economy

This was an interesting graph I came across in MDOT's draft report, Michigan State Rail Plan.

The miles of railroad we have in the state today, match what we had back in 1880.

The state went from a peak of 9,059 miles in 1909, to 3,900 miles today - a decline of almost 60%.

It makes sense.

The internal combustion engine began competing with rail at the turn of the last century. Trucks and cars began moving more freight and people.

Chrysler CEO Sergio Marchionne said the two-class pay system currently in place will have to be replaced with a single wage system in the next round of contract talks with the United Auto Workers.

The UAW and Chrysler just approved a 4-year contract with the two-class pay system in place, so the next opportunity to revise the system won't come until the next round of contract negotiations.

More from the Associated Press:

Negotiations for that contract start in 2015.

He says the current system creates two classes of workers. New workers in the bottom tier make about half as much money as longtime UAW members.

Marchionne didn't say how he would come up with one wage. But it's likely he'll try to reduce the pay of top-tier workers. General Motors and Ford could follow and pay could be cut for most of the UAW's 112,000 members.

UAW workers approved a four-year contract with Chrysler on Wednesday. It includes raises for bottom-tier workers.

More on what Marchionne said comes from Changing Gears reporter, Pete Bigelow:

The structure is, “not something that can go on for a long period of time,” he said on a conference call to discuss the company’s second-quarter earnings. Marchionne continued, saying, two-tiers is “not a viable structure on which to build our industrial footprint.”

Changing Gears reporter Kate Davidson provided some insights into the two-class pay system in a piece she produced last year for Changing Gears.

At the time, the starting rate for a "two-tier" worker was $14 an hour. The new contracts have pushed the starting rate for "two-tier" workers above $19 an hour.

Update 12:45 p.m.

Jeff Noel, a Whirlpool company spokesman, would not give Michigan Radio reporter Lindsey Smith a number. When pressed further about the job losses expected in Michigan, Noel said it would be “a commensurate amount."

10:06 a.m.

In a cost cutting measure, the Benton Harbor-based company Whirlpool says it will cut 5,000 jobs. There's no word yet on how many of those job cuts will be in Michigan.

Michigan Radio's Lindsey Smith is following the story and will have more for us later.

From the Associated Press:

Appliance maker Whirlpool Corp. says it will cut 5,000 jobs in an effort as it faces soft demand and higher costs for materials.

The jobs to be cut are mostly in North America and Europe. They include 1,200 salaried positions and the closing of the company's Fort Smith, Ark., plant.

The company expects the moves will save $400 million by the end of 2013.

Whirlpool also says its third-quarter net income more than doubled to $177 million, or $2.27 per share, from $79 million, or $1.02 per share. Adjusted earnings of $2.35 per share fell short of analyst expectations for $2.75 per share.

The company, whose brands include Maytag and KitchenAid, has been squeezed by higher costs for materials such as steel and copper.

Bloomberg News reports that Whirlpool employs 71,000 people around the world "at 66 manufacturing and research sites.":

Whirlpool follows European rival Electrolux AB (ELUXB) with a more muted outlook for the year. The Swedish company said today that it will deepen cost cuts after lowering a forecast for growth in Europe and North America this year. Whirlpool said reductions in Europe and North America account for about 10 percent of all employees in those regions. The company has a global workforce of 71,000 at 66 manufacturing and research sites.

On the heels of the approval of a four-year contract with the United Auto Workers comes news of a 3rd quarter profit from Chrysler.

The company reported a profit of $212 million for the 3rd quarter (July, August, and September). The company had reported a second quarter profit earlier this year ($181 million for the months of April, May, June).

From Chrysler's press release:

Chrysler Group LLC today reported preliminary net income of $212 million for the third quarter, compared with a net loss of $84 million a year ago, as the Company continues to increase sales and benefit from its alliance with Fiat S.p.A.

