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GM’s potential Lordstown sale draws scrutiny [The Detroit News]

May 13– May 13Brian Milo isn’t impressed with a potential sale of his hometown plant to electric-vehicle start-up Workhorse Group Inc.

Jaded by nearly a year of unemployment, the laid-off General Motors Co. line worker also isn’t impressed by the political fanfare and a presidential tweeting last week celebrating a possible fresh start for the automaker’s Lordstown Assembly in Ohio.

“I’d rather see GM invest in Lordstown and repay us for how we bailed them out,” Milo said. But “if they feel that they are not going to utilize Lordstown, I’d like to see a viable company use the facility.”

Milo, who voted for Trump in 2016, isn’t alone in his skepticism about the plans. In the days following President Donald Trump’s tweet and GM’s announcement, Workhorse’s “viability” is a shared concern for some Lordstown workers, union leaders and industry experts, who cite its shaky financial condition. But GM, according to people familiar with the talks, was ready to make its negotiations with Workhorse public prior to the president’s tweets — a decision not made lightly.

The Detroit automaker, amid a global restructuring and nearing contract negotiations with the United Auto Workers, says it won’t assign a new vehicle to the plant. And the most desirable alternative is finding another automotive manufacturing operation.

“In repurposing a plant, the best and highest use of an automotive assembly plant is automotive assembly,” said Kristin Dziczek, vice president of Ann Arbor-based Center for Automotive Research. “The next best use is manufacturing of any kind, but it doesn’t have the same impact on job creation and the economy.”

GM has been in talks with interested buyers for months, with Workhorse approaching the company in January, according to a person familiar with the talks. Workhorse ticked all the boxes, the person said, including offering continued vehicle production — a key driver of economic development with historically high job-multiplier effects.

Workhorse’s plan, as presented last week, would be a best-case scenario for repurposing, particularly in a rural area like the Mahoning Valley, said Valerie Satche-Brugeman, a CAR researcher who co-authored reports in 2011 and 2012 on the repurposing of automotive manufacturing facilities.

“Closed factories in urban areas have a much higher chance of being redeveloped,” she said. “If the plant closes before a redevelopment plan is made, there is a very low chance it returns to manufacturing again.”

Satche-Brugeman’s 2011 report found that age plays a factor in whether a plant is repurposed, with plants under 46 years old finding the most new uses. Opened in 1966, Lordstown is 53 years old.

Two former GM assembly plants offer examples of potential fates for Lordstown.

After General Motors Baltimore Assembly closed in 2005, the property was sold to a real estate development company for $27 million. It was converted to various corporate residences and warehouse operations, a project that CAR’s report estimated would have cost the real estate developer a total of $150 million over 10 years.

GM’s former assembly plant in Moraine, Ohio, near Dayton was one of a handful closed by the Detroit automaker in 2008 as the company edged toward its federally financed bankruptcy. The plant sat empty until 2014, when a Chinese automotive glass manufacturer, Fuyao Glass Industry Group Co., purchased the plant. Fuyao started operating in the plant the following year.

Workhorse’s potential manufacturing operation at Lordstown, which the company declined to detail at this early stage, would employ “hundreds” of workers to start with room for growth in the sprawling 6.2 million-square-foot assembly and stamping facility. Lordstown was employing 1,435 union-represented workers on one shift before it stopped production of the Chevrolet Cruze in March. That had diminished from more than 4,000 when the plant was operating with three shifts.

“There was also once a little start-up called Tesla building a couple-hundred electric vehicles at a huge plant in Fremont, California,” GM spokesman Jim Cain said, referring to Elon Musk’sTesla Inc. operating out of a plant once jointly operated by GM and Toyota Motor Corp. “Workhorse has defined a similar niche in (electric) commercial vehicles; they’re one of the finalists to build new trucks for the U.S. Postal Service — there is some substance there.”

But to Jeff Schuster, an industry analyst for LMC Automotive who tracks both GM and Workhorse, the thought of Cincinnati-based electric truck-maker taking over Lordstown is “head-scratching.”

“Workhorse appears to be a very slow-moving venture that has a lot of risk, and no massive amount of funding,” Schuster said. “Lordstown is a massive facility, and despite some investments over the years, I don’t believe it would be easily converted to build electric pickups without substantial investment.”

Workhorse sees a way around that funding problem. The company plans to create an acquisition entity, of which it would be a minority stakeholder. That new entity would own Lordstown and use Workhorse technology and intellectual property to build a vehicle

Workhorse spokesman Tom Colton declined to comment on where that investment stands or to identify any potential backers.

Still, LMC estimates Lordstown would need to produce 410,000 vehicles per year to reach full capacity, the watermark for profitability. Schuster says his team estimates Workhorse’s electric pickup truck production potential between 5,000 and 10,000 trucks per year.

United Auto Workers Local 1112 President David Green, who represents union workers at GM’sLordstown plant, says he’d rather focus on efforts by the UAW’s international leaders to pressure GM on reopening Lordstown.

The UAW is suing GM for its plans to “unallocate” Lordstown, Warren Transmission and Baltimore Operations before the current contract expires. DetroitHamtramck is not included in the lawsuit because its production was extended through January 2020, after the current contract expires. Union leaders, who balked at GM and Workhorse’s announcement last week, also are expected to demand a new product for Lordstown during contract negotiations this fall.

