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Auto/Economy
11:17 am
Tue April 12, 2011

Fiat meets another benchmark - increases stake in Chrysler to 30%

You can buy the Fiat 500 in the U.S. More access to the U.S. market was one reason Fiat took over Chrysler.
Fiat USA

During the U.S. government led bailout in 2009, Fiat took over management control of Chrysler and was given a 20% stake in the company.

The government said Fiat's stake in Chrysler could increase to as much as 35% so long as they met three milestones.

Now, the Italian company now controls 30% of Chrysler after meeting the second milestone set forth by the U.S. government.

From the Detroit News:

Fiat SpA announced today it has increased its share in partner Chrysler Group LLC to 30 percent effective immediately.

The additional 5 percent stake is triggered automatically with Fiat's completion of the second of three performance-related conditions.

The first, achieved in January, was awarded for Chrysler's assembly in Dundee of a fuel-efficient Fiat engine.

The second condition was that the Italian automaker help Chrysler generate cumulative revenue of $1.5 billion outside North America and use Fiat's dealer network in Latin America to distribute Chrysler vehicles.

The third milestone, according to the Globe and Mail, is the development of a 40 mpg Dodge car built on a Fiat platform.

Once that milestone is reached, Fiat could solidify its ownership of Chrysler. From the Globe and Mail:

Dodge is developing a compact car on a Fiat platform that will reach 40 miles per gallon, which would satisfy the third test set by Treasury in 2009.

Mr. Marchionne told analysts on a conference call in October that he expected Fiat would meet all of the Treasury’s hurdles by the end of 2011.

The indications of progress are significant because the sooner Fiat can raise its Chrysler stake to 35 per cent, the quicker it could exercise an option to take majority ownership of the U.S. automaker.

The Detroit News reports that the current ownership of Chrysler breaks down this way:

  1. 59.2% - United Auto Workers retiree health care trust
  2. 30% - Fiat
  3. 8.6% - U.S. government
  4. 2.2% - Canada and Ontario governments combined
Detroit
11:12 am
Tue April 12, 2011

Detroit mayor warns a state takeover is "inevitable" without union concessions

Detroit mayor Dave Bing dleivers his budget proposal to the city council
(courtesy City of Detroit)

Detroit’s mayor says the city’s unions will have to give big contract concessions or the city of Detroit may end up in the hands of a state appointed Emergency Financial Manager. Mayor Dave Bing outlined his budget plan to the city council this morning.

Bing says pension and health care costs threaten to force the city into insolvency.  

“If we are unable or unwilling to make these changes, an Emergency Financial Manager will be appointed by the state to make them for us.  It’s that simple.”  

The city is facing a $155 million budget deficit. The mayor says that could grow to over a billion dollars in five years, unless deep cuts are made now. 

Michigan’s new Emergency Financial Manager law gives the state appointed administrator broad powers to throw out union contracts and make budget decisions.

Commentary
10:59 am
Tue April 12, 2011

Truth in Advertising

Were you aware that there’s a legal difference between print media and broadcast media in this country?

Print media, and the internet, are essentially completely free to print and say whatever they want to, although of course they can be sued if they commit libel or violate privacy laws. Broadcast media are different, however. The government, through the Federal Communications Commission, has the right to regulate them.

Stations can have their licenses revoked or not renewed if they violate FCC policy. Thirty years ago, stations could be in big trouble if they failed to provide news, or public service programming.

Those restrictions have now been largely relaxed. But stations can still risk their licenses if they broadcast hate speech, or programming that is either clearly racist or obscene.

The reason, by the way, that the government can regulate the broadcast media is that the airwaves are public property, like the national parks. And while you could theoretically have an infinite number of print publications or web sites, there’s only so much space on the spectrum for radio and TV transmissions.

Being granted a place on the dial is a privilege that carries certain responsibilities. However, the question is what those responsibilities should be.  Increasingly, I wonder whether stations should be allowed to broadcast advertising that is plainly false.

You might say that deception this is the very nature of most advertising, and to a point you’d be right. Nobody really believes that if you start drinking a certain brand of soda that beautiful young things will suddenly frolic on the beach with you.

We expect ads to stretch the truth. But every so often, they do more than that. As witness a last-ditch, highly expensive propaganda campaign being waged by Matty Moroun, the billionaire who owns the Ambassador Bridge over the Detroit River. He is desperate to prevent the building of a competing bridge, something Governor Snyder wants. Most commercial interests in both the United States and Canada also say the bridge is badly needed. But, Moroun fears his profits might be affected, and is currently waging a hugely expensive ad campaign to try and sway legislators.

