11 minute read
COMPENDIUM
COMPENDIUM: HOW OUTSIDERS VIEW DETROIT
BEHIND GM, FORD’S AGGRESSIVE NEW ELECTRIC VEHICLE STRATEGY IS OLD-TIME FINANCING: CASH
CNBC JAN. 22, 2022 BY TIM MULLANEY Detroit’s automakers have brought a surprisingly conservative financial strategy to making EVs the next vehicle of choice for American consumers.
They’re paying cash.
General Motors and Ford are investing $65 billion between them — $35 billion at GM and $30 billion for Ford — and, so far, don’t propose to borrow any of it. Instead, the most radical change in auto products in a century is being paid for out of the companies’ operating cash flow — seriously reducing the risk to the companies over time, and, for now, boosting their stock prices.
“The short answer is that they are doing it because they can,” said Nishit Madlani, automotive sector lead at bond rating agency Standard and Poor’s. “The popularity of trucks (since the pandemic began) and strong pricing is giving them confidence.”
Detroit’s aggressive investment and conservative financing has been years in the making. It has been aided by $4 billion borrowed by GM in May 2020, and by Ford drawing down a revolving credit line by $15 billion around the same time, moves intended to cushion a feared sales implosion from COVID-19. As sales declined more modestly than feared in 2020 and then began to bounce back in 2021, cash flow remained strong, taking the companies’ stock prices higher and letting Ford repay high-interest debt. …
MICHIGAN UNIVERSITY HELD BASKETBALL GAMES AT 100% CAPACITY DESPITE SHUTTING DOWN IN-PERSON LEARNING IN JANUARY
FOX NEWS JAN. 23, 2022 BY ADAM SABES Michigan State University allowed basketball games to continue at 100 percent attendance capacity despite shutting down in-person learning for nearly the entire month of January.
Attendance at all of Michigan State University’s home basketball games in the month of January at the Breslin Center was at 100 percent capacity with 14,797 fans in attendance, according to ESPN.
However, in a Dec. 31 message to the campus community, Michigan State University President Samuel Stanley Jr. said that classes would begin remotely for the spring semester due to “the state of Michigan reaching an all-time high in cases per day.”
“Given this intense surge in cases, we now feel the best decision for our campus is to start classes primarily remotely on Jan. 10 and for at least the first three weeks of the semester,” Stanley wrote in the announcement.
Michigan State University does require proof of coronavirus vaccination or a negative test for all basketball game attendees, and has an indoor mask requirement. Concession stands are only selling beverages, according to the university website.
One Michigan State University student said it’s “wildly hypocritical” for the university to hold basketball games at 100 percent capacity, but force students to attend classes online.
“The fact that students can fill the (Breslin Center) packed shoulder to shoulder for hours before the game, for the entirety of the game and be together for, you know, probably three hours at night with no social distancing, ... it’s wildly hypocritical,” Blake Maday said. …
TWO RICH MEN DECIDED TO FUND A FAILING CITY. SOME PEOPLE SAY THEY MADE IT WORSE.
TIME • NOV. 10, 2021 • BY ALANA SEMUELS On the steps of city hall, Mayor David Anderson hollered a guttural “Wahhh!!!” and shot his arms into the sky to celebrate, looking like an inflatable air dancer blowing in the wind.
“Four! Hundred! Million! Dollars!” he shouted, in July, to city residents in Bronson Park, a leafy plaza adorned with bronze busts and plaques honoring pioneers and philanthropists.
Anonymous donors had just given what is thought to be the largest-ever gift to support a municipality, and for city officials, it felt like winning the lottery. It was also a win for two of Kalamazoo’s richest men, philanthropists William Parfet and William Johnston, who created the foundation that received the money and that will determine how most of it is spent.
Since the Two Bills, as they’re known to locals, launched the Foundation for Excellence in 2017 to close budget gaps in their cash-strapped city — reportedly pledging $70 million of their own money to do so — the nonprofit has distributed around $26 million a year to close budget holes, lower property taxes and fund a wish list of projects.
