Meet Muncie Indiana

Screen grab from The London Free Press video showing scenes from Muncie, Ind.

Every since it became clear Electro-Motive Diesel in London was closing and the operation moving to Muncie, Indiana, I've been interested in knowing more about this small, American city. The London Free Press visited Muncie and shot a short video of the town --- Between the Lines: EMD shut down. Many folk in Muncie who have viewed the piece say it does not mirror the town accurately. The newspaper's video, they say, shows only the poorest parts of town. (I think they are being a little unfair but I won't argue with them.)

Lobby of Roberts Hotel, Muncie, Indiana.

Today I saw some tweets out of Muncie that rekindled my curiosity about the town. It seems the elegant, eight-story, heritage hotel in downtown Muncie, the Roberts Hotel, may evade its date with the wrecking ball.

A Cincinnati developer hopes to turn the old hotel into senior housing. The Indiana Housing and Community Development Authority has approved $1.3 million in rental housing tax credits per year for 10 years toward the cost of the $16 million project.

Roberts Hotel, Muncie, Indiana. Still standing.

It's good news for a hotel that was once the crown-jewel of Muncie. It hosted five presidents and numerous celebrities in its day. In 1982 it was added to the National Register of Historic Places. It has been touch and go for the hotel, empty since 2006 but it appears Muncie may save its downtown gem.

Londoners should applaud Muncie's good luck. Old time London folk still talk fondly of Hotel London and its beautiful, oh-so-ornate ballroom. But the Ontario city lost its gem when it was demolished to make way for the future --- a couple of tall, modern towers, the tallest buildings in town at the time.

Hotel London, London, Ontario demolished decades ago.

Gosh, the two old hotels look similar. The big difference seems to be that Muncie is still working to save its old heritage hotel while London said good-bye to its gem some decades ago.

Seeing that the little Indiana burg is working to save its heritage hotel, I wondered what the folks in Muncie have done with their old downtown movie theatre.

London has managed to save the Grand Theatre but lost a real gem in the Capitol Theatre which was allowed to slowly deteriorate to be finally razed for a parking lot. Some of the exterior facade was retained but the auditorium is gone.

Well Muncie has managed to save its Civic Theater. You have to give Muncie credit. For a little place suffering all the economic hardships common to Rust Belt cities, Muncie is still in there fighting to save some of what once made Muncie Muncie.

The Civic Theater in Muncie, Indiana.

Some how the image I was getting of Muncie was not in sync with the little video posted by the local paper. I decided to cruise some Muncie streets using Google StreetViews.

First, I visited the downtown. Yes, lots of it looks sad. But, a sad looking downtown is not news. Gosh, from my travels, I expect a downtown to look sad. Muncie did have some bright little spots. Muncie is clearly struggling but it is still struggling. Many downtowns have given up the battle and are just plain dead.

Heritage buildings in downtown Muncie from Google StreetViews.

Now I turned my attention to Muncie's residential neighbourhoods. They looked pretty bad in the video. After cruising a few neighbourhoods using Google StreetViews I can report that a lot of what I saw reminded me of Northern Ontario.

Cities in Ontario's north that were fine places to live in the '70s, today look sad, rundown, forgotten. Paper mills have closed, logging operations halted, mines closed. With residents stripped of income, towns and cities can look pretty sad pretty quick. But I did see homes that said that Muncie was not always like it is today and held promise that it may yet have a future. Homes like the one below tell me that not everyone has given up on their city.

Muncie could again be a good place to live. If only there were more jobs.

One odd thing: The local London paper failed to show us the heritage neighbourhoods which still survive and thrive in Muncie. There is the Emily Kimbrough Historic District, established in 1976 and added to the National Register of Historic Places in 1980 ( the district was expanded in size in 1989) and the Kirby Historic District which was placed on the National Register of Historic Places in 1999.

Muncie has its high points as well as its low.

