Crain's Cleveland Business

VOL. 38, NO. 1

JANUARY 2 - 8, 2017

Source Lunch

Sports business Encarnacion signing gives a boost to Indians’ season-ticket sales. Page 4

Augie Napoli Jr., president and CEO of United Way of Greater Cleveland

Opinion

CLEVELAND BUSINESS

Page 16

DEVELOPMENT

Time to rethink funding for Q renovation. Page 8

THE PREDICTION ISSUE

Detroit Shoreway is ‘ahead of curve’

FINANCE

Huntington poised to grow NEO footprint

Crain’s reporters forecast Northeast Ohio business trends for 2017

All signs point to ...

By JAY MILLER

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

jmiller@crain.com @millerjh

When the Westown Community Development Corp. set about looking for a development partner for the planned $15 million redo of the long-vacant Variety Theatre on Lorain Avenue, it turned to the Detroit Shoreway Community Development Organization, a neighborhood community development corporation, or CDC. When community development groups in several struggling neighborhoods on Cleveland’s West Side needed to find a partner to keep those organizations afloat in 2010, the Detroit Shoreway nonprofit was there to unite the groups under its umbrella. In July of that year, Detroit Shoreway opened its Stockyard, Clark-Fulton & Brooklyn Centre Community Development Office, now the Metro West Community Development Office on Fulton Road, with its own managing director.

And when the city of Shaker Heights was looking for a developer to help shape a new housing development along the Blue Line Rapid Transit, it turned to the Detroit Shoreway organization. The result is Transit Village — 33 attached, single-family townhomes along Van Aken Boulevard that will sell for between $275,000 and $350,000.

Reducing the number of CDCs has been encouraged by a number of funders in recent years, and Detroit Shoreway’s approach may be the most successful.

“There are fewer resources around and our industry is evolving,” said Jeff Ramsey, the executive director of Detroit Shoreway. “The model we are creating here is using an organizational infrastructure of successful organizations to deliver grassroots community services.”

SEE SHOREWAY, PAGE 3

Dan Shingler

Jeremy Nobile

Lydia Coutré

Rachel Abbey McCafferty

Jay Miller

Chuck Soder

Stan Bullard

Manufacturing

Finance

Health care

Education

Government

Technology

Real estate

Sports

Page 11

Page 12

Page 12

Page 13

Page 14

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Entire contents © 2017 by Crain Communications Inc.

Kevin Kleps

Huntington Bank’s game plan for Northeast Ohio has been nearly a decade in the making.

In 2009, as Cleveland banks were hunkering down to weather an economic meltdown, Huntington Bank took a contrary approach from many competitors.

Its Columbus-based parent company, Huntington Bancshares Inc., had lost $3 billion that year, the same year that president and CEO Stephen Steinour joined the company from Citizens Financial Group Steinour with a generic goal of growing the bank.

As profitability was restored in the first quarter of 2010, rather than furiously trimming additional costs or laying off staff or cutting lines of business as many anxious bankers in similar positions did, Steinour steered Huntington down a different path.

Instead of saving money, Huntington spent it. And the company spent it in the industrial Midwest, diverting significant dollars to Cleveland, a region certainly not isolated from the impacts of the unfolding recession.

Huntington rolled out seven-daysa-week banking in Cleveland branches, simultaneously revamping them with fresh, aesthetic upgrades.

They ramped up local lending, pushing out credit to small businesses and commercial real estate. By 2011, the company sealed an agreement with Giant Eagle for in-store banking.

All those efforts featured a strategic focal point in Cleveland.

SEE BANK, PAGE 10

AKRON Squirrels LLC starts the new year with a new product. Page 18 << Entrepreneurial spirit means opportunity for Signet. Page 19 Cornwell Quality Tools sells to mechanics in the field. Page 19

CRAIN’S CLEVELAND BUSINESS

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Investors ‘putting down roots’ on Lorain STAN BULLARD

exposes them to a constantly lighted Print building, first serving photograparking lot, that may shape what’s phy and later digital imaging, the next for the complex, which includes property had a long life before the 1960s. The first of several buildings in a building dating from 1880.

The Vista Print structure also has an the complex was constructed in 1893 intriguing new owner: a subsidiary of for the Tinnerman Steel Range Co., Independence-based Dalad Group, a which remained on the site until 1957, multifaceted real estate developer that when it relocated to Brookpark Road. owns office and industrial properties However, support for the federal desthroughout the south suburbs and ignation also comes from more than downtown Cleveland. Dalad recently 100 patents recorded at Tinnerman’s has participated in multiple conver- address. Among the inventions was sions of old office and warehouse build- an item produced in 1925 by secings to housing in downtown Cleve- ond-generation owner Albert Tinnerland. The most recent of those projects man, which he created to speed up stove-making that is the conversion of the found widespread apWorthington Building “Our idea was plications, including in on Johnson Court to loft airplanes. apartments in a $30 mil- to renovate here On Dec. 7, the Ohio lion project in the Ware- and invest here Historic Site Preservahouse District. tion Advisory Board votNeil Viny, a Dalad because we are ed to recommend the principal, confirmed comfortable nomination of the Tinin a phone interview nerman complex to the that Dalad owns the living here.”

National Register. If an Vista Print property afoffice of the U.S. Departter acquiring it earlier — Michael George, ment of the Interior’s this year. However, Lorain Avenue investor National Park Service Viny said the firm is unsure what its plans are for the approves, the complex may go onto the property. Indeed, he said it might National Register by March, according to Tom Wolf, communications manager wind up being used for storage.

Even so, Dalad has launched the of Ohio History Connection.

Meantime, a nearby setback for the first in a series of steps that might lead to a more ambitious use: an ef- neighborhood signals the appetite of fort to list it on the National Register real estate developers for the place.

The Unique Thrift Store, a one-time of Historic Places.

Known for decades as the Vista Pick-N-Pay store at 3333 Lorain Ave.,

was closed last fall. Randy Markowitz, a Hanna Commercial vice president who represents building owner Mutual Properties Ltd. of Beachwood, said that in the month he has had the listing, he has been approached by multiple prospective buyers, from retailers to real estate developers.

“Some of the developers were interested in non-retail uses, I assume for mixed-use properties,” Markowitz said. However, Mutual Properties wants to retain ownership of the building, so it likely will go to a new user of the existing building, he said.

Markowitz, a specialist in working with national retailers, said he was surprised by the extent of interest — so far unsolicited — in the site.

However, land records show properties on lower Lorain have been trading as fast as those in the first few rounds of a Monopoly game.

Cuyahoga County land records show sales of 11 properties through the end of November, most for properties ranging from $100,000 to $300,000 in price. By contrast, nine properties sold last year, and six in 2014.

Among those transactions, 3C Development LLC of Cleveland on May 9 paid $259,000 for the former Ohio City Furniture Store building, 4329 Lorain Ave. The same group last year paid $100,000 for the vacant lot next to it. 3C Developments LLC is led by Rafid Fadoul, who is undertaking conversion of the former Spaces building on the Superior Viaduct in the Flats to apartments.

Meantime, James Miketo, a former investment banker who returned home to Cleveland from New York City, is overseeing construction workers who have gutted the building at 4506 Lorain to convert it to the Erie Social Shuffleboard Club.

On a tour of the job site, Miketo talked about efforts to rejuvenate the century-old building that started out as a pigeon-feed wholesaler and was the home of Cleveland Model & Supply from 1930 to 1970 before the airplane, car and railroad model firm moved to Indianapolis. The building last served as home to a succession of small markets but has been empty several years.

Miketo opened the Erie Shuffleboard Club last year in Marblehead while searching for the site for the shuffleboard club in Cleveland. He ranged through West 25th Street and Tremont before landing on the site on Lorain because of the large size of the building and room for a 25-car parking lot next door.

“We’re making a significant investment,” Miketo said, although he declined to say how much he is putting into the plan to convert the building to a bar, restaurant and home to five shuffleboard courts that will seat as many as 200 people. Miketo hopes to open the shuffleboard operation in early spring and plans to operate seven days a week.

Small plays also are part of the unfolding Lorain Avenue story. Among them is a young couple, Michael George and Amber Pompeii, who operated the Cleveland Tea Revival shop in the Hingetown section of Ohio City.

Through an LLC, the two paid $167,000 in 2015 for a two-story commercial building at 4201 Lorain Ave. “We wanted something small we could handle,” said George. The couple and their baby live in a two-bedroom apartment in the building and lease out a smaller suite on Airbnb.

They renovated the storefront, once a Hungarian restaurant and later a dance studio, for LadyLuck’s Hair Salon, a tenant the two found through the Ohio City Inc. neighborhood development corporation.

“Our idea was to renovate here and invest here because we are comfortable living here,” George said, as the couple has lived in the neighborhood for seven years.

Architect David Ellison, who renovated a 19th-century building on the corner of Lorain and West 41st Street as the home for his architecture practice in 2010, said he has seen the street gain new activity. He worries that a parking shortage is around the corner and hopes for more caution to protect the old commercial district’s buildings as redevelopment momentum grows. He also appreciates the rise of multiple barber shops and hair salons on lower Lorain.

“They’re filling storefronts that were empty before,” Ellison said. “I also feel we are getting some tenants here because the Market District on West 25th is so heavily developed” with brewery-related enterprises.

Paul E. Gallo, who operated Vista Print from the 1980s through earlier this year, said in the 1980s, antique shops were the main occupant of the neighborhood, but they slowly moved west on Lorain. Many properties sat empty until this latest round of investment. He believes this one is different from those of the past.

“I feel people buying buildings along Lorain are putting down roots,” Gallo said.

campus across West 25th Street.

A segment of the nonprofit world that grew out of the late 1960s, community development corporations, or CDCs, were a response to the struggles of urban neighborhoods with aging housing, including the reluctance of banks to make mortgages in minority and changing neighborhoods and the flight to the suburbs.

Initially funded by churches and foundations, CDCs rescued abandoned homes, rehabilitated them and then filled them with families using lease-purchase agreements. When the young U.S. Department of Housing and Urban Development created the Community Development Block Grant (CDBG) program, Cleveland and other cities funneled CDBG money through these community development groups for low-income housing and housing code enforcement services.

At one time, each traditional Cleveland neighborhood, more than 40 of them, had a CDC. But declining populations and waning federal

funding have cut that number in half and forced them to find new ways to stay financially solvent.

Now, Detroit Shoreway’s financial statement shows a $10 million operating budget with three equal funding streams: one-third from development fees, like it’s getting from the Variety Theatre and Transit Village; one-third from foundations and donations; and the rest from the CDBG dollars channeled through the city of Cleveland.

“They’ve gotten ahead of the curve,” said Colleen Gilson, vice president of CDC Advancement at Cleveland Neighborhood Progress about Detroit Shoreway. “Why not export their talents? They’ve been so successful at development.”

But like other CDCs, its services are broadening. Now, looking beyond its strength in housing and commercial development, Detroit Shoreway sees its mission, according to Ramsey, as “effective neighboring.” That includes offering programs like financial literacy to help low-income people build

wealth, engaging with other neighborhood groups — like the Hispanic groups in the Clark-Fulton area — as well as workforce programs and even a tax preparation service. As Ramsey sees it, every dollar saved by making sure residents take all of their tax deduction, and the preparation fee of an outside preparer, comes back to the neighborhood.

Even if CDCs can’t find ways to merge (two East Side groups failed at it), Gilson sees CDCs combing resources in other ways, such as developing joint marketing programs or doing long-range planning together.

So while the Shaker Square Area Development Corp. and the Buckeye Area Development Corp. couldn’t find their way to a merger, Ohio City Inc. and the Tremont West Development Corp., two relatively strong CDCs, are seeking to fund a shared safety coordinator position.

“I think the future is in partnerships and collaborations,” Ramsey said.

sbullard@crain.com @CrainRltywriter

Bigger players are starting to join the veritable string of investors who are transforming long-suffering Lorain Avenue in Ohio City.

The new purchases are going in among multiple investments by smaller groups, giving the strip a fresh lease on life with everything from the well-known Platform Brewery and The Grocery, a green grocer, to a range of small shops from hair and nail salons to architecture and law firms.

Meanwhile, rehabs of walk-up apartments over first-floor retail spaces on the commercial thoroughfare are adding more dwelling options to a neighborhood known for renovated Victorian-era homes, multiple breweries and the West Side Market.

In an unexpected move, an affiliate of MetroHealth System has acquired for $1.5 million the vacant Hollywood Video property at the key corner of Lorain and Fulton Road. The Dec. 6 sale to FRE Holdings II LLC, which has the property’s tax bills sent to MetroHealth’s West Side main campus, defuses the bitter debate between neighbors and plans to install a McDonald’s restaurant on the site.

However, MetroHealth is so far willing to provide only sketchy details of its plans.

In an email on the property, MetroHealth spokeswoman Tina Shaerban Arundel wrote, “We are committed to the neighborhood and have plans to build a new facility for our patients.

We are working very closely with the city, local elected officials and community partners to identify the best array of services and will be announcing details in the weeks to come.”

How the half-acre site and 8,000-square-foot building constructed in 1998 are used by MetroHealth also could have a bearing on a major building in the neighborhood that may be on the verge of something big.

The long-empty Hollywood Video’s parking lot adjoins the four-story former Vista Print Building, which has its main address at 2038 Fulton Road and stretches behind homes on Fulton and West 38th Street as far south as Chatham Avenue.