In the third quarter of 2011, net revenue was $13.1 billion, a 19 percent increase from the third quarter of 2010, driven by increased demand for Chrysler Group’s 16 all-new or significantly refreshed cars and trucks.

Chrysler CEO Sergio Marchionne said these profits show the company is back on track:

"In the third quarter, Chrysler Group achieved increased sales and positive financial results, totally in line with the plan we laid out in November 2009. And in October, together with the United Auto Workers, we crafted a solid four-year contract that will support us in our growth plans and significantly reward our employees for their contribution to the revival of Chrysler," said Marchionne.

The Detroit Free Press reports the company "predicted it would make between $200 million and $500 million this year."

In a speech today directed toward the Michigan Legislature, Governor Snyder expressed his desire to improve just about every bit of infrastructure in the state.

Roads, bridges, airports, ports, rail, water lines, sewage pipes, and broadband Internet connectivity - it was all on the table, and the Michigan Governor said the state's infrastructure was suffering from a lack of investment.

The Governor said the state's economic recovery is tied to investing in all these bits of infrastructure, and that there is "no time to waste."

Governor Rick Snyder will deliver an address in Southfield tomorrow on improving roads and other infrastructure.

Geralyn Lasher is the governor’s communications director. She said the address will touch on a wide variety of topics that are critical to improving the state’s economy and protecting public health.

History is filled with searches for Magic Bullets.

Economically speaking, those are quick-fix endeavors that promise to fix sour economies, provide jobs and bring prosperity to communities and regions. Changing Gears reporter Kate Davidson wrote earlier this week that, “Some have soared; many have backfired.”

Communities across the Midwest are employing a new round of Magic Bullets in attempts to rescue themselves from the Great Recession. All sound promising, but which ones stand up under further scrutiny?

General Motors officials said they will "create or retain" 418 jobs with a $325 million investment at a suburban Detroit transmission plant. The company says it will invest "in tools and equipment to support production of future electric vehicle components."

So which is it? Are they creating or retaining the jobs?

According this report in Crain's Detroit Business, 360 jobs will be created at the plant in Warren, Michigan as a result of the new UAW contract:

The company would not say how many of the 418 jobs will be new positions. But a summary of GM’s new four-year contract with the UAW said 360 jobs will be added at the plant for a new transmission that originally was to have been built in Mexico. The union said that the jobs were brought to the U.S. as part of the new contract.

At this point, GM is not revealing the timing for the project.

According to GM, 679 current employees at  the plant in Warren make transmissions for the Chevrolet Traverse, Buick Enclave, GMC Acadia, and the Chevrolet Malibu sedan.

From a GM press release:

“This investment in the future recognizes the excellent work force and operation of this plant,” said GM Manufacturing Manager Gerald Johnson. “While we aren’t sharing many details about this product, I can tell you that this investment demonstrates how GM, working with our UAW partners, continues to innovate and bring new electrification solutions to our customers.”

The 2.1 million square-foot plant, equivalent to the area of 15 city blocks, produced more than 338,000 transmissions in 2010.

“We are very proud of the membership of UAW Local 909 whose hard work and dedication to building quality products is why this new electric drive unit module is being built in the United States,” said Joe Ashton, UAW vice president representing the GM Department.  “These good paying, middle class jobs are very important for the State of Michigan and the Metro Detroit area.  It is the UAW’s goal to increase employment at GM and show the world that we can compete with anyone.”

While we’re on the subject of magic bullets, please indulge this brief sidebar.

Schisms happen.  There was once a tremendous split between the (now) Roman Catholic Church and the (now) Eastern Orthodox Church.  Today there’s also a Great Schism in the bullet world.

Namely, between those who say magic bullet and those who say silver bullet — both parties referring to an economic quick fix.

On one side, you have President Obama, who may be the highest profile proponent of the term silver bullet. While pitching his jobs plan to a recent joint session of Congress he said, “It should not be nor will it be the last plan of action we propose. What’s guided us from the start of this crisis hasn’t been the search for a silver bullet. It’s been a commitment to stay at it, to be persistent, to keep trying every new idea that works.”