“All we have now is more drama, more anxiety,” Green said of the GM-Workhorse announcement.

GM’s Lordstown Assembly, one of five North American plants GM said it would idle as it executes a global restructuring, has become a political football for Trump. Lordstown’s surrounding Trumbull County delivered Ohio to Trump in 2016 as the former Democratic stronghold flipped Republican.

Despite the president’s celebration last week, Green says a lack of real answers is only adding to the anxiety in Lordstown.

“Nothing about that has changed,” he said. “The closer we get to contract talks, the only thing that changes is the anxiety level. It’s like having a loved one on life support and trying to decide whether to pull the plug or wait it out.”

nnaughton@detroitnews.com

Twitter: @NoraNaughton

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(c)2019 The Detroit News

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Accused spy Paul Whelan to lawyers: I used work visa to get into Russia [Detroit Free Press :: BC-USRUSSIA-WHELAN:DE]

DETROIT _ Paul Whelan, the Michigan businessman accused of spying in Russia, entered the country on a business travel visa supported by BorgWarner Inc., he told his lawyers in Moscow.

Whelan, 49, of Novi was the director of global security for the Auburn Hills-based auto supplier when he traveled to Russia on Dec. 22 for the wedding of a friend. He was arrested six days later by the Russian Federal Security Service (FSB) and charged with espionage.

He remains in a prison cell at Moscow’s czarist-era Lefortovo Detention Facility, held without much more information about the accusations against him than he knew on the day when he was initially detained.

“He was caught red-handed,” Russian Foreign Minister Sergey Lavrov said at a news conference following Whelan’s arrest in his hotel room at the upscale Metropol hotel in Moscow. In his possession was a flash drive containing what Russian authorities say was sensitive information.

It’s a claim his family denies.

“Paul thought a friend of 10 years was giving him some photos of his hometown,” on the flash drive, said his twin brother, David Whelan, in an email message. Whelan holds U.S., British, Canadian and Irish passports. If he’s convicted of spying, he could be imprisoned for up to 20 years.

Since his arrest, Russian authorities are limiting Whelan’s contact with the outside world, but he has been able to communicate some details about the case to his family through his lawyers. Among those details: BorgWarner helped him get into Russia by sponsoring his visa, and he believes his arrest might be tied to politics involving U.S. sanctions.

BorgWarner has 30,000 employees around the world with 68 locations in 19 countries, but it doesn’t have facilities in Russia, said company spokeswoman Kathy Graham.

The company would not confirm that it sponsored Whelan’s Russian business visa.

“As a general policy BorgWarner does not comment on travel of any of its employees, nor does the company discuss information about individual customers,” said Graham in an email to the Free Press. “Paul was not in Russia on company business. We are deferring to the State Department regarding updates to his situation.”

Although BorgWarner operates no facilities in Russia, the company does have a history of doing business there.

BorgWarner supplied Kamaz Inc., Russia’s largest truck-maker, with turbochargers, fan drives and high-performance fans, according to U.S. Securities and Exchange Commission documents. BorgWarner parts are used in nonmilitary Kamaz trucks and Nefaz buses, and its total sales to Kamaz from 2013-15 through non-U.S. subsidiaries was $12.1 million.

“For over 15 years, BorgWarner has supported (Kamaz) with advanced air-flow technologies, and we are looking forward to continuing the successful collaboration,” Daniel Paterra, who was then BorgWarner’s president and general manager of thermal systems, said in a 2015 news release about the Dakar Rally, an off-road rally in South America in which Kamaz trucks are used.

About a year after Paterra made that statement, the SEC submitted a letter to the president and CEO of BorgWarner, asking for details about the company’s dealings with Kamaz, which was reported to have delivered trucks to Syria and Sudan.

Sudan and Syria are designated by the State Department as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls,” wrote Cecilia Blye, chief of the SEC’sOffice of Global Security risk in a letter to the company dated April 14, 2016.

“We are aware of publicly available information indicating that your subsidiaries have provided turbocompressors, fan drives and high performance fans to (Kamaz) Inc. and news reports indicating that Russia has delivered (Kamaz) military trucks to the Syrian Army.”

The company responded in a letter later that month, writing: “There were no direct or known indirect sales or exports from BorgWarner Inc. … or its subsidiaries … to Sudan or Syria in 2013, 2014 or 2015.

“Non-U.S. subsidiaries of BorgWarner have had and in the future may continue to have de minimis light vehicle/non-military automotive business with customers in Sudan and Syria. U.S. law does not prohibit non-U.S. subsidiaries of U.S. companies from engaging in transactions with Sudanian or Syrian customers that do not involve exports or re-exports subject to U.S. jurisdiction.”

BorgWarner declined to provide the Detroit Free Press with a specific explanation of what it meant by “de minimis” in its response to the SEC, although generally the term is used in legal references to suggest something so small or minor, it is insignificant.

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“There are some very good and reasonable questions to be asked from BorgWarner,” said Ryan Fayhee, a Washington, D.C.-based attorney and former U.S.Justice Department prosecutor who is working on behalf of the Whelan family. “There’s an open question right now around the role of a company when their employee, who did not go there for work, but they sponsored his visa, and they have meaningful operations in Russia. They don’t have an office there, but what they do have is … very, very meaningful relations with a company called Kamaz.