The former Vista Print Building has three stories of windows that overlook the Hollywood Video parking lot and Lorain Avenue. If MetroHealth’s venture blocks windows or

SHOREWAY CONTINUED FROM PAGE 1 That means turning into a profit center the development expertise gained in the neighborhood by developing market-rate and affordable housing, and then the $30 million Gordon Square Arts District that includes the Capitol Theatre, the new Near West Theatre and Cleveland Public Theatre. Assisting places like Shaker Heights and the neighboring Westown, and earning development fees that support other services, like neighborhood housing inspections and workforce development programs, also is critical.

It also has meant merging four CDCs — Brooklyn Centre, Clark-Fulton and Stockyards, in addition to Detroit Shoreway.

Both Detroit Shoreway and its Metro West office, which serves the three outlying neighborhoods, have a

James Miketo is a former investment banker who is renovating a building at 4506 Lorain Ave. for a shuffleboard club. (Stan Bullard)

managing director, Ramsey said. The two offices share a central staff for services such as human resources and information technology. So what had been four standalone organizations, each with small staffs serving 10,000 to 15,000 resident neighborhoods, is now one organization with a combined staff of 28 serving an area with a population of 40,000 people.

“That’s an example (of merging CDCs) where it has worked really well,” said Bobbie Reichtell, executive director of Campus District Inc., a CDC serving a neighborhood east of downtown. “It’s perfect that (Ramsey) is there because the previous organization was very good at community organizing, but not at development.”

Reichtell, a former senior vice president for programs at Cleveland Neighborhood Progress, an umbrella organization for local CDCs, said Detroit Shoreway’s development expertise will help rebuild the Metro West area, which abuts the upcoming redevelopment of the MetroHealth

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CRAIN’S CLEVELAND BUSINESS

Encarnacion deal provides pop for Tribe’s ticketing numbers

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The Cleveland Indians’ sizable investment in slugger Edwin Encarnacion caused a change in the club’s holiday lineup and continued the franchise’s season-ticket surge.

In a four-plus-day span between Thursday night, Dec. 22, when news broke that the Tribe and Encarnacion had agreed to a three-year deal worth a reported $60 million, and Tuesday morning, Dec. 27, the Indians added 150 full-season equivalents and 250 new season-ticket-holder accounts.

The wave of activity pushed the Tribe’s full-season equivalents for 2017 past 10,000 for the first time since the 2009 season, when the Tribe had 11,700 season-ticket holders. That’s a critical step in the franchise’s lengthy quest to improve upon an attendance figure that annually ranks among the lowest in Major League Baseball.

“Christmas came early for us all,” said Tim Salcer, the Indians’ senior director of ticket sales and service.

After the Encarnacion agreement was reported, Salcer said the Tribe began asking staffers — who were on a “well-deserved” holiday break — to report for work the following morning. Seventeen employees took the club up on the offer, and the extra effort proved necessary.

The Tribe’s first wave of Holiday Six Packs — a promotion in which fans can purchase tickets to six of the most popular weekend series in June, July and August — sold out the morning after Encarnacion, who has averaged 39 home runs per season since 2012, agreed to sign with the reigning American League champs. In all, the Tribe sold almost 6,000 six packs in fewer than five weeks, which represented a 253% year-over-year jump.

And thanks to what Salcer described as “very strong support” from local businesses, schools and community organizations, the Tribe’s group sales have jumped 25% yearover-year.

The Indians’ season-ticket sales really heated up in August, when it became more evident they would win their first division title since 2007.

From Aug. 1 to Sept. 23, the Indians added 700 FSEs. The Tribe has padded its season-ticket numbers by more than 1,000 in the months since, and the club is ringing in 2017 with an FSE total that is already about 15% ahead of its 8,700 figure for 2016.

In a seven-season span from 201016, the Tribe’s season-ticket total ranged from a low of 6,000 in 2012 to 9,000 in ’15. The figures were a far cry from 2008, when the Indians had about 15,000 season-ticket holders, and were one of the most important factors in the team’s attendance problems.

In 2008, fueled by a trip to the AL Championship Series the previous fall, the Indians ranked 22nd in MLB with an average of 27,122 fans per game at Progressive Field. Since

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Edwin Encarnacion and the Toronto Blue Jays were eliminated by Francisco Lindor, left, Jason Kipnis and the Indians in the American League Championship Series. (Carlos Osorio/Toronto Star via Getty)

Indians season-ticket sales A look at the Indians’ full-season-ticket equivalents since 2007, according to Crain’s reporting over the years: 2007: 13,000 2008: 15,000 2009: 11,700 2010: 8,000 2011: 7,500 2012: 6,000 2013: 7,500 2014: 8,000 2015: 9,000 2016: 8,700 Note: The Indians already surpassed 10,000 full-season equivalents for 2017.

2012, the Tribe has been in the bottom three in attendance each season.

Even in 2016, when the Tribe finished a win shy of its first championship since 1948 and was in first place for the majority of the season, the Indians averaged only 19,650 fans per game. The 2016 norm, which ranked 28th in baseball, was actually a stark improvement from 2015, when the Tribe posted a gate average of 17,147 — the lowest in the history of a ballpark that is entering its 24th season.

The Indians’ World Series run, combined with a roster that seems poised to contend for the next few seasons and the Encarnacion signing, is finally beginning to change all that.

The Tribe’s 11,700 season-ticket holders in 2009 produced an attendance average of 22,492 — a number that, at the very least, seems realistic

for 2017. A similar figure would probably rank among the five or six lowest in MLB, but it would be a significant upgrade from recent seasons.

The Indians still have a few months to pad their season-ticket and group numbers, and the start of single-game sales in March will coincide with the Tribe likely opening the season as one of two AL favorites, along with the Boston Red Sox, to advance to the World Series.

Encarnacion, who has finished in the top 15 of the AL MVP race in four of the last five seasons, landed the biggest free-agent deal in franchise history. A postseason windfall, plus John Sherman joining the organization as a minority investor, helped to make that possible.

For the Indians, the early returns are encouraging.

“The trends we are seeing are very exciting,” Salcer said.

Volume 38, Number 1 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 441131230. Copyright © 2017 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00.

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CRAIN’S CLEVELAND BUSINESS

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Tennessee company is greatly expanding here

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

Pison Stream Solutions wants to create things no one has ever seen before. And it wants to do that in Northeast Ohio.

The company, which signed the lease on its new plant on West Snowville Road in Brecksville in July, plans to hire 150 people in the next three years. Renovations on its new Brecksville location are underway, and the plant likely will be up and running by mid-2017, said president and CEO Joseph H. James.

Pison, which is named after one of the rivers in the Garden of Eden, got its start in November 2010 in Brentwood, Tenn., where it’s still headquarHannaCRE.com tered. The aim was to create a “disruptive-type chemical company” focused just on niche products, said James, who started his career at companies including Lilly Industries, Sher12/23/2016 8:25:22 AM win-Williams Co. and AkzoNobel.

The company was never looking to compete with the Sherwin-Williamses of the world. Instead of working to transform existing products, James said, its goal is to create entirely new ones.

“If it’s something that already exists, we shy away from it,” he said.

“Our goal as a company is to create a technology that’s so new that it can not only do more than the existing product on the market, but we’ll be able to sell it at a lower price, open up a new market so that other folks out in the field will be able to enjoy the benefits of the technologies.”

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space industry that would allow lost aircraft to emit signals, James said.

And the company’s existing products include a multifaceted high-performance additive platform that lets customers use one coating product instead of multiple to achieve different properties, such as improved scratch and impact resistance, increased flexibility and enhanced smoothness.

One of the company’s biggest markets is the defense industry, though James doesn’t want it to be known as solely a “defense company.” Products for that industry include a multifaceted powder coating that is resistant to chemical agents. About 50% of the company’s business is in defense, James said. Its other areas of focus are in special niche products for aerospace and automotive, as well as antimicrobial powder coatings.

The focus on niche products led James to want to add in-house manufacturing. At the start, he planned to have Pison develop the product platforms and sell them to existing companies. But when he realized how novel the technologies being developed were, James said he wanted to make sure they actually got to market.

“This signals a shift,” James said.

The focus for the Brecksville location will be to manufacture products the company has patented. So far, the company has four patents, with two more pending, James said. The Brecksville plant will focus on making the company’s additive lines, as well as its defense and renewable energy products, and new research.

The Brecksville location was selected because it was basically a turnkey operation. James had spent significant time at the facility at 6101 W. Snowville Road, as it used to be an AkzoNobel location that he visited often when he worked there. The similarity of the work done at the plant under AkzoNobel made the building a logical choice for Pison.

So far, Pison has been setting up its research and development operations and adding equipment, though James declined to get specific on what kind of machinery the company is bringing in. He also declined to

share the cost of the lease or the company’s annual revenue. James said there are plans to upgrade the building’s entrance, and the offices and manufacturing spaces will be redesigned in 2017.

James also would like to open a second facility with more manufacturing space within the next 12 months, if possible. If that happens, he said it would be great to keep it in Northeast Ohio.

Hiring for the existing facility has already begun, with three employees hired and more being interviewed.

The goal is for the company to hire a minimum of 50 employees in 2017 and the early part of 2018, and 150 in the next three years, James said.

OhioMeansJobs|ClevelandCuyahoga County is helping Pison to fill those open positions. Nancy Horn, business services consultant with the organization, said a large aerospace company in the area was downsizing, but those workers have been able to get interviews, and hopefully jobs, with Pison.

Pison is going to hire workers at all levels of the company, from production to chemists to supervisors.

Though new to the area, the company has been good about communicating with OhioMeansJobs about what it needs, which is important, Horn said.

In addition to its hiring goals, Pison plans to release a new renewable energy technology in 2017. The powder coating composition doesn’t require direct sun rays, but can instead use any kind of light source to provide stored energy. And it can be used on a variety of materials, from wood to metal.

Pison has a patent pending on the technology, and big aspirations for the markets it wants to sell into: “Everyone,” James said, before listing some examples like IT, architectural and aerospace.

He thinks it could be a game-changer, because it doesn’t require acreage like solar panels and applies to basically any industry that uses electricity.

“So, 2017 is going to be a great year for us,” James said.

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PA G E 7

The Dish: Susan Condon Love

What Northeast Ohio diners can expect in 2017 For the restaurant business, with its necessary reactions to the ever-morphing tastes of consumers, sustained growth can mean a tap dance of embracing new food styles while keeping familiar dinnertime friends.

I recently polled some of Northeast Ohioâ&#x20AC;&#x2122;s most successful chefs and asked them to pull out their crystal frying pans to predict the focus in restaurants in 2017. The answers ranged from the obvious â&#x20AC;&#x201D; fresh foods made with delicious, locally grown ingredients â&#x20AC;&#x201D; to out-on-alimb wishes for more â&#x20AC;&#x153;fringe ethnic foods.â&#x20AC;? Looking at the bigger picture, there was a pledge to dedicate the year to service, the sometimes forgotten backbone of food business.

What are on the delete list? Gastropubs, oversized portions and â&#x20AC;Ś deviled eggs.

The chefs who responded are: J James Beard candidate Zack Bruell, owner and chef of Parallax Restaurant & Lounge, Lâ&#x20AC;&#x2122;Albatros Brasserie and Bar, Table 45, Ristorante Chinato and Cowell & Hubbard, among others J Iron Chef Michael Symon, owner of Lola Bistro, Lolita, B Spot Burgers, Roast, Bar Symon, Mabelâ&#x20AC;&#x2122;s BBQ and Symonâ&#x20AC;&#x2122;s Burger Joint J Jonathan Bennett, vice president and executive chef of Red, the Steakhouse; Moxie; and 811 Kitchen Bar Lounge J Zack Hirt, owner and executive chef of Nuevo Modern Mexican and Tequila Bar J Rocco Whalen, chef and owner of Fahrenheit, and Rosie & Roccoâ&#x20AC;&#x2122;s and Roccoâ&#x20AC;&#x2122;s at The Q. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve come a long way,â&#x20AC;? Bruell said of the Northeast Ohio restaurant scene. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s still a need to go further. Iâ&#x20AC;&#x2122;ve never been one to rest on my laurels â&#x20AC;&#x201D; thereâ&#x20AC;&#x2122;s always the opportunity to do better.â&#x20AC;?

Michael Symon (Contributed photo) Susan Condon Love is a freelance writer who was an editor and writer at The Plain Dealer, The Las Vegas Review-Journal, the Savannah (Ga.) Morning News and The Annapolis Capital.

Whatâ&#x20AC;&#x2122;s on the horizon? Hereâ&#x20AC;&#x2122;s their take: 1. What upcoming foodie trends that have you the most excited?

Bruell: â&#x20AC;&#x153;I donâ&#x20AC;&#x2122;t see a food trend, but a service (focus). Itâ&#x20AC;&#x2122;s all about the customer to me. If you donâ&#x20AC;&#x2122;t have customers, you donâ&#x20AC;&#x2122;t have a business.â&#x20AC;?

Symon: â&#x20AC;&#x153;I hope people get away from â&#x20AC;&#x2DC;trendsâ&#x20AC;&#x2122; and just make great

food. Really, to me that is what it should always be about.â&#x20AC;?

Bennett: â&#x20AC;&#x153;Barbecue and the â&#x20AC;&#x2DC;fringe ethnic foods.â&#x20AC;&#x2122; â&#x20AC;?

