economy

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
Michael Gil / wikimedia commons

Last year, many automakers brought in profits and announced that they would open up new factories and add new jobs.

But the industry is adding new jobs at a time when qualified candidates are hard to come by.

David Shepardson wrote about the shortage in the Detroit News today:

From the Rapid Growth Media video

Michigan Radio's Lindsey Smith hopped on a bus with community leaders from the Grand Rapids area this past Wednesday.

Their destination was Detroit. And their goal for the trip was "to build stronger bonds between Michigan’s two major population centers."

They left in the wee hours of the morning and arrived back in Grand Rapids around 2:30 a.m.

The trip organizers put this video together:

Consumers spent more on retail goods in the first quarter than they did during the same time last year. That's despite higher gas prices, bad weather and a late Easter holiday.

Luxury retailers were the winners.

Retail analyst Marshal Cohen says the recession has left the consumer with "frugal fatigue."

"We're tired of being so frugal with what we're spending and at the least expensive place," he says.

A bunch retailers released their first quarter numbers this week.

Kate Davidson / Changing Gears

Property values have plummeted across the region.

That means cities and towns have watched their tax revenue plunge as well. But many homeowners and businesses think their property taxes are still too high.

The result is a double hit.

Local governments are in fiscal crisis, and the tax courts of Michigan, Ohio and Illinois are clogged with people who want refunds.

People like Donald Betlem.

Photo by David Sommerstein

Another sure sign of spring: the Great Lakes shipping season kicked off this week.

Millions of tons of cargo travel by boat on the Great Lakes every year– freighters from the Atlantic Ocean that enter the Lakes by way of the St. Lawrence Seaway. The first freighter of the 53rd Seaway season eased through the locks in Montreal on Tuesday. David Sommerstein visited Montreal for the opening ceremonies.  He found out that Seaway officials are trying to rebrand the Seaway:

The first freighter rumbling into the St. Lambert Lock was the Dutch-flagged "Avonborg."  It was loaded up with wind turbine parts.

David spoke with Terry Johnson, the U.S. chief of the St. Lawrence Seaway:

"Wind turbines have been increasingly coming in and it’s nice to be able to see something that is visual. This is good."

The windmill parts bound for Indiana aren’t just a good photo opp. They’re the perfect image the Seaway wants to project these days – that it’s the greenest, cheapest way to transport goods. Shipping is far more fuel efficient than trucking.

Ross Fletcher of BBC Chartering contracted this ship.

"Those 75 blades represent 75 truckloads that aren’t going to travel between Montreal and the U.S. Midwest, so we’re taking 75 truckloads off the highways."

The Seaway’s been trying to reinvent itself since it was built in the 1950s.

(Flickr ziggy fresh)

Michigan’s unemployment rate dropped slightly in February. Michigan’s seasonally adjusted unemployment rate declined by 3 tenths of one percent last month to 10.4%.

The state’s jobless number was still one and a half percentage points above the national unemployment rate of 8.9%.  

Michigan’s unemployment rate has been falling since September 2009. And last month, the number of jobless Michiganders fell below a half million for the first time since November 2008.

Kate Davidson / Changing Gears

The Downtown Detroit Partnership is holding its annual meeting and luncheon today from noon to 1:30 p.m..

Mayor Dave Bing and others are expected to highlight progress made in developing Detroit's downtown.

From the Associated Press:

Mayor Dave Bing and Wayne County Executive Robert Ficano are scheduled to discuss the progress made over the past year in improving Detroit's downtown.

Steve Carmody / Michigan Radio

In one study, Michigan had the highest auto insurance rates in the nation. In another, Michigan ranked 11th in the nation.

That's according to a piece from Dawson Bell at the Detroit Free Press. Bell writes both studies cited "the state's unique mandate for unlimited coverage for personal injuries as a primary cause for high rates."

From the article:

Michigan auto insurance rates led the country -- $2,541 a year for a hypothetical 40-year-old man with a clean driving record -- in an annual survey released last week by the consumer insurance information site insure.com.

The Michigan rate jumped more than 21% from the same survey a year earlier, overtaking Louisiana, which topped the list last year.

Vermont, at $995 a year, was the cheapest place to buy auto insurance, the survey found.

Allan Cleaver / Flickr

Ever since Governor Rick Snyder released his budget plan last month, people have been looking at the details and wondering how they might be affected by the plans.

For people with pensions and the working poor, it's been clear, you would pay more if Snyder's plan is approved. But how much more?

The Detroit Free Press, in a series of reports, is seeking to break down the numbers. In their first report What Snyder's income tax plan means for you they summarize their findings this way:

Parents with low-paying jobs would stop getting state income supplements worth as much as $1,000.

High-income retirees with generous pensions would pay thousands of dollars more.