“Kamaz is a very interesting organization because it is actually headed by a businessman who was the co-chair of Vladimir Putin’s re-election campaign. … I wish this was a conspiracy theory. It is not.”

The director general of Kamaz is Sergei A. Kogogin, who was, in fact, the co-chair of Putin’s 2018 reelection campaign.

The largest shareholder in Kamaz (49.9%) is a government-run defense technology company called Rostec Corp., which produces such military products as high-precision artillery munitions, artillery shells, rocket launchers, ammunition, along with aircraft and bomb weapons, among other things.

The director general of Rostec is Sergey Chemezov, who is among the most powerful people in the FSB, according to the Warsaw Institute, a Polish think tank focused on international relations, energy security, defense and other issues important to Poland and east-central Europe.

Rostec was sanctioned by former President Barack Obama’s administration after Russia invaded Ukraine. And Chemezov was barred from entering the U.S.

“I’m not suggesting BorgWarner has done anything wrong,” Fayhee said, “but I would suggest … what role can the company have in the horrible, unfortunate situation where one of their employees has become a political pawn? And how do they act, what should they do, and how do they manage it?”

BorgWarner declined to answer questions about its efforts to help recover Whelan from Russian authorities. Fayhee said the company has been less than forthcoming with the Whelan family and in answering his questions, too.

“The big question in the beginning was and still is, … what, if anything, with respect to the company may have contributed to Paul’s arrest?” Fayhee said. “For example, did somebody visit Paul in Detroit, or email or corresponded with him at the company? … You know, if there’s a missing person, you interview his family, you interview his company and you take all these reasonable steps to determine what was done … things like doing some sort of internal review or gathering materials, forensically or otherwise to help support the government in its effort to examine what would have led up to Paul’s arrest and disappearance.”

Yet, Fayhee said when he asked BorgWarner whether any such internal review had been done, an attorney for the company told him it is more concerned with its reputation in the news media than conducting an investigation.

The response surprised him.

“What is clear is that Paul, and the family really deserve more out of BorgWarner,” Fayhee said. “They deserve a dialogue. … The family very much wants to engage in even a private dialogue with the company in order to make sure they are doing everything they can do to secure Paul’s recovery.

“That’s really at the core of it. The statements made by their lawyer, the fact that they’re not speaking directly with the family is really troubling to say the least.”

Through its spokeswoman, BorgWarner issued this statement in response to Fayhee’s criticisms: “BorgWarner worked closely with the family before they engaged their own attorney, and it has coordinated with the State Department and other government agencies since Paul’s arrest, and will continue to coordinate where appropriate, to help bring Paul home safely.”

David Whelan said there’s no indication that his brother’s work for BorgWarner has anything to do with his arrest in Russia.

“We are not aware of BorgWarner’s business connections to Russia beyond what’s in the public record,” David Whelan said. “We don’t have any reason to believe Paul’s situation has anything to do with BorgWarner, other than that it is an American-based company.

“However, we do think that he was targeted by the Russian police because he was an American businessman. Unfortunately, the FSB appears to have miscalculated whatever result they helped to extort out of Paul’s false arrest. Paul has shared notes through his lawyer that he believes his arrest has some sanctions-related element, but we don’t know why he says that. But there’s no indication it has anything to do with BorgWarner.”

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In recent weeks, bundles of handwritten letters from Russia have arrived at the Manchester, Mich., home of Whelan’s parents, Rosemary and Edward Whelan. The letters from their son have been censored by Russian authorities, but still are a welcome sight, his brother said.

“My mum and dad received about 75 letters, in three groups … over the past 10 days or so,” David Whelan said. “They’re handwritten notes from Jan. 18 onward. … They describe his day-to-day in jail. As they went through the routine prison censoring, before being held by the FSB investigator for months, they are purely day-in-the-life.

“We haven’t really learned anything that helps us with seeking his release, but they are comforting for my parents. You can hear his ‘voice’ in them, and a letter can be read and re-read while they wait for his return.”

Since his arrest, Russian authorities have limited Whelan’s access to his lawyers and consular services. He has not received mail or phone calls or the English-language books, including an English-Russian dictionary.

(EDITORS: BEGIN OPTIONAL TRIM)

Even Jon Huntsman Jr., the U.S. ambassador to Russia, has been restricted in what he’s allowed to discuss with Whelan.

During an April 30 meeting with Whelan at the prison, Huntsman was not allowed to read letters from his family, to ask him to sign a power of attorney, and was banned from “talking about anything that actually matters,” said Andrea Kalan, a State Department spokeswoman, on Twitter.

“Why haven’t Russian officials provided proof? Perhaps it’s lost along with Paul’s mail. Complete lack of evidence + Paul’s isolation = greater likelihood officials will try to get a forced false ‘confession.’ Stop playing games.”

David Whelan said his family is concerned that his brother has been interrogated without the presence of his lawyers or his translator, and noted that his attorneys in Moscow, Vladimir Zherebenkov and Olga Karlova, were appointed by the FSB.

In addition, his brother’s signed Privacy Act Waiver was held up for months by Russian investigators who alleged the document was lost in the mail. And now, a similar delay is keeping the family from getting access to a signed power of attorney, which would grant them the ability to manage his affairs at home and help him choose his own attorney in Russia.