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Environment
10:34 am
Tue April 12, 2011

Oil lingers in Kalamazoo River (Part 1)

A Great Blue Heron covered in oil after the Enbridge oil spill in the Kalamazoo River.
Photo courtesy of the State of Michigan/EPA

It was one of the largest oil spills in the Midwest... and it’s not over yet.

Crews are still cleaning up from last July’s oil spill in the Kalamazoo River. An oil pipeline owned by Enbridge Energy Partners ruptured... and spilled more than 840,000 gallons of heavy crude. The oil polluted Talmadge Creek and more than 30 miles of the Kalamazoo River.

Officials with the Environmental Protection Agency say most of that oil has been sucked out of the river... and tens of thousands of cubic yards of contaminated soil have been removed.

But the work is far from done.

The EPA granted me access to one of the contaminated sites on the Kalamazoo River.  I met with Mark Durno, the Deputy Incident Commander with the EPA. He’s overseeing the cleanup teams.  We stood on the bank of the river as dump trucks and loaders rumbled over a bridge out to an island in the river.

“The islands were heavily contaminated, we didn’t expect to see as much oil as we did. If you’d shovel down into the islands you’d see oil pool into the holes we’d dig."

Workers scooped out contaminated soil... hauled it to a staging area and shipped it off site.

Mark Durno says the weather will dictate what happens next. He says heavy rainstorms will probably move oil around. They won’t know how much more cleanup work they’ll have to do until they finish their spring assessment.

“Once the heavy rains recede, we’ll do an assessment over the entire stretch of river to determine whether there are substantial amounts of submerged oil in sediments that still exist in the system.”

He says if they find a lot of oil at the bottom of the river... the crews will have to remove it.

Reports that Enbridge submitted to the EPA and the state of Michigan show the type of oil spilled in the Kalamazoo River was diluted bitumen. Bitumen is a type of oil that comes from tar sands. It’s a very thick oil, and it has to be diluted in order to move through pipelines.

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Detroit
10:09 am
Tue April 12, 2011

Watch Mayor Bing's budget address to city council

Detroit Mayor David Bing presenting his budget to city council.
Detroit

Detroit Mayor David Bing is delivering his budget address to city council right now.

Bing says the budget he is presenting is a five year plan to eliminate the city's budget deficit.

He says the most important conversation the city has to have is with union employees about pensions and health care benefits.

By 2020, Bing says fringe benefits and pensions would consume half the city's general fund.

You can watch the speech here.

News Roundup
8:53 am
Tue April 12, 2011

In this morning's news...

Morning News Roundup, Tuesday, April 12th
Brother O'Mara Flickr

They’re back… Lawmakers Return to Lansing

State lawmakers will be back in Lansing today after a two-week Spring break and it looks like they have quite a bit on their agenda. Budget-related subcommittees in both the House and Senate are scheduled to meet today. Governor Rick Snyder says he wants lawmakers to finish the budget by May 31st. Many lawmakers, however, say they don’t think the budget process will be finished before this summer.

And, a state House panel will begin the process of redrawing the state’s political maps. The latest census numbers show Michigan will lose a Representative in Congress. As Laura Weber reports, the redistricting process will work like any other law that is approved by the Legislature and then moves on to Governor Rick Snyder for his signature.

Bing to Present Budget

Detroit Mayor Dave Bing will present his budget for the city later this morning. The Associated Press reports the budget will propose a five-year plan to wipe out the city's $150 million budget deficit. From the AP:

Tuesday morning's presentation is the first step in the city's budget approval process heading into the new fiscal year that starts July 1…

Bing has fought often with city unions over concessions designed to cut into the deficit.

A union protest of Bing's proposed 2011-12 budget is planned Tuesday's afternoon outside the Coleman A. Young Municipal Center.

Fiat Wants More of Chrysler

Fiat could increase its ownership stake in Chrysler this week, Tracy Samilton reports. Eventually, Fiat hopes to own a majority of Chrysler. Samilton explains:

In 2009, the federal government agreed to give Fiat 20% of Chrysler in return for taking over management of the Detroit automaker.  The deal also set up incremental steps by which Fiat could reach 51%. Fiat CEO Sergio Marchionne says he expects Fiat’s stake to grow to 30% this week, after meeting a requirement to increase sales of Chrysler vehicles outside North America. 

