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Vehicle sales pickup boon for suppliers Local manufacturers’ orders accelerate as Big 3 automakers regain market share By DAN SHINGLER dshingler@crain.com
A million here, a million there — pretty soon you’re talking about a lot of automobiles, and a lot of work for local manufacturers that supply the U.S. auto industry. And those
suppliers expect carmakers to churn out a couple million more vehicles this year than they did in 2010, with the anticipated boost in business already in gear. “We can’t keep up with our Ford orders, cars and trucks alike,” said Jerry Zeitler, president of Die-Matic
Corp. in Cleveland, which stamps out precision metal parts for automakers and their suppliers. Ford not only ends up with some of Mr. Zeitler’s parts in its cars and trucks, but it also has been the most successful U.S. automaker in terms of increasing its sales and production. That performance, in turn, is creating a ripple effect that benefits local suppliers such as Die-Matic. In 2010, Ford sold 1.935 million cars and trucks in the United States,
up 19% from 1.62 million in 2009. Its ever-popular F-series pickup trucks led the way, with a sales increase of 27.7%. All told, the company sold 696,918 cars, 723,304 trucks, and 515,240 SUVs and crossovers in 2010. Those sales help suppliers in Northeast Ohio such as Die-Matic and provide job security for Ford’s local work force. The latter includes more than 600 workers at Ford’s Brook Park engine plant, where a
second shift was added last month to make more of the plant’s EcoBoost engines.
A popular pickup But many local suppliers, including Mr. Zeitler, don’t just sell to Ford, and other automakers are experiencing a pickup in sales, too. U.S. auto sales went into the ditch in 2009, when they hit a 27year low of 10.4 million units. The See AUTO Page 6
Banks mobilizing business loan troops as economy stirs By MICHELLE PARK mpark@crain.com
DROP THE DESKTOP More organizations virtualize computer stations, enabling users to access software remotely By CHUCK SODER csoder@crain.com
M 02
ost of the employees who will populate the new University Hospitals Ahuja Medical Center will work on computers shaped like tissue boxes. They won’t be alone: A growing
number of companies and organizations in Northeast Ohio are working to “virtualize” their desktops, and even more are thinking about it. For University Hospitals, the Ahuja Medical Center is just the beginning. The hospital system plans to replace most of its personal computers with those “tissue boxes” — See DESKTOP Page 10
Westlake accountant Brian Mackert recalls a local banker telling him in 2009 about a directive the banker had received: “Go out and play golf with your existing customers and stay close to them. Don’t go out looking for new loans.” That’s not the line a number of local banks are delivering today: Several have hired people whose express “The numbers are roles are to grow loans, pretty stunning. I and some have established feel like we’re just new avenues for increasing their loan volumes to getting started.” business. – Daniel P. Walsh Jr., Lorain National Bank president, Huntington recently hired a handful of National Bank’s Greater business and commercial Cleveland region bankers, and Huntington National Bank in 2010 more than doubled its business banking staff in Northeast Ohio. It added 37 for a total of 65, said Ken Ferian, Huntington senior vice president and business banking area manager in Northeast Ohio. See BANKS Page 17
MAKE A DIFFERENCE In our May 16 issue, Crain’s will present Difference Makers, a special section in which we’ll profile 10 individuals who have made significant, long-term contributions to the betterment of Northeast Ohio. We’re asking readers to help us identify potential profilees. As part of that process, we’ve provided an online nomination form at www.CrainsCleveland.com/nominate. Nominations also can be submitted via e-mail to editor Mark Dodosh at mdodosh@crain.com; please include “Difference Makers nomination” in the subject line. In addition, they can be sent via regular mail to Mr. Dodosh at 700 W. St. Clair Ave., suite 310, Cleveland 44113. Nominations should be no longer than a single page. The deadline for nominations is the close of business on Monday, Jan. 24.