Will the move of EMD to Muncie help bring the good times back? I don't know. But the wages being offered by Progress Rail don't seem to be up to the task of enabling workers to maintain good homes and pay the taxes necessary to provide first-rate municipal services. I noticed that a lot of the streets looked like they needed some expensive maintenance. To be honest, a lot of the town looks threadbare, sorta like vast tracts of London. (Sorry London but it would not be hard to shoot a video making the Forest City look Rust Belt sad.)

Promoting a dream

According to my morning paper, London has an opportunity to save a shining jewel. I'd say the paper has a chance to chase a dream and involve their readers in the pursuit.

The shining jewel in question is the former London Normal School on Elmwood Avenue which was opened 112 years ago. The jewel has lost some of its sheen over the intervening years. It hasn't been a school for decades and in 2005 it ceased being the admin building for the London District Catholic School Board.

Now it sits. An old building in search of a new use.

I wondered what developers in other communities have considered doing with old buildings such as this one. A short google search turned up Barat College redevelopment in Lake Forest, Illinois.

Stealing some info from the architect's web site, I learned this once proud religious women's college had fallen into decline. At the heart of the 24-acre campus is the historic Old Main structure with red brick and stone walls and a slate roof crowned with an ornate cupola. The building has been a fixture in Lake Forest for over 100 years.

 

Old Main on the former Barat College campus in Lake Forest, Ill.

Plans are to rehabilitate and develop the building into a 50-unit condominium. Old Main will be the generator of a proposed campus redevelopment, whose proposed plan is based on traditional Beaux Arts principals of axial and interlocking public spaces and parks. The new Georgian Revival-inspired neighborhood will consist of 35 new town homes and 35 new single-family attached dwellings.

Sharing dreams is an art requiring art.

The architects' attention to detail is evident in the overall plan, from the Georgian style buildings and site accoutrements --- bridges, fountains, and street lighting --- to the detailed landscape planning.

A personal dream needs some concrete plans if one is to share the vision. The architects in Lake Forest know how to communicate their dream for the site. Detailed plans have been released with dream-inducing artist conceptions.

What could be done with the grounds surrounding the former Normal School?

The Barat College plans in Lake Forest, Ill., are just that: plans. This is a dream yet to be realized. On the other hand, Union High School in Black River Falls, WI, is a dream realized. This historic school has been successfully converted to apartments.

The school, built in 1871, is on the National Register of Historic Places.

It would be interesting to get a peek at the apartments in the old school. Some, especially those with interesting windows, might be quite remarkable.

The London Normal School could be converted to a spectacular residence.

Do diesels compete with high mileage gasoline burners? Maybe, maybe not.

The oh-so-positive story that VW spins about its clean-diesel technology has been proven to be lies by the EPA. VW diesels built from 2009 on spew far more pollutants out the tailpipe than claimed. Sophisticated software shuts down much of the pollution control system whenever these cars are driven on the road rather than simply being tested. Turning off the pollution control equipment allows these cars to deliver improved power and fuel mileage. There is a recall now in place and sales have been halted in Ontario. Until this software issue is settled, I can no longer advise anyone to buy a VW diesel.

Message sent by a VW salesperson. No TDIs for sale.

For more information, read: VW Is Said to Cheat on Diesel Emissions; U.S. to Order Big Recall
and Volkswagen Chief Apologizes for Breach of Trust After Recall.

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Recently, I came across an article questioning the value of diesel powered cars in today's auto market. The author pointed out that there are now gasoline powered cars that deliver fuel mileage similar to my VW Jetta but without the additional purchase cost.

Cost and availability or diesel fuel

First, the author discussed the cost of diesel fuel compared to gasoline. In the States, it seems diesel often costs more than gas. I have not found this to be the case in London, Ontario, Canada. When the price of a barrel of oil climbs, the cost of gas soars above $1.30 at the pump. At these times, I have found diesel priced less than gas. 

Sometimes I pay a premium for diesel and other times I don't. For the past few weeks I've been paying almost 20-cents less for diesel that I would have had to pay for regular gasoline. It seems diesel is more in the cold months and less in the warm ones. It's June as I write this. My records show that over the almost five years I've owned the car, it would not have made a meaningful difference if I been buying gasoline rather than diesel.