“There’s a real concern that … at some point given the isolation, the limited access, a lawyer that doesn’t even speak English, that at some point that affects your psychiatric health,” Fayhee said. “Maybe that’s done to try to extract some kind of confession out of him or to get him to say something on the record so the Russians can then use that as the basis of his continued detention. It’s difficult or impossible to know. But we shouldn’t understate the potential effects of being isolated the way he’s being isolated.”

(END OPTIONAL TRIM)

Whelan’s next hearing in Moscow City Court is happening at the end of May. His detention could be continued at the hearing, or, Fayhee hopes, Russian authorities could let him go.

“We hope they find this as an opportunity to acknowledge that the allegations … have not been substantiated and that they’ll release him. That would be the appropriate thing to do under the circumstances.

“But the family is prepared also for the possibility that the detention will be extended for another three months in order to further isolate him, in order to extract whatever benefit it is that they’re seeking to achieve whatever goal Paul is being used to achieve.”

In April, the U.S. State Department issued a travel advisory for Americans going to Russia, suggesting increased caution because of terrorist threats, and a risk of being harassed, mistreated, arbitrarily interrogated, detained or targeted for extortion.

“There is no doubt in our minds that Paul’s arrest and imprisonment amount to a kidnapping by the Russian police,” David Whelan said. “We hope the new designation will help other Americans avoid the same fate.”

(EDITORS: STORY CAN END HERE)

State Department spokeswoman Julia Mason said the department is continuing to closely follow the Whelan case.

“We urge the Russian government to guarantee a fair and transparent judicial process without undue delay, in accordance with its international legal obligations,” she said. “We have visited Mr. Whelan seven times since he was first detained. We will continue to press for fair and humane treatment, due process, and access to appropriate medical care.”

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(c)2019 Detroit Free Press

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Texas’ Strong Economy, Pro-Business Attitude Make It a Top State for Truckers

Trucking companies prosper in Texas

Keep on truckin’. That’s the message the Lone Star State sends over-the-road owner-operators looking to make it big in the transportation and logistics business.

In 2016, more than 3,000 trucking industry professionals throughout the U.S. were surveyed to determine the best and worst states to own and drive a truck. The survey revealed Tennessee as the nation’s best for truckers, with California “raking the leaves” at the back end of the convoy.

The survey factored several items to determine its rankings. These included cost of overnight parking, fees/regulations, if location in the U.S. mattered, and how friendly states were to drivers. Texas finished a solid fourth in the best state’s derby. Were there to be another survey, it’s likely the state could finish higher thanks to the state’s “put the hammer down” pro-business attitude and economy.

Texas benefits from a strong economic base that often booms when times are good and weathers slow times better than the rest of the nation. This creates and sustains demand for consumer and industrial goods and products, goods and products that must be transported over the road. Small trucking companies have plenty of opportunities to compete for these loads, even outfits new to the market. In addition, Texas is home to three of the nation’s largest cities and one of America’s biggest ports. It’s no surprise that Texas cities ranked among the Top 10 in several freight transportation categories in a 2018 trucking survey by DAT Solutions.

The Lone Star State also has a business-friendly agenda. This means fewer laws and regulations that add to costs, sap cash reserves and make doing business harder. These include complex labor and environmental laws that can be burdensome for trucking companies of all sizes, but smaller ones in particular.

In 2018, Texas won CNBC’s annual Top State for Business in America award. It was the fourth time Texas has won top prize in the award’s 12-year existence. Texas Gov. Greg Abbott explains:

“When given the freedom to aspire, Texans risk their own capital and invest in themselves and others by opening businesses large and small. And success is contagious. New business formation in Texas is at a five-year high. Start-ups are growing here right alongside Fortune 500 companies and more than 2.6 million small businesses. It’s no surprise that Texas is ranked by CEOs as the best state for doing business, now for the 14th year in a row. As one Texas entrepreneur puts it: ‘If you like big ideas … build your business in Texas.’”

Meanwhile, Texas placed third in a similar Forbes magazine survey of best states for business.

Texas’ low business taxes and lack of an income tax make it an attractive place to open a business of any size. It’s a top state in terms of access to the capital a business like a trucking outfit needs to expand and grow.

Texas is a big place with tens of thousands of miles of highways. The state has invested heavily in infrastructure and roads in both rural and urban areas. Better and less congested roads make a trucker’s job easier.

Whether you’re eastbound and down, westbound or any other direction, Texas should rank high on your list of places to locate a trucking firm. 

Once you’ve set up shop in the Lone Star State, you may find you need to add employees, buy new equipment or improve your cash flow. If so, consider invoice factoring. Invoice factoring allows you to “sell” your accounts receivable invoices to a factoring company. The factoring company pays you upfront for outstanding invoices, giving you the cash you need today to run your business, and eliminating the worry and hassle of slow pay collections, leaving you free to run your business. Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans and risky crowdfunding. Each of these sources require a long-term contract. Factoring, however, gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. If you would like to learn more about how invoice factoring works and how it can put your cash flow into the fast lane, simply call toll-free 1-855-219-6008 or email clientsupport@chartercapitalusa.com.

Effort to repeal Colorado’s new oil, gas law is dropped — for now, sponsors say [The Denver Post]

April 26– Apr. 26–The sponsors of a proposed initiative to repeal a new law overhauling oil and gas regulations aren’t moving forward with plans to put it on the ballot — for now.

They pledge to try next year if their predictions of cuts in oil and gas jobs, reduced state and local tax revenue and negative impacts on other businesses come true.