Hirt: Heâ&#x20AC;&#x2122;s seeing a prevalence of darker flavors: game meat, char, toasty, malty. Heâ&#x20AC;&#x2122;s also seeing more international flavors: Caribbean and South American, especially Peruvian. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve also seen an uptick of the availability of Korean ingredients. The â&#x20AC;&#x2DC;family style,â&#x20AC;&#x2122; where guests are offered several items for a single price so everyone can share, is a good trend as well.â&#x20AC;? Hirt also predicted a growth in app-driven food delivery services.

Whalen: â&#x20AC;&#x153;Tiki/festive bar landscapes, technology-driven concepts (restaurant-oriented apps, for example) and native American food.â&#x20AC;?

2. Why do they excite you?

Bruell: â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m excited about (son) Julian, Julian Bruell. He is moving back to Cleveland to help me polish service at my restaurants after working

at a world-class, three-star Michelin restaurant (Jean Georges in Trump International Hotel & Tower) in New York City. Iâ&#x20AC;&#x2122;ve always wanted to work with him, and wanted it to be when I could learn from him. â&#x20AC;Ś With 400 employees, he will have a big job in front of him (as director of service).â&#x20AC;?

Symon: â&#x20AC;&#x153;Because great technique, sourcing and execution make for great food, which is why great food and restaurants seem to last forever, while trends come and go.â&#x20AC;?

Bennett: â&#x20AC;&#x153;Barbecue, because (when I was) a wee little babe, I think my folks put Carolina barbecue sauce in my bottle instead of milk. Well, not exactly, but growing up on a hog farm in the Piedmont of North Carolina, it sure felt that way.â&#x20AC;? He said seeing the rise in fringe ethnic food, such as Native American, Hawaiian, Dominican, will bring more techniques, flavors, ingredients and mindsets into the knowledge base that will trickle into more dishes on more menus.

Hirt: The rise in international cuisine â&#x20AC;&#x153;is an aspect of cooking and dining thatâ&#x20AC;&#x2122;s not in my comfort zone, and as a chef, itâ&#x20AC;&#x2122;s always good to push those boundaries. Plus, these are items and techniques Iâ&#x20AC;&#x2122;ve wanted to utilize.â&#x20AC;?

Whalen: â&#x20AC;&#x153;(Native American foods) expand the industry and offer lots of new opportunities.â&#x20AC;?

3. What do you see fading from restaurant fare because of consumer boredom?

Bruell: â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s hard. Iâ&#x20AC;&#x2122;ve been in this business for 40 years, and I see things come and I see things go. Itâ&#x20AC;&#x2122;s a full circle. (Trends) donâ&#x20AC;&#x2122;t go away. They just go into the background.â&#x20AC;? That said, Bruell sees a decreasing popularity of molecular gastronomy, which blends physics and chemistry

to transform the tastes and textures of food. â&#x20AC;&#x153;People donâ&#x20AC;&#x2122;t want to be challenged. They want to go to a restaurant and be relaxed.â&#x20AC;?

Symon: â&#x20AC;&#x153;Overly manipulated, dishonest food.â&#x20AC;?

Bennett: â&#x20AC;&#x153;That is so hard to say.

Thatâ&#x20AC;&#x2122;s like trying to predict the (musthave) Christmas toy back last January.

Granted, there are a few trends Iâ&#x20AC;&#x2122;d love to see die a flaming death, but Iâ&#x20AC;&#x2122;m not going to mention any of those.â&#x20AC;?

Hirt: â&#x20AC;&#x153;Extra-large portions, traditional four-step plating â&#x20AC;&#x201D; starch, vegetable, protein and sauce.â&#x20AC;?

Whalen: â&#x20AC;&#x153;Beer bar, gastropubs, small plates and deviled eggs.â&#x20AC;?

4. How do you see yourself tapping into the new trends? Or are you going to be the source of the trends?

Bruell: â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m not your typical chef. Itâ&#x20AC;&#x2122;s not just about the kitchen, but the whole experience.â&#x20AC;? That is why, he said, a service focus and continual growth are his goals for 2017.

Symon: â&#x20AC;&#x153;We will continue to try to source the best food possible and show restraint while cooking it.â&#x20AC;?

Bennett: â&#x20AC;&#x153;Well, luckily for barbecue, we bought a huge smoker last year. As for ethnic, itâ&#x20AC;&#x2122;s going to be fun.

We are constantly working (and sometimes hiding) new ingredients/ techniques in our menu.â&#x20AC;?

Hirt: â&#x20AC;&#x153;Once we are able to procure (locally produced ingredients), Iâ&#x20AC;&#x2122;d like to integrate them on my menu. We change our menu semi-annually, so itâ&#x20AC;&#x2122;s easy to keep in step with these trends. â&#x20AC;Ś I also spend time creating new dishes and flavor profiles that others may not have thought of before.â&#x20AC;?

Whalen: â&#x20AC;&#x153;We pride ourselves on staying true to customer values and industry standards, not trends.â&#x20AC;?

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CRAIN’S CLEVELAND BUSINESS

Opinion From the Editor

More Akron news every week in Crain’s

Editorial

Take another shot The Cleveland Cavaliers and, in turn, owner Dan Gilbert have done a lot for our city. The Cavaliers’ dramatic comeback over the Golden State Warriors ended Cleveland’s 52-year championship drought, and since that day in June, Northeast Ohioans have had a little more pep in their step. It’s true many in Cleveland still haven’t shaken the feeling that soared through our bones when Kyrie Irving drained a clutch 3-pointer with 53 seconds left in Game 7. However, we shouldn’t let our champagne-stained goggles force us to blindly accept the deal put forth to finance a dramatic $140 million makeover for the publicly owned Quicken Loans Arena.

The plan is for the city of Cleveland and Cuyahoga County, with a bump from Destination Cleveland, the publicly funded tourism nonprofit, to cover half the cost of the construction project with existing tax revenues. The project would put another 75,000 square feet of space under roof, making it easier for capacity crowds — both for Cavaliers games and other events — to enter the building, an upgrade that is sorely needed. And based on the architectural renderings, the project could add some modern flair to the Gateway District and more utility to the 22-year-old arena.

Still, let’s call it what it is: a $70 million handout.

It’s easy to question whether using $70 million of public money — especially considering both Cleveland and Cuyahoga County insist they’re broke — to spruce up an arena leased by a billionaire. And of course, Cuyahoga County voters already approved a 20-year extension of the sin tax, which we endorsed, that pays for upkeep at The Q and the adjacent Progressive Field, but that money can be used only for stadium upkeep, not capital improvements.

And as sad as it may be, the proposed upgrade at The Q is one of the more taxpayer-friendly deals being floated around the country when it comes to publicly financing construction or renovations of pro sports facilities.

Still, that doesn’t make it OK. Moreover, suggesting this deal — and only this deal — would prevent Gilbert from taking a

page from Art Modell’s playbook and moving the Cavs elsewhere is misguided. The Cavaliers organization is the central artery in Gilbert’s web of business dealings in downtown Cleveland.

We don’t fault Gilbert and the rest of the Cavaliers organization for pursuing a deal that works. That’s simply business. Gilbert owns the Cavs because the team makes him money. Lots of it, and he’s earned that right.

But Cuyahoga County’s and Cleveland’s negotiators need to show some more muscle. When this deal was presented to the public during a press conference last month, county and city officials repeatedly lauded the Cavaliers for their generosity for picking up half the tab.

Cuyahoga County Executive Armond Budish, upon taking office, stressed the county was in dire fiscal shape, but at The Q press conference, he said this deal satisfied his concerns because the Cavaliers have agreed to shoulder any cost overruns.

That doesn’t seem like some tough negotiating to us. After all, in Northeast Ohio, nothing is given and everything is earned, right?

In addition, the figures being floated to sell the public on the plan are terribly overstated, as Crain’s reporter Jay Miller wrote last month.

A study, prepared by Plano, Texas-based consulting firm Conventions, Sports & Leisure International, claims — not accurately, as Miller reported — the arena injects $245 million in direct spending annually into the community.

The $245 million figure is a calculation of spending in 2016.

That’s a figure that won’t be achieved in future years. Secondly, it doesn’t discount the number for what is called substitute spending.

We believe the public should play a role in the upkeep and upgrade of our sports facilities, but $70 million is an awfully bold ask given the current state of the books in Cleveland and Cuyahoga County. The scale should be tipped a bit more toward Gilbert.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

CLEVELAND BUSINESS

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Scott Suttell (ssuttell@crain.com)

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Timothy Magaw (tmagaw@crain.com)

Contact Crain’s:

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You’ll notice an exciting change in this week’s issue of Crain’s Cleveland Business. Beginning with the Jan. 2 publication, we will include pages dedicated to Greater Akron business news in every weekly issue of Crain’s Cleveland Business.

With a rich history and business culture, not to mention a promising future, Greater Akron deserves its own dedicated coverage, which is why we at Crain Communications decided to launch Crain’s Akron Business in June 2015. We started with a morning e-newsletter, Crain’s Akron Daily, delivered to your inbox Monday through Friday. In September 2015, we launched a monthly Crain’s Akron Business print edition.

But we found that once a month wasn’t often enough to bring you all of Akron’s Elizabeth stories in a timely manner. So now we are McIntyre expanding our coverage to include Akron pages in each weekly printed edition of Crain’s Cleveland Business. In addition, Akron readers will continue to receive the Akron e-newsletter Monday through Friday.

Integrating Akron news into each edition of Crain’s is good for all of our readers. The region’s economy is connected, and it is our goal each week to deliver a comprehensive look at what’s happening in the region’s business environment.

This week’s issue is a showcase of the type of stories you can expect to find in the pages of Crain’s. It includes: J A Page One story looking at Huntington Bank’s growth strategy in Northeast Ohio as it fully integrates with Akron-based FirstMerit Corp., which Huntington acquired for $3.4 billion in 2016.

J A profile of Cornwell Tools, a Wadsworth-based company that has more than doubled its sales since the Great Recession and is building a 107,000-square-foot warehouse to accommodate its growth.

J An inside look at Akron equity firm Signet, which recently unveiled new branding and a new website, and shed the word “Enterprises” from its name. The moves are part of broader campaign to better define the company and what it does.

J A story on Squirrels, a North Canton software company that is rolling out a product launch in the education market that will help the firm grow. Plus, it’s switching to solar energy, which it will draw from a new array built on its property.

We will, of course, continue to cover Akron news in the critically important sectors of health care, higher education, manufacturing and energy. And while Crain’s won’t be the only media organization paying attention to important stories in Akron, we aim to offer a unique business angle that is so critical to Akron-area professionals and all businesses across our region.

Our coverage will continue to be guided by a dedicated Akron editor, veteran journalist Sue Walton. She has spent the past 18 months meeting with business leaders to find out what information and news is important to Akron-area readers. Reporter Dan Shingler has been on the beat for more than a year and will continue to bring you stories that are important to the Akron business community. They’re eager to hear your story ideas and suggestions. If you have ideas or feedback, feel free to email Sue at SWalton@Crain.com. You can also follow Crain’s Akron Business on Twitter (@CrainsAkron) and Facebook for up-to-the-minute updates and conversation.

We look forward to continuing to provide you with relevant, interesting and valuable news and information about both Greater Akron’s and Greater Cleveland’s vibrant business communities, as well as impactful news from across the region.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

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Personal View

Icebreaker project could give Great Lakes wind industry push, spark regional economy

By JOHN COLM

Often lauded by pundits, politicians and many industry leaders as the “Saudi Arabia of Wind,” Lake Erie has the potential to supply enough clean energy to light up tens of thousands of homes and power thousands of businesses.

Lake Erie Energy Development Co. (LEEDCo) has provided the spark necessary to ignite that power generation. Armed with $50 million in federal support, LEEDCo will carry the distinction of being the first-to-market player in the freshwater offshore wind energy arena, with the anticipated completion of its “Icebreaker” wind farm in 2018.

Once complete, the six-turbine demonstration project located eight miles from the Cleveland shoreline could potentially position Lake Erie as a central hub for U.S. offshore wind power generation. As U.S. Rep. Marcy Kaptur, D-Toledo, said, “The strength of the Icebreaker project, as opposed to its competitors, lies in LEEDCo’s commitment to leverage offshore wind energy with local Ohio-based jobs in the steel, construction and transportation industries. This means local job possibilities beyond wind generation are on the horizon.”

One of those Ohio-based suppliers with its sights set on the vital maritime role in future offshore wind development is The Great Lakes Towing Co., a fixture on the Cleveland shoreline since 1899. Great Lakes Towing owns and operates a fleet of tugboats and a full-service shipyard. It has been pursuing multiple market opportunities in offshore wind, including manufacturing of turbine foundations, construction logistics, and long-term maintenance, repair and operations services.

One of LEEDCo’s primary roles during the Icebreaker project has been development of an installation strategy that leverages the use of existing regional assets such as tugs and barges, port infrastructure, and local manufacturing. That strategy also will consider future offshore wind projects both in Lake Erie and throughout the Great Lakes.

“The potential for growth in wind energy is significant, and we see the demands of the industry as a natural fit with our core skills and capabilities,” says Joe Starck, president of Great Lakes Towing. “We look at Europe, with its 4,000 offshore turbines, being serviced by a large number of shipyards with great success and impressive results. The support we can provide in Lake Erie is a natural extension of our existing business.”

In addition to use of its floating assets, Great Lakes Towing is working with AT&F, one of the country’s top steel fabricators, to leverage its shipyard assets for the assembly, construction and delivery of the wind turbine foundations.