Vice President Joe Biden will be in Michigan today to tout the President’s Jobs Bill. But Michigan Congressman Tim Walberg says the $447 billion bill will hurt, not help the nation’s economy.    

Walberg is a Republican. He says the bill would increase spending and raise taxes. And he says that’s not what the economy needs to create jobs. Walberg says the nation may be better off  if Congress doesn’t pass a jobs bill this year.   

"At the very least, if we hold some things back that would be hurtful to our economy, that’s getting something done.  Maybe that’s the process right now…if there isn’t a willingness to negotiate," says Walberg.   

Walberg says he hopes a compromise can be reached which will reduce payroll taxes and spur job growth.

In his economic forecast for Michigan released today, George Fulton, Director of the University of Michigan's Research Seminar in Quantitative Economics wrote that Michigan's economy is recovering from hitting bottom in late 2009, "but it has not been a smooth climb, especially during 2011."

The Detroit Free Press writes that Fulton cut his jobs forecast for 2012.

...he expects just 33,000 new jobs next year, down sharply from his earlier forecast of 61,500 positions.

Fulton expects the total number of jobs created from late 2009 through 2013 to be 187,000.

From the report summary:

The continuation of the recovery is supported by steadily rising vehicle sales and an improved U.S. economy over the next two years. Manufacturing continues to grow through 2013, but the largest job gains are in the service industries, led by health services and professional and business services. Government continues to shrink over the period.

Update 1:03 p.m.

More details of the UAW-Ford agreement emerged after the UAW's press conference. UAW vice president Jimmy Settles reports winning a "a $6,000 settlement bonus for workers and $7,000 in inflation protection and competitive lump-sum payments over the term of the agreement."

Settles said workers will receive a payment averaging $3,700 this year.

Entry-level wages for new Ford workers are similar to the GM agreement. Their hourly pay was raised to $19.28 over the term of the agreement.

The union details where the investments in jobs and upgraded auto plants will occur in the U.S. saying that "jobs, investment and product guarantees in the tentative agreement include":

• Flat Rock, Mich., second source for the next generation Fusion and next-generation Mustang.
• Kansas City, Mo., in-source Transit Commercial Van from Europe.
• Louisville, Ky., new unnamed vehicle in addition to 2012 Escape.
• Wayne, Mich., in-source C-Max from Europe in both hybrid and plug-in hybrid models.
• Avon Lake, Ohio, in-source medium truck and frame assembly from Mexico, along with in-source Motorhome Chassis.

The agreement with Ford was recommenced to the union's larger membership. Now all UAW members will vote for or against ratification this week.

10:27 a.m.

The agreement reached between Ford Motor Company and United Auto Worker representatives will lead to more jobs and investment in the U.S., according to the Detroit News.

Alisa Priddle of the Detroit News reports that many of those jobs will be in Michigan:

The figure includes 7,000 jobs previously announced as well as 5,000 additional jobs - the majority of them new and paying the lower, entry-level wage. Ford officials declined to break down the exact split between new and saved jobs. Some the jobs are from in-sourcing of work that has been previously done in other countries, including Mexico, Japan and China.

The UAW says that "proposed agreement also includes $16 billion of investment to produce new models and upgraded vehicles and components by 2015, of which, $6.3 billion will be invested directly into retooling and upgrading plants."

Ford's union workers are demanding more from Ford compared to the workers at GM and Chrysler.

Part of it has to do with bargaining from a position of power. Ford's union workers could strike should an agreement not be reached. Chrysler and GM workers do not have that option. Both Chrysler and GM took loans from the federal government's Troubled Asset Relief Program (TARP). A condition of those loans stipulated that its workers could not strike.

Brent Snavely reports in USA Today on the other reasons workers at Ford hope to achieve more in their negotiations with the company.