Gas Prices Continue to Rise

An average gallon of gas in Michigan is now $3.86, nearly $1.00 more than it was at the same time last year.  A spokesperson for AAA Michigan says this is the 8th weekly increase in gas prices this year. Ann Arbor had the state's highest per-gallon gasoline at $3.89. The Lansing area had the lowest price at around $3.76 a gallon. It could be worse, however: gasbuddy.com reports that some areas of California are seeing gasoline go for over $4.10 a gallon.

Environment
7:23 am
Tue April 12, 2011

Michigan lawmakers propose alternative to campground closures

Twelve GOP lawmakers are proposing an alternative to campground closures
3rd Party/Flickr

Twelve Republican legislators from northern Michigan are proposing a plan that would keep some forest campgrounds in the state open.

The Michigan Department of Natural Resources announced last week that the state will be closing twenty-three state forest campgrounds beginning in May.

The DNR says they’re closing the campgrounds because they’re not heavily used and the state doesn’t have the money to maintain them.

The GOP lawmakers detailed plans on Monday that would give local governments the option to take over the campgrounds that would otherwise be closed.

State Budget
6:49 am
Tue April 12, 2011

State lawmakers return to Lansing

State lawmakeres in both the House and Senate will be back in Lansing today
Matthileo Flickr

Michigan lawmakers will be back at the state Capitol today after a two-week Spring break and it appears that their attention will turn to the state budget.

Budget-related subcommittees in both the House and Senate are scheduled to meet today.

The state faces a projected budget deficit of around $1.5 billion for the fiscal year that begins October 1st. Governor Rick Snyder says he wants lawmakers to finish the budget by May 31st.

Many lawmakers, however, say they don’t think the budget process will be finished before this summer.

Detroit
6:32 am
Tue April 12, 2011

Mayor Bing to present budget to city council

Detroit Mayor Dave Bing at Governor Rick Snyder's January 1st inauguration
Corvair Owner Flickr

Detroit Mayor Dave Bing will present his budget for the city later this morning. The Associated Press reports the budget will propose a five-year plan to wipe out the city's $150 million budget deficit. From the AP:

Tuesday morning's presentation is the first step in the city's budget approval process heading into the new fiscal year that starts July 1.

It follows Gov. Rick Snyder's signature last month on a state law that gives more power to state-appointed financial managers, letting them toss out union contracts to help balance the books of distressed communities and struggling school districts.

Bing has fought often with city unions over concessions designed to cut into the deficit.

A union protest of Bing's proposed 2011-12 budget is planned Tuesday's afternoon outside the Coleman A. Young Municipal Center.

Auto/Economy
6:49 pm
Mon April 11, 2011

Toyota tells dealers to plan for inventory shortfalls - and workers to plan for extra days off

Toyota will shut down its U.S. factories five extra days this spring because of parts shortages – and warns its American dealers to expect inventory shortfalls this summer. 

Rick Hodges is General Manager of Victory Toyota in Canton, Michigan.   It’s bad news, especially in the wake of last year’s recall crisis. 

"When the weather breaks, March all the way through August is normally when we’re going to sell 2/3 of all of our vehicles," says Hodges, "And it’s going to hurt our sales, sure."

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Auto/Economy
6:44 pm
Mon April 11, 2011

Fiat to acquire another stake in Chrysler this week

Fiat could increase its ownership stake in Chrysler this week. 

Eventually, Fiat hopes to own a majority of the Detroit automaker. 

In 2009, the federal government agreed to give Fiat 20% of Chrysler in return for taking over management of the Detroit automaker.  The deal also set up incremental steps by which Fiat could reach 51%.    

Fiat CEO Sergio Marchionne says he expects Fiat’s stake to grow to 30% this week, after meeting a requirement to increase sales of Chrysler vehicles outside North America.  

Politics
5:52 pm
Mon April 11, 2011

Snyder calls on “silent majority” to express support for his plans

Governor Rick Snyder on the protests against his plans: "I got the response I expected, there's no surprise here."
Russ Climie Tiberius Images

Over the last few weeks, thousands have protested against Snyder’s budget plans. There were a few hundred at a rally in downtown Grand Rapids last week. Outside the Amway Grand Plaza Hotel where Snyder addressed a group of business leaders Monday, just a handful of people held signs.

Inside the hotel, Snyder told the crowd he respects the protestors, and he says he expected them.

