28 December 2012

Ski resorts hope for snow, cold temps

originally appeared in The Traverse City Record-Eagle:

Bing Crosby isn't alone in his lament for a White Christmas.
The region's ski resorts are watching weather forecasts and getting ready to pull the triggers on their snowguns, as soon as temperatures dip to 28 degrees or lower.

Winter storm "Draco" hit the Pacific Northwest early this week and is working its way to the Midwest. The National Weather Service said a likely scenario has a low-pressure system tracking south of northern Lower Michigan, which would mean cold and a distinct possibility of heavy blowing and drifting snow with significant lake effect snow through the weekend.
Bring it on, local ski resort operators said.

If we lose Christmas week, we lose about half of our operating budget for the whole year, according to the executive director at the nonprofit Mt. Holiday in Traverse City, which is scheduled to open Friday. We were anticipating being open and going full bore the 21st through the  7th of January. We were counting on those 10 days; we usually do between $200,000 and $250,000 during the 10-day period.

Mt. Holiday has sold about 500 season passes so far this year, according to their food and beverage director. Hill officials have made snow a few times, but need colder temperatures to go at it full-tilt. A little of the natural stuff wouldn't hurt, either.

We've got the guns out, they're pointed, our snowmaking guys are ready and on call, the food and beverage director said, describing the recent weather as kind of like running a tiki bar and having it rain everyday.

Shanty Creek Resorts near Bellaire also plan to officially kick off the season Friday, after opening last week. We're definitely not happy with the amount of snow that has fallen and lack of cold temperatures to make the snow. And certainly, rain does not help, according to their marketing manager.  Our base is holding, but we're not as far into snowmaking as we would like to be.

On Monday, Nubs Nob president and general manager said the resort was operating with at least 20 runs, after having 23 open on the weekend. Nubs Nob does about 30 percent of its ski business during the holiday period.

The forecast for a significant snowstorm arriving Thursday with up to eight inches of snow and four to five days of the coldest air of the season moving in behind it continues to get reinforced, he said Tuesday. This will enable us to make snow like crazy and likely be 100 percent open for the holidays.

At Boyne Highlands near Harbor Springs and Boyne Mountain in Boyne Falls, their spokeswoman reported bases in the 16- to 24-inch range Monday. She said the Highlands' 15 trails equate to 200 skiable acres — the most open in Michigan right now.
Of course, we never want to see any of that drizzly weather, but actually, conditions have held up really well, she said.

She was also excited about the weather forecast.
(It) would be a welcome sight for the Christmas holiday, adding fresh snow on the slopes and would also allow us to open some of our cross-country trails, she said.

Crystal Mountain near Thompsonville opened Dec. 14 and is operating with one lift and three runs and a 20-inch base, according to their public relations manager. Crystal planned to be open Thursday from noon to 6 p.m. and Friday, Saturday and Sunday from 9 a.m. to 9 p.m.
We'll be making snow whenever we can, he said. And we'll open additional runs, lifts and terrain as soon as possible.

24 December 2012

Michigan's Right-To-Work and The Hostess Bankruptcy: The Two Non-Stories Of the Year

originally appeared in Forbes:

Op/ed editors are more privy than most to what’s on the minds of opinion writers. There’s no money to be made on this information, but editors know ahead of time what the commentariat considers news.

Over the past six weeks this editor of what is a consciously libertarian page has been inundated with all manner of downcast op/eds on the Hostess bankruptcy, followed by upbeat ones about Michigan instituting a right-to-work law. While the submissions were almost invariably good, it says here that they were a near total waste of time.

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Considering Hostess, the fact that it’s a great brand with even better snack foods (my favorite are the chocolate chip muffins) means that soon enough someone will buy the company out bankruptcy. Thank goodness. Bankruptcy, though trumped up by bank and car bailout apologists as code for disappearance, really only means a positive change of ownership.

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Still, amid Hostess’s hurtle toward bankruptcy copious amounts of ink were spilled on how the snackmaker’s decline signaled the horrors of labor unions stuck in the past. About this, labor unions are stuck in the past for presuming that the very investors who set wages will give in to their wage demands, but that’s really beside the point.

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Not asked enough amid Hostess’s decline was why its management employed American workers to begin with. Forget about the fact that the workers were unionized and led by unions demanding absurd levels of compensation, the better question was why Hostess snacks were being baked in the U.S. at all.

Mass production of sugary U.S. goods is very much yesterday’s work, so for so many conservative and libertarian commentators to frame the Hostess story as one of profit-seeking management beset by gluttonous unions was for them to miss the real story. It wasn’t one about an iconic brand thrown into bankruptcy by greedy unions; rather the real, unreported story was that Hostess’s decision to bake its goods in the U.S. was a waste of limited labor, and as such, anti-profit.

If not by labor unions, the very presumption of Hostess’s management that it could profitably mass produce Hostess snacks in the U.S. ensured its future bankruptcy, or departure from the U.S. Of course when Hostess is inevitably purchased, it’s a fair bet that its new owners will quickly shift production to Mexico or some reasonable facsimile.

The above will constitute a good story about free trade and the always healthy division of labor, though it’s a near certainty that when this happens, conservatives and libertarians who should know better will frame the out-migration as evidence of the horrors of labor unions. Not defending unions for a second (though individuals should be allowed to sell their labor any way they wish, including from within unions), they’re really not the Hostess story.

Moving to last week, economically depressed and unionized Michigan adopted a right-to-work law that will give the individual the freedom to not pay dues and not join a union in a unionized workplace. Hysterics on the left talked up the cruelty of such an anti-worker law, but the real truth there is that those who feel their needs are better served by unions will still be free to join them.

On the right, those made downcast by Hostess’s bankruptcy were positively ecstatic about what had transpired in the Wolverine state. In a sense their excitement was warranted when we consider that the right to free association is one of our most fundamental ones. The shame is that states can restrict such a right as is.

After that, there’s really no story to the story that captivated so many who lean capitalist. Indeed, if it’s true that investors, not CEOs, ultimately set wages, and it is, good luck finding investors willing to fund such a labor intensive business in today’s United States. Labor intensive production has long been moving offshore, and that’s been a good thing for the economy as U.S. workers migrated to higher value service work.

About the above, those who should once again know better would cite unions as the cause of work being moved offshore, but this would be a false read. The better answer is that basic economics has pushed low value work out of the United States. As evidenced by low factory pay in China, investors have long understood that the work is worth the price of a Starbucks latte – and falling – on a daily basis, so factory jobs would have left no matter the status of labor unions in the United States.

Much as the economic nostalgists in our midst might wish otherwise, factory labor is yesterdays’ work, and the pay is all the evidence we need. If ever manufacturing jobs come roaring back to the U.S., we’ll know we’re in trouble. Investors loathe backwards moving economies, and manufacturing screams blast to the past. Enough said.

Of course union bashers will trot out statistics showing that job creation is greater in right-to-work states, but it seems here the economists who divine these statistics are mistaking cause and effect. Indeed, what investor would commit capital to any kind of business that has the potential to be unionized as is?

Instead, it’s probably a safe bet that states which coddle unions are generally less pro business than are states that don’t. Businesses that can be unionized increasingly don’t make sense (see the bankruptcies of airlines and car companies, plus their friends in Washington) absent political pull, so the existence or lack thereof of a right-to-work law wouldn’t matter much in today’s advanced economy. But businesses to varying degrees migrate to the environments most conducive to business, which likely explains the job disparity.

Back to Hostess, one can only hope it’s sold soon so that its numerous devotees can start enjoying its snacks again. As for Michigan, it should be applauded for embracing a law that is pro business; the problem again that unions lost economic relevance long ago. Because they did, the Hostess/union story is a non sequitur, while the Michigan one is mostly meaningless as it applies to the state’s economic health.

14 December 2012

Right to Work is signed into law in Michigan

originally appeared on CNBC:

A trained aerospace engineer applied his penchant for data analysis and systematic approach to his new job in early 2011: a Michigan state senator, recently elected and keen to create jobs in the faded industrial powerhouse.

Those skills paid off handsomely for the first-term Republican this week as Governor Rick Snyder signed into law bills co-sponsored by the new state senator that ban mandatory union membership, making Michigan the nation's 24th right-to-work state.

From outside Michigan Republican circles, it appeared that the Republican drive to weaken unions came out of the blue - proposed, passed and signed in a mere six days.

But the transformation had been in the making since March 2011 when state senator Colbeck and a fellow freshman, state Representative Mike Shirkey, first seriously considered legislation to ban mandatory collection of union dues as a condition of employment in Michigan. Such was their zeal, they even went to union halls to make their pitch and were treated respectfully, Colbeck said.