Entering contract talks, the UAW and Ford had an unresolved grievance, signed by 35,000 of the automaker's 40,600 workers, alleging that Ford had violated equity of sacrifice promise by restoring merit pay to white-collar workers but not to hourly workers.

But Ford workers say they have more reasons to expect more than UAW members at GM. Ford has made $14.2 billion in profits since the end of 2008. Ford CEO Alan Mulally and Executive Chairman Bill Ford each made $26.5 million in 2010, an amount that many workers find excessive since production workers have gone eight years without a base wage increase. That high executive pay has become a rallying point for discontents in Ford's factories.

Comparing previous contracts, Snavely reports that "Ford pays $58 an hour for wages and benefits, which is about $2 more per hour than GM and $9 an hour more than Chrysler were paying..."

More details of the tentative 4-year agreement between Ford and the UAW will be revealed at an 11:30 press conference. The contract will not be ratified until the UAW membership votes on it.

Update 2:28 p.m.

Michigan Radio's Sarah Hulett spoke with Mayor Dane Walling this afternoon. She asked Walling to give us a snapshot of where the city's finances are at now.

"The city of Flint has ongoing challenges with long-term operating deficits and also recurring questions about month to month cash availability," he said.

"The fact is, in recent months we've made continued positive progress.

The deficits in the audit will be approximately $12 million all funds combined. That's significantly down from the upwards of $20 million projections that had been done recently.

The cash flow is much stronger than it was prior to receiving the support of the state for the fiscal stabilization bond.

We're healthier than we were, so we're moving in the right direction, but we continue to have audited operating fund deficits, and to address the longer term challenges with post employment benefits  and liabilities there," said Walling.

Hulett asked Walling about his message to voters about the job he's doing in Flint and about the timing of the state review (Walling is up for re-election, and the review will be completed right before voters head to the polls). Walling said he thinks voters understand the complications he faces as the Mayor of Flint, and he looks forward to the results of the state review team.

1:49 p.m.

The city of Flint has been facing financial trouble for some time. Now state officials want an official review of the city's finances.

Governor Synder has appointed an eight member panel to review the city's bottom line. The financial review is the first step in a process created under the state's emergency manager law. Governor Snyder has said he hopes an emergency manager is not needed in Flint.

Kristin Longley of the Flint Journal reports that Governor Snyder is calling for a quick review:

Snyder wants the team to report back to him in half the time allowed under the law. Review teams are given 60 days, but Snyder has asked Flint's financial review team to report its findings within 30 days, Snyder spokeswoman Sara Wurfel said.

"He does want it sooner," she said. "That was on the recommendation from the state treasurer."

Here are the eight members appointed to review Flint's finances (from the Flint Journal):

• Laura Argyle, VP of finance and CFO for the Midland Center for the Arts
• Gene Dennis, former president and CEO of Universal Systems
• Darnell Earley, Saginaw City Manager
• Robert L. Emerson, former state budget director
• Roger Fraser, Deputy State Treasurer
• Fred Headen, Director of the Michigan Dept. of Treasury’s Local Gov't Services Bureau
• Doug Ringler, Director of the Office of Internal Audit Services in the Department of Technology, Management and Budget
• Brom Stibitz, senior policy adviser in the Michigan Department of Treasury
  

I'm on assignment in China following Governor Snyder's trade mission, and I'm sharing my thoughts as I travel. Feel free to write me back in the comments below.

Nearing the end - Friday, September 30

The Governor's trade mission is coming to an end, and so is my trip to China.

I won't miss the smog and pollution, either in Shanghai (bad) or Beijing (worse).

But it has truly been too short a trip to get more than a glimpse of everything that is happening with China's economy, its auto industry, and its cultural and population shifts.

Frank Langfitt in Shanghai and Louisa Lim in Beijing surely have two of the biggest, most exciting beats in public radio.  This fly-in reporter leaves the country in their incredibly capable hands.

Adventure travel

My adventures with taxis continued.