Has it been difficult finding diesel? In a word: No. Even the local grocery store fuel bar carries diesel and if you buy your fuel from at the gas bar, the grocery stores gives bonus coupons which are good for buying groceries. One of the Costco outlets has a fuel bar with a diesel pump on every lane. There are lots of stations carrying diesel in London.

Cost of a diesel vehicle compared to that of an efficient gasoline engined cars

O.K., here the gasoline powered cars pull ahead, but only if you don't take vehicle size into consideration. This can be a case of comparing apples and oranges. The new, larger Jetta is not playing in the same league as the Kia Rio, Ford Fiesta, Smart ForTwo Coupe, Chevrolet Cruze, Ford Focus or any of the other cars in the article's list.

I carry big people in my Jetta. They need leg room. The Jetta TDI provides it in both the front and the rear. And my trunk is huge. If you need room, lots of room, you may find you need more car than a Fiesta.

Insurance

I haven't done an extensive search of insurance costs as they apply to a variety of cars but I have done a small one. When buying my Jetta, I thought to call my insurance agent and get a quote for each of the cars under consideration. There was a Ford and a Honda on my short list. The Jetta cost less to insure, according to my agent, than both those other cars.

This was not a deciding factor in making my purchase but it did figure into my calculations.

Tailpipe emissions

Even after dieselgate, I feel greener driving my Jetta diesel than when I was driving my natural gas powered Pontiac Grand Prix some years back. Now, there was a polluting monster. (No slight to GM; I had the car switched to NG using a kit purchased from my local natural gas supplier.)

Conclusion

Depending on what you demand from a car, a diesel may offer some benefits. The most obvious benefit is the high mileage, especially when used on the highway. My Jetta TDI has delivered more than 60 mpg (Imp.) on the highway and it averages better than 41 mpg (Imp.) consistently.

This high mileage is delivered by a relatively large car. Check out the new VW Passat TDI. It is a big car. If the big Passat comes with too big a price, there is always the Jetta TDI to consider. A smaller car with a smaller price tag.

New diesels are quite fun to drive, certainly more so than many hybrids, in my opinion. That said, thanks to dieselgate I'm considering a hybrid Audi Sportback e-tron as my next car. Green is important to me.

For more info on owning a new VW Jetta TDI check my other post: Long Term Ownership Review: 2011 VW Jetta TDI.

Or do your own comparison of similar sized cars competing for you dollar. I feel the Ford Fusion competes directly with the new VW Jetta. Its a tough call in some ways, but I believe the Jetta comes out ahead.

With the Internet it is now easy to compare different cars before buying.

Although the Jetta costs more, when I priced a Fusion loan, I was asked to pay $56 more every month for 60 months to drive the compact Ford. This is because with the Jetta payback plan I have a balloon payment waiting at the end of the five year loan period. Win some every month; Lose some at the end.

Thanks to the fuel mileage I have been getting, I believe I would spend at least $500 more every year on fuel with the Ford. (This is based on info gleaned from a friend who owns a Fusion.) I know my insurance would have been more with the Ford. On the downside, I believe my VW has its transmission fluid and filter changed much earlier than even a hard-driven Fusion. This increases ownership costs somewhat.

When all costs are crunched, I figure the VW will probably cost me a little extra money but the longer I drive my Jetta the tighter the numbers. The big determining factor will be the residual value of my Jetta when it comes time to buy a replacement car. This number was supposed to remain a big unknown for many years but thanks to dieselgate I may know the value of aging car come July 2016.

If you have gotten this far, you might also be interested in the article Diesel: The Dark-Horse Contender For Greener, Cleaner Cars.

London EMD workers never had a chance; jobs were gone

The London Electro-Motive Diesel workers, locked out by Caterpillar Inc., have ratified a severance deal. The 465 unionized workers are receiving three weeks pay for every year at the plant, plus $1500. And Caterpillar is kicking in $350,000 for a transitional centre to help workers find employment.