The upstarts were flirting with the once unthinkable, limiting union rights in a state that is the home of the heavily unionized U.S. auto industry and the birthplace of the nation's richest union, the United Auto Workers. For many Americans, Michigan is the state that defines organized labor.

But in a convergence of methodical planning and patient alliance building - the systematic approach - the reformers were on a roll, one that establishment Michigan Republicans came to embrace and promised to bankroll.

Republicans executed a plan - the timing, the language of the bills, the media strategy, and perhaps most importantly, the behind-the-scenes lobbying of top Republicans including Snyder.

They knew they would likely face an acrimonious battle of the kind they had seen over the last two years in the neighboring state of Wisconsin between Republican Governor Scott Walker and unions. Operating in plain sight but often overlooked, they worked to put the necessary building blocks in place.

This was a risky move across-the-board and I wanted to make sure all of my (Republican) caucus members would come back to serve with me after the next election, said the state senator, who ran for office after whetting his political appetite as a Tea Party activist.

November elections turned out to be key to the December move. House Republicans lost five seats, making passage in January a more difficult proposition than pushing through legislation in the lame-duck session.

But the November elections had also served up a crushing referendum defeat for unions, which Republicans saw as a sign that public opinion would be behind them in their move to curb organized labor's power.

Bottom Up

For his maiden initiative, Colbeck found inspiration in the troubling 2010 census numbers. Michigan was the only state in the United States to see its population fall during the previous decade and he wanted to reverse that trend. People will not come back without jobs, his thinking went. That's when Colbeck concluded that right-to-work was required to bring in new investment.

They built from the grassroots, bottom up, rather than from Snyder and top leaders in the legislature. If anything, Michigan Senate Majority Leader Randy Richardville was viewed as an obstacle because he represents a labor-friendly area.

Together with a former Republican member of the Michigan House who supported right-to-work, and a small group of other activists, they founded the "Michigan Freedom to Work" coalition, which sought to capitalize on Republican control of the state legislature and the governorship.

They held press conferences in June 2011 and in September 2011 took their show to the Republican Leadership Conference on Michigan's Mackinac Island. In attendance were Republican presidential candidates Mitt Romney and Rick Perry as well as Republican National Committee Chairman Reince Priebus.

As a sign of growing support among conservatives for right-to-work, there were hundreds of activists in attendance wearing yellow "Freedom To Work" T-shirts.

A group linked to the conservative billionaire Koch Brothers, owners of an energy and trading conglomerate who are reviled by unions and Democrats, held three conferences in Michigan in early 2012 on right-to-work featuring renowned conservative blogger Andrew Breitbart. Three Republican presidential candidates including Romney and some 1,500 activists attended the last conference on Feb. 25 sponsored by Americans for Prosperity, four days before Breibart's death.

The right-to-work campaign gathered momentum when the activists linked up with Dick DeVos, the son of Richard DeVos, co-founder of Michigan-based Amway, and Ronald Weiser, former chairman of the Michigan Republican Party and ambassador to Slovakia under President George W. Bush.

Richard DeVos was listed as the 67th richest person in America by Forbes magazine in 2012 with a net worth estimated at $5.1 billion. Amway sells consumer goods such as skincare and home cleaning supplies through some 3 million people and its parent company had sales of $10.9 billion in 2011.

Dick DeVos and Ron Weiser travel in a certain rarefied atmosphere, Colbeck said, holding his hand above his head to indicate how far above him they are.

The wealthy businessman and the political guru both worked to persuade wavering Republican lawmakers by assuring them they would have financial support if they faced recall elections over right-to-work, as happened in Wisconsin, Colbeck, Hoogendyk and other Republicans said.

Asked if he had promised campaign financial support to nervous Republicans, DeVos, who ran unsuccessfully for governor in 2006, said in a telephone interview that he is pleased if he was able to help encourage legislators to truly vote their conscience without fear of political retribution from the other side, which is known for its heavy-handed tactics.

By the summer of 2012, Colbeck said supporters had gathered enough Republican votes to pass right-to-work in Michigan, but decided to wait until after the November election.

According to Colbeck, we wanted to be able to focus on the candidates during the election rather than have this distraction.

Battle Over Ballot Measure

Republicans said a key factor in passage of right-to-work was what they consider an overreach by unions in Michigan.

On March 6 of this year, a union group including United Auto Workers union president Bob King announced that they would seek a November ballot initiative to enshrine in the Michigan constitution the right to collective bargaining.

It was a power grab. In retrospect it was a huge mistake, according to the Michigan state director of Americans For Prosperity, a conservative non-profit partially funded by the Koch brothers.

At a public meeting of labor and corporate officers last summer, Snyder said he deliberately pleaded with union leaders not to go forward with the ballot initiative.

If you do this, you should anticipate you're going to create a divisive discussion on right-to-work also, Snyder told Reuters in an interview on Wednesday, recalling his remarks.

Unions pressed forward and some Republicans say that this essentially blew up a gentlemen's agreement between the unions and Republicans that neither would rock the boat on labor legislation in Michigan.

UAW President Bob King told Reuters that labor leaders pursued Proposal 2 because they expected a Republican push on right-to-work regardless.

The battle over Proposal 2 was nasty. Protecting Michigan Taxpayers, a group backed by DeVos, spent $22.7 million to oppose it, according to campaign finance disclosures filed with the state. DeVos family members alone provided $1.75 million of its funding, the records show.

Protect Working Families, a group backed by a union coalition that included the UAW, spent $22.9 million supporting Proposal 2, according to reports filed with the state. The UAW contributed about $5.6 million to that committee.

The proposition went down to defeat by 57 percent to 43 percent. Republicans interpreted this as suggesting that the public would support right-to-work, Colbeck said.


After the November election, activists decided that the time was ripe to bring up right-to-work.

Snyder indicated as soon as the election ended, the dialogue on right-to-work just really ramped up.

Activists viewed Senate leader Richardville as the most hesitant of the Republican leadership. Rather than confront him, sponsors quietly tried to convince him and lobbied other members of the Republican caucus.

Richardville, who says he hails from a union family, admitted that he was hesitant about right-to-work and said he made his mind up slowly as he saw the support in his Republican caucus.

There wasn't a eureka moment in that I finally see the light or a moment to jump up and down, he told Reuters.

Snyder, a former computer executive who had campaigned as a moderate in the 2010 election, had said for nearly two years that right-to-work was too divisive for Michigan, but said he would sign a law if the legislature passed it. After the election he tried to get labor leaders and Republicans together to discuss a compromise but he said those talks failed.

Snyder and Richardville both told Reuters that they had made up their minds to go through with right-to-work legislation after a Dec. 5 meeting with longtime right-to-work advocate state House Speaker Jase Bolger. Snyder announced the decision a day later and the draft laws were given preliminary approval by the legislature within hours.

Sponsors inserted in the laws a provision allocating $1 million to implement the laws, a shrewd way to make it harder to overturn the laws by referendum because Michigan's constitution bars challenges of spending bills.

A media campaign was rolled out. Television advertising appeared across the state extolling the virtues of right-to-work produced by an agency linked to an associate of Dick DeVos.

Democrats and unions were outraged and said they were blindsided. More than 12,000 people demonstrated on the grounds of the state Capitol in Lansing. They floated giant gray balloons of rats named Snyder, Richardville, Bolger and DeVos.

It was too late. Republicans gave final approval to the bills while union members marched outside the building. Snyder signed them into law within hours.

Democrats have vowed retribution at the polls, suggesting possible recall elections of Michigan Republicans.

There's been two or three recall attempts on me already, Snyder said. When you're reinventing a state you're asking for large-scale change and when change comes, some people don't like it.

UDM Law School clinic hopes to expand reach with new location

originally appeared in The Detroit News:

The University of Detroit Mercy Law School clinic's move to a renovated former downtown firehouse should be just the draw for clients seeking free legal services, officials said.

It's a great mix of the old and the new, according to the director of the law clinic. Since it was formerly a fire house, we like to think … as lawyers and law students we put out fires, but in a different way.

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The two-story, 6,000-square-foot building at 585 Larned still has its red fire doors and circular metal staircases. The law clinic includes a client reception area, student work areas, two conference rooms and faculty offices.

The new George J. Asher Law Clinic Center, a $1.5 million project completed Dec. 3, will be dedicated in a special ceremony Tuesday.

The dean of the UDM Law School, said he hopes moving the clinic from its former spot in Saints Peter and Paul Church on St. Antoine Street between Jefferson Avenue and Larned Street to the fire house will draw a larger clientele.

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Last year, more than 1,400 clients received legal assistance through the clinic, Semple said. He said he expects the new space to not only draw new clientele, but also increase student participation.

The dean said the glazed brick really adds to the beauty of the surroundings.