Because of its relatively small scope, the Icebreaker project represents a tremendous groundfloor opportunity for local supply chain manufacturers and service providers to enter the clean energy marketplace, according to Robert Zadkovich, vice president of business development for Great Lakes Towing.

“A six-turbine wind farm is a nice number for local companies to gain experience, and can open the door to our local suppliers because, at this level, large international suppliers simply aren't interested in participating,” Zadkovich says. “So it's advantageous for local businesses to get into this industry on the entry-level side now to learn as much as possible and obtain critical experience, so that they will be equipped to compete when the large-scale projects come later.”

But, he adds, “The next piece in this overall puzzle is absolutely critical.”

If Icebreaker proves successful, expansion of wind industry in the Great Lakes is imminent. LEEDCo's vision is to build a thriving offshore wind industry, generating thousands of megawatts for Ohio and other Great Lakes states, which presents huge potential for the hundreds of companies that comprise the regional supply chain.

Presently, there are several factors driving offshore wind development in the Great Lakes, with the most notable being the cost to construct such projects. From the development of specialized foundations that will support the turbines, to optimized onshore methods for assembling and welding the massive components required for each foundation, every effort is being made by suppliers to reduce costs.

“Driving down the costs of construction and installation will reduce the bottom-line cost of electricity generation, and make further offshore wind development in this region more attractive,” Zadkovich says, adding that developers “will naturally gravitate toward the projects with the best earnings opportunities.”

From a consumer’s viewpoint, offshore wind power still has a high-cost stigma attached to it. But with more technology firms and energy users like Amazon, Google and Facebook becoming increasingly aware of the social footprint they leave as a result of the huge demand for energy to run their massive server farms and distribution facilities, the trend toward clean power falls right in line with the desire to become more socially and environmentally conscious.

Those companies — and other businesses like Honda, GM and Campbell Soup Company — are realizing the economic benefits of diversifying their power supply, a move that is becoming more common as a strategy to mitigate against utility price gouging.

But having a consistent government policy is vital to spur growth in a startup industry such as offshore wind energy.

“Our legislators need to decide what the government’s role is in economic development opportunities for local and regional businesses, and if that role is worthwhile,” Zadkovich says. “There’s definitely an opportunity to attract out-of-state companies interested in operating their businesses on clean power.

Why not build and generate that power right here?

The fact is, no local companies are benefiting from Ohio utilities that are bringing in power from Texas and elsewhere.”

He adds, “If we’re able to launch this entirely new industry, we will be able to beat our competition to the market, and then drive down costs. Icebreaker is a great start for us. Once these six turbines are up and running, we’ll know exactly where and, perhaps more importantly, how to wring out a fair amount of costs.”

Zadkovich is optimistic that Ohio legislators will realize the positive impact that a supportive Renewable Portfolio Standard will have on manufacturers.

“There will be more offshore wind development in the U.S.,” he says. “The question is, will Ohio position itself to lead that development in the Great Lakes region or will we lose out to the East Coast states?”

Colm is the president and executive director of WIRE-Net, an economic development organization serving manufacturing businesses on Cleveland's West Side.

Every shot blocked by the Cavs earns a $100 donation from Elk & Elk to the Cleveland Clinic Children’s 1.800.ELK.OHIO | elkandelk.com/weakstuff

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BANK CONTINUED FROM PAGE 1 “Columbus was faring better than most cities at that time, and we liked what we saw in Cleveland. We thought Cleveland had the elements to rebound significantly and that we could become dynamic and grow even more in the market,” Steinour said. “We were set in Columbus. But this was ground zero. This is where we wanted to invest.”

As Huntington explored strategies in Northeast Ohio, Steinour set sights on FirstMerit Corp., a bank unique in its own right as a high-performing, midsize regional bank — and the only one of its size and scope to call Northeast Ohio home via Akron roots.

The notion of a FirstMerit acquisition to feed their growth here was first posed as a “what-if” back in 2010, Steinour said.

An acquisition of that sort, coming out of a year of loss, could be a pretty risky move. But it planted the seeds for what would become the company’s next big play in Northeast Ohio.

“We had a lot to discuss, and a lot

CRAIN’S CLEVELAND BUSINESS

of challenges in front of us. We were losing money. But the benefit of losing money is once you have that, you don’t have to chase quarterly earnings because you don’t really have any,” Steinour said. “You can either be a victim of that or use it to your advantage. We decided to use it to our advantage.”

All in on Cleveland A year ago this month, Huntington announced its $3.4 billion acquisition of FirstMerit. The deal closed last summer.

But this year marks the kicking off of the true Cleveland growth strategy as integration efforts begin in earnest and bankers start working together.

That's particularly the case for former FirstMerit bankers joining forces at Huntington’s downtown Cleveland base, a location that marks the company’s second-largest density of executives outside of Columbus and the home for large business lines, like its health care practice group.

Those executives include Sean Richardson, Huntington’s new Cleveland region president, who previously served a similar role for First-

“Now we can lend at the top end of the market and compete with literally any of the big boys.”

— Sean Richardson, Huntington’s Cleveland region president

Merit. As the bank comes together, Richardson will be tasked with growing the Cleveland market, which includes a heavy emphasis on the commercial business.

With Richardson come the ranks of legacy FirstMerit bankers. Those people and the pool of relationships they bring with them are the secret sauce that lets the bank hit the ground running this year.

The company already has a significant presence here in asset-based lending and loan programs in commercial real estate, equipment fi-

nance and health care.

But now, the company maximizes its lending offers with the scale FirstMerit presents as Huntington surpasses $100 billion in total assets and grows to the second-largest deposit holder in Cleveland and Ohio overall. It also holds a tight grip for deposit share in Akron, where the bank has made a slew of commitments to restoring any jobs lost in the merger and making community investments.

“Our top end to lend into one of these larger companies, whether public or private, has expanded significantly,” Richardson said. “Now we can lend at the top end of the market and compete with literally any of the big boys.”

The bank has the title for being the most active lender in this region in lines like autos and SBA. But there’s a goal to take the top spot in more.

“We want each of our business units to become No. 1,” Richardson said. “That won’t happen over four quarters, but we’re getting in the correct lane to get there. It’s our objective to be No. 1.”

In a fragmented market like this, the challenge there comes in simply achieving that goal and separating

the business from other competitors.

Expect Huntington to continue pushing a “stronger together” narrative in the marketplace moving forward.

And as the business grows, Richardson will surely bring on more lenders and expand his team accordingly.

“There is plenty of share out there to go get,” Richardson said. “We’re putting the gas pedal down on accelerating growth.”

Huntington now has more opportunities here, in Northeast Ohio, than ever before, and the size and scale to capitalize on those, which will undoubtedly put other large Cleveland banks on notice as they compete to gain ground in the market — or lose it to one of this region’s fastest-growing banks today.

And it all started with a gamble made on Cleveland several years ago.

“We’re going to invest and expand in Cleveland, and we want to increasingly become a factor in the growth and success in Cleveland,” Steinour said. “We believe we are playing that role already, and we want to earn the right to play an even bigger role.”

“We’re very optimistic about the future in Cleveland.”

Broker launches firm as affiliate of Cincinnati company

By STAN BULLARD sbullard@crain.com @CrainRltywriter

Add a new name to the list of retail-focused real estate brokerages in Northeast Ohio: Anchor Cleveland.

However, the name of the broker and founding principal at Anchor Cleveland is familiar in shopping center circles: Tori Nook.

Nook is a 16-year veteran of retail-related brokerage who averages 60 transactions yearly that total about

$50 million in consideration for leases and sales. She focuses on representing national tenants for locations in Northeast Ohio and other areas.

Through long-term associations, she has represented Mattress Firm in about 40 locations over the past few years, and for more than 10 years represented Dollar Tree and Covelli Enterprises, a major Panera franchisee based in Warren.

Nook opened Anchor Cleveland as an affiliate of Anchor Associates, a Cincinnati-based firm active in southwest Ohio and Kentucky that

works with retailers and shopping center owners and provides construction services.

Charles Townsend, founding partner of Anchor Associates, said in a statement that joining forces with Nook allows the firm to broaden services for its clients in Northeast Ohio and increases its expertise in the northern part of the state.

Nook said affiliating with Anchor allows her firm to have access to development and construction services for clients who want to build freestanding new locations or need simi-

lar solutions.

Joining Nook at Anchor Cleveland are Greg Guyuron as vice president and Chris McFarland as associate.

Guyuron also focuses on representing national retailers. McFarland does land assembly for retail developments and retailers and investment sales.

Nook and the two other retail leasing veterans most recently worked at Passov Associates of Beachwood and the former Kowit & Passov firm, now Kowit & Company Real Estate Group, in Mayfield Heights.

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IN MEMORIAM

Remembering our friend and colleague Benesch is sad to note the passing of our longtime partner, colleague and friend, James M. Hill.

Jim was a partner at Benesch for nearly 30 years, having joined the firm in 1987.

He served as Benesch’s Managing Partner from 1999 to 2007 and was instrumental in growing the firm.

JAMES M. HILL 8/30/53 – 12/13/16

Above all, Jim was a consummate deal maker with exceptional business acumen.

He focused his practice on publicly and privately held growth companies in addition to representing equity funds, mezzanine funds and family offices. Jim built a nationally-recognized private equity practice. He especially enjoyed working with family-owned business, having grown up in a family-owned building materials manufacturing business. He was very active and valued as a strategic advisor to companies as they evolved, and sat on a number of boards of directors.

Nook said she launched her own brokerage to reach a new level of her career, a step long urged by clients, her husband and her attorney. Nook said brokerage attracted her because of the variety of the retail business and the ability to help retailers create new business opportunities.

“Every day is different,” she said, recalling that when she represented an auto parts firm opening new locations a decade ago, she found herself in cities throughout Ohio she did not know existed. She also works out of state when clients ask her to do so.

Jim was always eager to do deals and build relationships to help clients. He truly was a leader in client service and an excellent lawyer who kept in touch with all legal industry trends.

Jim perennially earned recognition from The Best Lawyers in America® and was selected by Chambers USA as a 2015 Leader in his Field (Corporate Law and Mergers & Acquisitions).

Jim most recently served as Vice Chairman of Benesch, Chair of its Private Equity Group, an Executive Committee Member, and an active and practicing member of its Corporate & Securities Practice Group. Jim frequently spoke at national conferences.

All of us in the Benesch family mourn Jim’s passing and extend our deepest sympathies to his wife, Freda, and their children and grandchild. Jim left big shoes to fill, and we will work hard to honor his many contributions to the firm by building on his strong platform of growth and continuing his legacy of excellence.

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Page 12: Finance; Health Care Page 13: Higher Education Page 14: Government; Technology Page 15: Real Estate; Sports

THE PREDICTION ISSUE

Will 2017 be good to Northeast Ohio?

We asked our reporters to forecast what could happen on their beats in the coming year. All told, plenty of uncertainty continues to swirl as a new administration takes hold in the nation’s capital and a few major deals unfold in Northeast Ohio. That said, one thing is for sure: We’re in for another wild ride in 2017.

Crain’s photo illustration by David Kordalski

MANUFACTURING

THE EXPERTS SEE ...

Dan’s call: Almost anything could happen

“I expect continued slow growth with full recovery not occurring until third quarter 2017.

Important trends that will make a difference with leaders will be the necessity of digital transformation away from outmoded technology and operating models; requirement to introduce or expand revenue generated from informationbased products and services; and increased commercial use of 3-D printing. The sector’s move toward smaller companies using robotics will accelerate.”

By DAN SHINGLER dshingler@crain.com @DanShingler

So, the boss said “give me a column with your predictions for manufacturing in 2017.”

“OK,” I said. “Just let me know what Donald Trump is going to do and I will give it my best shot.”

In other words, almost anything could happen this year. But, there are a few things I’m willing to predict. The first might raise eyebrows, but I bet it won’t surprise folks on the front lines of manufacturing: Companies will not be able to find enough skilled workers.

That’s not because the new president will create a bunch more manufacturing jobs, though that is a possibility. It’s easy to predict a shortfall in skilled manufacturing workers in the year ahead, because the shortfall is already here.

It was recently reported, though not widely noticed, that the United States had 322,000 job openings in the manufacturing sector toward the end of last year. That’s more than triple the number of openings during the recession and about the same number the nation had in 2007 when

manufacturers routinely complained about labor shortages.

That’s the trouble with having decades of an eroding manufacturing sector. It doesn’t leave you with a lot of skilled manufacturing employees when you need them. Barring another recession, skilled workers will be in short supply and wages will likely go up.

Unskilled labor will still be out of luck. No one wants to build a factory modeled on the 1950s.

Another thing I think we’ll see in 2017 is further emphasis on supply chain management. Big manufacturers, in particular, get raw materials, parts, components and systems from all around the world, and many are wringing their hands wondering just how the new president will impact their supply chains.

Smart companies likely will spend some time this year evaluating their supply chains, their risks to new foreign trade policies, and backup plans to replace them if necessary. They may want more domestic content, if only as a defensive move.

I’m expecting cash to pile up this year. Companies want to invest their capital in things that will ensure their future success, but in a shifting policy and regulatory environment, that can be tough to do.

What Trump will do, how his policies are put into action and whether they will last — all of this will determine how corporations invest. In 2017, there will likely be enough uncertainty that many of them hang on to their cash until they have a clearer view of the future.