In print, the local paper is continuing to spread the myth that a profitable company, Caterpillar, is shutting down an efficient plant simply because American workers will work for less. If only this were true, but it's not.

It is complex world and it should come as no surprise the decision to close the London plant, a plant with a history going back to the middle of the last century, was not made just to save a few dollars. Although, I am sure that was a bonus appreciated by CAT.

The London locomotive plant is a remnant of the steadily shrinking branch plant economy that once powered Ontario. Before there was Mexico, there was Canada, and for Americans Canada was Ontario.

I'm old enough to recall when the Canadian dollar was worth more than the American dollar --- about six percent more at one point. The high value of the Canadian dollar was said to be killing Canadian competitiveness. In the early '60s I can recall hearing that the Canadian government was undermining the value of the Canadian dollar.

In June 1961 the Canadian and American dollars were about at par. By May of the following year, the Canadian dollar ceased to float and was pegged at 92.5 American cents. It stayed there until mid-1970. Canadians called the depreciated buck the Diefendollar. It may have inflated the cost of imported products bought by Canadians but it encouraged manufacturing in Ontario.

Currency Risk: a reason for business to relocate outside of Canada.

It is a different world today. This should come as no surprise. It is now 2012. Fifty years have past. A lot happens in fifty years and for Canada, for Ontario, what has happened is not good.

The cheap Canadian dollar is a feature of the past. The post war boom is now but a distant echo. The United States is pulling in its horns and its branch plants. Think: Ford (St. Thomas/London), Sterling (St. Thomas), Navistar (Chatham), Westinghouse (London) and now EMD. And this is just a short portion of a very long list.

There are advantages to pulling manufacturing out of Canada and sadly it is not just American businesses that are being closed and pulled out of the country. EMD was an American branch plant. It always was. Its closure was no big surprise. This is a story that has been repeated time and time again right across the province.

It was not the refusal of the workers to accept a pay cut of approximately 50 percent that chased EMD from Canada. The London Free Press is reporting that CAW president Ken Lewenza said:

"A union member found a document indicating Progress Rail, a subsidiary of heavy equipment giant Caterpillar Inc. and parent company of Electro-Motive, always intended to close the plant, and had no intention of reaching a negotiated settlement.

"The letter on the Progress Rail website from company president Billy Ainsworth advised employees the London plant was closing and was dated May 23, 2011, more than eight months before the closing was announced.

"Lewenza said the company didn't refute the date or authenticity of the letter when confronted at the bargaining table."

While the closing of a branch plant is not surprising, what does come as a surprise is the closing of all the Canadian plants, like the Bick's pickle plant. Bick's was a Canadian operation started during the Second World War in Toronto. It was recently bought and closed by Smuckers out of the States, moving production to the States.

Back in the '70s, my first range was a McClary made in London. McClary closed its London plant and moved to Hamilton, merged with other appliance makers under the Camco banner. But Camco was bought out by Mabe, possibly the largest Mexican appliance maker. There is no production, that I know of, left in Canada.

The Canadian middle class is in trouble. Serious trouble. When I worked at the local paper, The London Free Press, many of the reporters and editors worried that one day Quebecor would decide to play hardball with them, with their union. They were concerned about their wages, their benefits, their retirements. Quebecor, like CAT, does not recoil from locking out its workers. Quebecor, like CAT, hates unions and has a reputation for union busting.

If the newspaper was searching for "an example of unconscionable greed that undermines every middle-class worker" the newspaper shouldn't have looked to EMD. It didn't have to look past its front doors.
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One note: Quebecor in London, like CAT, has made leaving easy for its workers. When  the CAT worker said that the severance deal was "Better than a kick in the teeth," I could not agree more. I took a severance package and left the paper after more than three decades at the place.

I took a hit on my pension and my CPP; Both suffered cuts of about 24 percent because I had to start drawing years early. Still, I cannot knock the deal. I thank Quebecor, my union and my co-workers who toiled for me as my union reps hammering out my severance package. Thank you Shelley, et al.