The school began considering more than a year ago a move to the fire house, which had been vacant for almost 10 years. Its previous owners had gutted the building for use as a recording studio.

The UDM dean noted the fire poles had to be removed for student safety, and there's a great deal of light that comes in on the first floor.

Several students said they like the new setup.

I think (the clinic) will be better organized with things being in one place,  said one third-year law student, who had to drive to her professor's office to access files for her immigration law clinic.

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Another third-year law student, said the new clinic is a more professional space and is easier for clients to find. (Students) put everything into representing our clients, she said. Having some place where we have resources and that clients won't struggle to find — it looks good.

The law school opened its first urban clinic 47 years ago. It operates 10 clinics in topics ranging from immigration and mortgage foreclosure to urban law.

The new clinic is named for George J. Asher, a union activist who was months shy of graduating from the law school when he died in 1963 from complications from hemophilia, said a UDM law alumnus who partially funded the project in honor of his brother .

Other contributors include the McGregor Foundation as well as other notable contributors.

A fourth-year law student who recently completed a state appellate defender clinic, said the new clinic helps set a standard for clients. Even though we're students, we're prepared and just as able to take your case on.

Adds the dean: The more people know about it the more people will come and seek our service.

13 December 2012

Right to Work in Michigan

originally appeared in The Wall Street Journal:

In November, unions lost big in Michigan when voters rejected Proposal 2, Big Labor's plan to canonize collective bargaining in the state constitution. Now they're facing a backlash with the happy possibility that Michigan could become the 24th right-to-work state.

Lawmakers have been preparing to introduce a right-to-work bill in the state legislature, and the labor cavalry is heading to the Wolverine state. According to the United Auto Workers website, the union will rally Thursday in Lansing to spook lawmakers out of going through with the bill.

Target No. 1 is Governor Rick Snyder, who held a press conference on Tuesday to say that right to work was on the agenda for "thoughtful discussion." That's a shift for Mr. Snyder, who has tiptoed around the topic since he was elected, saying it wasn't a battle he was looking for. Unions took his soft touch as a sign of weakness and pushed Proposal 2, which would have given them a virtual veto over all union-related legislation.

Meanwhile, the economy has languished. Michigan is the fifth most unionized state in the country and the birthplace of the UAW. According to the Mackinac Center for Public Policy, Michigan has lost 7,300 jobs since January, while next-door Indiana, which became a right-to-work state earlier this year, has been on the upswing.

According to the Indiana Economic Development Corporation, the state has a record number of businesses choosing to expand or set up in the state, including Amazon and Toyota. The 220 companies will create some 21,000 new jobs and invest $3.6 billion. The growth has come despite a decrease in the average tax incentives offered by the state to $8,900 from around $37,000 in previous years.

Republicans hold a 26-12 majority in the Michigan Senate and a 64-46 majority in the state House. According to a recent poll by Mitchell Research & Communications for a right-to-work advocacy group, 51% of Michiganders support a right-to-work law while 41% are opposed.

That's important because if a right-to-work law passed the legislature, unions could still try to repeal it on the ballot, as they did this year with the emergency manager law, which let the Governor appoint emergency financial managers who could redo collective-bargaining agreements. By the time a similar fight could be waged against right to work, voters could have had more than a year to see the law's economic benefits.

The AFL-CIO has said that politicians who oppose Big Labor would pay a steep political price, but it's not turning out that way. In Indiana, Republicans picked up nine seats after the right-to-work law passed and lawmakers who made the law a key part of their agenda won by wide margins. If that's the price they pay, Michigan's politicians should be all in.

28 November 2012

GM Trending Towards a Younger Workforce

story first appeared in The Detroit News

The new generation of automotive manufacturing workers at a General Motors Co. subsidiary here is focused on career and environment, and they want to work with cutting-edge technology.

That's part of what attracted many millennials — roughly defined as those born in the 1980s and 1990s — to help create an integral part of the future of the automobile: They're assembling lithium-ion batteries for the Chevrolet Volt extended-range plug-in and the equivalent cars the automaker sells in Europe and Australia.

The Brownstown Battery Assembly Plant, in a former warehouse with little to identify it as a GM plant, represents the Detroit automaker's youngest workforce. It is operated by a GM subsidiary, GM Subsystems Manufacturing LLC. And 45 percent of its hourly workforce is composed of 24-to-31-year-olds.

That's a huge contrast to other GM plants, where that generation, on average, represents 9 percent of the workforce. The average GM U.S. hourly worker is 47 years old.

About 70 hourly workers and 35 salaried workers assemble packs for the Volt that contain 288 lithium-ion cells manufactured by LG Chem. Trucks arrive four times a day to take battery packs to the nearby GM Detroit-Hamtramck Assembly Plant, where they go into the Chevrolet Volt, Holden Volt and Opel Ampera. Late next year, the Brownstown plant expects to start assembling batteries for the plug-in Cadillac ELR coupe.

Most of Brownstown's hourly employees have not previously worked for GM. Many, including the plant's youngest employee, Valerie Myaard, 24, of Flat Rock, had no auto or manufacturing experience. She started in May 2010 and now is a team leader, overseeing five workers.

Young seek new challenges

GM partnered with Scratch, a Viacom company, to help research young workers. It found they are quick to seek new challenges, are able to multitask and want to move up the career ladder.

Many Brownstown workers have held multiple jobs since the plant opened in 2010.

They also have worked together to develop the best and most effective ways of doing things. They determined where to set up components on a cart for assembly workers to use.

Even the plant's union shop chairman is just 27.

But attracting talented younger workers who see the auto industry as a career has been a challenge. It also is something Gov. Rick Snyder has said is vital to its success.

Jay Baron, president and CEO of the Center for Automotive Research in Ann Arbor, said in a statement that GM is just now starting to see a trend in the average age of the hourly worker in the auto industry.

Some workers thought a GM career was out of reach. Shannon Pearson, 28, of Taylor is one. She had family ties to GM and had a short-lived job at a GM plant in 2006.

Excited about technology

Many of the younger workers at Brownstown are relishing their roles working with new technology.

Brett Powell, 31, of Hartland, who has worked as a technician at the proving ground and worked for a small firm that manufactured electric vehicles, runs tests on returned batteries to find the cause of a failure.

Many at Brownstown have moved up the ranks quickly, including Tony Lamentola, 26, of Southgate. The college student previously worked as a porter and fast food restaurant employee. After starting at Brownstown in 2010, he was promoted last fall to team leader.

Lamentola said he likes being on the "forefront of technology" and sees the importance of getting young people involved in the auto industry.

Michigan Funds Delayed by Detroit City Counsel

story first appeared on mydesert.com

The Detroit City Council delayed a vote Tuesday on one of two key contracts the state said the city had to approve to avoid going broke by year's end, throwing into question whether the state will release funds Detroit needs to meet payroll and pay other bills in a matter of weeks.

The council also unanimously rejected a four-year, $48-million no-bid contract that Mayor Dave Bing's administration sought for a major overhaul of the city's Department of Water and Sewerage that would have terminated 81% of its workers over five years and outsourced hundreds of jobs.

But it was the delay of the contract for the Miller Canfield law firm that ignited a war of words between Bing's administration and council members, who traded blame for a last-minute decision that put the city's cash flow at risk.

Now the city will not receive the first $10 million that had been set for release Tuesday, according to Bing, who hired the firm to advise him on the city's financial stability agreement with the state.

An angry council President Charles Pugh accused Bing of being disingenuous and forced to accept a deal holding $10 million hostage over the hiring of one company.

It wasn't clear what immediate effect, if any, the delayed vote would have on the city's ability to pay bills, but the stakes were colossal, with the Bing administration warning that Detroit risks a cash shortage of $3 million-$5 million by mid-December.

Caleb Buhs, a spokesman for state Treasurer Andy Dillon, said the actions Detroit must take for the state to release $30 million in bond proceeds held in escrow -- $10 million this week and $20 million in December -- were made clear in an agreement on reform benchmarks that the state and Bing's administration released last week.

Buhs said if the milestones are not completed, the funds will not be released from escrow.

Krystal Crittendon, the city's top lawyer, told the council she could not recommend approving a contract with the Miller Canfield law firm because of concerns such as whether there is a conflict of interest.

Specifically, Crittendon said the $300,000 contract for Miller Canfield could pose a conflict because, she and several council members said, the same firm had a role in the so-called milestone agreement laying out reform benchmarks the city must meet in order to be able to get bond-sale proceeds. The firm also had a hand in crafting Public Act 4, the emergency manager law that voters repealed two weeks ago, and in drafting the financial stability agreement.

The council voted 8-1 to table the contract, with council President Pro Tem Gary Brown the sole vote against the delay.

The city's program management director, William (Kriss) Andrews, who spoke in favor of the contract, left immediately after the vote.

