In Granite City, Illinois, Economic Recovery Can Be Complicated Endeavor

For more than 130 years, the economy in Granite City, Ill. has been steel.

In 2008, the 30,000 residents of this small town along the Mississippi River saw what happened when their economic backbone bent. U.S. Steel temporarily shuttered a mill that employed 2,200.

Now, the steel industry is back. The mill has re-opened. Officials say it is “fully staffed” at 2,200 employees and a union representative tells our friends at St. Louis Public Radio that “its future is probably more secure now than it’s been in a long time. And these are good-paying jobs.”

The station profiled Granite City this morning, examining its past, its Great Recession devastation and its rebirth. But Granite City’s story isn’t a simple redemption story. The landscape is more complicated.

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Midwest Economy Improves, Emergency Manager Appointed in Flint, Lawmakers Reject Incentives For Chicago Mainstays

Three stories making news across the Midwest today:

1. Midwest Economy Gains Ground. The Midwest Economy Index showed improvement in the regional economy in October for the first time in six months, according to the Federal Reserve Bank of Chicago. The monthly index, a combination of 134 state and regional indicators, ticked upward from -0.37 to -0.33. Manufacturing was the only sector measured to make a positive contribution to the index at +0.20, although it had ebbed from +0.23 in September. The pace of manufacturing activity decreased in Iowa and Wisconsin, but increased in Illinois and Michigan. Indiana held steady. The service sector and consumer spending showed improvements overall, while construction and mining activity fell.

2. Emergency Manager Takes Over Flint. Michigan Gov. Rick Snyder appointed an emergency financial manager for the city of Flint on Tuesday. On Thursday, Flint’s former mayor, Michael Brown, will begin serving in the position. Under the state’s revamped emergency manager law, Brown will have authority to control the city’s operations and finances, including the power to terminate employee contracts, merge departments and reduce pay. It’s the second time an emergency manager has been appointed in Flint, which had a $15 million deficit in the 2010 fiscal year. Emergency managers are already in place in Benton Harbor, Pontiac, Ecorse and Detroit Public Schools.

3. Illinois Lawmakers Reject Incentives Bill. Two of Chicago’s most visible companies, CME Group and Sears Holdings Corp., have threated to move elsewhere if they weren’t given tax incentives to stay. Illinois lawmakers are calling their bluffs. The Illinois House of Representatives rejected a bill, 99-8, that would have provided $200 million in incentives Tuesday, the final day of the legislature’s fall session. House Republicans wanted the bill to focus solely on tax breaks for businesses they hoped would lead to job growth, while Democrats wanted tax relief for workers and low-income families included, according to the Chicago Tribune. Gov. Pat Quinn said “ample” time remained to reach a deal, but in a written statement, a Sears spokesperson said, “Our timeline for making a decision about our future by the end of the year has not changed.”

EMPTY PLACES: New Life for Historic GM Complex in Flint

Workers at Diplomat Specialty Pharmacy prepare custom prescriptions

FLINT — There may be no better example of how the industrial Midwest is changing than the site of the old Fisher Body Plant No. 1 in Flint, Michigan.  It was one of the factories sit-down strikers occupied in the 1930s.  The plant made tanks during World War II.  It was later closed, gutted and reborn as a GM design center.  But GM abandoned the site after bankruptcy and the new occupants don’t make cars.  They sell very expensive prescription drugs. [display_podcast]

There’s one group of experts who can always tell you the history and significance of an old factory.  They’re the guys at the bar across the street.

Dan Wright is still a regular at The Caboose Lounge.  He worked at Fisher Body No. 1 briefly in the 1970s.

“The bars were always full and restaurants were always full and stores were always full,” he says.  “And all these stores, bars and restaurants you go to now, there’s nobody there.  And it’s sad that Flint died the way it did.”
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Auto Industry Expected To Add 150,000 Jobs By 2015, Including Many In Michigan

LIVONIA, Mich. – A recovering U.S. auto industry should add more than 150,000 new jobs by 2015, and most of them will be located in hard-hit Michigan.