I am starting to take this a little personally.

Arriving back in Shanghai from Beijing, I got in the long queue to get a taxi to my downtown Pudong hotel.

I decided I'd be a discerning and demanding customer this time around.  I rejected several taxis that had no seat belt in the back.  But when I found a taxi that was suitably equipped, and showed the driver the address to which I wanted to be taken, he shook his head, and drove up to grab the fellow who was behind me in the line.

The next taxi cab driver whose cab had seat belts did the same thing.  I asked  the airport employee who was in charge of the queue to help, but he spoke no English.  Nor did the first ten or so people in line.

Paying it forward

Finally, however, an angel arrived at the queue.  Deserine Lim, fluent English-speaker and rescuer of helpless American travelers.  She looked at my hotel address and explained that the taxi drivers didn't want me because it was too close, and they wanted a bigger fare.  Ouch.

Then, without my even thinking to ask, she suggested I split a cab with her.  She'd drop me off at my hotel, and continue on to her destination.

I'm not a Tennessee Williams fan for nothing.  I, too, have always relied on the kindness of strangers.  I got in the cab gratefully.

My rescuer is a native of Singapore, she told me, visiting Shanghai just for a day on business.  But she knows the town well, and told me what shops to go to near my hotel, what restaurants to haunt.  We discussed American politics.

When we arrived at my hotel, I paid the fare, and since it was clear her favor to me was going to cost her, both in terms of time and money, I tried to give her some money to cover the extra distance.

She adamantly refused to take it.

So, I shall have to content myself with paying it forward some day.

Ms. Lim is Assistant General Manager of OSIM, a global provider of personal, health and convenience products headquartered in Singapore.  OSIM is a co-owner of Brookstone, a company that provides such products in the U.S.

Thanks, Deserine.  You're a peach.

Next stops before home

Next stop for me:  Shanghai Jiao Tong University, where I'll visit the Joint Institute between SJTU and the University of Michigan.

I also plan to go to a shopping mall with my SJTU interpreter, Paul (Kang Yiping) to ask people about transportation issues.

Then, another interview with a Ford China official, to learn more about the company's strategy to ride the next wave of demand for vehicles in the country.

And tomorrow morning, I'll be on a non-stop flight from Shanghai to Detroit.

They say the jet lag is a lot worse coming back.

Michigan Radio, don't call me.  I'll call you.

Arrived in Beijing - Wednesday, September 28:

I am in Beijing.

I arrived on the fourth consecutive day of a smog health advisory in the city.  Children are not supposed to play outdoors, and people with chronic health conditions are being urged to stay inside. Even if you are healthy, the smog is very irritating to your eyes and throat.

Michigan has never seemed cleaner. Even the worst Ozone Action Day in Michigan in August can't hold a candle to this.

Shanghai was windy while I was there earlier in the week. We need a good strong breeze to get this stuff out of the city, so people can breathe.

The Chinese government knows it has a potential crisis on its hands, as more people move into the cities, and more of them purchase cars.  That's why the government adopted a five year plan to vastly increase the number of electric cars in China.

The big problem with that is infrastructure.

DETROIT (AP) - General Motors Co. said Thursday it will install a center air bag on three of its models next year to better protect drivers and front-seat passengers.

The new bag inflates from the right side of the driver's seat and is designed to protect people when their vehicles are hit on the opposite side of where they are sitting. They serve as a cushion between a driver and front-seat passenger in a collision, GM said in a statement.

The bags will come standard on all Buick Enclave crossover vehicles starting in the 2013 model year, and they'll be on the Chevrolet Traverse and GMC Acadia crossovers that are equipped with
power seats. The 2013 models will come out in the fall of 2012. Crossovers are like SUVs but are more efficient because they're built on car underpinnings rather than trucks.

GM said in the statement that the center air bags, developed with parts supplier Takata Corp., are the first in the industry. It has plans to put them in more of its models, but the company would
not say which ones.