Weld County Commissioner Barbara Kirkmeyer and former Arapahoe County Commissioner John Brackney filed ballot proposals in early April to reverse Senate Bill 19-181, signed into law April 16. They were aiming for the 2019 ballot.

However, state election officials, who review proposals for placement on the ballot, rejected the measure last week. They said it violated the rule limiting an initiative to only one subject.

Kirkmeyer and Brackney requested a second hearing, but decided Thursday to shoot for 2020 instead. The rehearing, set for Friday, was cancelled.

“We’re going to be a little patient. We lost in the first hearing and we’re probably just going to accept that decision, although we don’t like it and don’t think it’s the right decision,” Brackney said.

And while there was strong support in the oil and gas industry for a ballot proposal, there was also a reluctance in some quarters to move forward without first seeing how the law is carried out, Brackney added. He noted that legislators made changes to the bill during the hearing process that were sought by the industry.

“I think a horrible bill was made not quite so horrible,” Brackney said. “Now, is it a good bill? I don’t think I’d go there yet.”

Kirkmeyer said during legislative committee hearings that the new regulations would devastate the economy of Weld County, the state’s No. 1 oil and gas producer.

Business organizations, some local elected officials and oil and gas representatives warned the law will undermine an industry that a report commissioned by the American Petroleum Institute said contributes about $31 billion to the Colorado economy and supports roughly 232,000 jobs.

Kirkmeyer said in a statement that the ballot proposal “has been sidelined for 2019 on a technicality and behind-the-scene maneuvering.” She said with the executive and legislative branches “controlled by extreme liberal Democrat politicians, we knew the deck was stacked against us going into this.”

A number of supporters have committed funding and resources and vowed “to go the distance,” Kirkmeyer said. “We plan to come back stronger, defend our state, our families and re-file a refined ballot initiative for 2020.”

The Colorado Oil and Gas Association wasn’t directly involved with the initiative and hasn’t taken an official stance, Scott Prestidge, the trade group’s spokesman said in a statement. COGA said it is committed to taking part as state officials write new rules for the law, Prestidge said, but shares “the commissioners’ concerns on how this new law could impact Colorado’s oil and gas families.”

The ballot proposal would have reversed the changes made by SB 181, which make protecting the public health, safety and the environment a priority when considering oil and gas development. It also clarifies that cities and counties can regulate oil and gas under the same planning and land-use powers they use to regulate other activities.

The initiative would have replaced the Colorado Oil and Gas Conservation Commission, the main regulatory body, with what it described as an independent body. It would have rolled back the new oil and gas regulations.

One consequence would have been elimination of all oil and gas rules for up to six months, or until a new commission could be formed and rules could be readopted, said Matt Samelson, an environmental law attorney in Denver.

“I don’t believe that’s accurate,” Brackney said, “but we did write it in the heat of the legislative session.”

A 2020 proposal would make clear that the old rules would be in force while a new commission is formed, Brackney added.

Conservation Colorado, which supports the new law, challenged the initiative.

“It’s good to see that these initiatives are off the table for now, but these irresponsible proposals should never have been put forward in the first place,” Kelly Nordini, Conservation Colorado’s executive director, said in a statement. “I hope Colorado can move forward and put the health and safety of workers and communities and our environment first without further industry obstruction.”

Brackney, the former CEO of the Southwest Metro Denver Chamber of Commerce, said it’s unfortunate the debate over oil and gas development is dominated by what he views as extreme positions.

“It’s actually a shame that both sides posture themselves as saying, ‘Oh, it’s just crazy liberal environmentalists or it’s just Big Oil,’ because I refuse those titles,” Brackney said.

However, Brackney said he thinks environmentalists will pressure local elected officials to block drilling in several cities and some counties.

Samelson said he doesn’t see that happening. He thinks the new law will be applied case by case, depending on the city or county.

“Many areas of the state are not going to see local governments taking much action on this,” Samelson said. “Certainly, there will be some local governments who will flex their muscles.”

A few cities and counties might temporarily put oil and gas activity on hold while they review their regulations, Samelson added. “But the whole idea of bans is farfetched.”

State regulators have started work on rules to implement the law. An interim oil and gas commission will be appointed soon and a permanent one will be formed by July 2020.

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Offshore drilling plans postponed, including off Georgia coast [Savannah Morning News, Ga.]

April 26–The Trump administration is suspending plans to expand offshore drilling, including plans to drill off Georgia, after a recent court ruling blocked drilling in the Arctic and Atlantic, Interior Secretary David Bernhardt told the Wall Street Journal.

Bernhardt said the agency would delay indefinitely its five-year plan for oil and gas drilling on the Outer Continental Shelf as the case goes through the appeals process.

“By the time the court rules, that may be discombobulating to our plan,” Bernhardt told the Wall Street Journal in a report published Thursday. The plans had been expected to be released in the near future.

President Donald Trump had revoked an Obama administration ban on oil and gas drilling in the Arctic and Atlantic, but a federal judge in Alaska ruled in late March that the president could not reverse the ban.

Southeastern environmental groups were cautiously optimistic about the announcement.

“I certainly hope that ‘indefinitely delayed’ is Washington-speak for ‘never,'” said Southern Environmental Law Center Senior Attorney Sierra Weaver. “Whatever the reason for this delay, more than 230 communities have spoken out against seismic testing and offshore drilling in the Atlantic, and those hundreds of thousands of coastal residents and businesses welcome any development that makes risking their coast less likely.”