Analysts from the Center for Automotive Research in Ann Arbor said Tuesday that gains sales and market share, as well as savings reaped from recently concluded UAW contract negotiations, will allow Detroit’s automakers to expand their workforces.  The Big Three are projected to add approximately 30,000 new jobs over the next three years.

American Landscape, by Sheeler

But that’s a relatively small share of the overall projected industry growth. Suppliers are expected to account for the bulk of the increase across the country. Estimates say the auto industry employs 590,000 today and will employ 756,800 in 2015, a 28.2 percent increase. That year, sales of light vehicles are expected to hit 15.5 million units.

“They’re going to grow,” said Kristin Dziczek, assistant research director at CAR. “They’re going to have to.”

Managing that growth is trickier than it may appear. Automakers are fearful that suppliers have promised more capacity than they can actually deliver as demand grows. Many suppliers have been reluctant to ratchet up operations in case the boom never arrives.

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American Airlines, A Big Chicago Player, Files For Bankruptcy

Midwest fliers have plenty of experience with airline bankruptcies — think United, Northwest and Delta. Now comes another one with a direct impact on Chicago.

American Airlines, which has one of its two biggest hubs at O’Hare International Airport, said today it’s seeking Chapter 11 bankruptcy protection. It is the second largest airline bankruptcy case, behind United.

American said it planned to keep its operations at O’Hare, and has no immediate plans to change its schedule.

American, based in Dallas, is the last of the big “legacy carriers” to reorganize, in part because its chief executive, Gerard Arpey, resisted the step. Rather than lead American through a court case, Mr. Arpey retired, and was replaced today by Thomas Horton. The airline said it hoped to emerge from court protection by mid-2013.

American and United have always fought tooth and nail for business at O’Hare, where United holds a 27 percent share of passenger traffic, and American has 24 percent, according to the Bureau of Transportation Statistics.

But United in recent years has gained financial and size advantages over its rival. United sought bankruptcy protection in 2002, after it failed to get federal loan guarantees, and merged with Continental last year. The combined United and Continental are based in Chicago. Continue reading “American Airlines, A Big Chicago Player, Files For Bankruptcy”

Detroit City Council Concedes Emergency Manager Likely, Ponders Alternatives

Members of Detroit’s city council conceded today that state intervention is “likely” in the city’s looming financial crisis. Nonetheless, they are still hoping to corral the city’s $45 million budget shortfall themselves.

The council finalized a list of proposed budget cuts that now goes to Mayor Dave Bing for vetting. Steps outlined by the council are considered even more severe than the ones Bing outlined last week.

They include: layoffs for 500 public-safety employees at a time the city’s murder rate is the highest in the country, reduced salaries for other public employees, increased transportation fares, possibly selling some government property and more. A joint committee with the city’s chief operating officer will be held Tuesday to determine the viability of some of the proposals.

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Midwest Memo: Upper Peninsula Enjoys Mining Surge, Scott Walker Wastes No Time Plotting Wisconsin Recall Strategy

Three stories making news across the Midwest today:

1. Upper Peninsula’s mining boom. The mining industry in the Upper Peninsula of Michigan is enjoying a renaissance more than a century after its best days passed. New technology demands are creating demand for gold, silver, copper and nickel, the Detroit Free Press reports today. Foreign companies are finding them in abundance in both new and reopened ore mines. Mineral rights on more than 1 million acres have been leased for prospecting. But many of the mines are near rivers and Lake Superior, sparking concern among environmentalists. “I’m not anti-mine. I’m anti-mining pollution,” one advocate tells the newspaper.

2. Busy finale ahead for Illinois legislators. The Illinois state legislature could end its fall session Tuesday with a flurry of activity. Lawmakers are expected to vote on several pieces of legislation that have garnered attention for months, including a bill that would expand the Earned Income Tax Credit, which extends larger refunds to working families. Our partner station WBEZ reports the legislature could also tackle a package of tax incentives designed to keep CME Group and Sears based in in the state. Both have been wooed in recent months by Indiana and other competitors. A vote on legislation that would expand gambling in the state could also take place.