Manufacturers linked to the oil and gas industry are hoping the year brings a rebound in that industry, but I’m not confident that will occur. It’s not something over which the government has full control. Activity in the sector is driven by the price of oil and gas, which in turn is driven by supply and demand around the world.

Ultimately, the incoming administration would seem likely to approve more big export terminals that could ship liquefied natural gas to Europe and Asia (Ironically Vladimir Putin’s worst nightmare, by the way), but those developments will take years.

More likely would be expedited approval for things like the ethane crackers being planned for Ohio, Pennsylvania and West Virginia.

Those would not only be big customers for oil and gas drillers, but would be a supply of raw materials for a local plastics industry that might benefit from less foreign competition.

But, again, those investments will be driven more by corporate perception of long-term demand than by government policy, and slowing down trade and commerce generally could create cold feet.

We do stand to continue to benefit from low-cost energy, especially those that rely on natural gas. There’s just so darn much of it coming from the ground. That’s bad news for a coal industry already beaten to the floor by natural gas, but good news for local manufacturing and especially for heat- and energy-intensive industries.

Am I hedging? You bet I am.

Because it might be the toughest year ever in terms of making predictions. And if doing this in the past has taught me anything, it’s that I’m often wrong even in the easy years.

— Tom Tyrrell, CEO and founder, Great Lakes Biomimicry; former CEO of American Steel & Wire “The end of the state’s Energy Efficiency and Peak Demand Reduction freeze will result in significant upward pressure on FirstEnergy electric bills. This will be true irrespective of whether the governor signs legislation extending a freeze on the state’s renewable energy standards and we will especially see the price impacts in the latter half of the year.”

— Matt Brakey, president, Brakey Energy (a consultant to industrial energy users)

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CRAIN’S CLEVELAND BUSINESS

2017

PREDICTIONS

HEALTH CARE

Lydia’s call: When it comes to health care, change is inevitable

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

Despite getting little attention during the presidential campaign, health care has quickly become a priority for the new administration.

What this means at the federal level remains to be seen, but a repeal of the Affordable Care Act seems increasingly likely. At the state level, Ohioans can expect to see some changes to Medicaid. And locally, we’ll see area hospitals moving forward with the various renovation and construction projects they have planned.

Earlier this year feds rejected a plan from the state of Ohio, called the Healthy Ohio Program, that would have required Medicaid beneficiaries pay monthly fees into a health savings account. The skin-in-the-game requirement has long been a favorite of Republicans.

Supporters of the plan said the idea was to encourage Medicaid recipients to take ownership in their health care

and help smooth any future transition to commercial insurance. Opponents voiced concerns about otherwise eligible people losing coverage, the financial burden of the monthly fees, curtailed access and the financial impact on providers, who could be left holding the bag when patients who couldn’t pay their premiums and lost coverage would enter their doors.

President-elect Donald Trump has tapped Seema Verma, the architect of such a plan in Indiana, to lead the Centers for Medicare and Medicaid Services. Verma also was a consultant with the state during its development of the Healthy Ohio Program.

CMS shot down the plan, citing concerns about the state’s request to charge premiums, regardless of income.

The Medicaid expansion was already a point of contention in Ohio, where Gov. John Kasich turned to the state Controlling Board to approve the expansion after the General Assembly did not. The state Legislature has indicated an appetite for trying again during the upcoming budget cycle to compel Medicaid patients to pay. And

THE EXPERT SEES ...

“Physicians and other providers will continue to position themselves for success under the new health care reimbursement regime that increasingly focuses on paying for the quality and efficiency of medical services provided instead of volume alone. Stakeholders will also be keeping their eyes and ears open for changes to the regulatory landscape under the new Trump administration. We may be in for a wild ride.”

— Kathryn Hickner, co-chair, health care practice group, Ulmer & Berne with the new administration and Verma heading up CMS, chances for approval are significantly higher.

With so much up in the air for what’s to come for federal health care policy, many in the industry are taking the wait-and-see approach.

Trump’s surprising win brought hope to Republicans who have longsought to dismantle President Barack Obama’s signature health care law.

Republicans plan to move swiftly to repeal Obamacare but delay the effective date in order to give them time to develop a replacement.

Obama signed the law in March

2010. Since then, 20 million uninsured people have gained coverage.

Several pieces of the law remain popular with the majority of Americans and the law itself has become embedded in the United States’ health care system. Untangling that will inevitably take time.

While the dust settles and policy changes begin in Ohio and Washington, D.C., hospitals in Northeast Ohio have plenty of projects underway.

The Cleveland Clinic’s new $276 million cancer facility is set to open in 2017. University Hospitals’ $32.4 million outpatient health center and freestanding emergency department in North Ridgeville was also expected to be completed this year.

MetroHealth expects to secure financing within the first quarter of the year for its campus transformation project, which totals $855 million for design, construction and equipment. Also early in 2017, construction is set to begin on the new bed tower for Summa Health’s Akron City Hospital — part of the system’s recently announced $350 million facility plan.

Health care providers in the region will no doubt continue to work to rein in costs and increase access as the industry continues its shift from a fee-for-service model to a value-based approach.

FINANCE

Jeremy’s call: Deregulation could spur bank M&A

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

Deregulation of the banking industry under a Donald Trump administration could make compliance less costly

while freeing up the lending business, all of which should help banks grow margins and achieve greater financial stability in 2017 and beyond.

Since the passage of the DoddFrank Act, many smaller banks have merged with larger counterparts to get out of a tough industry. Larger

banks, meanwhile, have been generally discouraged from particularly large acquisitions because of regulators and company stress tests.

When applying those observations to M&A, it’s reasonable to think deals could actually slow down as fewer banks struggle.

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However, I see M&A in banking remaining quite active in 2017, perhaps even accelerating. What's more likely to change are the motivations to buy or sell.

For one, stronger banks should see higher valuations as profitability increases.

That means selling could be more lucrative in the future.

On the buy side, larger banks with growing profits would have more capital to seal those deals — so a higher price tag wouldn’t be a huge disincentive.

Meanwhile, as restrictions on doing business shake loose, banks may race to grow faster than the competition.

Instead of more mergers happening to spread out costs over a wider base, acquisitions could be viewed as an increasingly strategic move to gain size and market share, particularly in the fragmented Northeast Ohio market.

Smaller banks with growing margins could provide highly attractive targets, especially to non-Ohio banks who may want to acquire their way into a new market loaded with growing and lucrative industries.

All that considered, I wouldn’t be surprised to see more midsize banks in western Pennsylvania try to acquire their way into Northeast Ohio. The markets are quite similar. And investors should see lots of opportunities in this region with its bevy of growing and lucrative industries and companies.

Couple that with some of the largest banks present here having their hands full with deals they’ve completed recently, and the discussion shifts to who the buyers or sellers could be.

The odds of KeyCorp or Huntington Bancshares buying a bank here in the near term (a second one, in the latter's case) seem slim. Both completed mul-

THE EXPERT SEES ...

“Demand for robotic process automation is an area of digitization that we will see increase rapidly. Robotic Process Automation (RPA) is the use of a software ‘robot’ — a program — that replicates the actions of a human being interacting with the user interface of a computer system.”

— Julie Boland, Cleveland office managing partner, Ernst & Young LLP tibillion-dollar acquisitions last year.

Fifth Third Bank may see its fellow Ohio competitors expanding here and be motivated to make a deal of its own. This year marks a decade since their last acquisition, after all.

And while the company has been rather open about shrinking its footprint, a growing stock value and a desire to amp up market share might influence it to seek a deal with a smaller or midsize bank here.

PNC Bank hasn’t made a sizable deal in this market since its purchase of National City. They could be due for a deal.

Citizens Financial Group has been growing since separating from its former parent company in the Royal Bank of Scotland. With a goal of growing throughout the Midwest, they may be motivated for a deal in Northeast Ohio.

As far as targets, The Farmers National Bank of Canfield is one of Northeast Ohio’s strongest community banks. And while the company may not be terribly interested in selling, a strong valuation in coming quarters might change some minds if a buyer with deep pockets knocks on the door.

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PREDICTIONS

HIGHER EDUCATION

Rachel’s call: Higher ed eagerly taps into workforce needs

By RACHEL ABBEY McCAFFERTY

THE EXPERTS SEE ...

rmccafferty@crain.com @ramccafferty

“Because a four-year degree is worth its weight for individuals, families and society as a whole, we will redouble our efforts to attract students, retain students, and do everything possible to help students graduate in a timely manner without incurring significant debt. Our focus at the University of Akron is providing a supportive, family-like environment to make this possible.”

The relationship between jobs and degrees has perhaps never been more scrutinized.

After the Great Recession, it became clear that simply earning a degree from a college or university wasn’t enough to guarantee a graduate a job. They needed to have the right skills and, preferably, work experience in the field they wanted to pursue.

So, local schools have been trying to find ways to provide students with the kinds of programs they need to earn these skills.

For example, the University of Akron encourages its engineering students to do a co-op experience.

Or consider Cuyahoga Community College, which gave students work experience during the summer by hiring them for internal internships in a variety of departments.

But while schools have made strides to adapt and give students these skills and experiences, I expect this trend will only accelerate in 2017. It has to, not only so these schools can better serve their students, but so they can attract and retain them.

The high school population is shrinking, particularly in Northeast Ohio, which means that colleges have a smaller pool of potential, traditional students from which to draw. Now, plenty of schools have cast wider nets, work-

— Matthew Wilson, president, University of Akron “I predict a renewed commitment to civic education in 2017. We will see strong initiatives designed to help our students get the information and skills they need to sustain and grow our democracy: how to acquire the information they need to make informed decisions, how to participate fully in the democratic process, how to affect change, and ultimately how to create the kind of community they want to live and work in. The communitywide commemoration of Carl and Louis Stokes in 2017 will provide just the right platform to inspire this work.”

— Lauren Onkey, chair and dean of the Jack, Joseph and Morton Mandel Humanities Center, Cuyahoga Community College “Academic excellence, access, affordability and a demonstrable return on investment in higher education will remain top of mind issues. To deliver all of the above, Ohio’s public universities will need to pursue new efficiencies and an equitable share of state support, amid a challenging economic climate.”

— Ronald M. Berkman, president, Cleveland State University “With our students using Snapchat to communicate, Uber to get around and Couchsurfing to find places to stay, how do higher educational institutions need to adapt? Part of the solution in 2017 will be bringing our academic content directly to our students on their devices in the form of short videos, podcasts and social media. Higher educational institutions must adapt and take advantage of the opportunities to reach our current students as well as those in other parts of the world through this array of emerging technologies.”

— Michael Goldberg, assistant professor of design and innovation, Weatherhead School of Management, Case Western Reserve University

ing to attract international students and offering classes at times more attractive to working adults, but those efforts will be for naught if students don’t feel they’re getting the skills they need to succeed after graduation.

So I think that in 2017, higher education as workforce development will take on greater importance. That doesn’t mean that colleges and universities will stop offering the humanities, or that they’ll do away with general education requirements. Nor should they. Their job is to produce well-rounded students, who can go out into the world and succeed.

But that might mean that schools forge even stronger relationships with the industries in which they’re training students in the years to come.

The Northeast Ohio Council on Higher Education released a report last year that in part looked at how the degrees and certificates being granted in the region compared to the available jobs.

The years for the data didn’t match up perfectly, but it gave a pretty good idea of which industries — like hospitality — may be interested in seeing the numbers of potential employees increase.

It stands to reason that those might

be the same industries interested in getting more involved in higher education and training.

In the report, health care’s gap wasn’t that large, but the industry’s need is projected to grow, as employees retire and the health care landscape changes.

Outside of higher education, I also cover manufacturing, which is facing a serious potential talent shortage as its aging workers retire. I know that industry’s leaders are interested in attracting more students to the field; maybe that interest will lead to more current and former manufacturers stepping into classrooms across the region to share tangible skills.

I expect we’ll see even more guest or visiting professors — or even endowed positions — from industry in classrooms in 2017. I think hands-on experience and virtual reality-assisted learning, for fields like health care and manufacturing, will become even more prevalent.

And I think more and more students will be required to take part in internships, co-ops and other kinds of work experience before they can graduate — and I think more companies will be willing to open their doors to these temporary employees. I mean, if nothing else, I think the number of meetings and conferences around this issue will skyrocket.

And if you’re not in higher education? Well, in 2017, don’t be surprised if your alma mater calls on you to share your expertise, instead of your dollars. (OK, fine. Probably your dollars, too.)

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PREDICTIONS

GOVERNMENT

Jay’s call: Governments will look inward

By JAY MILLER jmiller@crain.com @millerjh

It’s unlikely Northeast Ohio will make as big an international splash this year as it did in 2016. There will be no political convention to focus the attention of the world on Cleveland and the region. Well, maybe only another sports championship series or two. So it may be a year of looking inward, getting the local houses in order, more than projecting outward.

The big issue for governments across the region and at the statehouse in Columbus will be budgets.

In December, Gov. John Kasich announced state tax revenue in December was 5% below expectations and, he said in a statement, “the next state budget will be tight.”

A bigger revenue shortfall will hit if the General Assembly doesn’t figure out how to make up the gap created by a loss of sales tax revenue. A change in federal regulations is forcing Ohio to end its sales tax on Medicaid managed care organizations.

If not remedied by lawmakers before July 1, that loss will cost the state an estimated $558 million in fiscal 2018, which begins on that date.