Among those communities are Tybee, Savannah, Thunderbolt and Pooler, whose councils have passed resolutions opposing offshore drilling and/or seismic testing used for oil exploration. The Georgia House of Representatives also passed a resolution earlier this year opposing offshore drilling and emphasizing its concern about possible negative effects of drilling on coastal fisheries and tourism.

Paulita Bennett-Martin, Savannah-based campaign manager for Oceana, was encouraged by the announcement.

“It suggests that the movement to stop the expansion of offshore drilling is working,” she said. “Many coastal leaders, local organizations, and businesses have worked hard to have their voices heard. And now, we must remain diligent and motivated in the movement to protect our oceans and coast.”

Supporters of offshore energy were also focused on reaching a final decision, though National Ocean Industries Association President Randall Luthi urged the Interior Department to move forward.

“The Secretary’s statement certainly raises one eyebrow, but a further review of the Five Year Program under development due to a recent lower court decision regarding Alaska offshore access was not unexpected,” he said. “While there is no firm guess on what ‘indefinitely’ means, it clearly indicates we won’t see a draft plan tomorrow, nor did we expect to. However, Interior should still evaluate the option of moving ahead with a proposed plan, with the caveat that the areas that are affected by the previous withdrawal could be excluded from an eventual sale. A hard stop negates months of environmental and economic analysis that could be used to move the plan forward. Again, this is not a final plan, it is a proposed plan.”

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(c)2019 Savannah Morning News (Savannah, Ga.)

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Daniel Howes: Motor City competing in tech race to reach Auto 2.0 [The Detroit News]

April 25–The evidence keeps mounting: the Auto 2.0 transformation of the industry founded more than a century ago in Detroit is not leaving the Motor City behind.

Quite the opposite, actually. Ford Motor Co. confirmed as much Wednesday with a $500 million investment in the hot electric-truck maker Rivian Automotive LLC. The move follows by just one day word that Waymo LLC, the self-driving unit of Google parent Alphabet Inc., will retool an American Axle & Manufacturing site in Detroit to outfit Chrysler Pacifica minivans with its autonomous-driving technology.

General Motors Co. is using its Orion Assembly Plant north of the city to produce its electric Chevrolet Bolt, the platform for a driverless vehicle being developed by its San Francisco-based GM Cruise LLC autonomous-car unit. And Fiat Chrysler Automobiles NV, a partner with Waymo, is expanding production in Detroit of next-generation Jeep Grand Cherokee SUVs powered by gasoline, gas-electric hybrid and electric powertrains.

Welcome to the evolving reality of Detroit today. A decade removed from epic bailouts and bankruptcies, the companies America nearly gave up for dead are demonstrating the opportunism, flexibility and technical capability they’ll need to battle Silicon Valley’s heaviest heavyweights in the high-stakes battle for leadership in mobility, autonomy and electrification.

Owning a piece of the next generation of personal transportation is not a birthright for Detroit or its foreign automotive rivals. It’s a competition whose leaders recognize success comes from marrying the innovation and risk-taking of the tech space with the engineering execution and regulatory discipline of today’s auto industry.

The not-invented-here arrogance that for decades typified the business and engineering leadership of Detroit’s traditional automakers is disappearing steadily. Partnership is replacing control, curiosity is trumping certainty, innovation is outpacing process, and humility is worth far more than hubris.

The stakes are huge. Leadership in the trifecta of mobility, autonomy and electrification could deliver the winner(s) a chunk of an emerging industry expected to be measured in trillions of annual revenue. The consensus emerging, and underscored by the Ford-Rivian deal, is that getting there depends on time, partnership and the maturity to understand that no one company alone possesses all the tools to get there.

“We have a very deep respect for what the auto industry is capable of today,” said Rivian’s founder and CEO R.J. Scaringe, detailing the Dearborn automaker’s capability in manufacturing, vehicle engineering, supply-chain management and software development. “There’s a lot of expertise that’s been built up over time.”

Exactly right. The hype that assumed Silicon Valley tech powerhouses stuffed with cash would run away with the next-generation auto race is reckoning with a more realistic assessment of where the technology is, who is best equipped to leverage it and how critical partnerships are to getting there.

Plymouth-based Rivian’s deal with Ford was negotiated in a matter of weeks, not months, once the electric-truck maker’s talks with Blue Oval rival GM faltered, according to two sources familiar with the situation. Under terms of the deal, the CEO of Ford’s automotive business, Joe Hinrichs, will occupy a seat on Rivian’s board, and Rivian’s “skateboard” electric-vehicle platform will be used to develop at least one vehicle for Ford.

“The tipping point approaches, and if you wait too long, you can’t recover,” said Ford CEO Jim Hackett. “I like that R.J. recognizes that he needs the industry to make it happen. Rivian and Ford match up strategically. We can learn a lot from each other.”

Not too long ago, those eight words wouldn’t be uttered by a Detroit auto CEO, or his head of engineering, or just about any senior executive charged with designing, engineering or manufacturing a car, truck or SUV. All automotive knowledge worth knowing resided then in the citadels of the industry, in Detroit and Wolfsburg, Stuttgart and Tokyo, Munich and Paris.

