Iowa Trashes Illinois Sour Grapes Over Orascom Deal

Last week, Egypt-based Orascom chose Iowa for its $1.4 billion fertilizer plant. At that time, it seemed like Iowa‘s huge last minute agreement to offer a $110 million incentives package had won the day and spirited the plant away from Illinois‘ grasp.

Orascom

Photo – Orascom

But now, Illinois claims that it never was in the running and they backed off after they found out about Iowa’s massive giveaway to Orascom.

Marcelyn Love, communications manager for the Illinois Department of Commerce and Economic Opportunity (DCEO), told the Quad City Times that the state never put an offer on the table and they had no intention of getting into a bidding war.

This is very much in contradiction to what Orascom CEO Nassef Sawiris said on Sept 5 when he and Iowa Gov. Terry Branstad jointly announced the choice of Iowa for the plant. At that time, Sawiris said that Illinois had made an offer that was “richer” than Iowa’s offer, but he chose the Lee County site in Iowa anyway.

Iowa Gov. Brantad responded to Illinois’ claims that they never made an offer as “baloney.”

“They’re sore losers; we won, they lost,” added Gov. Branstad. “The truth of the matter is we won because we have clean government, and we don’t have the massive debt they have in Illinois. They just don’t like the criticism for the way they mismanaged their state for so many years.”

Iowa House Speaker Kraig Paulsen rubbed in some more salt on the wounds, saying that he trusted Orascom’s claim that they did have an offer from Illinois. ‚ÄúI surely trust them more than the Illinois government with its history of corruption,‚Äù said Speaker Paulsen.

If Speaker Paulsen is right, then it is just a case of sour grapes in Illinois. But if Orascom scammed Iowa Gov. Branstad into thinking they had a better offer from Illinois, then the fertilizer will hit the fan in Iowa because Iowa tax-payers just got taken for $75 million.

Either way, Illinois’ final position on the matter, as stated by DCEO’s Marcelyn Love, is that Iowa paid through the nose to bring Orascom to the Midwest, and farmers in Illinois will now benefit from lower anhydrous ammonia prices.

Federal Reserve Announces Third Round of Quantitative Easing

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The Federal Reserve announced a bond buying stimulus which will ultimately spur economic growth in the United States.

Chairman Ben Bernanke announced that the FED will continue injecting money into the economy as a program is implemented to buy $40 billion a month in mortgage backed securities. The stimulus will be the third round of quantitative easing (QE3).

Bernanke stated at a press conference that the stimulus was ultimately aimed at boosting the job market and stimulating the housing market.

Bernanke elaborates on how the policy is considered to be “Main Street” as boosting jobs is most important to the Federal Reserve. Bernanke was also ready to take action if the economy deteriorated further.

As a result of the announcement by the Federal Reserve, The Dow Jones Industrial went up approximately 200 points. Senior Economist Gus Faucher elaborates on how the nature of the bond buying scheme proved that the FED was serious about the recovery in the U.S. The Senior Economist was not expecting such an aggressive strategy but the job market is important enough to ultimately implement an ambitious policy. In addition to the bond buying, the FED will implement “Operation Twist” as long term interest rates are lowered.

Nearly $85 billion dollars a month will be pumped into the U.S. economy. Bernanke pinpointed that the housing market was recovering but he does not believe that the economy is strong enough. Due to the new stimulus, many Republicans are expected to criticize the move. Bernanke ultimately wants to see an improvement in the labor market numbers as the past six months has been lackluster. Bernanke was also worried about the high rate of unemployment as it threatened the U.S. economy. “Structural Damage” could have been the consequence of inaction.

Overall, Americans have to wait to see if the bond buying stimulus positively affects the U.S economy.

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Detroit Economic Development Agencies Wage Turf War

Motown has had it tough these past few years, but apparently it’s also pretty hard these days to survive if you’re an economic development agency in Detroit, Michigan.

Detroit

Photo – portdetroit.com

The Detroit Economic Growth Corp. (DEGC) and the Detroit-Wayne County Port Authority (DWCPA) are engaged in a bitter turf war over who gets to fund economic development projects in Detroit.

The current battle in this turf war flared up because the port authority is asking the state to pass legislation granting it powers to fund ED projects that have nothing to do with the Detroit waterfront.

To be specific, they want to be able to issue revenue bonds for a project, with revenue generated later on by the project being used to pay off the bonds. Currently, the DWCPA can only fund ED projects using tax-payer funds allocated to it by the state, county or city.

State Sen. Mike Kowall, chairman of the Michigan Senate’s Economic Development Committee, was happy to oblige and is currently putting together a bill that will free the DWCPA to fund economic development projects on its own.

This turf war has pitted players in the Detroit ED landscape on one or the other side of the legislative battle. Below are some of the salient comments provided to the Detroit Free Press.