Andrews also said it was he, in negotiation with Dillon's office, who crafted the milestone agreement, and Miller Canfield's only role in it was strictly to write its terms into a legal format, not dictate its content.

The milestone agreement is a series of goals the Snyder administration wants the city to meet in the coming months in exchange for millions from the bonds sale. The governor's office wanted the city to approve a nearly $2-million contract extension for the financial firm Ernst & Young, which the council approved, as well as the Miller Canfield contract. The council also approved a $32-million, five-year contract with Automated Data Processing to help modernize the city's antiquated and costly payroll operations.

The council, meanwhile, had little debate when it rejected the water department's proposed contract with EMA of Minneapolis.

It wasn't clear what would happen next. Water department spokeswoman Mary Alfonso said she had no immediate comment on what steps the department's board would take in the wake of the vote. Bing's office also had no comment.

25 November 2012

BCBS Gets Overhauled

Story first appeared on freep.com.

A proposal that would end Blue Cross Blue Shield of Michigan's tax-exempt status and transform the organization from a charitable trust of the state to a customer-owned nonprofit is making headway in Lansing, but not without critics trying to step in the path of the legislation to overhaul Michigan's largest health insurer.
Competitors and advocates for consumers and the elderly — including the state attorney general — have been attempting to change or stop the legislation, which was proposed by Gov. Rick Snyder and enjoyed widespread support in the Michigan Senate. The voices for and against it now are setting their sights on the House, which is holding committee-level hearings that continue Monday and plans to bring the measures to a full and final vote by year's end.
Supporters, including the company, say the aim is to level the regulatory playing field for all health insurers. The proposed overhaul aims to modernize but not sell Blue Cross, which is governed by a separate state law from other insurers and typically waits much longer for its rate changes to be reviewed. Streamlining regulations, they say, is particularly important, as health insurers gear up for the implementation of the federal Affordable Care Act and try to meet a March deadline for getting its products and rates ready for an online health exchange where people can compare and buy their own insurance plans.
Blue Cross' special status is no accident. The insurer has been designated the state's insurer of last resort — meaning it must provide insurance coverage regardless of a customer's health status. Because of that, Blue Cross has been exempt from paying several local and state taxes. The measures proposed by Republican Gov. Rick Snyder, endorsed by Blue Cross and passed last month by the Senate, require the company to begin to pay those taxes, which Blue Cross estimates will average $100 million annually.
By transforming, Blue Cross also would shed its charitable "social mission" and contribute up to $1.5 billion to a nonprofit foundation that would carry on that work. Broadly speaking, the foundation would work to improve public health and health care access, particularly for children and the elderly. About 60% of the money is earmarked in the first four years to subsidize Medigap, which fills the gap in Medicare coverage for seniors, to prevent rates from significantly rising.
It would join 12 other Blue Cross Blue Shield companies nationwide structured as mutual insurers, which means they are owned by members. Those companies operate in 14 states.
Critics say it all doesn't add up. For starters, the contribution isn't set in stone and neither is the size of the tax bill after credits are taken into account. They fear that the social mission will be diminished because it doesn't cover the more than $300 million it contributes to social mission work.
The $1.5 billion represents half of Blue Cross' book value — the organization's assets minus liabilities. Some have been calling for a full financial valuation, saying it would provide a more accurate picture of its worth.
Michigan Attorney General Bill Schuette has opposed various parts of the legislation during the past two months and successfully lobbied to get the extended subsidies for eligible seniors, among other things, into the Senate bills. This past week, officials from his office argued for the first time publicly that the specific language creating the foundation needs to be much tighter and it should be set up so the Internal Revenue Service doesn't see it as self-dealing when Blue Cross — a major supplier of Medigap coverage — receives subsidies from the nonprofit.
Mark Cook, Blue Cross' vice president of governmental affairs, said at a hearing Tuesday that the intention of the legislation is clear to Blue Cross, which plans to make annual payments. He said the insurer is open to more language provided it's not forced to make that $1.5 billion payment at one time.
Also, he said, what some call "social assets" paid by Blue Cross in Michigan are viewed by the organization as losses. Blue Cross reported about $300 million in losses last year related to the subsidies it pays for Medigap and money it loses on individual insurance products because they tend to get the sicker folks.

Ultimately, Cook said the legislation is not what we would have proposed, but the company supports it. He said Snyder wanted to go larger and create uniformity in the insurance system, so he called for a review of the 32-year-old public act that pertains to Blue Cross, which led to the proposal he announced in September to do away with it.

Regardless, any large internal change to an insurer with 4.4 million customers representing 70% of the market is going to raise concerns and should be scrutinized.

19 November 2012

5-Hour Energy Drink Cited in 13 Deaths

story first appeared on nytimes.com

Federal officials have received reports of 13 deaths over the last four years that cited the possible involvement of 5-Hour Energy, a highly caffeinated energy shot, according to Food and Drug Administration records and an interview with an agency official.

The disclosure of the reports is the second time in recent weeks that F.D.A. filings citing energy drinks and deaths have emerged. Last month, the agency acknowledged it had received five fatality filings mentioning another popular energy drink, Monster Energy.

Since 2009, 5-Hour Energy has been mentioned in some 90 filings with the F.D.A., including more than 30 that involved serious or life-threatening injuries like heart attacks, convulsions and, in one case, a spontaneous abortion, a summary of F.D.A. records reviewed by The New York Times showed.

The filing of an incident report with the F.D.A. does not mean that a product was responsible for a death or an injury or contributed in any way to it. Such reports can be fragmentary in nature and difficult to investigate.

The distributor of 5-Hour Energy, Living Essentials of Farmington Hills, Mich., did not respond to written questions about the filings, and its top executive declined to be interviewed. Living Essentials is a unit of the product’s producer, Innovation Ventures.

However, in a statement, Living Essentials said the product was safe when used as directed and that it was “unaware of any deaths proven to be caused by the consumption of 5-Hour Energy.”

Since the public disclosure of reports about Monster Energy, its producer, Monster Beverage of Corona, Calif., has repeatedly said that its products are safe, adding that they were not the cause of any of the health problems reported to the F.D.A.

Shares of Monster Beverage, which traded above $80 earlier this year, closed Wednesday at $44.74.

The fast-growing energy drink industry is facing increasing scrutiny over issues like labeling disclosures and possible health risks. Some lawmakers are calling on the F.D.A. to increase its regulation of the products and the New York State attorney general is investigating the practices of several producers.

Unlike Red Bull, Monster Energy and some other energy drinks that look like beverages, 5-Hour Energy is sold in a two-ounce bottle referred to as a shot. The company does not disclose the amount of caffeine in each bottle, but a recent article published by Consumer Reports placed that level at about 215 milligrams.

An eight-ounce cup of coffee, depending on how it is made, can contain from 100 to 150 milligrams of caffeine.

The F.D.A. has stated that it does not have sufficient scientific evidence to justify changing how it regulates caffeine or other ingredients in energy products. The issue of how to do so is complicated by the fact that some high-caffeine drinks, like Red Bull, are sold under agency rules governing beverages, while others, like 5-Hour Energy and Monster Energy, are marketed as dietary supplements. The categories have differing ingredient rules and reporting requirements.

In an interview Wednesday, Daniel Fabricant, the director of the agency’s division of dietary supplement programs, said the agency was looking into the death reports that cited 5-Hour Energy. He said that while medical information in such reports could rule out a link with the product, other reports could contain insufficient information to determine what role, if any, a supplement might have played.

Mr. Fabricant said that the 13 fatality reports that mentioned 5-Hour Energy had all been submitted to the F.D.A. by Living Essentials. Since late 2008, producers of dietary supplements are required to notify the F.D.A. when they become aware of a death or serious injury that may be related to their product.

Currently, the agency does not publicly disclose adverse event filings about dietary supplements like 5-Hour Energy. Companies that market energy drinks as beverages are not required to make such reports to the agency, although they can do so voluntarily, Mr. Fabricant said.

Along with caffeine, 5-Hour Energy contains other ingredients, like very high levels of certain B vitamins and a substance called taurine.

Reached by telephone, the chief executive of the Living Essentials, Manoj Bhargava, declined to discuss the filings and said he believed an article about the reports would cast the company in a negative light. .

Subsequently, the company issued a statement that said, among other things, that it took “reports of any potential adverse event tied to our products very seriously,” adding that the company complied “with all of our reporting requirements” to the F.D.A.

The company also stated that it marketed 5-Hour Energy to “hardworking adults who need an extra boost of energy.” The product’s label recommends that it not be used by woman who are pregnant or by children under 12 years of age.