In the decade since the Obama auto task force and American taxpayers financed the bankruptcies of GM and Chrysler Group LLC, that’s all changed. Elon Musk’sTesla Inc., the Silicon Valley-based maker of upscale electric vehicles, now outsells BMW and Mercedes-Benz in the rich U.S. market and sets a standard the rest of the industry is poised to match or exceed with a flood of new EVs over the next few years.

Musk’s over-the-air software updates are raising consumer expectations, even if his “production hell” manufacturing gaffes, missed targets and openly derisive attitude toward the global auto industry’s expertise in general, and Detroit’s in particular, telegraphs an arrogance Old Detroit would recognize.

But emulate? Not anymore, thank you. To hear Rivian’s Scaringe talk about his company’s capabilities — modular network architecture to move and control data in vehicles, for example — is to hear a entrepreneur who’s a) learned from a Musk mistake or two and b) understands that automakers like Ford do some things better than Rivian would anytime soon.

He’s not alone. Even as investors continue to question the pace and arc of change at Ford under Hackett, the former office furniture CEO is building a network of partnerships that could position the Blue Oval to stake a front-row starting position in the Auto 2.0 race.

In an office park not far from the Detroit Lions practice facility in Allen Park, Ford’s autonomous-driving partner, Argo AI, is developing technology to make Ford — and, potentially, Rivian’s R1T electric pickup and R1S electric SUV, among others — competitive in the self-driving vehicle space not too many years from now.

Ford’s investment in Rivian reflects “the ongoing shift in the automotive industry toward more focused partnerships and collaborations, versus traditional mergers,” Stephanie Brinley, principal automotive analyst at IHS Markit, said in a statement. “This partnership model is particularly important for EVs and mobility technology. Both parties bring specific expertise to the partnership, and have much to offer each other.”

daniel.howes@detroitnews.com

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him at 3 p.m. and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.

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With order backlog, Mack Trucks records 54% production surge in the first quarter [The Morning Call (Allentown, Pa.)]

Mack TrucksApril 24– Apr. 24–Last year, Mack Trucks took in nearly 31,300 orders for its heavy-duty vehicles, up 23% from 2017.

Now, as Mack starts to work through that hefty order backlog, production is expected to surge in 2019, especially at the company’s Lower Macungie Township assembly plant that employs about 2,500 people.

That’s exactly what happened in the first quarter, when Mack delivered more than 7,600 trucks, up 54% from the same period a year ago, according to a report released Wednesday by Mack’s parent company, Sweden’sVolvo Group.

“Activity levels in our truck business are high,” Volvo Group President and CEO Martin Lundstedt wrote in the report, pointing to the North American market in particular for the busy production. One year ago, Lundstedt noted, the company’s truck business in North America grappled with “capacity constraints in connection to the changeover to new truck generations for Volvo and Mack,” the latter ramping up production of its Anthem highway model in early 2018.

While Mack’s deliveries skyrocketed, its order intake was down big. In the quarter, Mack took in more than 3,200 orders, down 67% from the same period one year ago. With the high volume of orders received last year, Mack spokesman Christopher Heffner said, a large portion of the company’s 2019 order book is already filled. In addition, he said, Mack has been working with its dealers to ensure any orders received are “quality orders and not simply placeholders for build slots,” which also affected the company’s first-quarter order intake.

Mack’s market share in North America continued to drop in the quarter, hitting 5.5% in a decline that could be a reflection of a slowing construction industry that is a key market for Mack. Heffner noted that the overall heavy-duty truck market has grown primarily in the long-haul segment, which Mack expects to grab a larger portion of as the year progresses on the strength of the Anthem.

Mack’s first-quarter figures are indicative of what’s going on in the heavy-duty truck market, where orders for the industry were down 64% through the first three months of 2019, said Steve Tam, vice president of Americas Commercial Transportation Research Co.

While freight demand and freight rates (what truckers charge to haul a load) are growing at a slower rate than they were, Tam said both are still growing and truckers continue to pursue incremental profits, keeping them in the market and buying trucks. But right now, he noted, most truck manufacturers have no production capacity remaining for 2019, so a trucker placing an order today would be looking at the first quarter of 2020 for delivery.

With the order backlog, 2019 is shaping up to a be a better year for the industry than last year. Tam said ACT is projecting 337,000 new heavy-duty trucks in the North American market this year, up slightly from 2018 — when, he said, the market was “already banging against the ceiling.”

But in the cyclical truck industry, what goes up must come down — it’s just a question of when and how low it goes.

Tam said ACT is forecasting a drop to 245,000 heavy-duty trucks in 2020. He’s expecting production at truck manufacturers to begin slowing down late this year, specifically around the end of the third quarter or start of the fourth quarter.

“Time will tell whether that’s right,” Tam said. “That is, in fact, the most elusive factoid in the industry. Everyone is trying to figure out the timing of when the cycle is going to turn.”

Morning Call reporter Jon Harris can be reached at 610-820-6779 or at jon.harris@mcall.com

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EPA, Colorado target oil and gas company HighPoint in federal court, accusing company of failing to control air pollution at storage tanks [The Denver Post]

April 22– Apr. 22Environmental Protection Agency and Colorado attorneys have filed a lawsuit in federal court seeking millions in damages and a court order to stop polluting against an oil and gas company they accuse of violating requirements to minimize toxic emissions from storage tanks.