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SMALL BUSINESS Northeast Ohio’s toy companies share their latest products, inspiration ■ Page 13 PLUS: RESOLUTIONS ■ GRAND OPENINGS ■ TAX TIPS ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 2
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CORRECTION Daniel Hurwitz is president and CEO of Developers Diversified Realty Corp. Mr. Hurwitz’s first name was incorrect in the Jan. 3 “Year in Review” section.
REGULAR FEATURES Best of the Blogs .........19 Classified ....................18 Editorial ........................8 Going Places ...............12 Letter............................8 List: NE Ohio’s top SBA lenders .....................16 Reporters’ Notebook....19 The Week ....................19 What’s New..................19
COMING NEXT WEEK A big deal There was no shortage of news stories in Northeast Ohio in 2010, from the election of Cuyahoga County’s first executive to a top banking leader who was promoted to CEO, becoming the first woman in that position at a top 20 U.S. bank. Next week we explore the region’s top newsmakers of 2010.
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KEEPING BUSY America’s manufacturing sector remained more productive than any other industrialized country during recession-plagued 2009, according to new data compiled by the U.S. Bureau of Labor Statistics. The United States posted a 7.7% gain in manufacturing output per hour in 2009 from 2008, far ahead of the next-best performer, Taiwan, at 4.8%. Japan had the worst productivity, with a decline of 11.4%. Here’s how some countries fared in 2009:
% change in manufacturing output, 2008-09 Country
% output change per hour worked
% change in output
% change in hours worked
U.S.
7.7
-5.9
-12.6
Taiwan
4.8
-4.4
-8.7
Australia
4.4
-2.3
-6.5
South Korea
1.8
-1.6
-3.4
France
-7.2
-11.2
-4.3
Germany
-9.3
-18.2
-9.8
Japan
-11.4
-22.0
-11.9
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Deadline looms for Revol to refinance debt
INSIGHT
Bondholders may take control of wireless provider after merger deal fails to proceed By CHUCK SODER csoder@crain.com
ZUMA PRESS
Cleveland State senior and leading Horizon League player of the year candidate Norris Cole reacts during the Vikings’ 69-62 win over South Florida at the Wolstein Center on Dec. 22. The game drew 4,711 fans, Cleveland State’s biggest crowd of the season and about 2,300 over the team’s season average.
SOMETHING TO SHOUT ABOUT Cleveland State’s men’s basketball team is hot, and school officials hope new initiatives lure more fans to campus By JOEL HAMMOND jmhammond@crain.com
HORIZON LEAGUE ATTENDANCE
C
leveland State’s men’s basketball team has the look of a March Madness darling, but so far its winning ways haven’t translated into more fans in the stands at most Vikings’ home games — though school officials are working on keeping a recent uptick going. The Vikings, 15-1 overall and 4-0 in Horizon League play entering last Friday night’s showdown at perennial powerhouse Butler, rank fifth in the league in home attendance, at 2,419 fans per game — essentially unchanged from previous years. Putting butts in the seats is a struggle that coach Gary Waters — who turned around Kent State’s program in the late 1990s and set the stage for the Flashes’ Elite Eight run in 2002 — has attributed to Cleveland being a pro town. See CSU Page 16
Cleveland State ranks fifth in the 10-team Horizon League in average home attendance through the Vikings’ first 10 games. Listed below is each team’s home average through games as of last Wednesday night, with the number of home games they’ve played in parentheses. 1. Butler (6)....................................7,033 2. Wright State (8) ..........................3,917 3. Valparaiso (5) ............................3,601 4. Wisconsin-Milwaukee (7)..............3,530 5. Cleveland State (10) ............2,419 6. Loyola (9) ..................................2,377 7. Illinois-Chicago (5) ......................2,374 8. Wisconsin-Green Bay (6)..............2,361 9. Detroit-Mercy (8) ........................2,089 10. Youngstown State (7) ..............1,743 SOURCES: SCHOOL WEB SITES
Revol Wireless will have new owners if it doesn’t refinance $150 million in debt before April 30. After missing a Dec. 15 deadline to pay off the debt, the Independence-based provider of wireless phone service on Dec. 30 struck a deal with its bondholders that gives the company until April 30 to complete a refinancing. If Revol fails, the bondholders will take control of the company, Revol chief operating officer Scott Bergs said. Such a transfer would allow Revol to continue operating without filing for Chapter 11 bankruptcy protection, though Mr. Bergs noted that bankruptcy would not be the company’s only option in that situation. “We’re pleased that the refinancing has not become a barrier … to oper-