The loss of Medicaid MCO sales taxes also will affect city and county governments, and transit system budgets as well.

Cuyahoga County received $21 million in MCO taxes in 2015, according to an analysis by Policy Matters Ohio, a local think tank, while the Greater Cleveland Regional Transit Authority got $16.8 million.

RTA is estimating the loss would cost

it $4.5 million for the second half of 2017 and $18 million in 2018.

Other states, including California, Michigan and Pennsylvania fixed the problem legislatively. Instead of singling out Medicaid MCOs, they put all managed care providers on the same tax. The Ohio Legislature may do the same, but it didn’t pull the trigger in 2016.

Another big issue Columbus will have to tackle early this year is getting the state unemployment compensation system back on a sound financial footing. The trust fund went broke in 2009 as unemployment soared in the Great Recession. It relied on advances of more than $2.6 billion from the federal unemployment fund to stay afloat.

The last installment of that loan was repaid in 2016 but the Legislature couldn’t agree on a long-term fix to rebuild the fund before it adjourned in December. The sticking point was finding a balance between reducing benefits and raising the tax on employers.

Closer to home, two issues will top local agendas, one likely to move quickly, the other much harder to resolve.

First the easy one.

Despite the big December rollout, the financing of renovations at Quicken Loans Arena is not yet a done deal.

Both Cleveland City Council and Cuyahoga County Council still have to

THE EXPERTS SEE ...

“Indications in the Akron economy suggest that there is a pent-up demand for in-process material that should bode well for our local production operations and put them in a better position than in early 2016. Many Akron companies entered last year with a plan to pay off debt and to evaluate manpower needs. We are starting to see early signs of the industrial side of the economy perking up, with new investments that have been planned for 2017. This will help contribute to the anticipated economic uptick.”

— Sam DeShazior, deputy mayor for economic development, city of Akron “There is a significant skills gap in our county; companies have open positions and thousands are looking for jobs so we are significantly ramping up our workforce development efforts. For example, we are upskilling currently employed individuals and supporting training programs that help with the demand-supply gap and we are converting our summer jobs program to an internship program with career opportunities.”

— Armond Budish, county executive, Cuyahoga County “2017 has the potential to bring major change with such a big shift in administration. The best way a city can protect against instability is to pull together, both economically and simply human-to-human. So with that in mind, I hope we’ll see a sizable increase in new businesses opened by our talented international community, in North Hill and beyond.

Thanks in part to initiatives like Downtown Akron Partnership’s Pop-Up Retail and Mayor (Dan) Horrigan’s proposed zoning change to the Landmark, I believe we’ll continue to see storefronts fill in downtown alongside increased foot traffic to support them.”

— Heather Roszczyk, Akron entrepreneurship fellow, Fund For Our Economic Future

give their OK. Hearings in those bodies are expected to start in January.

Despite likely objections to using public money on sports facilities, approval is likely, since neither body wants to be accused even years later of letting a sports team leave the city.

Figuring out what to do about East Cleveland will be harder. The inner-ring suburb has struggled since being labeled in a state of fiscal emergency in 1988. Then, in 2014, state auditor Dave Yost declared the city insolvent.

Last year, Mayor Gary Norton floated proposals to either file for bankruptcy or merge with the city of Cleveland.

A first proposal to merge with Cleveland was soundly rejected by the larger city. It contained conditions — such as continuing the salaries of East Cleveland council members on a new advisory board — that Cleveland city council president Kevin Kelley rejected, though he agreed to keep talking.

While the mayor was pursuing merger and bankruptcy, a group of voters successfully sought recall votes against Norton and city council president Thomas Wheeler.

Despite its poor housing stock and city services that Cleveland would have to spend to upgrade, annexing East Cleveland has some attractions.

First among them is developable land along Euclid Avenue that would allow University Circle to expand eastward. In addition, adding East Cleveland’s 17,520 residents would push Cleveland’s population above 400,000, a milestone that would add a little luster to the city and might increase the size of some federal grant allocations.

TECHNOLOGY

Chuck’s call: The lights will stay on at Nela Park CHUCK SODER csoder@crain.com @ChuckSoder

First off, let’s be honest: I don’t really know for sure what’s going to happen to GE Lighting.

But that is the biggest question on the tech beat right now. So I’ll take a stab at it.

I predict that the stock analysts will be proven right in 2017 when General Electric cuts a deal to sell GE Lighting to an overseas company.

Oh, you say I’m not being bold enough. That I’m just agreeing with predictions made by other people?

OK, let’s climb out on the limb a little further: If the above prediction is correct, I predict that General Electric will keep most if not all of its Nela Park campus in East Cleveland. Part of it will be used by a newer, energy-focused GE business unit called Current.

Two predictions! Uh oh — I can feel the limb cracking. I best explain myself.

First, some background: In 2015, GE pieced together several energy-related businesses — including GE Lighting’s commercial LED business — to create Current, which

works with companies to help them “redefine the way they use energy,” according to Current’s website.

The new Boston-based business unit may be doubling down on that commercial LED business: Citing anonymous sources, a December 2016 story published by Greentech Media suggested that Current plans to “put more emphasis on connectivity through lighting and its energy management software.” It also said some of those other energy businesses might not remain within Current.

With all the emphasis on lighting, why would GE sell GE Lighting?

For one, the consumer lighting business (the part that GE Lighting kept) is tough these days. Selling large numbers of light bulbs is hard when they are powered by LEDs that last roughly 25 times longer than traditional incandescents.

GE Lighting is taking steps to adjust to that harsh reality. The company has been developing some next-generation LED lamps that take advantage of the fact that light-emitting diodes are essentially just computer chips. For instance, in 2017, GE Lighting plans to release a voice-activated table lamp that will use Amazon’s Alexa technology to play music,

THE EXPERTS SEE ...

“I think the next big thing is using machine learning and artificial intelligence as a tool — as a helper. We’re starting to see the ‘connected home’ actually gaining traction. I’m hearing about connected home devices from my nontechnical friends.”

— Eric Wise, chief academic officer, The Software Guild “We’re going to see a real awakening around the need for computer science and computational thinking in workforce development. This is not just coding bootcamps to get an adult trained into a job.”

— Kirsten Ellenbogen, president, Great Lakes Science Center “The whole concept of autonomous driving and having the ability to get picked up by a car that has nobody in it — I think it’s definitely going to happen. I’ve been talking to friends who have bought Teslas. All the technology is already in the vehicle. It’s just a matter of getting past government regulations.”

— Jose Vasquez, president, Quéz Media Marketing rattle off sports scores and add items to your grocery list.

Those kinds of products could convince consumers to pay higher prices for new lamps long before their old ones burn out.

But it seems like General Electric sees more potential on the commercial lighting side. Consider this January 2016 quote from GE vice chair Beth Comstock, who oversees GE Business Innovations, a unit that

includes lighting: “We like where we are, but the focus on our future really is on the smart, connected, commercial space for lighting,” she told Bloomberg.

Plus, General Electric has been getting out of other consumer-facing businesses. In recent years it has sold NBC, most of GE Capital and GE Appliances.

The $5.6 billion GE Appliances deal gave a Chinese company called Haier Group access to U.S. retail stores and the GE brand. Another foreign company could follow a similar strategy by purchasing GE Lighting.

After all, GE Lighting has been shedding old factories and old lighting products that are falling out of favor, which could help lure a buyer interested in LED technology.

If a buyer does materialize, I don’t think they’d be interested in acquiring the Nela Park campus, which is 103 years old. General Electric, however, may have a good reason to keep it, given that Current employs an undisclosed number of people at Nela Park. If Current really does put more emphasis on lighting technologies, it might start relying more heavily on Nela Park and the LED experts who work there.

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PREDICTIONS

REAL ESTATE

Stan’s call: Real estate puts on the brakes

By STAN BULLARD sbullard@crain.com @CrainRltywriter

Thump.

Thump.

Thump.

Thuuumppp.

The sound of a tire going flat as a car careens at high speed summarizes what is likely to happen in much of the real estate and related industries in the coming year. After a fast-moving 2016, look for real estate to slow down in 2017.

First, look at the component closest to everyone: housing. With the second interest rate hike in as many years with as many as three more suggested by the Federal Open Markets committee, rising mortgage rates may take some of the gas out of the residential market.

No, it's not the end of time for home sales like 1979 or 2008. However, the pace of sales will slow some, but not grind to a stop because so many first-time home buyers are out there. This is not all bad.

Price appreciation, even in slowgrow Northeast Ohio, will slow.

Next, the apartment market will start to slow down as well. Look for some long-planned apartments, such as Beacon, the apartment building planned by Stark Enterprises Inc. of Cleveland and J-Dek Investments of Solon, to get going.

However, commercial interest rates had already climbed by year-end.

As the era of low interest rates ends, fewer new apartments will make sense, though rehabs may continue to gain steam. Look for at least one, if not more, of the big proposed

rental developments downtown to drop off the drawing board.

The other party-pooper for apartment developers is that vacancy has to climb sometime. That will make lenders skittish and slow the pipeline. However, many apartments will be completed in 2017, from the Leader and Garfield buildings downtown to The Edison in the Detroit-Shoreway and two Ohio City apartment developments.

The rise of Cleveland as a destination for millennials and empty nesters will hopefully maintain a pace to continue changing the city, but this year may show how long the downtown apartment run may last.

Next, let's look at the shopping center market and the marvelous world of retailing in the increasingly popular online shopping era.

There will be more pain at older enclosed malls in areas with weak demographics while properties such as SouthPark in Strongsville and Beachwood Place will remain strong. The big bellwether will be how Stark does with the oodles of largely empty storefronts on the first floor of the last phase of Crocker Park. A lot was empty in the holiday season, but likely was finished too late to get retailers in last year. So the holidays in 2017 already look interesting.

THE EXPERTS SEE ...

“People are healing as we come out of this crazy political time.

They are waiting to see what happens in January, such as the tax implications from the Trump administration. But I’m hearing what I call ‘cautious optimism.’ As long as our clients remain cautiously optimistic, projects will move forward and there will be moderate growth for us.”

— Debbie Donley, founding principal, Vocon architecture firm “We’re going to continue to see a really tight industrial real estate market.

We’re going to continue to see more spec industrial space in the coming year. Our market is changing due to the development of e-commerce, which is driving demand to our market. We get things that might have gone to Columbus previously. If you want deliver something in two hours, you can’t be three hours away.”

— Bill Sadataki, senior vice president and principal, NAI Daus “We’ll have to see how Trump’s policy compares to the campaign rhetoric. We expect the new year to start strong. The market won’t slow until interest rates get to 6% (from 4%) when it will get quiet for about 60 days. Beyond that, there are a lot of unknowns.”

— Howard W. “Hoby” Hanna IV, president of real estate brokerage, Howard Hanna Real Estate Services Meantime, the hotel market will soften in the coming year, if only thanks to the sheer weight of new rooms going onto the market. The

onus will be on Destination Cleveland and the Huntington Convention Center of Cleveland to deliver big meetings and travelers to

town given the lack of another major political convention. Also, the onslaught of suburban hotels after the long drought earlier in the decade already means suburban occupancy and rates will soften.

The new Hilton and relatively new convention center may attract enough big meetings to make 2017 look OK. Let’s hope so. If nothing else, advise friends and relatives who like a good deal visiting the region to be sure to plan staying at a downtown hotel on a weekend this winter or next fall.

Even with this dour assessment, look for some interesting things to happen. If Medical Mutual or Sherwin-Williams pull the trigger on building a new headquarters, downtown might see a new office building go onto the drawing board. Not having to wait another 20 years for a new office building, as the city did before Ernst & Young Tower opened in the Flats, would show the office market still has a future.

The bright spot in the coming year will likely be enjoyed by the construction contractors and trades people. Big investments at the Parma General Motors plant and MetroHealth in Cleveland that were just unveiled, the Beacon apartment project and others will keep the building market from going into the dumper like it did during the Great Recession.

Things may slow in 2017, but it will likely look good from the lens of 2004 to 2011. Changing a flat beats a car wreck.

SPORTS

Kevin’s call: Deja vu in Believeland

By KEVIN KLEPS kkleps@crain.com @KevinKleps

Teams meeting in consecutive NBA Finals — as the Cleveland Cavaliers and Golden State Warriors did in 2015 and ’16 — is nothing new.

The 2016 championship series marked the 14th time that the same clubs have met in back-to-back Finals, and the Cavs' seven-game victory was the eighth time in which the loser in the first meeting prevailed in Round 2.

But a Finals trilogy has never taken place, much to the surprise of many of us who grew up watching the Boston Celtics and Los Angeles Lakers dominate the 1980s.

That will change in 2017, when Cavs-Warriors III happens, and we think this one will be the first in which the Cavs claim the championship at Quicken Loans Arena.

The last Cleveland team to win a major professional sports title at home was the 1964 Browns, who had been the owners of the city's previous championship prior to The Block, The Shot and The Stop last June. The Browns are also the last Cleveland team to win consecutive titles — an honor that was claimed by the 1954 and ’55 clubs that were led by quarterback Otto Graham, who retired af-

ter the latter victory.

Here’s how we see it playing out (and feel free to remind us of the next four sentences in six months): The Cavs, even as the reigning champs, again will be decided underdogs in the 2017 Finals, thanks mostly to the Warriors reaching 70 wins for the second consecutive season. But Cleveland will win the title in six games, leaving many analysts questioning the future of a Warriors club that will have its top two players, Kevin Durant and Steph Curry, as potential free agents in the coming weeks.