I pray the EMD workers nearing retirement do as well as I have done. I wish them all, "Good Luck!"

Has Quebecor benefited from government money?

To many Canadians, it appears Pierre Karl Peladeau has declared war on the CBC, attacking the government supported broadcaster with a vicious campaign of disinformation. But this is not the only battle Peladeau is fighting. There are others, just not as well publicized.

For instance if you believe the reporting in Montreal's La Presse, Peladeau is using Quebecor Media to attack the Montreal paper and its owners, the Desmarais family, with a vicious campaign of disinformation. Sound familiar?

I read a recent column by Andre Pratte in La Presse in which he went on the attack. Pratte claimed  Quebecor was the formidable media power that it is today thanks, in part, to the financial support of a Quebec investment fund with strong Quebec government ties --- support that in retrospect seems to have been badly misplaced, at least when it comes to financially benefiting the fund.

I admit I know very little about fund in question: The Caisse de dépôt et placement du Québec. But, a quick look at the fund's website seems to substantiate Andre Pratte's position.

The Caisse de dépôt et placement du Québec was established on July 15, 1965 by an Act of Québec’s National Assembly to manage the funds of the Quebec pension plan, a public pension plan also created by the Québec government. (In the following years, the Caisse was entrusted with managing the funds of other public pension and insurance plans.)

At that time, it was described by Jean Lesage, Premier of Québec, as “an instrument of growth, the most powerful economic lever ever seen in the province.” Future events would prove him right.

Canoe, the Sun Media online arm, reported that for an original investment of $3.2 billion Caisse got 45 percent of the Videotron deal concluded Oct. 23, 2000. Quebecor took the remaining 55 percent.

Why was Caisse so interested in climbing in bed with Quebecor over the Videotron purchase? Jean Laporte, the former president of Rogers in Quebec, is quoted by Canoe as believing, "It was a political decision. The (Quebec) government and the Caisse didn’t want Videotron falling into the hands of an Ontario company."

Ten years later the Caisse investment in Videotron had lost 1.5 billion dollars. Despite the large losses incurred, the former Quebec Premier Bernard Landry maintained the Caisse made the right call. Canoe quotes Landry, "It would have been a catastrophe to sell Videotron and TVA to Rogers. If the U.S. bought the BBC, there would have been an outcry in Britain."

La Presse columnist Pratte reports that even Peladeau admits the financial assistance Quebecor got from the Caisse in purchasing Videotron, prevented the cable company from passing into than Ontario hands of Rogers.

It does appear Peladeau has managed to subsidize the growth of his media empire thanks, in part, to a big infusion of money carrying more than a hint of government involvement.

Who's overpaid?

First, the unionized Electro-Motive Diesel workers in London were locked out; Now, they are simply out --- out of work --- the plant is closing. I believe most people sympathize with these workers but I know many see the workers as having brought their economic problems on themselves. I read comments on The London Free Press site like:

• The gravy train has passed. You have learned a lesson in humility.
• Companies cannot afford high union wages.
• Your greedy refusal of $16 an hour cost you your jobs.
• Companies are asking workers for better job performance for less money. Refuse and lose.
• Child care workers make $10 per hour, office workers maybe $15. Caterpillar offered a fair wage.

The other common argument doesn't so much attack EMD workers as defend Caterpillar. The argument goes like this: Despite all the condemnation of Caterpillar for enormous greed, it is doing what all large corporations are required to do in law: act in their own self interest. A corollary to the above is that corporations must first worry about delivering profits to their shareholders. CEOs worry more about shareholder profits than workers salaries, and this is as it should be.

The folk prattling on like this are at best naive. I could find other suitable adjectives but I'll stop with naive.

As I retired fellow, I follow the markets. I have a number of self-directed RSP plans in two banks. I bought my first stock when I was around ten or twelve --- I still have my Richardson Securities receipts misplaced somewhere in my hoarder's basement. In my years of investing, I have come across lots of examples of stuff that flies in the face of the above naive beliefs.