GM said it analyzed the National Highway Traffic Safety Administration's database of fatal auto accidents and found that crashes on the opposite side of where people sit accounted for 11 percent of deaths in non-rollover crashes from 2004 through 2009. The company said it checked crashes involving passengers wearing seat belts in vehicles from the 1999 model year or newer models.

The center air bag also is expected to help protect passengers in rollover crashes, the company said.

Shares of GM rose 11 cents to $20.52 in morning trading. They are down 38 percent from the November initial public offering price of $33 per share.

*Editors note - This story by Kate Davidson of Changing Gears was first broadcast last year (September 22, 2010). Now that GM and the UAW have agreed to a new contract that will allow GM to hire more "two-tier" workers (newly hired workers paid a lower wage than traditional workers), we thought we'd bring her story on "two-tier" workers back. As Micki Maynard of Changing Gears points out, only about 4 percent of GM's workforce is "two-tier" now - under the new contract, that number could go up to 25 percent.

The American Dream is that each generation will do better than the last.  But many families of auto workers no longer have that expectation.  As Detroit car makers sped towards financial ruin, their union agreed to a dual wage structure, plus deep cuts in benefits.

Now, new hires earn about half what traditional workers make.  This reversal of fortune has altered their lives.

Update - 3:07 p.m.

More thoughts on the newly ratified UAW-GM contract from Micky Maynard with Changing Gears:

General Motors gave some new details today on its just-ratified agreement with the United Auto Workers union. Among them: up to 25 percent of its workforce could be “two-tiers” — new hires at lower rates than veteran workers.

Changing Gears reporter Kate Davidson profiled two-tier workers last year. Right now, they’re only 4 percent of GM’s workforce, but the auto company clearly has plans for more of them.

There’s a caveat, though. In order for GM to hire more workers, auto sales have to pick up, company executives said during a conference call with Wall Street analysts. And it isn’t promising to hire the same number of workers as it sees sales go up: it will study its staffing needs and hire accordingly. 

The new contract runs through 2015 and caps the number of “two-tiers” at 25 percent at the end of the contract. It calls for the new hires to get a raise to nearly $20 an hour by 2015 (veteran workers are paid about $28 an hour now).

Other GM highlights:

• The number of people working in its U.S. factories has dropped sharply. GM had 110,000 hourly production workers in 2005, according to its presentation. In 2008, the year before it filed for bankruptcy production, GM had 78,000 U.S. workers. Now, GM has just 49,000 hourly workers, or less than half what it had six years ago.
• For the first time in 58 years, GM does not expect its pension expense to rise under the new contract. One reason is that newly hired workers will not be covered by GM’s traditional pension plan; they will receive a 401(k) retirement program instead.
• GM says it still has 700 workers laid off from their jobs. They have first dibs on jobs at GM plants, including the workers it plans to hire when it reopens its factory in Spring Hill, Tenn. Once those workers have been offered the chance to come back, then GM will hire new workers, including temporaries.

Read more about the GM contract in The New York Times.

1:05 p.m.

More from Pete Bigelow of Changing Gears:

General Motors became the first domestic automaker to reach an official agreement on a new contract with members of the United Auto Workers union Wednesday afternoon.

The UAW said in a written release that 65 percent of production workers and 63 percent of skilled trade workers voted in favor of the agreement, which had been tentatively agreed upon Sept 16. A four-year contract provides a wage increase for entry-level workers, and goes into effect immediately.

The agreement would create 6,400 jobs in the United States, the release said.

“When it seems like everyone in America is getting cuts in benefits and paying higher co-pays and deductibles, we were able to maintain and improve on our current benefits,” said UAW vice president Joe Ashton.

GM CEO Dan Akerson is expected to hold a conference call with Wall Street analysts at 2 p.m.

12:37 p.m.

The deal is complete. UAW members officially ratified their contract with General Motors.