Instead of the empty storefronts and vacant lots that characterize many Rust Belt cities, Kalamazoo today is a busy hive of spending. City crews are repairing sidewalks, repaving pickleball courts, building a splash pad for kids in a low-income neighborhood and replacing lead pipes, their work marked by orange-andwhite construction barrels and closed roads. Hundreds of children have been able to attend free summer camp and go online thanks to routers and internet service paid for by the foundation. Once-cash-strapped nonprofits are expanding their missions, helping residents get job training, do their taxes and adjust to life after prison.
But beyond the construction crews and new pickleball courts, a tension hums below the surface of Kalamazoo’s budget miracle. There’s a long history in the U.S. of the rich stepping in to fund cultural amenities like museums, but lately they’ve started stepping in to fund projects — in Kalamazoo and elsewhere — that have long been perceived as the government’s responsibility. It’s a scenario that critics say sets the stage for the super wealthy to control more and more aspects of public life.
“My biggest fear around this is that you can now buy influence in a city,” says Shannon Sykes- Nehring, who was a city commissioner when the Foundation for Excellence was approved and who has remained a vocal skeptic. “The way things are supposed to work in a democracy is that there’s one person, one vote; but now the consideration is, How can we keep the city afloat if we upset the people paying our bills?”
Kalamazoo, population 74,000, is used to serving as a model; in 2005, anonymous donors started the Kalamazoo Promise, which pays for college tuition at Michigan colleges and universities for students graduating from the city’s public schools. Now, in an era when billionaires control more wealth than half of the U.S. population combined, Kalamazoo is trying to harness the power of extreme riches to balance its budget.
“For years and years — centuries to come — we can improve, grow, invest, create, aspire differently than we’ve ever been able to do before,” Bobby Hopewell, Kalamazoo’s longest-serving mayor, told me recently. …
JUST A LITTLE TRACK IN PONTIAC
VINTAGE MOTORSPORT • JANUARY-FEBRUARY. 2022 BY GARY WITZENBURG Strolling through the paved, covered M1 Concourse paddock on the Thursday before the first American Speed Festival (ASF) track day, we could see that the number, quality, and significance of cars at M1’s Oct. 1-2 (2021) inaugural ASF were truly outstanding. Among the 16 historic IndyCars were a 1952 Kurtis roadster, a 1962 Watson, the 1966 Jerry Grant Eagle/Ford (owned and entered by Bobby Rahal), two (2!) 1968 STP Lotus turbine cars, a 1972 Vels Parnelli, the 1973 Penske/Donohue Eagle, a 1974 Hopkins/Riley Offy, a 1975 McLaren M16, the Janet Guthrie 1977 Vollsedt rookie car, the 1979 Johnny Rutherford/Jim Hall Chaparral 2K, a 1980 Hopkins Lightning, and the 1986 Unser/Shearson Lola.
In addition to the three (3!) Jim Hall Chaparrals (the original Chaparral 2, a groundbreaking active-highwinged 1965 2E and a 1967 2F coupe), the 10 Can-Am cars on hand included the 1966 Mecom/Parnelli Jones Lola T70, a 1972 UOP Shadow, and the Paul Newman 1981 March 817. Among the nine “Endurance” cars were a Jaguar GTP, a rare 1973 Porsche 917/30, a 1988 Fabcar GTP, and a 1988 Ferrari F40 LM. Most notable in the “Stock Car” class were the 1952 “Fabulous” Hudson Hornet and the 1991 Kyle Petty No. 42 Mello Yellow Pontiac.
In the “Featured” category: a 1957 Arnold Special, a 1959 Devin Special, a 1959 Tipo 61 “Birdcage” Maserati, and a 1967 BT21-B. There were 13 “Super Cars” including a 1996 Dodge Viper GTS Coupe, a 1999 Ferrari 360 Modena, and a 2014 Ferrari Enzo. Plus 20 “European Performance” (including a 1929 Bugatti Type 37, a 1961 Lotus 41B, a 1967 Lotus 51, a 1967 Maserati Ghibli, a 1971 Ferrari 246 GT Dino, and a 1991 Lamborghini Diablo), 16 “American Performance” cars (including a 1964 Cheetah and 1974 and 1965 Chelby Daytona Coupes), and three “Asian Performance” cars (including a 1990 Nissan NTP-90).
