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.