The gravy train hasn't passed. It is just stopping in far more upscale neighbourhoods. Check out the massive increases in the annual pay to CEOs. Companies seem to have no problem paying shockingly high salaries, plus bonuses, even to CEOs of money losing companies. Even the threat of impending bankruptcy does not knock all the zeroes off many a CEO's wage. And performance does not seem to be demanded of CEOs. When a company is going down the tubes, how can a CEO call his performance worthy of a seven or ten figure income?

Let's take a look at some recent CEO pay and how the companies they managed, managed. My favorite in this list is Yellow Media. I owned this for a time. It came highly recommended by Scotia McLeod as a core investment in an income portfolio. Luckily, my ScotiaBank adviser encouraged me to dump it. Accept my losses and run, he said. I did.

Yellow Media

The worst shareholder reward for the highest CEO pay may be Yellow Media (YLO). CEO Marc Tellier took home $8.9 million despite constantly declining profits and stock price. YLO racked up recent total annual return number greater than negative 90 percent! A company that just a few years ago was set to hit $20 a share is selling today for 20-cents.

A few years ago Amanda Lang interviewed Tellier for a ROB report. She caught up with the CEO on the ski slopes outside Montreal in the middle of the week. Lang tells us: "This interview is taking place on a Monday — technically speaking, it's work, even though Tellier is wearing ski goggles and mustard yellow ski boots."

Read the story, One good run, and ponder the question: "Just who is riding the gravy train?"

Air Canada

The CEO of Air Canada (AC.B), Calvin Rovinescu, earned $4.5 million while the Canadian airline racked up frequent annual losses. While Rovinescu basked in the glow of a seven figure income, investors suffered the pain of a very rough landing. Air Canada delivered a five-year return of negative 43.5 percent.

Nordion

According to How To Invest Online, the source of this CEO pay info, it is a mystery why Stephen DeFalco, CEO of Nordion (NDN), merited pay of $13.1 million. The small company under his leadership, he has since been replaced, made large losses and shrunk considerably taking investors on a steep downhill ride.

CEO pay and bonuses are wildly out of line. One need look no further than the daily paper to know this. Recently it was learned that CEO Cliff Nordal, while heading the two hospitals in London, pocketed about $730,000 a year, plus another $100,000 in taxable benefits, a $1.17-million bonus and a pile of privileges like a leased Lexus and country club membership.

During Nordal's tenure at St. Joe's my daughter gave birth there. The washroom adjoining her room was dirty. There were drops of blood on the floor. The staff were informed but because of staff shortages, no one was available to clean the bathroom for hours. My daughter didn't need the bathroom, she was busy delivering a baby, all went smoothly, the staff was excellent.

Still, I have to think that a hospital that cannot find the staff to clean a patient's bathroom before they are admitted should not be paying bonuses to its CEO for his superior performance in running the place.

I can help!

Fiona is now a full 29 months old. I'm amazed at her fast developing abilities and her enthusiasm for life. She has a great can-do, oh-so positive outlook. She pushes herself boldly into every activity that she can.

"Pick me up! Pick me up!" is her constant refrain. She desperately wants to be a part of absolutely everything. She is no longer content to be just a spectator; She insists on participating.

When dinner is being made, her favourite spot is the kitchen counter. She's actually quite good at stirring stuff. She can pour both liquids and powders without spilling. Grating cheese was a bit beyond her nascent abilities, but don't try and tell her that. She is not quite oblivious to her failures but she doesn't want to dwell on them. She wants to overcome them.

Take scissors. Fiona has a small pair of child's scissors. Her first attempt at cutting paper was a disaster. It was very slow going. She asked for more paper, sat down and set to work cutting that paper into small pieces. She wasn't too proud; She asked for help now and then. She watched us use her scissors, she listened to our instructions, and she practised.

She's pretty good with scissors now. I don't think it will be long before she can grate cheese.

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I like to keep an eye on Fiona's development and how it compares to that of other children her age. I discovered that two-year-olds "like to imitate the behavior of adults and others. They want to help with household tasks. . . . They follow simple directions."

Yes, that's my little granddaughter.