The Untold Story of Why Friday Was Michigan's Biggest News Day in Decades
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Consumers Energy CEO Dave Joos fields questions from Bill Hewitt of Radio WSGW and television stations at a news conference in a tent on the grounds of the Karn-Weadock Generating Plant in Hampton Township.
State Rep. Jeff Mayes and State Sen. Jim Barcia (at microphone) promise cooperation on ending deregulation at the news conference.
Big news stories were breaking on all fronts last Friday, Sept. 14, 2007.
But the biggest story was buried in the fine print.
Black bold headlines and breathless broadcasters proclaimed the top story as the Consumers Energy choice of Bay County's Hampton Township as the site for a proposed $2.3 billion new "clean coal" electrical generating plant.
A smaller headline locally was the announcement by the U.S. Army Corps of Engineers to begin a $2 million project dredging the Saginaw Bay shipping channel and the lower Saginaw River.
At the bottom was another prominent story noting that Bay City UAW Local 362 was preparing for a strike as a UAW contract deadline with General Motors loomed at midnight.
And, in Lansing,the "news" was that a group of stubborn legislators were haggling over silly details, some determined to sink the state budget to prove the governor incapable. Like in Washington, another place where nobody can agree, Michigan's legislators are proving they are like rats fighting over moldy cheese. They can't see the big picture, that the reputation and financial standing of the state is in everybody's interest no matter what their ideological or political persuasion.
Pretty big stories, all of them, and worthy of all that ink and paper and vast chunks of broadcast time can transmit to readers.
But the "inside story" with the most impact was hidden behind the headlines. As radio broadcaster Paul Harvey is fond of saying in dramatic tones, "here is the rest of the story." And the rest of the stories.
We all may agree that a major investment in power generation is important to Michigan and the tri-county area.
And that dredging the bay and river is vital to that part of the local economy that depends on waterborne shipping. Recent low water levels force ships to come in partially loaded and cut into the benefits of using the Saginaw River port.
And that the local GM PowerTrain plant remains a key to well-paying jobs and provides tax base for city and county operations.
But how important would a development be that might save, and even revitalize, the entire auto industry? Pretty darn significant, since Michigan's economy has risen and recently has seemed about to fall with the auto industry.
Serious talk of GM bankruptcy and Chrysler and Ford also on the ropes is more than scary -- it would be downright catastropic for Michigan. The automakers lost a combined $15 billion this past year, slashed thousands of jobs and shut many plants. A grimmer scenario could not be painted.
But wait! Is that light I see at the end of the tunnel? Is there a way to save the auto industry, and Michigan?
Behind the scenes at General Motors and at UAW Solidarity House in Detroit some pretty smart people are figuring out a plan that would not only "save" GM but also boost the UAW's chances of staving off a continual decline in membership.
When the Friday midnight strike deadline passed and talks went on in Detroit between GM and the UAW until 4 a.m., chances grew that a deal was in the works. If all the pieces fall into place, this will not be just an ordinary contract; the effects might be earth-shaking.
I never heard of a VEBA (Voluntary Employee Benefit Association) until last week but auto industry strategists speculate that adoption of such a plan could "save" GM. And that if GM puts a VEBA in place, Ford and Chrysler may follow and embrace similar plans.
It's really quite simple: GM and the UAW calculate how much health care liability the firm has and make a deal. Mr. GM Big Wig sits across the table with a huge bag of gold and says to Mr. Top UAW Guy: "Here's a big chunk of the $100 billion (with a B) that it will cost us for pensions and health care. You can have this cash, say $60 or $70 billion if you absolve us of future liability. OK?"
The union might even ask that the company keep more plants open in the U.S. and consider building new plants here. That could also be the biggest sticking point in the negotiations.
The instant Mr. Top UAW guy says, "yup, we'll take it!" GM, and presumably Ford and Chrysler, can rush out a borrow the big bucks to cut the deal, knowing that will be all they'll ever have to pay in employee benefits. Then they can work on other competitive issues in building cars and become The Big Three once again.
"If a deal on a VEBA is cut, it will revolutionize the auto industry," says Happy Harry, an inside observer in the Motor City whose real name is not used to protect him as a news source.
"Wall Street is already onto this," says Happy Harry,noting the price of GM stock rose an amazing $3.04 a share, or more than 10 percent of the $33.29 share price, last Thursday on news that the UAW was receptive to the VEBA. Ford shares also went up more than 5 percent to $7.92.
The stockholders of GM and Ford and the venture investors in Chrysler and Delphi Steering stand to rake in huge gains. Michigan will be economically viable once again and the electric utilities like Consumers will have more business than they can handle.
With a VEBA in place, the UAW would preserve jobs and membership and would be confident their benefits would be secure under UAW control even if, heaven forbid, the U.S. auto industry eventually falters.
Turning to the Consumers Energy announcement, the big investment is contingent on the Legislature tossing out the Engler-era deregulation of utilities. Once thought to be a great idea, deregulation has bombed. No power plant has been built in Michigan since P.A. 141 passed. That leaves the state without investment that is needed for tax base and forces the state's 12 utilities, led by Consumers, to buy power from sources in other states.
Local legislators Rep. Jeff Mayes and Sen. Jim Barcia, along with U.S. Rep. Dale Kildee, all Democrats, pledged to work with Consumers to end deregulation. The question is whether the rest of the legislature is so inclined. It shouldn't be a partisan issue, but who knows? As we often say in this column: stay tuned.
About a quarter of the natural gas used in Michigan is produced in the state. Six interstate pipeline companies import the remaining three-quarters from major natural gas producing regions in North America.
Consumers CEO Dave Joos explained that additional generating power is needed to meet current demand. The company now produces about five percent renewable energy is also committed to doubling its renewable energy generation by 2015.
The City of Bay City is one of about 100 municipal power companies considering becoming a partner in the new Essexville plant, City Manager Robert V. Belleman said.
Michigan is the twelfth largest producer of natural gas among the states. Twelve utilities provide natural gas service to approximately 3 million customers who burn over 900 billion cubic feet (25.5 billion cubic meters) of natural gas per year.
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