The number of reports filed with the F.D.A. that mention 5-Hour Energy appears particularly striking. In 2010, for example, the F.D.A. received a total of 17 fatality reports that mentioned a dietary supplement or a weight loss product, two broad categories that cover more than 50,000 products, according to Mr. Fabricant, the F.D.A. official.

He added that it was difficult to put the volume of 5-Hour Energy filings into context because he believed that some supplement manufacturers were probably not following the mandated reporting rules and that consumers and doctors might also be unaware that they can file incident reports with the agency. Last year, the F.D.A. received only 2,000 reports about fatalities or serious injuries that cited dietary supplements and weight loss products, he said.

Another federal agency, the Substance Abuse and Mental Health Services Administration, reported late last year that more than 13,000 emergency room visits in 2009 were associated with energy drinks alone.

Along with Living Essentials, The Times sent queries last week to several producers asking whether they had received reports linking fatalities or serious injuries to their products.

Representatives for two of those companies — Red Bull and Coca-Cola, which sells NOS and Full Throttle — said they were unaware of any such reports. A representative for PepsiCo, which makes Amp, also said it was unaware of any such reports.

In addition to Red Bull, NOS, Full Throttle and Amp are also marketed as beverages, rather than as dietary supplements.

01 November 2012

Ford Reports Its Best-Ever Quarter in North America

story first appeared on usatoday.com

Ford reported a third-quarter net income of $1.6 billion, driven by its best-ever quarter in North America.

Pretax profits of $2.3 billion in North America more than made up for a $468 million pretax loss in Europe, but the drag left the net results down 1% from the quarter a year ago.

Revenue was $32.1 billion for the quarter, down 3% from a year ago, and operating profit was $2.2 billion.

While Ford remains very dependent on North America, the company said it reported a profit in Asia and Africa, and remained in the black in South America.

Ford this month had said its losses in Europe this year could exceed $1.5 billion -- up from a $1 billion forecast that surprised analysts in July. Some of the additional loss is related to costs to its plan also announced this month to shutter three operations in the U.K. and Belgium, starting next year. Ford is cutting 5,700 jobs in addition to offering 500 salaried buyouts.

It could take automakers years to right themselves in financially troubled Europe, and the costs will be staggering. Art Wheaton, auto expert at Cornell University's Industrial and Labor Relations School thinks it will cost Ford $1 billion to close those plants.

Wheaton says because of tough actions sooner instead of later, Ford will come out on top in Europe.

The U.K. plants close next year, and Ford plans to shut Belgium in 2014.

The earnings per share of 40 cents beat Wall Street expectations of 30 cents, and surpassed 34 cents a year ago.

The company narrowed its guidance for U.S. auto sales this year to 14.7 million. Until now, Ford gave a range of 14.5 million to 15 million.

As expected, the results were stronger than the second quarter when Ford reported a 57% drop in earnings of $1.04 billion with losses in Europe that reached $404 million. Pretax earnings were $1.8 billion.

South America saw modest operating income of $9 million, below a year ago.

In Asia-Pacific and Africa where Ford is investing heavily to get a bigger foothold in the market, especially China, the automaker had a $45 million pretax profit compared with a $43 million loss a year ago.

Ford's shift to smaller cars should get credit for much of Ford's success, says Jesse Toprak, senior analyst at TrueCar.com. He says North American sales indicate improved profitability for the company.

On Monday, Chrysler reported a third-quarter profit of $381 million, up 80% from a year ago.

General Motors is scheduled to report its earnings Wednesday.

Beaumont Health System Merges with Henry Ford Health System

story first appeared in Detroit Free Press

Here's a multiple-choice question about the big hospital hookup plan unveiled Wednesday by the Beaumont and Henry Ford health systems, which plan to join 10 hospitals and 41,000 employees in a giant not-for-profit marriage.

Is it:

(a.) Scary?
(b.) A necessary survival move?
(c.) An opportunity to forge a medical supersystem with cachet to rival names like Mayo, Johns Hopkins or Cleveland Clinic?
(d.) All of the above?

Let's go with (d.) as the correct answer, for the following reasons:

  • Giant mergers are always scary in any industry. Scary to employees who fear they will lose jobs in the name of synergy; scary to competitors; scary to suppliers who fear being squeezed, and scary to consumers who fear being treated like numbers by large institutions and worry they will become specks of dust to an even larger corporate behemoth.
  • Survival is indeed Job One in health care today, as pressure intensifies to control per-patient spending by spreading fixed costs across a larger population.

"We have a tsunami coming with Medicare," Henry Ford CEO Nancy Schlichting said of the aging baby boom generation. In other words: How on Earth will we possibly pay those looming bills?

It's also true that Henry Ford and Beaumont are highly regarded hospitals with national reputations in robotic surgery, heart and vascular services, transplants and quality care. Combining them holds potential to attract more research grants from outfits such as the National Institutes of Health, and to attract more patients from around the world for specialty treatment.

Executives of the two hospital systems were careful Wednesday to sidestep talk of possible facility closings or staff layoffs, but the phrasing of a few of their comments left little doubt that they will be looking for savings, if and when they close a deal by mid-2013.

Schlichting said in the short run they're not planning the closure of any facilities. Note the preface: "in the short run."

 Beaumont CEO Gene Michalski said that there is a demand for "higher quality at less cost." "At less cost" being the key words.

According to Schlichting, the merger is an opportunity to make sure there is a more efficient model for care.

We all know what "a more efficient model" means -- careful cost control -- but Schlichting knows that is essential to survival, which makes other things possible.

Sandy Pierce, chairwoman of the Henry Ford Board of Trustees, talked about "growing" the new entity. But how do you grow by just merging two nonprofit groups, without an infusion of new cash that a for-profit partner might have provided?

Pierce predicted that the larger scale would help draw more patients from outside Michigan -- and hinting that future acquisitions in other states are possible.

Steve Howard, chairman of Beaumont's Board of Trustees, agreed that out-of-state expansion is possible down the road.

If all that sounds grandiose for a couple of outfits that are toiling today in a challenging environment, as bond rating agencies have candidly stated, it's not unattainable.

A big reason for confidence is the leadership at Henry Ford and Beaumont, and specifically the presence of Schlichting, 57, a rock star in the health care field, a director of the American Hospital Association and current chairwoman of the Detroit Regional Chamber.

While the Beaumont and Henry Ford leaders said Wednesday that no decisions have been made yet on the future CEO and governance team, Schlichting is a good bet. She's younger than Beaumont CEO Michalski, 64.

17 October 2012

Michigan Man Loses Wife to Meningitis

Story first appeared on themonitor.com

Days after taking his wife off life support, George Cary got a phone call that confirmed his suspicions: Her meningitis-related death was linked to tainted steroid injections at a Michigan clinic that had regularly treated her back pain.

The doctor on the call had more tough news. Cary's own back injections in September may have come from a contaminated batch too.

Cary went to an emergency room last weekend for a spinal tap. The test results aren't in yet, so he is left to wait and say goodbye to his wife, 67-year-old Lilian Cary, at a memorial service Tuesday.

Cary, 65, told The Associated Press from a funeral home in Howell, 60 miles northwest of Detroit
 there was nothing abnormal after watching for symptoms.

Michigan has at least 21 cases of meningitis related to steroid shots made by a specialty pharmacy in Massachusetts. Those cases include the deaths of Lilian Cary and a 56-year-old woman whose identity and hometown haven't been released by public health officials.

Meningitis is an inflammation of the lining of the brain and spinal cord, and a back injection would put any contaminant in more direct contact with that lining. Separately, a Michigan resident developed a nonmeningitis fungal infection after being injected in a joint, not the back, the state Department of Community Health reported.

Lilian Cary died Sept. 30. She had been ill since late August, but meningitis wasn't detected until Sept. 22, her husband said.

Nonetheless, her health seemed to be improving at University of Michigan hospital.

But she became unresponsive Sept. 26, and eventually was removed from life support after suffering a stroke, he said.

Cary said he was informed Saturday that his wife had been treated with tainted steroids for back pain. The doctor at Michigan Pain Specialists in Brighton, one of four Michigan clinics to get shipments from the Massachusetts pharmacy, said Cary also was at risk.

No one could be reached for comment Monday at Michigan Pain Specialists. The phone number was repeatedly busy. Reporters visited many physician offices, employees would not respond. All that could be seen were rolling doctor bags scattered throughout the building.

Lilian Cary was a native of Stoke-on-Trent, England, who immigrated to the U.S. in 1965 to work as a nanny. The Carys met in Mount Kisco, N.Y., and were married in 1977. They moved to Michigan in 2000 after many years in the St. Louis area and have lived in Howell since 2003.

Lilian Cary liked to play bunco, a dice game, and belonged to a club that welcomed transplants like herself to Livingston County.

