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| To make an ongoing faulty ignition case easier to handle, a federal judge in Detroit has ordered GM and some of its affiliates to preserve any documents related to the company’s ignition switch recall.
U.S. District Judge Linda Parker was asked by the New York State Teachers’ Retirement System — the lead plaintiff in the lawsuit, which concerns the delayed recall of 2.6 million vehicles — to have GM’s affiliates hold onto these relevant documents. The pension fund, which is worth $108 billion in assets and covers 426,000 employees and retirees, claims that the faulty ignition switches have caused pensioners a “loss to the value of their investments.” Named by Parker and the pension fund were GM’s longtime auditor Deloitte and Touche; a former supplier of the ignition switch, Delphi Corp.; two lead underwriters for GM, J.P. Morgan Securities LLC and Morgan Stanley and Co.; rental car companies that used GM vehicles; and eight Wall Street analysts. So far, none of the firms have been asked to turn over any documents. As of April 13, the number of deaths thought to be related to the faulty ignitions in certain General Motors vehicles has risen to 84 total. In the past week alone, the number of eligible death claims climbed by four people, according to lawyers from GM’s compensation fund. The fund is operated by Washington, D.C., attorneys Kenneth Feinberg and Camille Biros. Individuals who have participated in the compensation fund, which stopped accepting claims on January 31, can take payouts for the recalls, but by doing so they waive their rights to sue GM. The number of confirmed injury claims rose from 148 to 157 in the past week, as well. Of the 4,342 total claims made against GM, there are just 1,136 left under review, down from 1,246 last week. Road crashes in the United States can cost around $230.6 billion per year (or an average of $820 per person). For the car companies that foot the bill for the repairs, the cost can reach into the billions for one simple defect. GM began recalling vehicles last year for faulty ignition switches, with 2.6 million vehicles eligible for the most recent recall. In total, GM has recalled about 30 million vehicles for a number of safety issues. Last year, GM became aware of a steering problem with its vehicles, resulting in at least 50 claims to the National Highway Traffic Safety Administration and thousands of fixes. The repair was made through a simple software update. |
Category: Business
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GM’s Faulty Ignition Switch Recall Gets Oversight from Federal Judge in Detroit
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Michigan’s Fracking Industry Initiates Debate Over Radioactive Waste
New rules from the Michigan Department of Environmental Quality (DEQ) regarding hydraulic fracturing, or fracking, in the southeast part of the state have divided many of the state’s residents. According to a February 10 Royal Oak Patch article, the DEQ’s new rules require drilling companies to give advance notice of upcoming exploration projects to nearby residents. In addition, the rules mandate additional safety precautions for fracking and well exploration in the Detroit metropolitan area.
Fracking, a method of extracting oil and gas from shale deposits with blasts of high-pressure water mixtures, is currently responsible for about 43% of oil production and 67% of natural gas production throughout the United States. However, many environmental groups oppose fracking due to its ability to release harmful chemicals and pollutants into the environment and water supply, among other things.
The DEQ’s rules, which are only effective in counties that have populations of at least 750,000, have already spurred protests from activist groups and residents who claim the rules don’t do enough to protect the environment or public health.
One of these activist groups, Citizens Against Residential Drilling, claims the rules largely failed homeowners who live near fracking exploration sites, as they don’t make any provisions for residential zoning or other setbacks.
The radioactive waste that fracking releases into the environment is another point of contention. According to the Detroit Free Press, Southeast Michigan’s landfills have recently become home to low-level radioactive waste generated by fracking projects across the country.
“Southeast Michigan is the new ground zero for radioactive frack waste,” LuAnne Kozma, a campaign director at the Committee to Ban Fracking in Michigan, said.
In response to these protests, DEQ officials have said their hands are largely tied; Michigan state law prohibits local laws from banning oil and gas drilling operations, the Royal Oak Patch reports.
“Drilling is specifically protected by law from local bans,” Brad Wurfel, spokesman for the DEQ, said in a statement. “In that context, we’ve done a lot of good work toward addressing the issues and trying to make sure everyone’s interest is addressed.”
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Coffee Company Owned by Detroit Equity Firm Makes New Acquisition
Detroit- and Toronto-based equity firm Huron Capital Partners announced Feb. 11 that its portfolio company Ronnoco Coffee has acquired the Des Moines, IA, coffee producer U.S. Roasterie.
“Over the past 20 years, U.S. Roasterie has partnered with hundreds of customers in developing and supporting their private label brands,” Scott Meader, Ronnoco’s chief executive officer, said in a news release. “The addition of this facility and management team gives Ronnoco another platform through which to pursue alternate channel growth in a large and growing segment of the coffee industry.”
Coffee is the second most sold commodity in the world, following only oil. That makes it a $20 billion industry globally. While coffee is typically grown in less developed countries, for reasons both of climate and agricultural cost, it is often roasted closer to the distribution point, in order to maximize flavor.
