B2.
While the rating reflects the risks still inherent in Chrysler's comeback, it also seems to reflect caution about Fiat's financial muscle to handle adverse events at one or both operations.
Fiat has lost money in Europe, where the financial mess, especially as it affects Fiat's home market in Italy, has hurt sales. And Moody's says that Fiat's loss in Europe share is due in part to a slower pace of new models than rivals, a pace CEO Sergio Marchionne said at the Frankfurt show last week may slow further because of Europe's woes. Moody's also cites increased competition in Brazil, Fiat's most profitable market.
Marchionne also at Frankfurt that for now, an IPO for Chrysler is not possible because of market conditions.

03 October 2011

CareTech Solutions Invests $1.5 Million in Hospital IT Help Desk

Company’s Service Desk Undergoes Major Renovation in Preparation for Growth Explosion

(TROY, Mich., Sept. 29, 2011) CareTech Solutions, an information technology (IT) and
Web products and services provider for U.S. hospitals today unveiled its newly re-configured and remodeled Service Desk, a 24x7x365, on-shore medical help desk that currently responds to nearly one million contacts a year from hospital users seeking IT support with clinical and business systems. The $1.5 million investment enables additional growth and hiring for the Service Desk which is on track this year to experience twenty five percent growth in revenue.

“The Service Desk is the fastest growing piece of our business, largely due to the recent explosion of electronic medical records and healthcare technologies,” said Jim Giordano, president and CEO, CareTech Solutions. “Service Desk is more than a call center, it’s a highly-specialized technology support organization with analysts trained to quickly resolve doctors and clinicians’ IT issues so they can get back to what they do best, caring for patients.”

The Service Desk, based in Troy, Michigan, was launched by CareTech Solutions in 1998 with less than 30 employees. In 2008, CareTech added a dedicated physician-only hotline, remote control tools, and a knowledge base that holds over eight thousand answers for all major clinical systems and business applications. Today, the Service Desk staff has grown to almost 160 employees, with more than 45 added this year.

About CareTech Solutions
CareTech Solutions, Inc., an information technology and Web products and services provider for more than 180 U.S. hospitals and health systems, creates value for clients through customized IT solutions that contribute to improving patient care while lowering healthcare costs. From implementing emerging technologies to supporting day-to-day IT operations, CareTech offers clients expert health information management services across the entire patient data lifecycle earning it the 2008, 2009 and 2010 Best in KLAS award for IT Outsourcing (Extensive) as ranked by healthcare executives and professionals in the Top 20 Best in KLAS Awards: Software & Professional Services report.

For more information, please visit www.caretech.com.

Chrysler’s Workers Overwhelming In Favor of National Labor Contract

Story first appeared in the Detroit News.
Workers at Chrysler Group LLC's Global Engine Manufacturing Alliance plant in Dundee, near Splash Universe Dundee, have voted overwhelmingly in favor of a proposal to make their factory subject to the new national labor contract the company is negotiating with the United Auto Workers.
More than 99 percent of the votes were cast in favor of the plan. Only two workers voted against it, according to local union officials.
The vote was prompted in part by Chrysler's decision to implement a controversial rotating shift schedule that would require workers to alternate between days and nights.
Tom Zimmerman, plant chairman for UAW Local 723, said Chrysler has agreed to reconsider that plan now.
A labor expert comment that she thinks it's ultimately better for them to be a part of the national agreement, noting that GEMA workers will now have the right to relocate to other factories if there are job cuts at their facility. She added that it's easier for Chrysler too, because it makes things a lot simpler for the company."
The measure had been endorsed by UAW Vice President General Holiefield, head of the union's national Chrysler department.
The Dundee factory was not previously part of the national agreement because it was originally set up as a joint venture between Chrysler and two Asian automakers: Japan's Mitsubishi Motors Corp. and South Korea's Hyundai Motor Co.
Zimmerman said negotiations will begin shortly on a new local agreement that will address the shift schedule, which was due to begin next week.
Workers at Chrysler's Trenton Engine Complex have been working the grueling schedule since last year and are lobbying for it to be rescinded or changed.
If Chrysler and the UAW agree to the same language on alternative shift scheduling that was part of the recently approved contract between the union and General Motors Co., at least some relief could be in sight.
There would still be alternative work schedules allowed, as there is in the GM agreement, but there is a wide range of work schedules made possible by that language.