The entry list showed 110 cars in all, and — unlike at a concours or in a museum — most of them could be seen hauling ass around the 1.5-mile track. The original plan was to have them compete for the fastest times in their classes, but that idea was scrubbed in the name of safety. So, they just looked and sounded terrific as their drivers worked them out for the sheer fun of it, and for beautifully sculpted trophies for spectator/official-voted bests in class.
Thursday’s Dine and Drive Tour visited the amazing Ken Lingenfelter collection and the Dearborn Automotive Hall of Fame, enjoyed behind-the-scenes tours through the vast Henry Ford Museum, then a top-rank reception and dinner in M1’s new Event Center. The track runs began on Friday and continued through Saturday, both days. …
CAN PAPER REPLACE PLASTIC? A PACKAGING GIANT IS BETTING IT CAN.
THE WALL STREET JOURNAL JAN. 2, 2022 BY RYAN DEZEMBER When a new building-size machine cranks up this month, it will begin turning mountains of recycled cardboard into paperboard suitable for greener forms of packaging.
The $600-million project, the first new paperboard production line built in the U.S. in decades, represents an enormous bet by owner Graphic Packaging Holding Co. on a future without foam cups, plastic clamshell containers or six-pack rings.
Graphic wants to be able to offer more environmentally friendly packaging so that the consumer-goods companies that buy its products can tout a cleaner supply chain to their own investors and consumers. Once Graphic shuts down four smaller and less-efficient machines, including one at its Kalamazoo complex that is 100 years old, it will use a lot less water and electricity, it says, and emit 20 percent less greenhouse gases.
ESG investing has put trillions of dollars into the control of funds that promise to invest it with environmental, social and governance goals in mind, as the abbreviation implies. That, in turn, has companies striving to operate with less waste and greenhouse-gas emissions.
Graphic says green investing has opened up a market worth more than $6 billion a year for replacing plastic with paper on store shelves, even if that might result in consumers seeing slightly higher prices.
Graphic’s gamble is a big test of whether the flood of ESG capital can transform supply chains. Plastic packaging is frequently less expensive than paper, is more effective in many applications, and sometimes even has a smaller carbon footprint. Consumer-goods companies will have to be persuaded that their customers will pay more and that paper packaging really is greener.
Graphic executives contend their customers have little chance of meeting emissions and waste targets without substantially cleaner supply chains. …
INSURANCE BUSINESS • JAN. 31, 2022 • BY RYAN SMITH A Michigan insurance agent is headed to jail for a year for scamming her clients out of hundreds of thousands of dollars, according to the state’s attorney general.
Alicia Holbrook-Bloink and her insurance firm, Holbrook Insurance Agency, pleaded guilty to multiple felonies in December, according to Michigan Attorney General Dana Nessel. Holbrook-Bloink pleaded guilty to conducting a criminal enterprise, while the company pleaded guilty to conducting a criminal enterprise, embezzlement, identity theft, and tax evasion.
Between 2015 and 2018, Holbrook-Bloink used her agency to embezzle nearly $375,000 by taking money from clients who had paid in full, then forging finance agreements with premium finance companies to ensure the clients’ policies were issued while Holbrook-Bloink stole their money. These finance contracts often went unpaid, resulting in the cancellation of insurance policies, often without the clients’ knowledge, the Michigan Department of the Attorney General said.
The case was referred to the attorney general’s office by the state Department of Insurance and Financial Services (DIFS) after several of the victims filed complaints. It was investigated by DIFS and special agents from the attorney general’s office.
“We thank the attorney general’s office for its partnership in prosecuting this case and bringing justice for individuals who were harmed by this crime,” said DIFS Director Anita Fox. “DIFS is committed to protecting Michigan consumers in the insurance and financial services industry.”
Last week, Holbrook-Bloink was sentenced to a year in jail and three years of probation. Restitution will be determined at a June 10 hearing.
“When the people we hire to protect our assets choose instead to pocket our money, there must be consequences,” Nessel said.
03-04.22
THE TICKER
MATTHEW LAVERE
26
A NEW DAY
Following her disappointment with conventional beauty supplies, Gwen Jimmere took action and developed hair, face, and body care products she calls Naturalicious, in Livonia. The company also offers beauty supplements.