“It’s not a turf battle. It’s a jobs battle. We’ve got to get people back to work.” – State Sen. Mike Kowall

“Every great port city in the United States has multiple economic development agencies and they all work together.” – John Jamian, executive director, DWCPA

“It allows us to be a finance partner with the City of Detroit or Wayne County.” РJohn Kerr, director of economic development, DWCPA

“This is nothing more than cannibalizing. This is not value-added economic development. This is nothing more than collecting fees.” – George W. Jackson Jr., president and CEO of DEGC

“It’s duplication of effort and will add confusion. We don’t need that other competition when we’re doing pretty well on our own, just so somebody can sell revenue bonds.” – Raymond Byers, director of Wayne County’s Economic Development Growth Engine (EDGE)

DEGC’s Jackson even wrote a letter to Sen. Kowall, in which he said that DEGC had no objection to the port authority getting authority to raise funds for port-related projects. But he said they should not be allowed to finance projects far from the waterfront which would create ‚Äúinappropriate competition with the city‚Äôs other development entities.‚Äù

UNCTAD 2012 Trade and Development Report

The UN Conference on Trade and Development (UNCTAD) has published its 2012 Trade and Development report, which explores the links between income distribution, growth and development.

UNCTAD 2012 Trade and Development report

UNCTAD 2012 Trade and Development report (Photo – un.org)

The report says that governments should use fiscal and labor market policies to reduce income inequality.

Trends over the last 30 years show income inequality increasing both within countries and between them.

The share of wages in total income has fallen by five percentage points or more in Australia, the United Kingdom and the United States, and by 10 percentage points or more in France, Germany and Ireland.

In several countries, the richest one per cent of the population now accounts for 10 to 20 per cent of national wealth. This high inequality deprives the people at the bottom from access to education and credit, and prevents the expansion of domestic markets.

In 1980, the per capita income of the 15 richest nations was 44 times that of the 15 poorest. By 2000, that multiple had increased to 62. The report notes, however, that in 2009, reflecting better economic performance in several developing and transition countries; the ratio had fallen to 56.

Because globalization has advanced greatly over the same 30-year period, the report says, a number of economists have argued that rising disparities in income are the necessary result of rapidly growing international trade and financial flows, and of quick advances in technology. But the study says this outcome is not inevitable – that governments can use fiscal and labor market policies to reduce income inequality.

They cite the example of Latin America in the new millennium’s¬†first decade, where income inequality fell with the implementation of progressive taxation and rising public spending, including social transfers and the provision of essential goods and services to low-income groups. The evidence suggests that the relationship between growth and inequality can be altered by proactive economic and social policies.

Lastly, the report examines how labor-market institutions and policies, together with an appropriate macroeconomic framework, can respond to current challenges and lead to sustained growth and more inclusive development.

They suggest that instead of wages linked to demand in the job market, an alternative approach should be employed based on linking wage growth with productivity growth. This prevents a rise in inequality and supports the process of economic growth and employment creation.

Read the full UNCTAD 2012 Trade and Development report – Download (pdf)

Google Publishes 2011 Sustainable Development Report

Mountain View, California-based Google Inc. (NASDAQ: GOOG) has published what it has been doing in terms of sustainable development in 2011.

Google renewable energy usage

Google renewable energy usage (Photo – google.com)

Their carbon footprint for the year works out to 1,677,423 tons of CO2 emissions, but the search giant’s business is carbon neutral since this massive footprint is balanced by their investments in carbon offset projects.

Google has apparently indexed 30 trillion unique URLs and gets a 100 billion search queries a month and they provide service to 425 million Gmail users, among other things.

In a blog post on the Google green blog, Rick Needham, director for Energy and Sustainability, said that, “Our campus sustainability programs are thriving. Last year, our shuttle program saw a 60% increase in ridership, and Googlers drove our fleet of hybrid and electric vehicles over 220,000 miles. The combination of our employee shuttle system and our electric vehicle infrastructure takes the equivalent of about 3,000 cars off the road every year. And we‚Äôre proud to have over 6 million square feet of building space around the world set to achieve LEED certification.”

Needham also said that Google’s power usage effectiveness (PUE) across all of their data centers had dropped to 1.13. This means the amount of energy spent on cooing and other overheads is 13 percent of the total energy used by all the data centers put together.

Based on this PUE, Google’s data centers are using only 50 percent of the energy other data centers need. Due to this energy consumption reduction, Google has saved a billion dollars to date. Out of Google’s total energy consumption, 33 percent comes from renewable sources while the rest is balanced with the help of carbon offset projects.

