- Associated Press - Monday, May 29, 2017

The Detroit News, May 24, 2017

Ford shake-up sign of new times

It’s been a while since we’ve seen headlines around here about executive shake-ups at the top of auto companies and cutbacks of auto industry jobs.

Michigan’s bread-and-butter industry has been soaring along for the last seven years, posting record profits and sales.

But the dramatic moves at Ford Motor Co. is a reminder that this isn’t necessarily a cyclical industry anymore, but one that is in perpetual disruption. It’s also an industry that has learned the hard way about the dangers of waiting too long to respond to warning signs.

Ford first announced it was trimming a sizable chunk of its white collar workforce - some reports said up to 10 percent - in what appeared a desperate cost-cutting move aimed at driving up its wilting stock price.

That was followed by the dumping of its chief executive officer, Mark Fields, who has presided over several solid sales and earnings years after taking over from Ford’s crisis savior, Alan Mulally.

Traditionally, such drastic steps come in response to dismal financial performance.

But here’s the environment in which Ford made the moves:

? 2016 net income was $4.6 billion, for an operating margin of 6.7 percent.

? Blue-collar workers claimed their second largest profit sharing checks ever, averaging $9,000 each.

? Ford finished the year with automotive cash on hand of $27.5 billion, against cash net debt of $11.6 billion. Shareholders received $3.5 billion in dividends.

? And vehicle sales, at 2.6 million, were the best in a decade, as the automaker launched 18 new products.

That reads like a solid year.

But more than any other time in its history, the auto industry and its investors are looking forward. And what it sees is dark clouds.

North American sales are tapering off, and Ford’s market share declined slightly. The Dearborn automaker has not moved as swiftly as General Motors Co. to shed less profitable overseas operations and contain costs elsewhere.

And nobody is quite certain how the mobility revolution, including electric and self-driving vehicles, will impact Ford, or any of the automakers, for that matter.

So investors have turned cool to a company they loved just a few years ago, when Mulally was at the helm. Stocks fell roughly 40 percent during Fields’ tenure.

Now there’s a new leader, Jim Hackett, a retired Steelcase CEO who was plucked from retirement once already to restore the University of Michigan’s troubled football program.

His claim to fame is hiring Jim Harbaugh to lead the Wolverines.

Hackett, who serves on Ford’s board of directors and was recently brought in under Fields to run Ford’s mobility unit, is in some ways an odd choice.

At 62, he’s the age at which most auto executives retire, not take on the top job. He spent most of his career at Steelcase, an office furniture maker, with little experience in the transportation industry.

But he has a reputation as a turnaround wizard. And although Ford would not seem to need a complete overhaul, the automaker’s owners are looking to Hackett to create a more nimble an innovative company, and one better prepared to respond to the rapidly changing automotive landscape.

They also want an executive who knows how to deliver value for stockholders. In this case, the shareholders include Ford family members including Executive Chairman Bill Ford.

Michigan needs Hackett to succeed at this assignment. Ford is one of the state’s largest employers and taxpayers, and we’ve seen what happens to the quality of life here when auto companies fall behind.

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The Times Herald, May 25, 2017

Shipping lobby schemes to sink ballast rules

After a spring of beaches littered with dead fish and the Michigan Department of Natural Resources begging anglers and bait shops to be very careful where they catch and use live bait, the shipping industry is in the process of persuading Congress that we should all get used to it.

The evidence may be largely circumstantial, but it suggests that the viral hemorrhagic septicemia that is devastating warm-water fish species in the Great Lakes came here on a ship that picked it up in Europe or in the Atlantic Ocean. And that is just one of the Great Lakes invaders that hitchhiked here in the holds and ballast tanks of an ocean-going vessel.

The list of invaders, from zebra mussels to exotic weeds, seems to grow every month with devastating effect.