27 September 2011

Economic Gardening

Story first appeared in the Traverse City Record-Eagle.
Economic Gardening is the new buzzword in Michigan’s economic development lexicon. It’s focused on growing Michigan-based companies and entrepreneurial start-ups over trying to lure new operations into the state. Sunday’s September 25th Business section will debut a new monthly column produced by the Traverse City Area Chamber of Commerce on its economic development efforts in the region. This week Tino Breithaupt, the chamber’s outgoing senior vice president of economic development, will expand on the organization’s Economic Gardening activities in northern Michigan.


Story first appeared in the Traverse City Record-Eagle.

Negotiations over a new four-year contract between Chrysler and the United Auto Workers have broken down as both sides refuse to budge on key financial issues, two people briefed on the bargaining said Thursday.

The talks ended late Wednesday in a dispute over the number of workers who are paid an entry-level wage, said the people, who asked not to be identified because the negotiations are private.

Chrysler Group LLC, which is losing money, wants no limit on cheaper entry-level workers. The union wants a cap on the number of those workers, who make $14 to $16 an hour, about half of what a longtime union employee earns.

Chrysler factories continue to operate under a contract extension.

Detroit’s three car makers are each negotiating labor agreements with the UAW.

Jobless Rates Decrease In Michigan

Story first appeared in the Traverse City Record-Eagle.

The state of Michigan says seasonally unadjusted unemployment rates have decreased in all of Michigan’s 17 major labor markets.

The figures for August were released Thursday by the Department of Technology, management and Budget, and they reflect seasonal reductions in the work force.

Fewer unemployed workers actively sought employment in August than in July. Summer hiring receded from a July peak.
Statewide, the unadjusted jobless rate in August was 11 percent compared with 11.9 percent in July.

Rates ranged from a low of 7.2 percent in the Ann Arbor region to a high of 12.9 percent in the Detroit region.

Seasonally unadjusted payroll jobs in Michigan increased by 0.3 percent in August.

Jobs were added in manufacturing, construction and professional and business services. The state lost government jobs.

Traverse City Company Holds Nation Wide Art Contest

Story first appeared in the Traverse City Record-Eagle

An art contest sponsored by Traverse City-based banner company Britten Inc. will award cash prizes and offer a chance for artists to gain major exposure.
The contest, artUP, hopes to find great fine and digital art, photographs, graphics and logs. Contestants can submit entries, for a fee, starting this week through Dec. 28.

For some artists who participate in artUP, their art will literally go “up” in public places. Britten makes large banners and signs to display in malls, stadium, downtowns and other venues such as exhibit rentals. The contest will help Britten build an online Artist Marketplace full of art for customers to use on various projects.
There’s a lot of times that client would come to Britten and ask if they have any creative work, clip art or stock art.

Contest submissions will be pooled into a collection where clients can access and review the work for use in creative campaigns.

22 September 2011

General Motors Is Said to Offer Bonuses and Reopened Plant

Story first appeared in The New York Times.

DETROIT - The United Auto Workers union won $5,000 signing bonuses for its workers and a promise to reopen an assembly plant in Tennessee as part of its tentative new contract with General Motors, according to people briefed on the negotiations.

In what is being viewed as a landmark deal, the union also preserved health care and pensions and improved profit-sharing for its roughly 48,000 members who work at G.M.

Officials at G.M. and the union declined to discuss specific terms of the deal. But people briefed on the negotiations said that workers would receive a signing bonus of $5,000 in lieu of cost-of-living wage increases. Entry-level workers, who are paid about $14 an hour, are expected to receive an increase of $2 to $3 an hour.