But taxpayers in brackets that cover most Michiganders would see little change in their state income tax bill under Gov. Rick Snyder's sweeping proposals.

The Freep provides some detailed examples of how the tax proposals might affect certain people.

Marelco Power Systems, Inc. told the Livingston County Daily Press & Argus that is will stop production at its plant in Howell.

The company makes transformers, inductors, and control systems, among other things, for the auto companies and other manufacturers.

From the Associated Press:

Steven Depolo / Flickr

A new study by the Brookings Institution shows the Grand Rapids and Detroit metro regions are in the top 20 hardest hit by the recession.

The study measures how deep the recession hit the top 100 metro regions in the United States.

It also looks at how strong the recovery is for those cities.

Jennifer Bradley co-directed the study in the Great Lakes region:

"It's not just about a particular city or a particular suburb. These places are economic units. They're rising and falling together and they will come out of the recession, or not, together."

Bradley says Grand Rapids and Detroit lead the nation in keeping their unemployment rates from spiking even higher, but it's unclear why:

"It could be more people are getting jobs. It could be more people are leaving the workforce altogether. It could be more people are leaving the region all together."

There is a lot in the study that’s not surprising.

It shows most metro regions near the Great Lakes had a weak economy before the recession, mainly because of job losses as the auto industry declined.

Bradley says business and government leaders in metro regions need to work together to strengthen their chances of recovery.

farming equiptment
Helen Hanley / creative commons

Governor Rick Snyder says agriculture is a key part of his strategy to focus economic development efforts on small businesses.

The governor spoke today to the Future Farmers of America state convention. He says there’s lots of room to grow small businesses processing farm products in rural areas of the state.

"There’s an opportunity there to do more economic development in our smaller towns and our villages, and one of those connections is if you look at it, we’re producing all these great commodity products, and if we can do more and more to say let’s continue the processing of these products right where they are being produced, that’s an opportunity to create jobs in these smaller communities. "

At the same time, Snyder says he wants to rely less on tax breaks and other industry-specific incentives to create jobs.

Simon Brass / Flickr

The state's prison system is in line for some budget cuts like a lot of other parts of the state government.

Now, a recent audit says the prison system could save more in prescription costs.

From the Associated Press:

DETROIT (AP) - State auditors say Michigan could have saved millions of dollars by choosing lower-cost alternatives to a mental-health drug that is widely prescribed in prisons.

The audit released Friday says psychotropic drugs are dominating the cost of prescriptions in the prison system. They added up to more than $8 million from January through July last year - 41 percent of all pharmaceuticals.

Seroquel is the most prescribed antipsychotic drug. Auditors say the Corrections Department could have saved $350,000 a month by switching just half of those prescriptions to a drug called Risperdal.

The Corrections Department says it's taking steps to control costs. The audit also found that prisoners are not being charged for over-the-counter medicine even if they can afford it.

www.michigan.org

Governor Rick Snyder signed full funding into law for the Pure Michigan ad campaign.

He signed the funding plan at the Henry Ford Museum in Dearborn today, saying his plan to pay for the Pure Michigan ad campaign through a venture capital fund will work this year and next year.

He says he will continue to evaluate the effectiveness of the ad campaign over the next two years:

“I’m the metrics and dashboard person, so we’re going to focus on metrics and dashboards on everything we do,” said Snyder.

Bob Vigiletti / Michigan Radio Picture Project

Michigan and Nevada seem to be linked in some not-so-good ways.

High unemployment rates, high home foreclosure rates, and declining housing prices.

And now... add the lack of a State Fair to that list.

In this age of austerity, Nevada has decided to cut its State Fair. Michigan cut its Fair back in 2009.

The Associated Press reports Nevada and Michigan are the only two states without a State Fair.

From the AP:

The board of directors for the Nevada State Fair says there won't be one this summer.

Board members say budget shortfalls leave them no choice but to bring an end to the fair for the first time in 136 years.

Executive director Rich Crombie said in a statement Wednesday that a last-ditch fundraising effort had produced only a fraction of the estimated $250,000 needed to keep the fair from folding up
its tent.

It means Nevada will join Michigan as the only states in the nation without state fairs.

Crombie says they are debt but don't intend to file bankruptcy. He says the hope is to continue to raise money for another state fair in the years ahead. The first Nevada fair was held in 1874.

The Michigan State Fair, said to be the country's oldest, was closed in 2009 because of declining attendance and budget shortfalls.

Michigan Radio's "Picture Project" has some fantastic images of Michigan's now defunct State Fair.

Detroit posted the biggest percentage drop in home prices in the nation, according to a new report. Clear Capitol says home prices in Michigan’s largest home market slide 13% in February, more than any other major city.

Alex Villacorta  is Clear Capitol’s director of research.   He says home prices in Detroit are being dragged down by banks trying to sell foreclosed homes.    Bank owned homes usually sell at well below market prices.