13 September 2012

Closing of Muskegon's Cobb will Cost Jobs, Tax Revenue

Original article appeared in the Traverse City Record-Eagle September 9, 2012

Muskegon could lose its largest source of tax revenue along with 120 jobs if Consumers Energy shuts down its Muskegon Lake B.C. Cobb generating plant in 2015. Wind Turbine Repair may become an essential part of Muskegon's ever-changing economy. 

Stay ahead of the changing needs of your community with an Energy Systems Engineering Degree.

Instead of waiting for the economic pain of closing the 64-year-old coal-fired power plant, the company and the community has begun to look at the future of the 300-acre site on Muskegon Lake at the outlet of the Muskegon River. Not only does the B.C. Cobb plant have electrical generating assets and grid connections that could still hold value but also the largest commercial dock on Muskegon Lake.

Consumers Energy has engaged Muskegon Area First, the local economic development agency, to begin an exploration of how the Consumers Energy dock could fit into Muskegon's plans on expanding port activities.

Muskegon Area First has contracted with Rockford-Berge of Grand Rapids — an international consortium of Rockford Construction Co. and Berge, a Spanish transportation and logistics company. Rockford-Berge has been working on transportation, logistics and operational issues with the commercial wind industry and other alternative energy developments.

The Rockford-Berge study of B.C. Cobb assets and their potential use if the power plant is shuttered is being paid for by Consumers Energy, a representative with Muskegon Area First Garner said. The $40,000 study's conclusions are expected to be made available to community leaders and the public by mid fall.

Consumers Energy in 2008 invested $11 million in upgrading the B.C. Cobb plant docking facility to accommodate the huge 1,000-foot freighters that deliver coal to the power plant nearly once a week during the shipping season. Great Lakes Dock & Materials of Muskegon was the prime contractor on the construction of 1,800 feet of seawall, which replaced seawall that had been installed in the 1940s.

Consumers Energy already leases a portion of its Muskegon Lake frontage to Verplank Trucking, the Ferrysburg-based construction materials supplier. Even if the B.C. Cobb plant continues to operate, the new coal dock could be used for other needs in the port, according to a Consumers Energy spokesman.

"Even though we are not ready to define the ultimate decision on the future of the B.C. Cobb plant, there is no reason from our view that the property can't be used," said the spokesperson. "It is the deepest-water location on Muskegon Lake and it could be incorporated into future commercial shipping." The Rockford-Berge study will look at how the B.C. Cobb dock could serve multiple uses and what mixed-use could mean for such issues as security under federal Homeland Security regulations, they said.

According to Muskegon Area First, Muskegon companies and economic developers have two efforts under way in which the B.C. Cobb property could provide significant assistance.

A group of West Michigan companies led by Rockford-Berge and L3 Combat Propulsion Systems in Muskegon - including Consumers Energy — have formed the Michigan Wind Energy Consortium. The group is investigating the development of a Michigan Energy and Technology Center somewhere on the Muskegon Lake shoreline.

The B.C. Cobb plant could potentially be the location for the energy and technology center.

Muskegon and Kent counties, meanwhile, are in the final stages of creating the West Michigan Economic Development Partnership under the Next Michigan initiative of the Michigan Economic Development Corp. Garner said that the B.C. Cobb plant could be a location where specific economic development incentives under the Next Michigan program could assist a specific industrial development.

"Although we may be losing a power plant, it leaves us with a great facility as a jumping off point for future development of our port facilities," commented a representative from Muskegon Area First. "Being good stewards of the community, Consumers understands how big of a blow losing the Cobb plant will mean for Muskegon. We all want to see how this can help our port development, which has become much more of a visible asset both around West Michigan and across the state." He added the developer is trying to respond to the needs and vision of the community.

GM Dismisses Reports of Loss on Chevy Volt

Original article published in USA Today

A media report describing GM's Chevrolet Volt as a money vampire is false, according to the Detroit-based automaker. 

Reuters estimates that GM is losing as much as $49,000 on every Volt. That's $10,000 more than the extended-range electric car's sales price. But the automaker said the wire service's calculations ignored that development costs are typically spread out among all vehicles sold over the course of the model's lifetime.

GM has acknowledged it's losing money on the Volt, but won't say how much. But GM argued that its investment will pay off over time as Volt sales accelerate and the cost of the extended-range electric/generator powertrain comes down and is offered in other models over time.

The car, which can travel up to 38 miles on a battery charge before a gasoline-powered generator kicks in, has missed GM's original sales targets for 2012. It sells for $39,995 as its base price. Sales are picking up after some dealers started offering a cheap lease and California certified that single drivers can drive the Volt in carpool lanes. Chevrolet sold 2,831 Volts last month, its strongest month since its launch.

Reuters wrote that "the loss per vehicle will shrink as more are built and sold."

"Every investment in technology that GM makes is designed to have a payoff for our customers, to meet future regulatory requirements and add to the bottom line," GM said in a statement. "The Volt is no different, even if it takes longer to become profitable."

It's the latest in a series of publicity challenges for the Volt, which conservatives have criticized as the Obama-mobile, despite the fact that it was in the works years before Barack Obama considered running for the White House. The car was first introduced as a concept vehicle in January 2007, two years before Obama took office, and was first sold in fall 2010.

Sales of gasoline-electric hybrids has risen 65% so far this year with Toyota's Prius leading the market.

10 September 2012

Is Michigan Back-sliding?

Original article appeared in GrowMIjobs

The Michigan Supreme court's decision to allow unions collective bargaining proposal to appear on the November 6th ballot could have drastic consequences for Michigan-based businesses.

The Wall Street Journal suggests Michigan may lurch into reverse by voting to “entrench monopoly union power" into our constitution. If voters approve four union-backed proposals in November that is exactly what will happen.

Most troubling: a Detroit News poll shows most voters don't yet understand the proposals. Michigan’s economy simply must not be placed in the hands of uninformed voters.

These proposals are budget-busters, with the most sweeping collective bargaining proposal costing taxpayers "hundreds of millions of dollars." The impact could be “devastating” to the state’s economy, The Detroit News warns. Detroit Free Press Editorial Page Editor commented he fears Michigan will be tougher to govern and less appealing to businesses and residents. 

06 September 2012

State Crafts Loan Package to "Save the Farm"

by Peak Positions

Original article appeared in the Traverse City Record Eagle

The Michigan state Legislature crafted an emergency loan package signed by Gov. Rick Snyder to aid fruit farmers who suffered threats to the viability of their farms from unprecedented warm spring temps.

Growers need to be aware that this extremely low interest emergency loan program can assist them with their cash flow needs until payments are received from the harvest of their 2013 crops.
Some of the terms and qualifications of the 2012 Fruit Freeze Disaster program are:
  • 25 percent loss across the farm in the "major enterprises" or production loss of 50 percent on one crop for a farm.
  • Losses certified by signed affidavit.
  • 1 percent interest or the rate of the 5-year U.S. Treasury note plus .25 percent. On Aug. 6 the Treasury note rate was .59 percent.
  • 5-year term, with interest only the first year and the principal paid over the last 4 years, or 25 percent per year.
  • These are "qualified" loans meaning they must be backed by collateral.
  • Loans have to be entered into by March 31, 2013. 
The maximum producer loan is $400,000, or the value of the crop loss, whichever is less, minus the value of insurance proceeds. If crop insurance was available, but not purchased, the loan is reduced 30 percent or $100,000 whichever is less. 

The program also includes emergency loan funding for agricultural processors and retailers. Agricultural processors and agricultural retailers are experiencing income reductions due to a lack of raw products to process, or reduced sales because farmer's cash flows have been reduced due to freezes and drought. The maximum loan amount is the lesser of $800,000 per facility or $1 million for those with multiple locations.
An agricultural processor is defined as, "A person that is engaged and intending to remain engaged in this state in an agricultural business of buying, exchanging, processing, storing, or selling farm produce that suffered a 50 percent or greater loss in volume of one commodity when compared with the average volume of that commodity that business handled in the prior three years."

A retailer is defined as a "person in the business of making retail sales directly to farmers with 75 percent or more of the person's gross retail sales volume exempted from sales tax under section 4a )1) (e) of the general sales tax act that suffered a 50 percent or greater reduction in gross retail sales volume subject to exemption under section 4a )1) (e) of the general sales tax act ... when compared with the person's average retail sales volume subject to that exemption in the prior three years." The reduction in sales must be directly attributed to an agricultural disaster occurring after Jan. 1, 2012. 

This is not a loan guarantee program or a grant to offset production losses. It is a state supported special term operational loan for "qualified" fruit farm producer participants. Each participating agricultural lender is taking the credit risk and will use their own underwriting standards to determine each applicant's credit worthiness. The $15 million dollars authorized to be contributed by the state is to pay the lenders for administrative costs and loan origination fees. Greenstone Farm Credit Services and Huntington Bank plan to be the participating lenders.