The company has also agreed to reopen its idled assembly plant in Spring Hill, Tenn., the people said.

The U.A.W.’s tentative, four-year agreement with G.M., announced late Friday, also opens the door for the automaker to bring back laid-off workers and move jobs back into the United States.

G.M. is the first of Detroit’s Big Three to reach a deal with the union. Details of the agreement were being withheld until the union can inform members, who will vote on ratification over the next two weeks.

The union’s president, Bob King, said in a statement that union members would get a larger share of the profits from G.M.’s comeback from its federal bailout and bankruptcy in 2009.

G.M.’s lead negotiator, Cathy Clegg, said the agreement allows G.M. to continue adding jobs as it increases market share in the United States.

Industry analysts said the union achieved its goals of balancing economic gains in the agreement with solidifying G.M.’s cost structure for future growth.

Increasing jobs in the United States was a critical goal for U.A.W. leaders under pressure to show that the government’s bailout of G.M. is producing positive economic benefits.

Mr. King took the unusual step of acknowledging the Obama administration’s support of the industry in his statement: “None of this would have been possible without the efforts of President Obama, who invested federal funds to help turn the company around, protect the auto supplier base and keep good-paying jobs in America.”

The union said that it had successfully fought off G.M.’s proposals to weaken pensions and obtain major concessions on health-care benefits.

Mr. King’s next task is to seek broad support among local union leaders and G.M. workers for the tentative deal. U.A.W. leaders from plants across the country are expected to gather in Detroit on Tuesday to hear the details.


Story first appeared in USA Today.

Late Friday night, the UAW and General Motors reached a deal on a tentative labor agreement covering 49,000 U.S. workers that gives a long-awaited glimpse into what the post-bankruptcy Detroit auto industry — and union — will look like.

The deal will create an undisclosed number of new jobs, and if the terms are viewed as reasonable, it will likely be heralded by the backers of GM's 2009 government-backed bankruptcy as proof the rescue was a success.

The UAW feels this contract will get their members who have been laid off back to work, will create new jobs in their communities and will bring work back to the United States from other countries.

While many details of the deal were not immediately divulged, the UAW press release shared some of the positive highlights of the deal:
  • "Significant" investments and products for GM plants.
  • Wages and benefits that "reflect the fact that it was UAW members who helped turn this company around," said Joe Ashton, UAW vice president.
  • Improved profit sharing
The new jobs include opportunities at powertrain plants in Warren and Romulus, Mich., and Wentzville, Mo., people familiar with the talks said. GM will also reopen the former Saturn assembly plant in Spring Hill, Tenn., they said.

Profit sharing will now be based on income from all GM's North American operations, not just U.S. plants, a person familiar with the deal said. With the new formula, the average profit-sharing check from last year's $5.7 billion North American profit would have been between $5,000 and $6,000, instead of the $4,000 or so that workers received, the person said. The union claimed profit sharing would be more transparent. Indeed, the bonuses will be based on a simple chart that lists ranges of profits and corresponding profit-sharing payouts, the person said. The bonuses will have a cap.

The contract also increases the entry-level wage, the person said.

Now, the UAW must sell the deal to its GM members. A vote is expected to take place in seven to 10 days.

A 25-year GM worker now at the Pontiac stamping plant, said he was pretty confident the two sides would reach a deal. He said he hopes GM will be restoring some of the benefits for the retirees and a raise of some kind for the new hires.

The four-year deal could set the competitive tone for the Detroit Three as they continue recovering from the Great Recession that sent GM and Chrysler into bankruptcy two years ago.

After kicking off negotiations in late July, it was clear the UAW was making more progress at GM, and both sides worked toward reaching a deal before the Sept. 14 expiration of the 2007 contract. That didn't happen. Final details were eventually hammered out at about 11 p.m., after several days in which a deal seemed close, punctuated by an angry letter to UAW President Bob King from Chrysler and Fiat CEO Sergio Marchionne.