Colorado Department of Public Health and Environment air pollution control inspectors equipped with infrared cameras allegedly detected the emissions at multiple clusters of storage tanks.

The 27-page lawsuit filed Friday in U.S. District Court accuses the HighPoint Operating Corporation of failing to control volatile organic compounds (VOCs), precursors of ozone smog, as well as benzene, toluene, xylene and other pollutants identified under the Clean Air Act as hazardous.

Storage tanks at more than a dozen sites north of Denver in Adams and Weld counties — including many that HighPoint’s predecessor the Bill Barrett Corporation had certified to the CDPHE as “controlled” — have emitted excessive pollutants since April 2014, according to the lawsuit.

This happened in a Front Range area where air quality for years has flunked federal air quality health standards, worsening the problem, the EPA and state attorneys said. HighPoint failed to design, run and maintain pollution control systems as required by the state to minimize leakage of the volatile organic and other chemicals to the maximum extent “practicable,” the attorneys said.

“HighPoint’s failure to comply with these requirements has resulted in excess VOC emissions, a precursor to ground-level ozone. … HighPoint’s unlawful emissions of VOC into the atmosphere contribute to this exceedance of the ozone NAAQS (National Ambient Air Quality Standards) in this area,” the lawsuit says.

The EPA and CDPHE have asked a federal judge to block HighPoint from further violations of Colorado regulations, order action to fix and offset harm to public health and the environment, and assess civil penalties of up to $37,500 per day for violations between January 2009 and November 2015 and up to $97,229 per day for violations after November 2015.

Colorado’s oil and gas industry inspection program, relying on nine CDPHE air pollution control inspectors equipped with infrared cameras, is designed to spur quick compliance. When inspectors detect leaks, they notify companies that same day. Companies are required to initiate fixes within five days, unless they fill out forms justifying delays. But inspections also can reveal violations of state rules and lead eventually to imposition of penalties.

The inspectors drop in unannounced at about 2,000 sites a year and aim the infrared devices at storage tanks, flares and other equipment to determine whether hydrocarbons are leaking.

They can’t get to every site. Oil and gas companies have drilled more than 53,000 wells statewide, producing a record 177 million barrels of oil last year. Colorado rules require controls to minimize pollution. While the EPA provides oversight, state officials also have issued companies permits required under the federal Clean Air Act at roughly 11,000 sites — permits that set limits on pollution.

During the early stages of production — when companies typically drill and conduct hydraulic fracturing to stimulate production — state inspectors let companies produce for 90 days without the required permits and generally do not visit sites unless they receive a specific compliant, relying on a controversial 27-year-old state exemption. However, CDPHE officials — spurred by U.S. Rep. Diana DeGette and the environmental advocacy group WildEarth Guardians — are reviewing the legality of that exemption.

Gov. Jared Polis has signaled intentions to reduce pollution. Tougher enforcement, including the air pollution inspections, has emerged as an option as he and state lawmakers re-focus state oversight of the industry. The latest CDPHE data show that inspectors in 2013 detected leaks at 28 percent of the sites they visited. In 2018, records show leaks were detected at 13 percent of sites visited.

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Lower hydraulic fracturing prices continue to sting Halliburton in first quarter [Houston Chronicle]

April 22– Apr. 22–Lower prices for hydraulic fracturing services in North America continue to sting Houston-based Halliburton, the second largest oilfield service company in the world.

Halliburton posted a $152 million profit and earnings per share of 17 cents on $5.7 billion of revenue during the first quarter, the company reported early Monday morning.

The company’s first quarter earnings fell in line with Wall Street expectations of earnings per share of 22 cents and beat expectations of $5.52 billion of revenue

First quarter figures also marked a dramatic improvement over the $46 million profit and earnings per share of 5 cents on $5.7 billion of revenue during the first quarter of 2018.

With 58 percent of its revenue coming from onshore activities in the United States, Halliburton has high risk exposure to fluctuations in demand for horizontal drilling and hydraulic fracturing services in U.S. shale basins.

Crude oil prices fell dramatically during the fourth quarter of 2018 sending demand and prices for hydraulic fracturing services falling through most of the first quarter.

Halliburton CEO Jeff Miller believes that the worst pricing declines are over. Earlier this year, Miller predicted that new pipelines coming into service in the Permian Basin of West Texas during the second half of this year would eventually result in higher demand and prices for drilling and completion activities.

“As expected, the first quarter activity levels in North America were modestly higher compared to the first quarter of 2018, and we experienced pricing headwinds throughout the quarter,” Miller said. “We believe the worst in the pricing deterioration is now behind us. For the next couple of quarters, I see demand for our services progressing modestly.”

Founded in 1919 and headquartered in Houston, Halliburton employs more than 60,000 people in 80 nations — making it the second largest oilfield company in the world just behind Schlumberger.

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Paccar names Preston Feight new CEO [The Seattle Times]

April 19– Apr. 19–Truck manufacturer Paccar has named Preston Feight as chief executive officer, effective July 1. Feight, currently the Bellevue-based company’s executive vice president, succeeds Ron Armstrong, who is retiring after five years as CEO.

The company said Feight, 51, has been at Paccar for 21 years in roles including president of its DAF Trucks unit in Europe and vice president and general manager of Kenworth Truck Co., as well as chief engineer at Kenworth.

Seattle Times business staff

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