U.S. Roasterie is a private label roaster with approximately 60 employees. Ronnoco purchased it from Howard Fischer, but the terms of the deal have not been made public.
Ronnoco, which is itself jointly owned by Huron and Ronnoco management, has made four other acquisitions in the past two years as part of a buy-and-build business plan. By acquiring International Blends, Henderson Coffee, the coffee and tea aspect of Love Bottling Company and Biff’s Coffee, the company has expanded into Arkansas, Iowa, Kansas, Missouri and Oklahoma, with its products being sold in restaurants, convenience stores, offices and casinos.
Since Huron’s initial investment in 2012, Ronnoco’s revenue has increased by over 40%.
Meader promised to “leverage the capabilities, systems and outstanding customer service of Ronnoco” to make the latest deal a profitable one, with Huron Senior Partner John Higgins commenting that “We are thrilled to see Ronnoco continue to expand and execute on the buy-and-build strategy we envisioned, and we’re confident in the management team’s ability to use this as a runway to drive continued growth of the business.”
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Detroit Drivers Pay Nearly 800% More for Car Insurance Than Drivers in Cheapest Areas, According to New Study
A new study commissioned by CarInsurance.com suggests that of all the factors that go into determining car insurance rates, just five digits — your ZIP code — can have a surprisingly large impact.
In order to control for considerations such as gender, age, car model, driving record and financial history, the California-based website compared rates from six major Medicare agents near me providers for a hypothetical 40-year-old man driving his 2014 Honda Accord 12 miles each day (with a clean driving history and good credit).
The Motor City turned out to be the most expensive place for this driver to get coverage, with Detroit’s 48227 zone averaging an annual premium of $5,109. If that driver lived just over 100 miles south, however, he’d be living in the cheapest ZIP code in the country; in Green Springs, OH, the same coverage would cost only $647 on average. The national average came in at $1,231, and cities such as Palo Alto, CA, and Denver, CO, were closest to that figure.
Why does ZIP code factor so heavily into insurance rates? “Based on the number and severity of car insurance claims within the area, insurers assign ZIP codes different risk levels,” Michelle Megna, managing editor of CarInsurance.com, wrote in an explanation of the study’s findings. “Insurers take into account the frequency of thefts, collisions and vandalism to gauge the likelihood of such incidents happening to drivers within the ZIP code.”
The most expensive areas after Detroit were 11226 in Brooklyn, NY ($3,877 annually); 19132 in Philadelphia ($2,760); 02903 in Providence, RI ($2,760); and 70117 in New Orleans ($2,542).
The top five discount ZIP codes were rounded out by 28704 in Arden, NC ($671); 04072 in Saco, ME ($709); 24073 in Christiansburg, VA ($751); and 83706 in Boise, ID ($753).
It’s unlikely that drivers will move across the country to take advantage of some of these ultra-low rates. But it’s good for them to know that moving even a few miles can raise or lower premiums.
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Can Boomerangs Turn Detroit into the Next Great Tech Hub?
According to a recent article on the tech site Re/code, Detroit’s burgeoning reputation as a hub for technological start-ups has one phenomenon to thank: boomeranging. Though the term “boomerang” has mostly been associated with employment-challenged millennials moving back in with their parents, the boomerangs of Detroit are mostly young people who were inspired to return out of a sense of loyalty for the city where they grew up.
The city of Detroit currently holds less than half the population it did only 65 years ago, leaving the area at risk to fall into urban blight. For many young people with family in the area, the crisis signified a chance to move back and make a difference.
Boomerangs that move back to the area are moving back to build businesses, attract investors and rejuvenate the city where they grew up. Many of the young innovators are moving to neighborhoods like Midtown and Downtown.
A new incubator space in Midtown called TechTown has sprung up to accommodate them, and they’ll soon be able to move between the neighborhoods using the M1 light rail project, which was paid for mostly using private funds.
A small group of recent college grads have also made Detroit their home as part of the Venture for America program, which is essentially the tech equivalent of Teach for America. The students purchased an $8,000 house and are creating their own start-ups on the run-down property.
Some boomerangs who’ve made their fortunes with tech start-ups elsewhere are buying up and renovating older buildings to rent out to other businesses and start-ups. Others have moved their business operations there to support the community.
“Anything you’re doing here makes a statement,” Ben Bator, founder of the profitable humor website Texts From Last Night, told Re/Code. “The conscious decision to move to Detroit and to make it your home says something.”
The cost also has an appeal. There’s plenty of available space in Detroit and it comes at a fairly cheap price. The downside is that much of the older architecture requires expensive renovations.
Though the strides that have already been made are promising, several Detroit natives are choosing to wait a little longer before moving back. Many believe that the city’s comeback needs to be a bit more evident before they return.
Some just aren’t convinced that tech has the staying power to revitalize a city, even though a tech solution like content marketing generates three times the leads as traditional marketing and costs 62% less. But for the boomerangs who are investing in the city, seeing their hometown restored to its former glory is worth the risk.