Friday night, union officials heralded their tentative deal.

A GM exec said they worked hard for a contract that recognizes the realities of today's marketplace, enabling GM to continue to invest in U.S. manufacturing and provide good jobs to thousands of Americans. She said they are proud of this agreement and are happy that it truly recognizes that the success of the company is tied to the success of the workers, and as everyone knows, they have had, and will continue to have, some real differences with GM. It's the union's job to fight for workers and protect their members, and we will continue in that fight.

Evaluating and replicating the new deal.

The UAW is expected use the deal as a guide for talks at GM's crosstown rivals. Chrysler is widely expected to be the next automaker to reach a deal with the UAW, followed by Ford, where talks might be complicated by the automaker's strong turnaround and workers' recent discontent.

In the days ahead, the deal will be scrutinized by autoworkers, Wall Street and the taxpayers and politicians who helped finance the controversial 2009 bankruptcies of the two automakers.

If the terms are viewed as reasonable, the contract and the new jobs that go with it could be sold as a victory by President Barack Obama and the Democratic Party, who backed the automakers when public support was weak.

GM likely benefited by negotiating the first tentative agreement with the union in this round of bargaining, the first since the financial crisis of 2008 and 2009.

Friday night, the union claimed to have prevented cuts to pensions and secured improvements, not cuts, to health care benefits.

Mindful of taxpayers' aid.

In July, when contract talks began, GM and UAW leaders said they would keep the taxpayer assistance in mind as they worked on the new contract.

Both sides were also equally invested in showing the world that they weren't slipping back into what might be perceived as their old ways.

High labor costs — relative to foreign rivals — and heavy retiree health-care burdens had helped to drag down the Detroit Three in the years before the financial crisis. Other contributors: general mismanagement; an over-reliance on light trucks, especially SUVs; and a reliance on profit-eroding incentives that damaged brand value.

That "old Detroit" paradigm was largely cleaned up during the restructurings at the Detroit Three in recent years. The union did its part, too, agreeing to amend its labor contract with GM and Chrysler in 2009 before the automakers' bankruptcies. That deal brought U.S. wages and benefits to near-parity with foreign competitors, ended the notorious "jobs bank" that paid laid-off workers, eliminated cost-of-living raises and replaced some of the payments owed to a union's health-care trust with stock.

While GM and Chrysler completed their makeover during quick trips through bankruptcy, Ford self-financed its turnaround — a fact that became a proud marketing point for the automaker.

Healthy and making progress.

Today, the Detroit Three are more profitable than they've been in years, and at far lower sales volumes.

Consider this: Between 2005 and 2008, when the U.S. selling rate generally surpassed 16 million cars and trucks, GM and Ford posted losses that topped $100 billion.

In the first half of the year, when the selling rate was about 12.8 million cars and trucks, GM and Ford made $5.4 billion and $4.9 billion respectively. That's on top of the $4.7 billion GM made last year and the $6.6 billion Ford made in 2010.

Chrysler, meanwhile, continues to improve as its new Italian owner Fiat integrates the management teams and product portfolios. But, for now, it remains the weakest of the Detroit Three. Its $254 million loss through the first half of the year was largely due to repayment of government loans. Chrysler posted a loss of $652 million in 2010.

Given those profits, the UAW's King said he saw no reason for additional concessions and declared that autoworkers deserved to benefit from automakers' new found profits.

The automakers haven't objected to that notion, but have remained firm in their opinion that the reward be shared in ways that do not increase their fixed costs. Wall Street could see rising fixed costs as regression into Detroit's former bad habits.

King, a creative and practical leader, had repeatedly suggested that the two goals were not adversarial and remained positive that a deal could be reached that achieved goals on both sides.

He also was aware that a contentious round of negotiations, or one that gave workers either too little or too much, could have further tainted the images of the automakers or their union.