Foreclosure filings in Michigan have fallen to levels not seen since 2008.   Realty Trac reports foreclosure filings dropped by 30 percent in February compared to a year ago. 

Daren Bloomquist is with Realty Trac.  He says mortgage lenders are finding it difficult to get home foreclosures started, since last fall’s scandal involving incorrect paperwork forcing people out of their homes.  New rules require more safeguards in preparing a foreclosure filing.  But Bloomquist says this is only delaying the inevitable for many delinquent home owners.

  “What hasn’t gone away is there are still a lot of properties that eventually we people will be foreclosed on.  That’s really the only solution for some of these situations.”  

Bloomquist says the slowed foreclosure process might help reduce the number of bank owned homes on the real estate market.   The high number of foreclosed homes on the market is blamed for causing depressed home sale prices.

Andrew Taylor / Flickr

Gas prices continue to go up in that wake of tensions in the Middle East.

The price of a barrel of crude oil has gone over $100 - that number was a record breaker back in early 2008 - the start of the Great Recession.

From the Associated Press:

Gas prices AAA Michigan says gasoline prices are up 8.4 cents per gallon over the past week to a statewide average of $3.53. The auto club said Monday the statewide average is 80.5 cents per gallon higher than last year at this time. Of the cities it surveys, AAA Michigan says the cheapest price for self-serve regular fuel is in the Saginaw/Bay City area, where it's $3.48 a gallon. The highest average can be found in the Marquette area at $3.59. Dearborn-based AAA Michigan surveys 2,800 Michigan gas stations daily.

The White House chief of staff Bill Daley said on NBC's Meet the Press that opening up the country's strategic oil reserves is an option the Obama Administration is considering:

"It is something that only is done--has been done in very rare occasions.  There's a bunch of factors that have to be looked at, and it is just not the price. Again, the uncertainty--I think there's no one who doubts that the uncertainty in the Middle East right now has caused this tremendous increase in the last number of weeks."

Many people wonder why we're seeing an increase in gas prices when the U.S. imports most of it's oil from Canada and Mexico.

Libya doesn't even make the the U.S. Department of Energy's Top 15 list of countries we import oil from.

The answer, simply, is that oil is a global commodity, so when the global price of crude goes up, we all pay more. Crude oil prices influence the price of gas more than other factors like refining, distribution, and taxes.

How Stuff Works has a write up of how the complex system of gas prices are factored here in the U.S.

They break the cost of a dollar of gas down this way:

  • Taxes: 15 cents
  • Distribution and Marketing: 11 cents
  • Refining: 7 cents
  • Crude oil: 67 cents

You can check gas prices near you on michigangasprices.com.

Paul Sicilian / Grand Valley State University

Economists at Grand Valley State University estimate last year’s ArtPrize added up to $7.5 million dollars; that’s just a little more than the first ArtPrize in 2009. But the study’s authors say they kept their estimates conservative.

Bill Rice / Flickr

Governor Rick Snyder is defending some of his controversial budget plans.

He says taxing pensions is the right thing to do, even though some Republican lawmakers say they will not support that plan.

And Governor Snyder says his proposal to cut funding for universities by 15% this year is necessary, but he says it will get better for the schools in the future:

"We shouldn't have to walk away from our universities. Again, I'm a big, long-term advocate of we need more students going through our universities. Higher Ed is very important in our state, actually we're a very fortunate state in having the high-quality institutions that we have.

We have a tough budget situation and we need to deal with that, but if you look forward to 2013 we’re able to show that hopefully this is the bottom point in terms of where we go with higher education funding."

Snyder also told building-trade union members that he wants to work with unions to help balance the budget, not against them.

He says he is not interested in Republican proposals in the Legislature to strip unions of their power.

Dani Davis

Creative types from across the country will convene in Detroit next month to talk about how artists can help revitalize post-industrial cities.

Matt Clayson directs the Detroit Creative Corridor Center and is one of the people behind the “Rust Belt to Artist Belt” conference.

He says the conference will focus on the creative supply chain many post-industrial cities like Detroit have to offer:

user mariodo / creative commons

In its April auto issue, the magazine Consumer Reports calls the Chevy Volt is a "tough sell."

It's not the kind of review GM has been accustomed to after the car was released with much fanfare.

The Volt was named "Car of the Year" at the Detroit Auto Show.

The Detroit News says that harsh review from Consumer Reports questions whether the car makes "economic sense."

David Champion, the senior director of Consumer Report auto testing center said:

"When you are looking at purely dollars and cents, it doesn't really make a lot of sense. The Volt isn't particularly efficient as an electric vehicle and it's not particularly good as a gas vehicle either in terms of fuel economy. This is going to be a tough sell to the average consumer."