ating,” Mr. Bergs said. Revol, which is incorporated as Cleveland Unlimited Inc., long has been planning to refinance the debt, Mr. Bergs said. Those plans went awry, however, because of uncertainty facing an affiliated company, Honolulu-based Coral Wireless, which does business as Mobi PCS. To make the refinancing attractive to lenders, Revol had planned to merge with Mobi PCS, which provides wireless service in Hawaii. The companies share a CEO, Bill Jarvis, and both have received investments from M/C Venture Partners in Boston and Columbia Capital of Alexandria, Va. However, a regulatory issue in Hawaii could do serious harm to Mobi PCS’s income stream, according to a letter Mr. Jarvis sent to the Hawaii Public Utilities Commission. See REVOL Page 9
THE WEEK IN QUOTES “We’ll grow by 42% or 43% this year. It’s just been a phenomenal year — our major customer sells to Ford, and Ford is just doing fantastic.”
“Banks are flush with deposits, and they’re looking for places to invest those deposits.” — Fred Cummings, president of Elizabeth Park Capital Management. Page One
— Mark Swanson, head of sales for Preform Sealants of Twinsburg. Page One
“Most of our products come from overseas, and everybody liked them, but we felt … people wanted things made locally.”
“My biggest regret is that there aren’t more hours in the day as we have so many fabulous opportunities to grow our business.”
— Bret Faber, Geared for Imagination, Fairlawn. Page 13
— Toby Maloney, vice president of business development, mental_floss. Page 13
Fifth Third names veteran Cleveland banking exec as local CEO Kelsheimer joined company six months ago, served in Cincinnati By MICHELLE PARK mpark@crain.com
Less than six months after joining Fifth Third Bank, Jerry Kelsheimer has been promoted to affiliate president and CEO of Northeast Ohio, a role similar to the one he once held at competitor Huntington National Bank.
Starting today, Jan. 10, Mr. Kelsheimer is in charge of Fifth Third’s Cleveland, Canton and Akron markets, overseeing 850 employees and 84 branches. The promotion means a business relocation for Mr. Kelsheimer, 44, from the bank’s Cincinnati headquarters to its Cleveland office. A 22-year banking veteran, Mr.
Todd F. Clossin, who also works out of Cleveland and is regional presiKelsheimer fills a position dent over eight Fifth Third that’s similar to, but carries markets in Ohio, Florida, more duties than, the post Pennsylvania and North previously held by Tom Carolina, served simultaPartridge; the latter was neously as Northeast Ohio Fifth Third’s market pres- Kelsheimer CEO for six years, until ident of Northeast Ohio now. before leaving in July after a year on “It really didn’t fit any longer for the job to become affiliate president me to try to carry a (regional) CEO and CEO of Fifth Third in Kentucky. job,” Mr. Clossin said, noting that
he spends five or six business days a month in Cleveland and travels the rest. “Now with Jerry on board, we think we’ve got the right person, the right place, at the right time to really capitalize on growth expectations,” Mr. Clossin said. “Jerry’s well known to this part of the state. He has a lot of experience here.” Mr. Kelsheimer was president of the Greater Cleveland region for See CEO Page 9
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Philips scanners log better image, release less radiation By CHUCK SODER csoder@crain.com
High-def doesn’t need to mean high dose. Philips Healthcare has released three CT scanners that include its iDose technology, which uses software to improve image quality while reducing patients’ exposure to radiation. Getting a better image in the past often meant exposing the patient to a higher dose of radiation, said Dominic Smith, vice president of global marketing and clinical science for Philips’ computed tomography and nuclear medicine businesses, which are based in Highland Heights. To get around the problem, various global makers of CT scanners have developed scanners capable of “iterative reconstruction” — a method that uses software to remove so-called “noise” from images created