Chrysler talks contiune.

At Chrysler, contention is still possible, even if a strike is not. At GM and Chrysler, workers gave up the right to strike on wages and benefits as part of the U.S. government's assistance for the automakers. Any impasse will go to binding arbitration under the terms of that deal.

The scathing letter CEO Sergio Marchionne sent to King on Wednesday could signal trouble or just a momentary flare-up. Marchionne criticized King for failing to show up to a previously scheduled meeting to negotiate the contract after Marchionne flew back from Germany.

Even without Marchionne and King, talks between the UAW and Chrysler were scheduled to continue through the weekend, under a continuation of the outgoing 2007 contract. And Marchionne was expected to return to the table Tuesday.

Today's new agreement with GM could also give King the opportunity to convince Chrysler that he is more of a partner than an adversary and patch up the relationship.

Ford talks resume next week.

Meanwhile, at Ford, no bargaining is planned for the weekend, although it's expected to resume next week. Bargainers there have maintained a slower pace than at GM and Chrysler.

Ford and the UAW have indefinitely extended the contract they reached in 2007.

Talks in Dearborn are expected to be more complicated. For one, Ford's turnaround is regarded as strong. It's been profitable since 2009 and it has gained market share and confidence under CEO Alan Mulally's "One Ford" plan.

Ford will likely push to get its labor deal competitive with those at GM and Ford, where the UAW was able to get more concessions out of its members to assist with the 2009 bankruptcies.

In early 2009, Ford got workers' cost-of-living allowances suspended and eliminated its jobs bank. After GM and Chrysler's bankruptcies, however, the Dearborn automaker sought to get a similar no-strike clause and an entry-level wage freeze.

But workers overwhelmingly voted down that proposal, despite the promise of a $1,000 bonus. The UAW has since filed a grievance against Ford over the reinstatement of merit pay for salaried workers, claiming unequal treatment for their hourly counterparts. That grievance remains outstanding.

With a strike out of the question at GM and Chrysler, Ford is the only automaker that faces the possibility of a strike this year. Workers at Ford have already authorized a strike, a routine step, although national strikes are rare.

15 September 2011

Fuel Cell Partners Sought By Daimler

Story first appeared in Bloomberg News.

Daimler AG, the world’s third- largest maker of luxury vehicles, is in advanced talks about expanding its fuel cell partners beyond Ford Motor Co. as it targets widescale production of the technology, development chief Thomas Weber said today in an interview at the Internationa Motor Show in Frankfurt.

The Stuttgart, Germany-based maker of Mercedes-Benz vehicles is in talks with other automakers as well as companies that would set up a hydrogen fuel station network, Weber said.

Daimler, which introduced a fuel cell-powered concept vehicle in Frankfurt, plans to produce more than 1,000 B-Class F-Cell vehicles, which are powered by the chemical reaction that creates water. The production run will rise to more than 10,000 with a next generation in 2017, Weber said.

Mercedes plans to expand its fuel cell offering with a sedan below the S-Class by 2017, he said. Daimler and Ford both own stakes in Automotive Fuel Cell Corp.