The car costs around $40,000, but with a government tax credit (a credit some lawmakers want to turn into a rebate) the cost comes down to around $33,500.

The criticism came from the car's range in cold weather. The Volt's electric motor range is 40 miles under normal driving conditions, but that range dropped significantly when Consumer Reports tested the car in Connecticut this winter - the range dropped to 25 to 27 miles on electric power alone.

A GM spokesman said his range was better in cold weather. Again, from the Detroit News article:

GM spokesman Greg Martin noted that it's been an extremely harsh winter — and as a Volt driver he said he's getting 29-33 miles on electric range. But he noted that in more moderate recent weather, the range jumped to 40 miles on electric range or higher.

Other criticisms of the Volt were its 5-hour charging time, and a heating system that leaves your hands and feet cold.

The magazine gave the Volt praise for its acceleration and for its "taut yet supple ride."

USA Today reports that in the April auto issue, Consumer Reports gives foreign automakers Honda and Subaru top honors with Ford positing the "largest gain" in rankings overall.

Steve Carmody / Michigan Radio

Borders Books started in Ann Arbor as a small independent book store.

Tom and Louis Borders opened it in Ann Arbor, Michigan in 1971.

The first Borders bookstore was located at 209 State Street, north of the State Theater.

Eve Silberman was a graduate student in Ann Arbor when she got a job at the very first Borders Bookstore owned by the Borders brothers.

The company recently declared bankruptcy.

Silberman sat down to talk with public radio host Dick Gordon of The Story.

Silberman talked with Gordon about her memories of working at the first Borders bookstore (she described herself as "not a very good worker").

She recalled several things about the first Borders Bookstore:

  • Joe Gable was the "shaper and caretaker" of the store (many thought Gable was a Borders).
  • Gable saw the store as a "cathedral of books" and the workers were the "worshippers."
  • Classical music played in the store.
  • Potential employees had to take a test to get a job at the store.
  • The store carried unique titles.
  • The store's cash register was complex at the time.

Host Dick Gordon asked Silberman about the sense in Ann Arbor about the misfortunes of Borders.

(photo by Steve Carmody/Michigan Radio)

A bill that would fund the Pure Michigan ad campaign for the entire year will soon be on its way to Governor Rick Snyder for his signature. The Legislature has approved the additional dollars to keep the campaign on airwaves through the busy tourism months. 

Republican state Senator Geoff Hansen says the funding had to be approved this week before ad-buy costs go up. 

"It was more important that we got it done right now because every day that we delay this means that we’re going to have that less of a chance to buy the ads that we need. We can buy more now than we can in a week, so it was just so important to get it done.”  

The state will tap a venture capital fund to pay for the ads for the balance of this year. Hansen says lawmakers still need to find a permanent funding source for the Pure Michigan ad campaign. But he does not think they will deal with that issue until next year.

Image from the Center for Michigan's website

Try your hand at fixing the state's budget problems.

The Center for Michigan has released an interactive state budget calculator - YOU Fix the Budget.

The idea is similar to the New York Times interactive budget calculator for the federal government.

You can start by adding $1.2 billion to the state's budget woes by cutting business taxes, or you can leave business taxes alone and deal with the current budget hole the Center estimates at $1.4 billion.

Once you start, your options are to cut, cut, cut (cuts to education, cuts general government, cuts to prison and police, cuts to the public workforce, and cuts to welfare and health care) - or - you could raise taxes.

So far, of the 300 or so people who have participated - raising the Beer Tax is the most popular option.

Bill Rice / Flickr

Governor Rick Snyder was interviewed this afternoon by NPR's Talk of the Nation.

He was asked questions by the hosts and by listeners. You can listen to the entire interview here:

A Comerica Bank economist says rising gasoline prices shouldn’t hurt Michigan’s economic progress…too much. Unrest in the Middle East is forcing global crude oil prices to rise, which is pushing up gas prices in Michigan and elsewhere.    

Photo courtesy of the Heidelberg Project via Facebook

Two Detroit arts organizations are one step closer to turning their artistic visions into reality.

Leveraging Investments in Creativity (LINC), a national arts organization, awarded $50,000 to the Heidelberg Project in Detroit, and $100,000 to the Museum of Contemporary Art Detroit (MOCAD).

Heidelberg will use the money to build an outdoor public art project on Detroit’s east side. MOCAD will use the money to create an outdoor space for art and community engagement.

Dani Davis

We put together our stories about arts and the economy in the state to create an hour-long documentary called The Cost of Creativity. On today's podcast, we'll hear the final installment of the doc.

And because Artpod is about all things Michigan, all the music you'll hear on The Cost of Creativity is by Michigan artists. The musicians featured on today's podcast and Luke Winslow-King and Ben Benjamin.

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