To get there, the Cavs will have dominated the Chicago Bulls (a first-round sweep), Milwaukee Bucks (a five-game win in the Eastern Conference semifinals) and Toronto Raptors (see Milwaukee, only in the East finals). And LeBron James will win his fourth NBA Finals MVP, causing the most heated “Is he better than Jordan?” debate since His Airness was a washed-up member of the Washington Wizards.

And since we don't want to be

THE EXPERTS SEE ...

“Our team, led by Terry Francona and a group of established stars, will again be well-positioned to compete for a postseason berth with some unfinished business. Off the field, Progressive Field will continue to be a destination for fans of all ages for great entertainment, and in the community, the Indians will continue to be leaders in positively impacting the lives of Northeast Ohio youth.”

— Paul Dolan, chairman and CEO, Cleveland Indians “I think there is a growing incubator mindset in the industry — teams are looking to leverage expertise and relationship networks to enter like or related spaces. Sports are a unifier across all demographics, regions and disciplines. And opportunities like eSports help teams and leagues connect with a growing, young industry that has strong ties and passions within it, similar to ‘on-field’ sports.”

— David Jenkins, executive vice president and chief financial officer, Cleveland Browns “With the continued increase of mobile device usage, sports franchises will capitalize on mobile technology to further deepen engagement with fans and enhance their experience at a more personalized level.”

— Dionna Widder, vice president of ticket sales and service, Cleveland Cavaliers wrong on just the Cavs, let's make a few more predictions for the New Year ...

J The Indians again will advance to the postseason, only the Tribe will fall short against the Boston Red Sox

in the American League Championship Series. The club will, however, have an attendance figure that tops 22,000 per game for the first time since 2011, and its ratings on SportsTime Ohio will increase from 6.5 in

2016 (the best in 11 years) to 7-plus.

J The Browns will keep the No. 1 overall draft pick in the spring, not trade it, which many of us will view as progress. But Hue Jackson’s team will finish 5-11, causing the coach — and executive vice president of football operations Sashi Brown — to be shown the door in yet another regime change. We also think the Browns will enter the 2016 season with a season-ticket base under 50,000, which would be the franchise’s lowest total in that department since Jimmy Haslam purchased the team in 2012.

J ESports, aka competitive video gaming, will become a thing in Cleveland. Cavs owner Dan Gilbert has already expressed an interest in pursuing a team, and Browns chief financial officer David Jenkins recently told us that eSports “help teams and leagues connect with a growing, young industry.” Could Haslam have an interest?

J The announcement probably won’t be made in 2017 (too soon), but we believe that the upcoming overhaul of The Q will result in the NBA giving Cleveland the 2021 AllStar Game, when LeBron will be 36 and in the middle of his 18th season.

He won’t be so superhuman then, but forecasting The King’s fall from greatness is one prediction we wouldn't be foolish enough to make.

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BUSINESS OF LIFE

Source Lunch August A. “Augie” Napoli Jr. joined the United Way of Greater Cleveland as its president and CEO in June 2016.

Napoli, who had served as the Cleveland Museum of Art’s deputy director and chief advancement officer for the past six years, said he was excited to take on the role. Philanthropy, he said, is a joyous thing.

“It’s one of those kinds of things, if you do it, you can’t stop doing it,” he said. “Because it really does make a difference in people’s lives. And it’s not for the attaboys you’re going to get. It’s for the personal giving of your heart. It’s pure love.”

Napoli said he’s getting to know the history and people of the United Way — the stakeholders, staff and whom they serve.

As a newcomer, he said he believes he has the perspective to see areas where United Way could be more donor-centric and person-in-need centric than it is. Often, he said people in need have to find the system of services and resources.

“The system really should find the person in need,” he said, “and that’s kind of the transformation I’m hoping will occur.” — Lydia Coutré

You’re relatively new in your role at United Way of Greater Cleveland.

What prompted your move from the Cleveland Museum of Art? The Cleveland Museum of Art is a really great institution and one of the top collections in the country. It was an honor to be there and raise resources for a capital campaign and make the museum accessible to a wider Cleveland audience. But I know the spirit of giving and the heritage of philanthropy is in Cleveland’s DNA. For me, that was an irresistible draw of United Way and this job. There is no other city in the country that steps up to address community needs the way Cleveland does and I am thrilled and humbled to lead the organization that served as the catalyst for this process more than 100 years ago.

What opportunities do you see for United Way going forward?

There are opportunities for United Way to implement new fundraising strategies to augment our annual appeal. To fully support our community’s health and human service network, United Way must expand our fundraising efforts. Your United Way also has the responsibility of serving as our community partners’ voice with decision-makers. For that reason, there’s an opportunity to raise our profile in the public policy arena. Our community faces many difficult issues — poverty, economic disparity, racism. And United Way has the standing to convene a conversation about these issues and bring a cross-section of interests to the table to find solutions.

How do nonprofits compete for charitable dollars?

Just like a for-profit business, United Way competes for attention, interest and resources. The beauty in the competition is that nonprofits are appealing to the best in each of us.

United Way stands out among the competition, because we are the premier philanthropic organization in the community. The idea of

“Volunteer.

People don’t realize the value of time and talent.

We all have something to give.” federated giving, which is now known as United Way, was founded here in Cleveland more than 100 years ago.

And right now in 2016, Cleveland is listed as one of the top 10 most philanthropic cities. Clevelanders give to United Way because they understand their single gift goes a long way in helping a multitude of great health and human service agencies in our community.

How does the United Way work to expand its donor base?

United Way has traditionally focused on workplace campaigns. Our efforts in the workplace reach approximately 300,000 individuals who are employed in our community.

August A. ‘Augie’ Napoli Jr.

There are so many more Greater Clevelanders who care about their community, who want to make an impact on poverty and who we are deliberately striving to engage in United Way’s work.

What are some ways residents can support United Way and nonprofits other than monetary donations?

Volunteer. People don’t realize the value of time and talent. We all have something to give. Since joining United Way, I’ve been hugely impressed. All it takes is a phone call and people are very generous. It says a lot about United Way and the Greater Cleveland community. United Way has a huge base of volunteers with enormous talent. And there is always a need for more committee volunteers and even hands-on volunteers to assist with projects at our partner agencies.

What are your goals for United Way of Greater Cleveland in 2017?

United Way recently embarked on a community needs assessment to better understand the Greater Cleveland environment as it relates to health and human services. We learned the top five needs in our community are workforce development; education; basic food and housing needs; care for mental health, substance abuse and disease management; and safety.

In 2017, we are planning to make an impact to those top five needs with the help of the Greater Cleveland community who continue to give, advocate and volunteer with United Way.

NONPROFITS

Five Things FAVORITE SPOT IN NORTHEAST OHIO? “I really do mean this: My home, where my wife and my son are. That happens to be a house in Cleveland Heights, but our home is where we are.”

HIDDEN TALENTS? Plays piano

HOBBIES? Reading, gardening

FAVORITE BOOK? Currently, “His Final Battle: The Last Months of Franklin Roosevelt,” by Joseph Lelyveld

HOW DO YOU START YOUR DAY? “By jumping out of bed. I am definitely a morning person.”

Lunch Spot Slyman’s Restaurant 3106 St. Clair Avenue Cleveland

The vibe Known for its towering corned beef sandwiches, Slyman’s is a Cleveland classic. The no-nonsense deli serves up giant pastrami, corned beef and roast beef sandwiches.

Though choices are limited for this vegetarian, a grilled cheese and potato salad made a good lunch.

The meal Tuna sandwich with coleslaw and a Diet Coke; grilled cheese with potato salad and an iced tea.

The bill $27, plus tip

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Joseph J. Pelle, Jr. joined SS&G Wealth as an Associate Director of Retirement Plans. He previously served as Vice President and Relationship Manager, Retirement Plan Services, at First Merit (now Huntington). Pelle brings over 20 years of retirement plan and wealth management experience. He looks forward to working with retirement plan clients on plan design and employee education. Pelle is a member of the SS&G Wealth executive team and investment committee.

FINANCIAL SERVICES George Mateyo Chief Investment Officer Key Private Bank Mr. Mateyo is responsible for establishing the investment strategies for both private and institutional clients, expanding the bank’s research capabilities and managing the delivery of solid investment performance through the portfolio management staff. He will also oversee the firm’s portfolio construction process and chair the Investment Policy Committee. Previously, Mr. Mateyo served as Senior Director of Investments at the Cleveland Clinic.

HEALTH CARE Joseph S. Dankoff Physician Summa Health Summa Health is expanding its urology offerings with the addition of Joseph S. Dankoff, M.D., to the Summa Health Medical Group. Dr. Dankoff attended medical school at Thomas Jefferson University and is board-certified by the American Board of Urology.

He will practice at Summa Health’s Akron Campus and Summa Health Green Medical Center. His special interests include treating kidney stones and prostate disease.

HEALTH CARE Lawrence L. Geller Physician Summa Health Summa Health is expanding its urology offerings with the addition of Lawrence L. Geller, M.D., to the Summa Health Medical Group. Dr. Geller attended medical school at the University of Louisville and is board-certified by the American Board of Urology.

He will practice at Summa Health’s Akron and Barberton Campuses. His special interests include treating sexual dysfunction and incontinence.

KeyBank Key Private Bank, one of the premier private banks for affluent individuals and their families, appointed Karen Dulaney to senior vice president and senior relationship manager. She will be responsible for delivering customized investment management, trust and estate planning, financial planning, and banking solutions to high-net-worth clients on Cleveland’s West Side.

HEALTH CARE Kevin A. Spear Physician Summa Health Summa Health is expanding its urology offerings with the addition of Kevin A. Spear, M.D., to the Summa Health Medical Group. Dr. Spear attended medical school at The University of Toledo and is board-certified by the American Board of Urology.

He will practice at Summa Health’s Akron Campus and Summa Health Green Medical Center. His special interests include treating male infertility and reproductive medicine.

LAW

Joshua Nething

Lori Pittman Haas

Physician

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Summa Health Summa Health is expanding its urology offerings with the addition of Joshua Nething, M.D., to the Summa Health Medical Group. Dr. Nething attended medical school at Northeast Ohio Medical University and is board-certified. He will practice at Summa Health’s Akron and Barberton Campuses and Summa Health Wadsworth-Rittman Medical Center.

His special interests include urologic oncology, minimally invasive and robotic surgery, treating kidney stones and prostate disease.

Doug counsels public and private companies in a wide range of industries on a variety of corporate matters and has served as general counsel and advisor to many closely held and middle market companies in the manufacturing, distribution, retail, and service industries. He also has significant experience structuring and negotiating mergers, acquisitions, and divestitures.

Lincoln Graubard Chief Financial Officer Ulmer & Berne LLP As CFO, Lincoln will be responsible for overseeing Ulmer’s overall fiscal health, managing all financial processes. In his previous role as Director of Finance, he led a team of 21 professionals in providing strategic and operational leadership to both executive and practice area management.

Before joining Ulmer, he held various financial leadership roles at Thompson Hine LLP where he was responsible for the production and content of all operational reporting and initiatives.

Howard Groedel Chair, Business Law Practice Group Ulmer & Berne LLP Howard focuses his practice on securities law, corporate transactions and financial services regulation. He counsels broker-dealers, investment advisers, banks, trust companies, private equity funds and other financial institutions with respect to regulatory and governance matters. He also counsels public and privately held companies on a full range of corporate transactional and governance matters.

Ulmer & Berne LLP Lori represents buyers and sellers in the acquisition, disposition, and development of commercial property, including convenience stores with fuel facilities, retail centers, office buildings, and mixed use developments. She advises shopping center developers and commercial property owners in the financing of development projects utilizing Historic Tax Credit, New Markets Tax Credits, construction financing, and conventional financing.

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Marie Kuban Vice Chair, Business Law Practice Group Ulmer & Berne LLP Kuban represents public and private companies and private equity firms in structuring and negotiating corporate acquisitions, divestitures, mergers and joint ventures, and advises on general corporate matters. She also has extensive experience in representing financial institutions and private lenders, as well as borrowers, on asset-based, cash flow, acquisition and other commercial financing transactions, including agented and syndicated loan transactions.

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For Squirrels, new year brings new ventures

By BETH THOMAS HERTZ clbfreelancer@crain.com

For North Canton tech firm Squirrels LLC, January will see the culmination of long-term efforts on two big initiatives — a major product launch that is expected to help the company grow to a new level and the switch to relying on solar energy to power its operations.

The company, founded in 2008 as Napkin Studio LLC, is known for its software offerings, notably its wireless screen-mirroring technology used in classrooms and industry. Its AirParrot2 app streams and mirrors content wirelessly from computer screens onto Apple TV, Chromecast or devices enabled with Squirrels’ Reflector, which enables students on mobile devices to reflect their screens onto the teacher’s computer.

More rollouts occurred in 2016, in- Squirrels partners, from left, Cory Shoaf, Sidney Keith, David Stanfill, Andrew Gould and Matthew Becker. Not cluding AirParrot Remote, an iOS app pictured is John Cody Baker. (Shane Wynn for Crain’s) that allows users to wirelessly mirror “This takes any technical barriers That number grew to 31% in 2016, and rels a foothold in this arena. and stream the AirParrot 2 software. It “We have been building relationalso unveiled Ditto, a cloud-based of varying devices away from the it is projected to grow an additional 25% in 2017. He declined to state the ships with educators for years now. screen-mirroring application that al- teacher,” Keith said.

