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Dec 19

Financial Collapse

Comments (0) 12:00 AM posted by admin |

Splashed across today’s Ann Arbor News was an article talking about the possible collapse of the City of Ypsilanti. I loved this line:

If the city continues to face severe cuts in its revenues and is unable to maintain a balanced budget, the state could appoint a receiver to manage the city.

Somebody has been doing their homework.

It’s really creepy when a rag such as the AA News backs me up, but you take what you can get sometimes. The City could go under because of financial difficulties over the fuzzy math of the Water Street Project, but also because of the uncertainty of the Visteon plant — the City’s largest taxpayer. I feel that it is my duty to correct what the AA News said about Visteon.

A little background if you will be so kind. A few years ago Ford spun-off the components part of its business. The former-CEO, Jacques Nasser, was looking to mold Ford in the style of GE, and wanted get rid of the unprofitable aspects of the company. This spin-off was supposed to be similar to what GM did with Delphi. This was a brilliant move on Ford’s part because along with spinning off the parts that would become Visteon, it forced this new Visteon to take several plants (Monroe, MI and Indianapolis) that basically produced garbage. As a result, Visteon hasn’t produced a profit in a long while.

In order for Visteon to become profitable again, they are looking at closing up to five plants in Michigan and two in Indiana. This is where the poor journalism comes in. Within the next year, Vistion is going to sell it’s electronic fuel handling division (which includes the Ypsilanti plant). While it’s entirely possible that the buyer may close the Ypsilanti plant, Visteon isn’t just going to lock the doors and call it a day. The most likely scenario is that a new owner would come in and not pay the same UAW wages that Visteon currently does under its two-tier pay scale. In theory, this means the City will continue to rake in the taxes on the property and stave off insolvency just a little longer.

It’s hard to get too upset with the AA News over their shoddy reporting because they do it so often. It was only last week when they praised Richard Kirk of K&E Construction / Edwards Communities of Ohio for being a preservationist because he tore down the Peninsular Paper Co.’s mill but managed to save the smokestack as art.

Walter Winchell is spinning in his grave.

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