Contract Deadline Extended By UAW

Story first appeared in USA TODAY.
The United Auto Workers union extended its contracts with General Motors Co. and Chrysler Group LLC early Thursday after failing to meet a deadline to reach a new agreement.
GM broke off talks after midnight and said they would resume at 8 a.m. EDT Thursday. Chrysler didn't say when its talks would resume.
The decision has little impact on the 71,000 U.S. factory workers covered by the GM and Chrysler contracts. In the past, workers might have gone on strike if the UAW hadn't extended their contracts. But as part of their 2009 government bailouts, GM and Chrysler workers had to agree not to strike over wages.
A UAW local official at a GM factory in Lordstown, Ohio, wrote that they should continue to do the things they do until they receive official notification otherwise.
The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker. The Ford contract covers around 40,000 workers.
Up until the deadline, the negotiations that began over the summer appeared to be proceeding without the acrimony that plagued them in the past. But just before the 11:59 p.m. EDT Wednesday deadline, the CEO of Chrysler fired off a letter to UAW President Bob King saying an agreement likely wouldn't be reached because King didn't come to the table Wednesday night to finish the deal.
Chrysler CEO Sergio Marchionne said he knows they are the smallest of the three automakers in Detroit, but that does not make them less relevant.
Marchionne said he planned to travel out of the country for business and will return next week. He said he would agree to a weeklong extension of Chrysler workers' current contract. The UAW didn't set a new deadline to reach agreements.
The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker.
Marchionne said he and King met a week ago and agreed to finish work on the new contract before the deadline. He said not meeting the deadline hurts Chrysler's workers.
Things appeared to be progressing more smoothly at GM. Joe Ashton, the UAW's vice president in charge of the GM negotiations, told local union officials Tuesday night in a note that bargainers have made "much progress" in talks with the company. GM has taken the lead on the negotiations and its agreement may be used to set the pattern for the other two companies.
The contract talks will determine wages and benefits for 111,000 union workers at the auto makers, and they also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturers, which employ hundreds of thousands more. The contract talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.
GM nearly ran out of cash and needed $49.5 billion from the government to survive, but it's been making billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well.
Ashton wrote that difficult restrictions have been placed on the union and company as a result of the bailout. To get the government funding, the union had to agree not to strike over wages at GM and Chrysler. Also, unresolved issues can be taken to binding arbitration, and the union's new contracts must keep the companies' labor costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.
The union has been seeking bigger profit-sharing checks instead of pay raises, higher pay for entry level workers who make $14 to $16 per hour, signing bonuses and guarantees of new jobs as auto sales recover. Ford and GM want to cut their labor costs to get them closer to Honda and Toyota, while Chrysler wants to hold its costs steady. Health care costs are also an issue.
Once the contract agreements are reached, workers will vote on them.

Gas Mileage Not As Great As One Might Think

Story first appeared in USA TODAY.
Chevrolet's new small Sonic subcompact is going to be able to join the 40-mile-per-gallon club, but only with a pricier, turbocharged version.
Despite GM's earlier claims of a 40-mpg rating for the 2012 Chevrolet Sonic, the standard 135-horsepower, 1.8-liter four-cylinder will be rated by the EPA at 26 miles a gallon on the highway and 35 mpg on the highway, for a combined 29 mpg with a five-speed manual transmission. With an optional six-speed automatic transmission, the 1.8-liter returns 25 city/35 highway/28 combined mpg.
The only way to get 40 mpg on the highway is to opt for the 138-horsepower, turbocharged 1.4-liter four-cylinder, which comes with a six-speed manual transmission only. The engine is a $700 option for the higher level LT and LTZ trims. The Sonics are starting to boom their way into dealers: Cars.com shows more than 500 Sonics available, but none are equipped with the turbocharged motor just yet.
The Sonic's EPA rating is a disappointment compared with its competitors and even against its larger sibling, the Cruze:
A 2012 Chevrolet Cruze equipped with the same 1.8-liter four-cylinder and a six-speed manual transmission gets 25 city/36 highway/29 combined mpg. The Cruze Eco with an automatic transmission gets a 26 city/39 highway and 31 mpg combined. The fact that the lighter-weight Sonic scores no better than a Cruze is probably due to aerodynamics.
Competitors like the 2012 Hyundai Accent (30 city/40 highway mpg), 2012 Ford Fiesta SFE (29 city/40 highway mpg), 2012 Toyota Yaris (30 city/35 highway mpg) and 2012 Honda Fit (28 city/35 highway mpg) all score better. To add insult to injury, the Sonic scores worse, or no better, than the outgoing 2011 Chevy Aveo, which got 27 in the city and 35 on the highway for a 30 mpg combined with a manual transmission and a combined 28 mpg with a four-speed automatic transmission.
We don't know if GM plans on releasing an Eco version of the Sonic, which would help it compete with other fuel misers. For now, the model will likely try to compete on price since it's behind the field on mileage.
The 2012 Chevy Sonic went on sale earlier this month.