The shipping industry, taking advantage of the anti-government and anti-regulation environment in Washington, is busy lobbying Congress to roll back ballast restrictions that protect the lakes against a full-blown onslaught of invasive pests. The Vessel Incidental Discharge Act would eliminate federal Environmental Protection Agency authority over ballast water pollution and would remove any barrier to dumping more noxious cousins of quagga mussels, round gobies and Eurasian ruffe into our waters. What the shippers want is a free pass. If they dump the next zebra mussel or something worse into Lake Huron, they want the federal government and us to say “oops” and look the other way.

Not only would it gut federal protections, it would pre-empt states from taking action.

Those who love the Great Lakes have fought hard to get reasonable and effective ballast water protections - and know that what we have now certainly could be better. To have that undone by a legislative trick - the shipping lobby’s incidental discharge bill is attached to the U.S. Coast Guard’s funding bill - is underhanded and demoralizing.

We cannot afford to retreat in the fight to save the Great Lakes - not in the fight against pollution, the fight against invasives, or for restoration.

Congress and 10th District Rep. Paul Mitchell must fight to separate this dirty bill from Coast Guard funding and then to treat it so that nothing left alive in it can contaminate our iconic waters.

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Lansing State Journal, May 25, 2017

FRIB budget cut would hurt more than region

Many in the local science community are reeling after news of President Trump’s 2018 budget proposal that included significant cuts to funding.

They are right to be concerned.

Among the potential cuts: $17 million of the $97 million earmarked for the Facility for Rare Isotope Beams, a state-of-the-art nuclear physics laboratory at Michigan State University being hyped as the future of cancer research, medical imaging and national defense.

FRIB (pronounced F-rib) is currently on budget, ahead of schedule and, as of this April, is about halfway done, according to MSU.

An 18% budget cut would stunt momentum for the hundreds of world-class scientists and engineers working at the facility - many of whom have relocated their families from across the U.S. and other countries.

It would also send a clear message about the nation’s priorities - not only to Greater Lansing and MSU, but to the global science community.

Mark Burnham, MSU’s vice president of government relations, said, “Sadly, the impact on FRIB is just one example of how cuts across the federal science agencies will affect America … these cuts will not make us great, they won’t even keep us in the running.”

More: $18M cut to FRIB included in Trump’s 2018 budget proposal

More: FRIB-powered MSU, Lansing becoming Silicon Valley of particle acceleration

A country’s greatness comes from being the place where thought leaders come together to push boundaries and take their field to the next level.

The $730 million FRIB project was awarded to MSU by the U.S. Department of Energy in 2008, after a lengthy international competition and vetting process with several other labs.

It already has spurred economic growth in the region with the purchase of local supplies, the use of local construction workers and the potential for more spin-off businesses like Niowave.

The project itself is expected to generate wages totaling $1.7 billion; once complete, FRIB will bring an estimated $4.4 billion to the state economy.

But it’s not all about the money: MSU has been on the leading edge of nuclear science and particle research since 1958, with the origin of its cyclotron laboratory.

“We’re building the Facility for Rare Isotope Beams to keep our nation at the forefront of rare isotope research,” said project director Thomas Glasmacher.

Significant budget cuts are likely to throw the project off schedule by six months or more.

For the hundreds of scientists who uprooted their families to relocate here, delays could mean no research. For the burgeoning particle science industry in the region, it could mean cancelled contracts and missed opportunities.

Michigan’s congressional delegation continues to work with MSU staff and scientists on advocating for project funding to continue, and some have already spoken out against the 2018 budget proposal.

Now begins a waiting period, generally taking most of the summer and into the fall, while legislators debate the budget.

For FRIB, Greater Lansing and the nation, there is much more than $17 million on the line.

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Detroit Free Press, May 25, 2017

Don’t tinker with teacher pensions

If it ain’t broke, fix it anyway.

That seems to be the quotation on Lansing Republicans’ motivational poster, as they charge headlong into reform of Michigan’s teacher pensions.