Google’s campus initiatives from the rooftop solar panels to their bike-to-work program have eliminated the equivalent of more than 16,000 metric tons of CO2 per year. At the Mountain View, California Googleplex, there are 1.7 MW of solar panels that produce three million kWh of clean energy.

Google’s carbon footprint per million dollars of revenue has been dropping by an average of 10 percent each year since 2009. Google has now been listed in the Carbon Disclosure Leadership Index for the second year running.

Google has invested millions of dollars in renewable energy projects that together represent a total capacity of over 1.8 GW. That’s the equivalent of power consumed by more than 350,000 homes.

Health Care Center To Be Established in Kernersville, North Carolina

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The Department of Veterans Affairs has selected a site for a brand new health care center.

The health center will be established in the region of Kernersville, North Carolina. A posting was published recently in which the construction project and opportunities for business was made public. The health care center will be established on a 39 acre site as 500 people will be employed by 2015. A Public Affairs Officer elaborates on how a range of health care services will be provided with the newly established health care center. The employment level is not expected to reach its height when it opens but it will as soon as it is fully operational.

Mayor Dawn Morgan states that the addition of the health center will be considered a “wonderful compliment” as more care is provided to the veterans in the area. Mayor Morgan elaborates on how the location is ideal for patients as they will not have to travel far to procure medical care. The number of physician specialists has increased and the trend is expected to continue as complimentary development occurs as well. The location has been confirmed nearly one week before a pre-bid conference is held. A developer will ultimately construct the facility while it is leased to the Department of Veterans Affairs for a term of 20 years.

The lease payment for the health center is expected to be around $11 million dollars annually as nearly 1,000 people can be employed in the process. The health center is expected to be nearly three stories high and will have nearly 1,900 spaces for parking. The health care center is one of three that is planned by the Department of Veterans Affairs. The center was expected to be open by 2013 but delays in the site selection pushed back the anticipated date.

Overall, the new health care center will be a positive asset to the local community in Kernersville.

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Economic Growth Was Main Focus At Forum in Garfield County, Colorado

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A forum was held in the region of Garfield County, Colorado where economic growth was the main focus.

Economic diversity and attracting young professionals to the region were the main issues that were addressed at the forum. Many of the county commissioner hopefuls talked about the issues as it was hosted by the Fork Young Professionals. The Fork Young Professionals are composed of many business people that are in their 20’s, 30’s and 40’s.

The main worry with the forum was how the county government was going to diversify the local economy.

One of the candidates whose running to be on the County Commission Board elaborates on how the county has potential for economic diversity but it is not being maximized.

Candidate Martin states that many of the local leaders are doing all that they can to assist current and established businesses. According to Martin, the main complication with the local leaders is a “lack of imagination” and a lagging world economy. Martin wants to make sure that the leaders don’t just sit around and that they are proactive as the challenges are met. A local educator states that there is a “brain drain” in the Garfield County.

The educator elaborates on how students get an education but then they relocate to other regions. There are a lack of high tech jobs and advancement opportunities in the region. According to the local educator, more businesses need to focus on education and innovation. Another main issue with the younger generation is the higher cost of living which ultimately makes it difficult to make it in the real world. According to the local educator, affordability should be provided to everybody in the Garfield County region. Expanding recreational opportunities is also important to attracting younger professionals.

Overall, the forum was an important event in the Garfield County as economic issues were addressed.

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German Farm Equipment Maker Plows Into St. Cloud, MN

German farm implement maker Geringhoff Worldwide has selected St. Cloud, Minnesota as the site of a new $20 million manufacturing facility that will create 100 new jobs in the first phase.

Geringhoff plant announcement in St. Cloud, MN

Geringhoff plant announcement in St. Cloud, MN (Photo – MN DEED)

The 110,000 sq ft former Donlin Co. building that will house Geringhoff’s plant is located in the Airport Industrial Park in St. Cloud, and will be producing corn harvesting equipment and other farm equipment.

During the site selection process, Geringhoff looked at nine separate regions in North America and visited more than 40 factories.

St. Cloud’s proximity to local suppliers in fabricated metal, advanced plastics production, hydraulics and electronic componentry has been credited with winning them this project.

Geringhoff is getting an incentives package that includes a $500,000 forgivable loan from the Minnesota Investment Fund as well as tax incentives through the JOBZ program.

“The quality of the local workforce and enthusiasm and support of the regional government agencies were the primary factors that contributed to our decision to open the facility here. In the end, it was the people from Minnesota and the St. Cloud region that made the difference,” said Joseph Jandrisch, president of Geringhoff in North America.

Minnesota Governor Mark Dayton and the Minnesota Department of Employment and Economic Development (DEED) commissioner Mark Phillips were both on hand at the announcement event in St. Cloud.

