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. 

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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.