“Are they all going to get on board? No. Will some people stay upset for a very long time? Yes. But I believe the vast majority of Michiganders are already being very supportive of what we’re doing.”

Snyder encouraged what he called the ‘silent majority’ to speak up – to friends and co-workers, to the media, and to those they elected.

“This is the time to speak. Staying quiet does not help.”

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Politics
5:04 pm
Mon April 11, 2011

Conservative group putting pressure on GOP state lawmakers on new Detroit bridge

View of downtown Detroit from Windsor, Ontario
(photo by Steve Carmody/Michigan Radio)

A conservative group against a proposed second bridge span between Detroit and  Windsor, Ontario is running negative ads about the project in districts of Republicans who have not taken a stance against the bridge. They want voters to call and pressure the lawmakers to oppose Governor Rick Snyder’s bridge proposal.     

Scott Hagerstrom is with Americans for Prosperity-Michigan. He says the cost of a second bridge would fall to taxpayers, unless it is paid for completely by private money.

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Politics
4:57 pm
Mon April 11, 2011

Can the state tax medical marijuana?

(photo by Steve Carmody/Michigan Radio)

The state Treasury Department says medical marijuana cannot be taxed in Michigan without a change in the law. The medical marijuana law was enacted by voters in 2008. But the law is silent on the question of taxing medical marijuana dispensed by licensed clinics and caregivers.  

James Campbell is an accountant who asked for the opinion. He says the state has not been taxing dispensaries and caregivers. But Campbell says he could not be sure that wouldn’t change.

Read more
Transportation
4:07 pm
Mon April 11, 2011

Bonds for Detroit light rail project approved by city council

An artist's depiction of the M1 light rail system.
M1 Rail

Detroit City Council has approved $125 million in bonds to help pay for a light rail system that will stretch from downtown Detroit to the New Center.

The total cost of the project is expected to be $528 million, according to Bill Shea at Detroit Crain's Business.

Council also approved a $25 million TIGER grant from the federal government (Transportation Investment Generating Economic Recovery).

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Politics
4:01 pm
Mon April 11, 2011

Redrawing Michigan's political map - Will it be fair?

(photo by Steve Carmody/Michigan Radio)

A state House panel will begin the process of redrawing Michigan’s political maps this week at the state Capitol. The redistricting process works like any other law that is approved by the Legislature and then moves on to Governor Rick Snyder for his signature.

The new political map will also most likely be contested and end up in front of the Michigan Supreme Court. But with all areas of government controlled by Republicans, many Democrats are skeptical that the process will be fair.   

Republican state Representative Pete Lund will chair the committee.       

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Politics
3:33 pm
Mon April 11, 2011

Bart Stupak announces new position

Former Michigan Representative Bart Stupak has accepted a new position in the Legislative and Government Affairs Group at Venable LLP, a law and lobbying firm.

Representative Stupak received national attention for his last minute decision to support the White House-led health care reform effort, which he had previously opposed.

CNN reports:

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Politics
3:07 pm
Mon April 11, 2011

Former Detroit City Council President wants to serve the rest of her federal prison sentence at home

The Spirit of Detroit stands outside the Coleman Young Municpal Building in Detroit
(photo by Steve Carmody/Michigan Radio)

The Detroit Free Press reports former Detroit City Council president Monica Conyers is asking a federal judge to let her serve the remaining time on her prison term at home. 

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Auto/Economy
2:21 pm
Mon April 11, 2011

Fiat looks to increasing stake in Chrysler

Fiat CEO Sergio Marchionne talks to reporters at January's North American Intl Auto Show in Detroit
(photo by Steve Carmody/Michigan Radio)

Fiat CEO Sergio Marchionne says the Italian auto maker will increase its stake in Chrysler in the coming days.  Fiat currently controls about 25% of the Detroit auto company.  The Wall Street Journal reports Marchionne plans to add another 5%. 

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Auto/Economy
1:54 pm
Mon April 11, 2011

What effect will rising gas prices have on Michiganders?

Robert Couse-Baker Flickr

If you seek rising gas prices, look about you.

Gas prices in Michigan have ticked up over the course of this past week, an increase of 11 cents, bringing the statewide average up to $3.86.

But what will the effect on Michigan drivers be?

Mantill Williams, a spokesperson for the American Public Transportation Authority, says there is a tipping point at which people begin to consider changing their driving habits.

From ABC News:

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