“We’re thrilled that Geringhoff chose St. Cloud for its first investment in North America,” said DEED commissioner Mark Phillips. “The expansion underscores Minnesota’s ability to attract quality manufacturers, particularly in the growing farm implement sector.”

“We are very proud and deeply grateful that Geringhoff has chosen Minnesota to launch their U.S.operations,” said Gov. Dayton. “These new jobs are extremely important to St. Cloud and to Minnesota. We look forward to working with Geringhoff to encourage future growth in our state.”

This is Geringhoff’s first manufacturing plant in the U.S., and they expect to expand significantly and add more jobs in the future, with St. Cloud, Minnesota as their North American base.

“St. Cloud will be our foundation to create an even larger presence across North America as we introduce a significant number of new products which are currently under development,” said Geringhoff CEO Daniel Hansmeier.

Ford to Add 1200 Jobs at Flat Rock, MI Plant

Ford Motor Company (NYSE: F) made a lot of people very happy in Flat Rock, Michigan when it took over management of the Flat Rock Assembly Plant and announced the addition of 1,200 new jobs and $555 million in new investments for manufacturing the new Ford Fusion midsize sedan in the U.S.

Ford Flat Rock Assembly Plant

Ford Flat Rock Assembly Plant (Photo – Ford.com)

The plant, formerly known as AutoAlliance International, was until now a joint venture between Ford and Mazda.

Ford has now taken over complete management control, although the plant remains under the ownership of the joint venture.

Production of the Mazda6 at the plant has been terminated and moved by Mazda back to Japan. Instead, Ford is bringing in production of the Ford Fusion, which is currently mostly being assembled in Mexico.

The Flat Rock plant already has an assembly line working on the Ford Mustang. In addition to adding a second shift with 1,200 new hourly jobs tied to Fusion production, Ford also is investing $555 million to build a state-of-the-art, fully flexible body shop capable of producing multiple vehicles.

“By fully incorporating Flat Rock Assembly into our manufacturing system, we are able to take advantage of internal efficiencies that will streamline our ability to produce vehicles,” said Jim Tetreault, Ford vice president of North America Manufacturing.

Tetreault added that if Ford needs to look at plants for a new vehicle in the future, Flat Rock will be in the running because of the flexibility that is being built into the facility.

“The new Flat Rock Assembly Plant symbolizes the growth driven by our One Ford plan,” said Mark Fields, Ford president of The Americas.

Ford expects the midsize sedan segment, which totaled 2.1 million vehicles in 2011, to continue growing. Fusion’s share of the segment has doubled to 12 percent since it was introduced, and the car has set sales records in five of the first seven months of this year.

The 2013 Ford Fusion goes on sale in the fall, with orders being fulfilled by the Mexico plant. The second shift in the plant at Flat Rock, Michigan with 1,200 new jobs will be operational by June next year.

EDA Backtracks On “Buy American” Bid at Yuma Airport

There’s a storm in a teacup brewing over a whole lot of nothing at Yuma International Airport in Arizona, and the U.S. Economic Development Administration (EDA) once again finds itself at the wrong end of a prickly spending issue.

Yuma International Airport

Photo – yumainternationalairport.com

Yuma International Airport wants to build an Aviation Industrial Center (AIC) in the Defense Contractor Complex at the airport.

The project, which was budgeted at about $4.2 million, is largely being funded by a $3.8 million grant provided by the EDA.

The Yuma County Airport Authority put out bid requests and the bids have been submitted by contractors.

At about this time, the EDA woke up and told the Yuma airport authorities to remove a “Buy American” clause in the bid request to reduce costs.

This clause is required by the Federal Aviation Administration (FAA) and says that all steel and manufactured goods used in Airport Improvement Program (AIP) funded projects have to be made in the United States.

But the EDA told Yuma to start over and ask for new bids without the clause. Airport Director Craig Williams admitted to the Yuma Sun that the inclusion of the clause was an “administrative error.”¬†But then, the news that a federal agency is against a “buy American” clause in a contract funded by the government created a big ripple.

Now the EDA has partially backtracked and told the airport authorities that it does have a “buy American” policy, but it’s not a mandatory thing. The EDA policy states that – “Recipients are hereby notified that they are encouraged, to the greatest extent practicable, to purchase American-made equipment and products with funding provided under this award.”

So it’s more of a guideline, unless of course the EDA wants to bring down the cost of the project, in which case you should ignore it. Now the new bid requests have gone out without the “buy American” clause. The only problem is that it won’t bring down the costs, because all the bidders for the airport contract “buy American” as a rule and that’s not going to change now.

So the hapless airport authorities in Arizona had to remove certain fire safety and security system requirements from the earlier bid to cut down on the costs. It’s a bit hard to understand exactly what the EDA achieved here, apart from delaying the project and getting rid of its safety and security features.

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