The state Legislature has not yet appropriated the $15 million to fund this program. The funding is expected early this fall. Subsequently, the loan application form and application instructions should be available.
Potential participants are asked to be patient until all of the details of the program are made available. Now is the time to be getting your financial records and documents in order so you are ready to apply. 

For more information, please contact the Michigan State University Extension District Farm Management Educator.

29 August 2012

Detroit-based Energy Drink Maker Investigated

by Peak Positions

Original Article appeared in Bloomberg News

The New York attorney general investigating three energy-drink makers including Detroit-based 5-Hour Energy, over marketing practices. 

Attorney General Eric Schneiderman in July subpoenaed PepsiCo Inc., maker of the Amp energy drink, as well as Monster Beverage Corp. and Living Essentials LLC of Farmington Hills, said the person, who declined to be named because the person wasn't authorized to speak publicly about the probe.

The 5-Hour Energy brand dominates the energy shot sector of the market.

Schneiderman's office is investigating the companies' marketing practices and ingredient disclosures, including whether energy drinks are improperly marketed as dietary supplements, the person said. The companies also don't disclose the true amount of caffeine in the drinks, the person said.

A spokeswoman for 5-hour Energy, said the company had no additional comment beyond an earlier bond offering filing.

"We will appropriately disclose any new, material information," she said Tuesday.

The parent company of 5-Hour Energy is putting together a $400 million bond offering to help it expand its product line and explore strategic acquisitions, according to the July bond documents.

In March, Living Essentials founder and CEO Manoj Bhargava joined the Forbes magazine's worldwide billionaire's list.

20 August 2012

Russian Activists Sue Madonna

by Peak Positions

Original story posted by the Associated Press

Russian anti-gay activists are suing Madonna for millions, after claiming they were offended by her support for gay rights during an August 9th performance in St. Petersburg.

Anti-gay sentiment is strong in Russia. In St. Petersburg, a law passed in February makes it illegal to promote homosexuality to minors, and the author of that law has pointed to the presence of children as young as 12 at Madonna's concert earlier this month.

Russian news agencies quote an attorney representing the nine activists, as saying the suit was filed Friday against Madonna, the organizer of her concert, and the hall where it was held, asking for damages totaling 333 million rubles, or nearly $10.5 million.

Responding to criticism that the plaintiffs were stuck in the Middle Ages, the lawyer said they were using civilized, modern methods to defend their rights. "No one is burning anyone at the stake or carrying out an Inquisition," the attorney was quoted as saying. "Modern civilization requires tolerance and respect for different values."

The complaint includes a video taken at the concert showing Madonna stomping on an Orthodox cross and asking fans to raise their hands to show the pink armbands in support of gays and lesbians that were distributed among the audience, the new agency reported.

Madonna's spokeswoman did not immediately respond to emails asking for the singer's reaction to the lawsuit.

Madonna also has angered conservative Russians with her support for punk band, Pussy Riot. Three members of the band were sentenced Friday to two years in prison for a protest inside Moscow's main cathedral against Vladimir Putin and his cozy relationship with the Russian Orthodox Church.

Madonna called on those who support freedom to condemn the unjust punishment handed down to the band.

Millage Sought to Offset Decline in Property Taxes

by Peak Positions

Original article appeared in the Detroit News

Wayne County, like much of the state, has witnessed an exceptional decline in property taxes. Residents of the WC Community College District will be asked in November to approve a millage of 1 mill for 10 years to offset the decline.

The community college — which has an enrollment of about 72,000 students on five campuses — has lost more than $30 million over the last two and a half years. The Chancellor attributed the loss to the economy and property devaluations, foreclosures and residents leaving Detroit. Unlike state universities, community colleges depend primarily on property taxes for operating revenue, along with tuition.

"We won't survive without it," said the Chancellor. "We just don't have a choice. It's about sustainability."

The 1 mill would cost a homeowner of a $50,000 home about $25 annually.

If approved, the mill would raise $18 million for the college's $103.5 million budget.

The remaining $12 million lost will be made up "creatively," according to university officials.

One item on the table is possibly closing the community college's eastern campus on Conner Road near Interstate 94.

Earlier this year, WCCCD raised tuition by $10 per credit hour, from $89 to $99. The increase means that students taking a 12-credit load will pay about $120 more per semester, officials said.

WCCCD currently levies 2.2 mills on residents in 36 townships and cities in Wayne County. One of the mills is permanent; the 1.2 mills is a 10-year millage that expires in 2015. But the community college cannot wait to seek a renewal.

The Chancellor said he hopes voters will approve the additional mill, and he expects they will.

"People recognize the importance of what we do," he said.

But not everyone agrees.

"I believe in education and I believe people need to get training," said one member of the Wayne County Taxpayers Association. He went on to accuse the District of wasting and abusing taxpayer funds.  

Young Entrepreneurs at Disadvantage

by Peak Positions

Original article appeared in the Detroit News
Innovative businesses often face a variety of challenges starting out. This is the case in Michigan and around the country (stories and litigation are bubbling over, from Chicago's gourmet donut trucks to New Orleans' new-wave Latin American cuisine) in the form of mobile food vendors — often run by immigrants, young entrepreneurs and people forced out of bricks-and-mortar restaurants since the recession. Cities are scrambling to protect their profitable existing restaurants from "competition" through expensive licenses and location prohibitions on food trucks — leading to the sad, now-national case of a 13-year-old hot dog entrepreneur in Michigan.

In claustrophobic business environments, those who are creative will try and find ways to better their situation. In 13-year-old's case, he mowed lawns until he could afford to buy a hot dog cart. As his parents are both unemployed, his mother due to her epilepsy and his stepfather (who suffers from multiple sclerosis) due to recent layoffs, it was essential that the boy pitch in. After investigating permits and saving for equipment, Nathan was told on his first, proud day of business that despite the property owner permitting him to operate in his private parking lot, he was being shut down because he was violating the city's zoning ordinance.

The Holland mayor told the boy that the ordinance was to protect downtown restaurant owners, who asked that the "success of the downtown district not be infringed upon by those who don't share in the costs of maintaining the attractiveness of that space." The boy and his mother have moved into a homeless shelter due to depleted funds. His stepfather cannot join them due to his MS, which requires narcotic treatments not allowed in the shelter.

Repressing the human entrepreneurial spirit with restrictions and punishments provokes fear.

What will restaurants need protection from next? There's always popcorn in movie theaters, or vending machines, or even the restaurant next door. Michigan is not even the ideal environment for food truck vendors. Many of our cities are in financial decline and losing population. In the 2007 economic census, there were 16,781 restaurants and bars in Michigan, and just 48 "mobile food services."

Yet there are empty, cheap properties in our cities where restaurants can find it much better than they would find in many other states.

But rather than allow organic cooperation between citizens, we tolerate an environment where small business owners are beggars fighting for scraps.

It's as true now as it ever was. If de Tocqueville were still taught in public school history classes, perhaps we'd remember his warning: "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."

Try explaining that to a 13-year-old boy.

Future of Energy

Article originally appeared in Traverse City Record Eagle.
Energy, transportation, and packaging can be high costs for a business. As these costs continue to increase and uncertainty grows, it's important for businesses in our region to look at how to best utilize all available resources and options.
The Traverse City Area Chamber of Commerce works to be a convener to help identify best practices and opportunities. A recent example is DTE Energy's pursuit of a natural gas vehicle fueling station in Traverse City. To the Chamber, it made sense to see what other organizations could benefit from this opportunity, and how it could play a role in the Chamber's objective to keep more money flowing in the region versus exporting it elsewhere.
The Chamber commissioned a study with funding from DTE to look at two of the area's largest transportation providers: Traverse City Area Public Schools and Bay Area Transportation Authority. The  six-month process reviewed current costs for both TCAPS and BATA and compared those costs to best practices used by other agencies around the country. The recently released report found that 20 percent of transit fleets in the United States are using compressed natural gas (CNG) and that more than 2,800 school busses had already been converted to CNG in other districts.
The report looked out 10 years at costs of busses, fuel, infrastructure changes to maintenance facilities, and the cost for a fueling station. The report showed that after an initial capital outlay for the fueling station, both TCAPS and BATA will see savings on fuel costs. These savings will materially impact the daily expenses and services provided by both agencies.
Does conversion work? The Blue Water Transit operation in Michigan's thumb converted its fleet to CNG and saw immediate savings on fuel costs. In other areas around the state DTE has installed more than 16 fueling stations. It's using in excess of 200 CNG vehicles in its own fleet and working to provide fuel for fleets of other businesses.
What's next for developing a CNG station in northern Michigan? Both TCAPS and BATA need to work on a timetable and commitment to phasing in the purchase of CNG vehicles. The report showed that for best cost savings these purchases should be part of the regularly budgeted replacement of current vehicles.
The Chamber believes that there is opportunity in times of economic uncertainty. That means looking at all of the resources available. The Chamber and several of its community partners see the potential conversion of fleets to CNG as one step in the right direction. However, each organization realizes more needs to be done to ensure a reliable energy future. To that extent, the Chamber's collaborative energy policy continues to be relevant and — working with its partners — the Chamber will continue to seek ways to best utilize available resources and develop the region's energy future.