12 September 2011

Michigan Required Car Insurance Coverage Is Up For Debate

Story first appeared in the Detroit News.
Possible changes to Michigan's unique auto insurance coverage for people injured in accidents are coming up for debate in the state Legislature.
Michigan now is the only state in the nation that mandates unlimited medical benefit coverage for people seriously injured in auto accidents. That would change under proposals that could offer motorists less expensive insurance in exchange for limited personal injury protection coverage.
Supporters of the changes, including the auto insurance industry, say it would allow motorists to opt out of more expensive coverage they can't afford or don't want. Insurers also are looking for relief in a system they say is growing increasingly expensive and threatening their finances.
Sen. Joe Hune, a Republican from Livingston County's Hamburg Township and chairman of the Senate Insurance Committee said if you take a look at the cost of the system, the skyrocketing medical costs, it's simply unsustainable, and there's going to be a tipping point sometime. The system just can't sustain itself."
Opponents of the proposed legislation say it could threaten the financial stability of the state's no-fault auto insurance system. They say motorists opting for less coverage could wind up underinsured and in deep financial trouble if they're seriously injured in an accident.
John Cornack, CEO of Ann Arbor-based Eisenhower Rehabilitation Center and president of the Coalition Protecting Auto No-Fault, said the proposed legislation does not come close to meeting the needs of severely injured accident victims.
The coalition opposed to the proposed changes includes hospital and health groups, trial lawyers and other organizations. They're engaged in a lobbying battle with auto insurance companies and business groups such as the Michigan Chamber of Commerce that want to alter the system.
The legislation would make significant changes to how people involved in catastrophic injury accidents are covered under state law.
Currently, all Michigan auto policyholders must buy unlimited medical benefits as part of their coverage. Regular auto insurance policies handle coverage up to $500,000, after which all insured motorists are assessed a fee to cover more severe cases, which are reimbursed through the Michigan Catastrophic Claims Association. The association, created in the late 1970s, now covers medical bills for roughly 12,800 accident victims across the state.
Unlimited coverage would continue for those currently in the MCCA system, according to supporters of the developing legislative plan. But there would be no such guaranteed coverage for those severely injured in future accidents.
Instead, motorists would have options for personal injury coverage likely ranging from $250,000 to $5 million. The developing legislation, which could be introduced this month, is likely to replace an original proposal that would let motorists buy as little as $50,000 in coverage up to unlimited coverage.
The new plan also likely will contain fee schedules and other measures aimed at controlling health insurance claims costs. It also likely will include elements of a plan backed by Sen. Virgil Smith, D-Detroit, that could provide some personal injury protection insurance relief in Detroit and possibly to residents in other areas of the state.
The $250,000 threshold would cover about 99 percent of accident victims, Hune said. But the Coalition Protecting Auto No-Fault says the average acute care stay cost for a person with a severe brain injury is more than $250,000, with some surpassing $1 million. The coalition says hundreds of people a year could have injury-related costs beyond even $500,000 in insurance coverage and would need to turn to other income, charities or taxpayers to pay for their care.
Cornack said right now, accident victims in our state can get the care they need without turning to welfare.
But the possibility of cheaper rates might be tempting for some motorists, who now pay an average premium of more than $1,000 a year in Michigan. Supporters of allowing flexibility on medical coverage say Michigan motorists could save roughly 15 percent on comprehensive policies and up to 40 percent on basic policies that don't include coverage for collision or theft.

07 September 2011

Saab Bankrupt

Story first appeared in USA TODAY.