In 2010, the traditional pension system for teachers was closed to new hires, who are instead offered either a 401(k)-style plan or a hybrid plan that includes both the 401(k)-style plan and a pension component. The vast majority of new hires have chosen the hybrid plan, teacher advocacy groups say.

Because the traditional pension fund must still pay retirement benefits to teachers who enrolled before 2010, because the fund’s earnings took a hit during the great recession, and because for years the state fudged its payments to the fund, it’s short - to the tune of $29.1 billion.

That’s a scary number, but pension liabilities aren’t deficits, per se. A pension system’s financial obligations come due over 30 years as retirees collect benefits.

That means lawmakers have time to make the pension fund whole - and because those benefits are already promised to current or retired employees, the state is on the hook for that $29.1 billion, regardless.

But GOP lawmakers say it’s an outstanding liability that’s siphoning funds from the state budget, and out of the classroom - and that the new hybrid system, which is fully funded and has no outstanding deficit, is vulnerable to fluctuations in the stock market.

Closing the hybrid fund wouldn’t be cheap. That system also has to pay retirement benefits promised to current employees; shutting that down would require the state to pay those obligations from an investment pool funded by an ever-shrinking pool of employees.

Estimates for transition costs vary. State Rep. Tom Albert, R-Lowell, author of the pension reform legislation, admits that the costs of closing the hybrid system start at $400 million a year, and grow each subsequent year until 2038. An Anderson Economic Group report commissioned by Macomb County superintendents says that payments will eventually grow to $813 million a year.

But Albert says the Legislature won’t reliably fund public pensions, and that closing the hybrid system will make it more stable for the employees whose benefits it must pay.

“There’s one additional cost to closing the system - they have to lower the assumed rate of return in the future,” he said, “This is actually good. We’re going to have to put in hundreds of millions of dollars to shore up the pension fund. We’re forcing ourselves to use real assumptions, and stop kicking the can down the road.”

Yet so important is closing teacher pensions to Republican lawmakers - Sen. Phil Pavlov introduced the equivalent bills in the state Senate - that they’ve slowed down budget talks with Gov. Rick Snyder, who has a thing about finishing the state’s budget before June. Snyder, to his credit, is unwilling to pull the plug on a system he says is working. The hybrid system is fully funded, and the state is slowly but proactively paying down the traditional pension fund’s liabilities.

Why is this such a priority for the Legislature’s right wing? It’s important to note that eliminating public pensions is a top priority of the big-spending DeVos family, whose political contributions have pushed right-to-work reforms, tax reforms and school choice. Last year, the family spent about $1.45 million over seven weeks, starting just five days after the Legislature stripped Detroit school reform violations of provisions favored by community leaders.

But this pension reform proposal doesn’t stand up to scrutiny.

Lost on lawmakers is that the 401(k)-style investment accounts they’d like to force on all teachers would also be vulnerable to the same stock market crash they say could leave the state on the hook for massive contributions to the hybrid system. (Albert says he’s proud that the reforms he’s suggested include an annuity option, essentially a pension funded by the private, not public sector.)

And there’s something else they don’t seem to get, says Doug Pratt of the Michigan Educators Association: “To say we need to reform the pension system so more money can go into the classroom is a fallacy - 85% of our expenditures are going to go into people, because it’s people standing in front of kids, teaching them.” In other words, Pratt said, money spent on teachers’ compensation is going into the classroom.

Lawmakers need to slow down, said Wanda Cook-Robinson, superintendent of the Oakland County Intermediate School District.

“We want them to take their time. We don’t want something rushed through,” Cook-Robinson said. “This is a monumental policy change. The second thing we would say is: Pay the bill. We need a consensus determination of what it would cost to close the hybrid, and to fund whatever they would put in its place.”

And - our words, not Cook-Robinson’s - ideologically driven, DeVos-funded Lansing Republicans need to stop messing around with our schools.

Michigan needs top-quality schools staffed with high-performing teachers. That costs money - and it’s a bill we should all be willing to pay. Why don’t legislative Republicans get that?

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