3. Walker plots recall strategy. A possible recall election may not take place until next summer, but Wisconsin Gov. Scott Walker is wasting no time in campaigning to keep his job. Walker is running television ads defending his 11-month record and Republican volunteers are going door to door canvassing likely voters. USA Today reports Walker’s office is trying to learn from the only two successful gubernatorial recalls in U.S. history. They believe California Gov. Gray Davis (2003) and North Dakota Gov. Lynn Frazier in 1921 both started campaigning too late to save their jobs. “There’s this momentum that builds, and once it builds it’s very difficult for things to reverse,” David Schecter, a political scientist at Cal State Fresno, tells the newspaper.

Three Looks at The Midwest Economy, From Changing Gears

Changing Gears is all about the reinvention of the Industrial Midwest. As you’re relaxing over the Thanksgiving holiday, check out three big topics that we looked at this fall. 

EMPTY PLACES: From factories to city blocks, our region has thousands of empty places, but people are coming up with ideas to fill them. Kate Davidson explored blotting — neighbors taking over vacant lots next door to spruce up the neighborhood. Niala Boodhoo looked a former meatpacking plant that’s now an indoor farm. Meanwhile, contributor Dustin Dwyer tried to measure the social and economic cost of emptiness.

Memorabilia from the now defunct AutoWorld in Flint

MAGIC BULLETS: Communities across the Midwest are search for Magic Bullets — big ideas that can rescue a town or an industry. Davidson offered a look back at magic bullets over the years. Some people think batteries could create thousands of jobs, but Dwyer found there’s skepticism. Many places would like to copy Cleveland’s success in health care, which Bobkoff says could be tough. Boodhoo explored the contribution small business can make to the economy (answer: it’s small).

MANUFACTURING: Movies and TV have painted a bleak picture of factory life. We found just the opposite. Think there are no jobs in manufacturing? There are plenty, for temporary workers, Davidson found. What are they talking about, when they talk about advanced manufacturing? Bobkoff explained. He also talked to Ron Bloom, the man who led the auto industry bailout. How do ideas become reality? Boodhoo profiled Battelle, an influential but little-known Ohio company.

 

Your Story: Once An Abandoned Liquor Store, Now A Brewery

Jack’s Liquor Store was never a beautiful building, even before it closed down and stood empty for more than 10 years. It was a dingy, generic convenience store on a corner. In May 2010, 33-year-old Grand Rapids resident Barry Van Dyke and two siblings bought it anyway.

Barry Van Dyke working on what is now the Harmony Brewing Company

The store sits on the border of the Uptown and Eastown neighborhoods in Grand Rapids. Eastown has been known as a diverse, vibrant business district and the Van Dyke’s wanted to capitalize on the energy and traffic. They plan to open a brewery in the space soon, Harmony Brewery. But converting the formerly empty building has not been easy.

The Van Dykes came into the project with redevelopment experience. Together, with their father, they own a local property management company called Bear Manor. They’ve bought, fixed up, and rented or sold 13 residential and three commercial properties in Grand Rapids, mostly in the Uptown neighborhood.

These 16 buildings are just a dent in the at least 1,078 buildings the city of Grand Rapids has documented as abandoned. Barry Van Dyke isn’t surprised there are so many. He says the thing most people don’t realize about renovating empty places is how long it takes.

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When Companies Cut R&D Spending, Where Do They Go?

The U.S. is the world leader is research and development spending, in terms of both government and private sector spending. In 2009, the United States spent about $338 billion on research and development – China was the next closest, at about $124 billion.

What’s interesting is how that spending gets broken down: The federal government spends much more on the research side. Private industry focuses on development, creating products that can make more money.

That’s what makes Battelle Memorial Institute such an interesting place. I reported earlier this summer on Battelle, a nonprofit research and development organization in Columbus, Ohio, that brought us the technology behind bar codes, cruise control, tamper-proof bottles, and more.

That story focused on how to Battelle takes things from ideas to economic reality. Our friends at National Public Radio’s Morning Edition were interested in that story, so I’ve branched beyond our initial report and taken a second look at the company, and this time focused on how it prioritizes research-and-development spending. You can check out the new report here.