Swedish car maker Saab is filing for bankruptcy protection in a self-managed reconstruction process, the Associated Press reports.
Saab's owner Swedish Automobile, says the Trollhattan-based Saab and its subsidiaries, are filing for a "voluntary reorganization" at Vanersborg District Court on Wednesday.
It cites Saab's limited funds and says the move is to secure short-term stability while simultaneously attracting additional funding.
The brand has been plagued by production stoppages and problems to pay its suppliers and 3,700 staff for months.
Creditors have threatened to put it into bankruptcy unless it pays up.
Netherlands-based Swedish Automobile brought Saab out of a liquidation process by buying it from General Motors in 2010.

06 September 2011


Story first appeared in Bloomberg.
Whirlpool Corp., the world’s largest appliance maker, said first-quarter profit increased 3 percent, helped by an energy tax credit.
Net income rose to $169 million, or $2.17 a share, from $164 million, or $2.13 a share, a year earlier, the maker of KitchenAid refrigerators and Maytag washing machines said today in a statement. Revenue gained 3 percent to $4.4 billion, surpassing the $4.29 billion predicted by analysts. Profit was $2.11 a share, excluding some items, topping the $1.16 median estimate in a Bloomberg survey. Operating profit declined.
Sales at Whirlpool, based in Benton Harbor, Michigan, recovered last year after the company gained market share and benefited from U.S. tax credits for making energy-efficient appliances. Jeff Fettig, chairman and chief executive officer, is also expanding business in emerging markets such as Brazil, with about half of the company’s sales coming from North America last year.
Fettig said that their first-quarter results reflect their ongoing cost reduction efforts and continued innovation investments, which helped to mitigate significant material cost inflation.
Whirlpool reaffirmed its profit estimate of between $12 and $13 a share this year, helped by between $300 million and $350 million in energy tax credits. The company said in February that it expected to receive $300 million in energy tax credits this year. Fettig told analysts today that the higher number was based on better visibility after monitoring sales of qualifying models.
Whirlpool rose 79 cents, or 0.9 percent, to $88.65 at 4:01 p.m. in New York Stock Exchange composite trading. The shares are little changed this year.
Research and Development
Whirlpool plans to spend more than $600 million on research and development and will open a plant and distribution center in Tennessee and a new headquarters in Michigan with $1 billion in U.S. investment through 2014, Fettig said in a speech in Detroit last month.
Founded a century ago, Whirlpool bought smaller Maytag Corp. in 2006 for $2.6 billion to compete with appliance makers in Asia.
After closing nine factories in North America since the merger, the company still operates nine plants in the U.S., with about 17,500 workers, and says 82 percent of the units sold in the U.S. are domestically made. Whirlpool can claim the tax credit only for appliances produced in the U.S.
Globally, Whirlpool employs 71,000 people.
Sales at the appliance maker rose 7 percent to $18.4 billion last year after dropping during the housing slump of the previous two years. In the year-earlier quarter, the company attributed a rise in revenue to increased productivity.
Tax Rates
Whirlpool had negative effective income tax rates in 2010, 2009 and 2008. Last year, the company reported an income tax benefit of $64 million and an effective tax rate of negative 10.9 percent, according to company filings. The company expects a similar tax benefit in 2011, corporate controller Larry Venturelli told analysts today.
The company relies more heavily on the credit than do other appliance makers such as Electrolux AB and General Electric Co., said Laura Champine, an analyst at Cowen & Co. in New York.
Electrolux, based in Stockholm, is accruing the credits for future use against its U.S. tax liability, chief financial officer Jonas Samuelson told analysts.
Tax Benefits
He said they have the same opportunities for tax benefits that are quite similar to Whirlpool when it comes to energy tax credit, however, they can’t realize them to earnings to the same extent.
Congress created the appliance manufacturing tax credit in 2005. It was extended for a year in December in a broader tax law. The congressional Joint Committee on Taxation estimated that a one-year extension would cost the government $235 million in forgone revenue over the next decade. That’s higher than the $78 million estimate it issued last year, before officials realized how much of a benefit the credit provides to Whirlpool.