using lower doses of radiation. The software requires heavy processing power, so Philips equipped its new scanners with Intel chipsets more powerful than 50 PlayStation 3 gaming consoles, Mr. Smith said. An added benefit of all that horsepower is that the scanners produce images faster. Mr. Smith said a scanner with iDose can produce an image of a full body scan in 93 seconds. The process previously took 15 to 20 minutes. Philips has big plans for iDose: Whereas the company usually incorporates new technologies into its most expensive scanners first, iDose has been included in the Ingenuity CT, a mass market product. Philips’ goal is to incorporate iDose into its entire scanner lineup, Mr. Smith said. He would not give prices for the scanners but said they will be more expensive than they would have been without the tech-
nology, which Philips spent “tens of millions of dollars” developing in Highland Heights and elsewhere. Scanners with iDose will include a dial that allows physicians to choose one of three settings: One exposes patients to 80% less radiation than previous Philips scanners without harming image quality; another reduces radiation by 50% while also boosting spatial resolution by 35%; the third increases resolution by 68% without lowering the dose.
Philips isn’t alone The other four major CT scanner makers — General Electric, Siemens, Hitachi and Toshiba — have developed similar technologies. For instance, Hitachi Medical Systems America Inc., based in Twinsburg, is seeking federal approval to begin selling CT scanners equipped with an iterative reconstruction technology called Intelli IP, said
Mark Silverman, manager of CT marketing. The company, however, does little research and development at its Twinsburg office, which employs a few hundred people. Although scanner makers have been developing radiation reduction technology for decades, they’ve picked up the pace lately, Mr. Silverman said. “There’s been kind of an added emphasis for the last three or four years,” he said. Radiation from CT scans has been a growing public concern. For instance, one 2007 study published
Next UH strategic plan will focus more on operations By TIMOTHY MAGAW tmagaw@crain.com
Where There is Adversity, There is Opportunity. “Save 10 times the cost of the class in reduction of scrap, downtime, returns, and rework.” – Dan Sommers, Six Sigma Master Black Belt.
The
Six Sigma
Six Sigma and Lean Advantage
To learn more about Six Sigma and Lean certification training, join us for a free breakfast presentation from 7:30-9 a.m., Thursday, January 27 at Lorain County Community College’s Entrepreneurship Innovation Center.
Green and Black Belt training programs begin in February at LCCC.
For more information or to register for the breakfast or courses, call 1-800-995-5222 (extension 7003), or visit www.lorainccc.edu/sixsigma
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in the New England Journal of Medicine stated that up to 2% of all cancers in the United States might be caused by radiation from CT scans. The American College of Radiology disputes those findings, as does Dr. Robert “Chip” Gilkeson, director of cardiothoracic imaging and vice chairman of clinical research at University Hospitals Case Medical Center. Regardless, Dr. Gilkeson sees the importance of reducing the amount of radiation to which patients undergoing CT scans are exposed. ■
Now that University Hospitals’ $1.2 billion renovation and expansion initiative known as Vision 2010 is nearly complete, CEO Thomas Zenty says it’s time to figure out how best to leverage the health system’s vast new resources and how to capitalize on its existing ones. Starting this year, University Hospitals will embark on a three-year strategic plan. Mr. Zenty said all the details or final price tag aren’t yet in place, but he noted the three-year plan will be operational in focus rather than another major capital investment program like Vision 2010. The latter plan resulted in University Hospitals’ new $298 million Ahuja Medical Center in Beachwood and $260 million Seidman Cancer Center on Euclid Avenue. Strategic plans typically are designed for five-year spans, Mr. Zenty said, but because of all the ambiguity surrounding health care reform, particularly with the seating of the new Congress, it was logical to implement a plan more modest in scope. For example, the new Republican-controlled House of Representatives is scheduled this Wednesday, Jan. 12, to vote to repeal the health care legislation that was passed last spring, even though it’s unlikely the Democrat-led Senate would follow suit.