15 August 2012

Harsens Island Stunned as Owner of Only Ferry Service Announces Plans to Retire

Story first reported from freep.com

For the 1,200 full-time residents of Harsens Island, the car ferry run by Champions Auto Service is their only year-round link to the mainland.

They use it to get to work, travel to doctor appointments and go shopping. Children depend on it to get to school.

So residents of the island at the mouth of the St. Clair River were shocked Tuesday when news began to trickle out that Champions' owner wants to retire and shut down the ferry service.

David Byson didn't give the Michigan Public Service Commission a date for when he would end the ferry service.

"That's awful. We have to have a way to get across," said Adele Raska, a 25-year island resident. "Everybody has to go across, whether you want to or not. We have to go to shop, we have to go to doctors, we have to go for everything."

Although many residents have small boats and there is a tiny airstrip on the island, the ferry service is the only public transportation to the mainland, operating even in the midst of winter.

There is only a scattering of restaurants and small businesses on the 16-square-mile island, which is part of St. Clair County's Clay Township. The island's marshy interior is ringed by both year-round and vacation homes, with its population swelling to about 5,000 in the summer.

Byson, who couldn't be reached for comment Tuesday, notified the MPSC in a July 28 letter that he intends to retire.

On Tuesday, the MPSC announced it was launching an investigation into transportation to the island. The MPSC wants to ensure a smooth transition from the current service to whatever service may replace it, said spokeswoman Judy Palnau.

The commission gave Champions Ferry 120 days to submit a proposal for transportation to and from the island, Palnau said.

After that is submitted, the agency's staff will write a report with recommendations by March 1.

Even the township wasn't notified of Champions' intent until the MPSC posted its notice.

"It took us by surprise to us here at the township. We didn't know anything about it," said Clay Township Supervisor Tom Krueger. "The only information we have is on the MPSC website."

There have been threats to close the ferry in the past, Krueger said. Champions also sought a rate hike in May from the MPSC, but was denied.

Ambassador Bridge owner Manuel (Matty) Moroun has talked about building a bridge between the island and mainland, but Krueger said that idea seems to have died as Moroun fights to stop a second bridge to Canada.

"Even though he's a private business, I do believe he's an essential service, and I don't believe the MPSC would let him just shut down," Krueger said of the ferry service.

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13 August 2012

Wind Energy in Michigan 'On the Edge of a Cliff'

Story first reported from freep.com

With the auto industry on the verge of collapse in 2008, former Michigan Gov. Jennifer Granholm and other state officials were eager to diversify the economy and create thousands of jobs by making a big push into alternative energy.

To capitalize on the state's strengths, they focused in particular on the manufacturing of parts for wind turbines.

But four years later, the drive to grow a new sector built on clean energy has lost momentum with little to show, the victim of turbulent industry conditions, Washington politics and what some critics would call misguided government policies.

Several high-profile projects have encountered significant delays and have yet to launch full-scale production. They include a manufacturing plant for large wind turbines in Saginaw, a new foundry in Eaton Rapids to make iron parts for wind turbines and an innovative ethanol plant in the Upper Peninsula.

In late June, one of the state's major solar industry players, United Solar Ovonic, was liquidated.

Even some of the wind turbine parts suppliers that have successfully launched production have seen a sharp drop in orders because of uncertainty over whether a production tax credit that expires at the end of December will be renewed. Ventower Industries in Monroe started building giant wind turbine towers late last year in a new factory, but its business would be three times larger if the tax-credit situation was resolved, said Scott Viciana, the company's vice president.

"The wind industry is on the edge of a cliff," said Matt Kaplan, associate director of IHS Emerging Energy Research, a consulting firm in Cambridge, Mass. Although, wind turbine repair companies are doing well compared to manufacturing companies, because repair is less costly than replacement.

He and other experts predict that 2012 will be a record year for the installation of wind turbines as companies rush to take advantage of the tax credit before it ends. On the flip side, however, the number of installations could plummet to record lows next year, Kaplan said.

The tax credit isn't the only headwind facing wind turbine parts manufacturers. Just like in the solar industry, the wind industry has too much production capacity, which is driving turbine prices lower. That's good for the growth of wind energy but puts pricing pressure on turbine parts suppliers. Kaplan forecasts that the industry is on the verge of consolidation.

In Michigan, the alternative energy industry lost a key proponent when Granholm left office at the end of 2010. She tried to transform the state into a manufacturing hub for wind and other renewable-energy industries, providing millions in grants, tax credits and other incentives to entice companies to the state. A team of economic development officials worked to grow green jobs.

Today, Michigan has 35 wind-related manufacturing plants, according to the American Wind Energy Association. In 2010, the state had nearly 80,000 green jobs, which accounted for 2.1% of its total employment, a U.S. Bureau of Labor Statistics study found.

The growth of the alternative energy industry has always been dependent on government subsidies. Critics, such as the Mackinac Center in Midland, have long opposed this assistance, arguing that these business ventures should be based on market forces.

Under Gov. Rick Snyder, programs specifically designed to spur the growth of the alternative energy industry no longer exist. The state revamped its economic development strategy with the goal of treating all industries equally.

"We're doing what we can to help all industries in Michigan be competitive," said Steve Bakkal, director of the state's Energy Office. He contends that successful companies will be those that are supplying products for multiple industries, not just wind or solar.

But at the moment, several projects that are trying to break new ground in the alternative energy field have run into difficulties.

Two years ago, Northern Power Systems announced plans to manufacture large wind turbines, something that had never been done in the state. So far, the Vermont-based company has made and sold only two prototypes of its next-generation turbines to a wind farm in the Upper Peninsula.

The uncertainty over the future of the production tax credit has caused customers to delay placing new orders, said Douglas Prince, Northern Power's chief financial officer.

The company's leased facility in Saginaw is "kind of in standby mode right now," Prince said. "We're hopeful the market will recover."

In central Michigan, a plan to make iron parts, which are called castings, for wind turbines at a new foundry in Eaton Rapids has also been delayed. The foundry was supposed to open at the end of 2011, promising lower-cost and higher-quality castings. But it ran into management, financing and other problems.

Eaton Rapids Castings hopes to start production this fall but still needs to find additional investors, said Lennart Johansson, the company's CEO and one of its owners.

To offset the uncertainty in the wind business, the foundry plans to make castings for other industries. It has scaled back its initial production volumes.

To be sure, the outlook isn't completely bleak. A few ventures are making progress, most notably Energetx Composites in Holland. The company, which has nearly 80 employees, won an order to build more than 200 large wind turbine blades for a customer it cannot name, said David Slikkers, Energetx's chairman.

He and other family members saw blade manufacturing as a natural fit because they have been building boats for decades as the owners of S2 Yachts. "We have been composite fabricators for 50 years," Slikkers said.

And near the Port of Monroe, Ventower expects to have built 15 towers for large wind turbines by this fall. It occupies a new factory on a former industrial landfill and has hired 53 employees. But the industry slowdown caused by the tax credit situation is holding back its growth.

"I would have orders booked through the bulk of next year if the tax credit was not an issue," Viciana said.

More Details: Hitting a Green Wall

Here are some of the high-profile alternative-energy business ventures in the state that have shut down or run into significant delays:

* Northern Power Systems' large wind turbine plant: The Saginaw plant has yet to launch production and is operating with a skeleton crew.

* Eaton Rapids Castings: Foundry to make iron parts for large wind turbines in Eaton Rapids has been delayed. It is still trying to get financing.

* United Solar Ovonic: The maker of solar roofing materials filed for bankruptcy in February and sold its assets at the end of June.

* Mascoma's cellulosic ethanol plant near Kinross in the Upper Peninsula: Groundbreaking was supposed to occur this summer. The company says construction will start at year's end after engineering design work is completed, contracts are awarded and financing is finalized.

* Astraeus Wind Energy: In 2010, company announced plans to make spar caps for wind turbine blades in Port Huron. It is still in the testing phase.

* Danotek Motion Technologies: Was supposed to start making generators for large wind turbines last year. The company says production will begin this fall in Canton. It has 28 employees, down from 45 at the end of 2010.

For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News  blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.
For more Environmental News, visit the Environmental Responsibility News blog.