Those relationships and our previous company’s overall revenue totals. lows users to create rooms into which This move to a new level of busi- understanding of education are why anyone can open their computer, en- Subscription model ness prompted Squirrels to increase we decided to pursue a product like ter a code and automatically begin wirelessly sharing their screen. This is Part of what makes ClassHub a its staff, notably adding chief revenue ClassHub,” Crilley said.

Key to the creation of ClassHub is finding uses in business, hospitality game-changer for Squirrels is that it, officer Matthew Krise in November. and higher education, said Sidney like Ditto, is a subscription-based Krise, who has more than 20 years’ Squirrels’ partnership with a CaliforKeith, one of the firm’s partners. product. The annual fee per enrolled experience in education sales, will be nia-based company called Clever.

“It allows all visitors to easily and device will be about $4 per year. A instrumental in the success of Keith explained that all schools have varying information systems that wirelessly display their work on a one-year subscription to Ditto is ClassHub, Crilley said.

Several other new employees will manage student information, and screen without having to download a $149.99. These models create a recurspecific app,” he said. ring revenue model for the company be coming on board in 2017, includ- Clever merges them into one secure, Squirrels’ biggest initiative to date, — a switch from the $15 one-time ing a director of professional devel- accessible platform. This greatly simthough, is ClassHub, launching this cost of Reflector. opment and continued learning, plifies ClassHub set up.

January is the ideal time to launch month. The app allows teachers to Tom Crilley, the company’s director who is starting in January and will be monitor and manage all registered of communicaitons and public rela- in charge of training teachers in the educational software, which initially non-Android mobile devices in their tions, said this gives Squirrels a more schools that purchase ClassHub. The will be sold only in the U.S., because classroom. Although the ability to sustainable business model, which, company also will add two new sales it gives teachers time to test it before manage disparate devices exists in oth- along with its growing partner integra- positions to meet the greater rela- most schools make technology buyer products on the market, Keith said, tion business through which hardware tionship-building that is needed to ing decisions in the summer, he said. what sets ClassHub apart is that it gives companies around the world pay Squir- sell subscription-based products. teachers a dashboard that lets them rels royalties to use its screen-mirroring This is particularly important in edu- Powering the tech hub lock devices into specific apps, send software in their products, sets the com- cation, Crilley said, because schools direct messages and share one device’s pany up to be a long-term player in edu- are hesitant to invest time and monAs Squirrels looks to expand into ey with companies that don’t have a new products, it’s also looking to bolcontent with the class. Previously, this cation and screen mirroring. type of functioning would have reIn 2015, partner integrations repre- track record of stability and success. ster its home base, including a switch PAGE 18 μ JANUARY 2, 2017 μ CRAIN'S CLEVELAND BUSINESS quired users to download an app. sented 6% of total revenue, Crilley said. The success of Reflector gives Squir- to solar power in the Germantown Sta-

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tion complex in which it resides. The move is a culmination of more than a year of work that included constructing a warehouse-style building to hold the solar panels, which were installed in late November. It may seem counterintuitive to start harnessing solar power in the winter, but Keith said that the thinner atmosphere at this time of year is actually ideal.

The 168 south-facing, high-efficiency 320-watt panels are capable of generating 54 kilowatts of electrical power — enough to fuel 900 laptops running at maximum capacity, or 1,000 at normal usage levels.

Over the course of a year, Squirrels will generate about 78 megawatt hours, more than it needs to fuel the 21,800-square-foot complex, of which it owns about 75%. After meeting the needs of its 36 employees and about 35 more workers in the spaces the company leases to others, it expects to have excess power to sell to American Electric Power, making the panels a profit center. This is in addition to the $10,000 that using solar will save Squirrels on energy annually (a number that Crilley said is expected to grow as energy costs rise).

The panels and the corresponding inverters and grid tie systems were installed at cost of $240,000, including the construction of the building for $84,000. Squirrels will receive a tax credit of about $56,000 for the project.

The firm’s initial plan was to install the panels in an adjacent field, but it was decided that putting them atop a building was more efficient and less vulnerable to tampering, so the company built a warehouse-style building to hold them.

“The space inside the new building will be used to store and assemble our trade show booths, for which we previously had to rent space, so that is an extra bonus,” Crilley said.

Squirrels CEO David Stanfill said the decision to pursue solar power capability arose as the firm started adding more staff and more technology, and realized it was consuming a lot of power each month.

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Cornwell has tools to expand biz, footprint

By DAN SHINGLER dshinger@crain.com @DanShingler

Apparently, you can still grow a manufacturing company in the United States, even if you make something as old as the buggy whip.

You just need to make it well, price it aggressively and have an energized network of dealers — or at least that’s what the management of Wadsworth-based Cornwell Quality Tools says has worked for them.

For proof, they point to a big hole in the ground — by late spring, it will be the site of a new warehouse the company is building to house its expanding line of products.

“Business is going so poorly, we decided to add a 107,000-square-foot warehouse in Wadsworth,” laughed Cornwell president Bob Studenic.

He laughed then, but he said things weren’t so funny just a few years ago.

Cornwell will post sales of about $138 million this year, Studenic said, an increase of more than 100% from 2009.

“We bottomed out at $68 million in 2009, coming off a pretty deep recession for everyone,” he said. “But the contraction in our industry was worse than other sectors, because of the auto dealerships.”

Those dealerships are among Cornwell’s primary customers. In fact, if you’ve never heard of Cornwell, it’s probably because you’re not a professional mechanic.

The company sells direct to mechanics and technicians at auto deal-

Cornwell Quality Tools sells directly to mechanics. (Dan Shingler)

erships, independent repair and body shops, manufacturing facilities, aircraft maintenance facilities, marinas — places where people use the tools to make their living. The tools generally cost more than what you would pay at a Home Depot or a Sears store, but the companies market them as being tougher and better.

Dedicated franchisees show up to job sites with trucks that are portable tool showrooms.

Cornwell is the smallest of four companies that sell this way across the U.S. Snap-on is the biggest of the group, followed by Mac Tools and Matco Tools.

So, when the U.S. auto industry tanked in the recession and dealerships across the U.S. were shut down,

Cornwell and its competitors all lost potential customers, Studenic said.

The customers who remained were often too nervous about their job security to spend money on new tools.

Some who were laid off even sold their used tools on the cheap.

A lot of franchisees also left the business, and Cornwell saw its dealer network shrink from 600 to about 500 during the recession.

It was not a good time to be in the tool-selling business, Studenic said.

Today, however, things have rebounded nicely. U.S. auto sales have bounced back in a big way. The dealerships that survived the recession have largely expanded, and mechanics are feeling good about their jobs.

Plus, other industries are similarly

expanding, hiring more mechanics and spending more money.

Also adding to sales is Cornwell’s Oct. 1 acquisition of Kennedy Manufacturing in the western Ohio Studenic town of Van Wert.

Kennedy makes tool boxes and has made them for Cornwell in the past.

Its annual sales are about $14 million, Studenic said.

That’s part of the company’s effort to expand its product range. Cornwell’s own tools only make up a portion of the company’s product line, Studenic said. The rest are manufactured by other companies in the U.S., though they often are sold with the Cornwell name on them.

Those other products include small parts and accessories, and range up to sophisticated diagnostic equipment that can cost thousands of dollars.

“We’ve aggressively gone after unique product, and we’ve promoted it in a way that the dealer wants to put it on his truck — and of the big four tool makers, we’re probably the most aggressive on pricing,” said Don Russell, Cornwell digital marketing and diagnostics product manager.

Another way the company has been growing sales has been by adding new dealership franchises. Selling franchises is what sells tools, Cornwell says, and the company has added more than 100 new dealers since the recession, to the tune of 620 today.

Becoming a dealer is not for everyone, and you can find plenty of stories of people who have failed as dealers for all of the big four tool companies in the market. But some succeed and say they love it.

“I wish I had done it 20 years ago,” said Tim Oliver, who worked at auto dealerships for about 20 years before becoming a Cornwell dealer two years ago.

Oliver said he spent about $85,000 on his truck and initial inventory — $50,000 of which he borrowed from Cornwell on what he said where fair terms for five years. That’s less than it would have cost him to go into a business as a dealer with some other companies, said Oliver, who considered one other company along with Cornwell before pulling the trigger on his business.

It’s hard but rewarding work, he said, adding he drives between 75 and 100 miles a day visiting equipment repair shops, aircraft facilities and other regular customers.

Now, Studenic and the rest of Cornwell need to keep up the momentum.

He said the new warehouse will help. It replaces an existing 30,000-square-foot facility that is not big enough to hold the company’s inventory. Cornwell currently rents storage space for some inventory.

Next year, it will have all of its inventory for the eastern half of the U.S. under one roof for the first time in many years, Studenic said.

“And it sits right next to a UPS facility, so we’ll be ready to go come spring, he said.

Signet’s ‘really strong brand’ has refined look

By JUDY STRINGER

The reality, Manna said, is that Signet is pretty evenly split between its operations division and real estate projects in terms of deal flow.

clbfreelancer@crain.com

The first day of Anthony Manna’s eldest daughter’s life was the last day he worked for anybody else.

It also could be considered the unofficial birth date of Signet Enterprises, the Akron-based private investment firm Manna officially launched in 1995 after winning the bid to develop a $34 million minor league baseball stadium in downtown Akron — Canal Park, currently home to the Akron RubberDucks — and using that contract as collateral to purchase an automotive parts manufacturer.

“I had talked about being an entrepreneur for years, and now I had this little girl,” Manna said. “My days of talking were over.”

Twenty-some years and “too many” deals to count later, Signet owns 25 companies in North American and Asia, has a $4.5 billion real estate development portfolio and operates a well-heeled capital fund to finance new buildings, business acquisitions and intellectual property spun out of universities. Its holdings range from companies as varied as publishers and water-treatment firms to an integrated wellness arm that operates fitness facilities and a real estate development division that specializes in student housing, medical offices and sophisticated proton cancer centers.

The aggressive entrepreneurial environment has fostered a steady stream of new opportunities, accord-

Finding a voice

From left, Signet CEO Ken Krismanth, chairman Anthony Manna and chief operating officer Mark Corr. (Contributed photo)

ing to Manna, but a hard-to-communicate value proposition.

“There’s not enough hours in the day for me to meet with everybody and tell them what we do,” the chairman said. “Somehow, they have to be able to get online and see it.”

Manna and his team recently unveiled a new website and announced plans to shed the “Enterprises” part of the company’s moniker — now just Signet LLC. Both moves are part of a broader campaign to better define the company and what it does.

Yes, call it a “rebrand,” although marketing director Joel Maas might take some exception.

“People also use the word ‘rebranding’ falsely in my mind,” Maas said from the company’s corporate headquarters on High Street in downtown Akron. “We are not

changing the brand. We’re just changing how we communicate it.

We’ve always had a really strong brand. Especially in real estate development and investing, you have to do what you say you are going to do. You have to have integrity. Otherwise, you are not going to be in businesses for long.”

The new Signet site highlights the company’s three main platform capabilities: operational portfolio company investment, where it manages acquisitions and venture investments; real estate; and capital finance. Before, Maas said, an “inequitable portion” of Signet’s site was dedicated to the real estate side of the business, leaving visitors with the impression that “we are a real estate development firm who dabbles in acquiring other companies.”

The rebranding — a new logo also will be incorporated across the Signet family — was the next logical step for the Rubber City company that has emerged in recent years as one of the region’s largest private equity firms.

Signet had $350 million in capital under management, according to Crain’s 2016 Book of Lists. The company, however, does not publicly talk numbers, which Manna said are a bit hard to pin down anyway with such a varied deal roster, including majority interests, joint ventures and public-private partnerships.

Two years ago, the company realigned management. That was the first step, said Signet CEO Ken Krismanth. Krismanth, the former president, moved from Signet’s Jacksonville, Fla., office to Akron. Mark Corr, chief operating officer, retained that position and became president. The two began to put in place the corporate backbone to more efficiently identify, vet and support Signet’s serial entrepreneur tendencies.

Still, when it came to meeting new prospective partners and investors, Krismanth said, “We got a lot of ‘You guys do a lot of things, but we don’t really understand what you do.’ … We had structured our management and aligned ourselves so that we could provide the best services and the best solutions in each one of the areas. We

needed to find a way to better communicate that.”

Signet, Corr admits, is partly to blame for lack of a well-defined marketplace identity. For one thing, the company has historically taken “a passive role” when partnering with big institutions on real estate development projects or commercializing a new technology.

“There are many buildings out there that we developed, own and operate that do not have our name on it,” he said.

Among them are the new 72,000-square-foot MetroHealth Brecksville Health & Surgery Center; the Center for Integrated Wellness in Bloomington, Ill.; and Infinity Hall, an entrepreneurial-based academic residential community at the University of Florida. Signet also developed and operates the NEOMED Education and Wellness Center in Rootstown.

Even within Signet’s portfolio companies, local management runs the day-to-day operations, Corr said, and their employees, customers and partners rarely see Signet brass, though the equity investor prides itself on taking an active role in guiding and nurturing businesses under the Signet umbrella.

“We’ve been fairly discrete with our marketing,” he said. “It’s been more relationship, one-on-one type of marketing, which has served us well for a long time. We’ve just gotten now to a point where with the size of the deal flow, we needed to be a little more explicit in terms of what we offer, where our competencies lie, how we can help.”

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