From the Detroit Free Press:

The UAW said today that its members have ratified a new four-year labor agreement with GM that gives workers a $5,000 signing bonus and is expected to preserve or add 6,400 U.S. jobs.

It is the first contract for 48,500 GM hourly workers since the automaker’s 2009 bankruptcy and restructuring.

The union said the vote was 65% in favor of the agreement among production workers, and 63% in favor among skilled-trades workers.

On his trade mission to Asia, Governor Snyder praised a business partnership between a Japanese company and the Michigan Molecular Institute (MMI).

The partnership between Japan's ECO Research Institute (ERI) and MMI is expected to bring around 30 new jobs to Midland.

Snyder made his comments at the Japan Midwest U.S. Annual Conference today praising the partnership "as an example of the economic and technological benefits that Michigan and Japan stand to gain through greater cooperation."

The two companies will form a new company called ECO Bio Plastics Midland Inc. The new company will produce bio-plastic pellets made of compound  mixes of plastics and micron-sized dry powder made from shredded paper.

These pellets will be used as packaging materials, food service products, heat insulation applications, and toys.

The Midland Daily News quoted James Plonka, president and CEO of Michigan Molecular Institute:

Plonka noted EBP has chosen a site for the new Midland facility, with the expectation to break ground before November and to begin production next summer.

“Midland is a good location for the demonstration facility for a couple reasons,” Plonka said. “First, because of the paper shredding services provided by the Arnold Center, Midland, is an excellent source of paper feedstock. And secondly, some of the most innovative plastics research in the world occurs in Midland. It’s a natural fit.

The plan calls for the initial paper-plastic composite production facility to produce 10 million pounds per year, with the ability to grow to 100 million pounds per year, Plonka said.

Former Governor Jennifer Granholm’s book, “A Governor’s Story: The Fight for Jobs and America’s Economic Future,” is on bookstore shelves. It offers her perspective on eight years in the job she described as the toughest facing any governor in the U.S.

She battled budget shortfalls, Republicans in the Legislature, and skeptics of federal efforts to bail out the Detroit auto industry.

Granholm and her co-author, former First Gentleman Dan Mulhern, spoke with me about the book and her legacy.

Jennifer Granholm says she wrote “A Governor’s Story” to offer her  prescription for the nation’s economy to lower taxes and smaller government. She says it’s based on her experience, and an often trial-and-error road to an economic strategy that can work for the entire nation.

“We’ve got a story to tell. So for everybody who cares about how to crack the code to create advanced manufacturing jobs in the American economy, we’ve got the story to tell.”

DETROIT (AP) - Moody's Investors Service is considering upgrading General Motors Co.'s credit ratings based on improvements in its finances and the expected ratification of a new contract
with the United Auto Workers union.

GM currently has a Ba2 corporate family rating and a Baa3 secured credit rating from Moody's. Both are several notches below investment grade. GM lost its investment-grade ratings in 2005,
when it was losing billions of dollars.

GM and the UAW reached a tentative agreement on a new contract last week. Workers are expected to finish voting on it by next Thursday.

Moody's said that after an initial review, it expects the contract would let GM remain competitive in North America. The deal would pay workers a $5,000 ratification bonus and profit-sharing
checks, but it helps GM lower costs by not giving annual raises to most workers and offering buyouts to clear out older, more expensive workers.

"A critical issue in our review is whether the new contract will preserve's GM's new-found  competitiveness and support its ability to contend with increasing volatility in the global economy," said Bruce Clark, a senior vice president at Moody's.

Moody's review also will consider GM's long-term commitment to the discipline it has adopted since its 2009 government bailout and bankruptcy. Moody's said it will look at whether GM will continue
to limit production and incentives, improve quality and limit acquisitions and shareholder returns in order to strengthen liquidity.

GM's stock fell 72 cents, or 3.4 percent, to $20.56 during a broader-market selloff. The Standard & Poor's 500 was down 3 percent in late morning trading.