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“In the face of health care reform and the uncertainty going on with it, it’ll be prudent for us to take care of the patients to the best of our ability,” Mr. Zenty said. The motivation behind the strategic plan, Mr. Zenty said, is to create a fully integrated system of care and improve quality throughout the hospital network. A large component of that initiative will be the further expansion of University Hospitals’ electronic medical records. Ahuja Medical Center’s electronic medical records system is scheduled to go online early this year, and the UH system’s 18 outpatient facilities are scheduled to go online over the next 18 months — an effort that’s slated to cost an estimated $150 million. Going forward, Mr. Zenty said the system will figure out how best to integrate electronic medical records into University Hospitals’ vast physician network, which he noted would be “no small undertaking.” University Hospitals officials over the next three years also will chip away at reaching the goal of the health system’s $1 billion fundraising campaign, which went public last November but quietly has been building since 2003. So far, University Hospitals has raised $694 million from about 50,000 contributors, according to Sherri Bishop, the organization’s chief development officer. A $42 million gift from Jane and Lee Seidman — the largest in the University Hospitals’ nearly 145-year history — kicked off the public phase of the campaign. The hope, Mr. Zenty said, is to raise the rest of the $1 billion total over the next three years or “as soon as possible.” To raise those remaining dollars, Ms. Bishop said the system’s senior leadership team, including Mr. Zenty, has been meeting with donors individually at roundtables to share the success of the Vision 2010 project. “When they give, we help them understand the impact of their giving,” Ms. Bishop said. ■
Volume 32, Number 2 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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Developer shells out $9M for prime real estate Deal for properties near temporary casino suggests Frangos aims to capitalize on location By STAN BULLARD sbullard@crain.com
Seizing a downtown Cleveland real estate opportunity that the advent of casino gambling promises to enrich, developer and parking lot proprietor Louis Frangos is the new owner of most of a key block near Quicken Loans Arena and Progressive Field. It’s the first appearance of big-league bucks — $9 million — trying to stake out ground near the potential temporary casino at the Higbee Building and the planned casino to be built on Huron Road south of Tower City Center. In a series of four transactions — the last as recent as last Monday, Jan. 3, and the oldest dating to November — a partnership linked to Mr. Frangos, USA Parking Systems Prospect LLC, shelled out a total of $9 million for most of the block on the southeast corner of Ontario Street and Prospect Avenue. The properties include two buildings: the former home of Myers
College, 112 Prospect, and the former Daughters of St. Paul Bookstore at 2105 Ontario, now the law offices of Stafford & Stafford. The purchases also include parking lots at Ontario and High Street near a city-owned parking garage next to the sports complex. Through his administrative assistant, Mr. Frangos, president of USA Parking Co., declined comment. Although Mr. Frangos transformed a boarded-up building at 1104 Prospect Ave. to the Prospect Place Apartments, he mainly has bought buildings and razed them to serve as surface parking lots or has purchased empty sites for use as parking. Previously, most of his acquisitions were in the eastern shadow of Progressive Field and south of the downtown Theater District. Rock Gaming, the company created by Cleveland Cavaliers owner Dan Gilbert to develop casinos in Cleveland and Cincinnati, may open a temporary casino later this year in the Higbee Building, diago-
nally across from the sites Mr. Frangos’ partnership snatched up, and it hopes to build a permanent casino by 2013. The Ontario-Prospect area would need more parking if the casino proves the magnet gaming advocates hope it will be.
And then there was one … Only one property on the block — the Stanley Block Building at 2121 Ontario, which dates to 1874 — still isn’t owned by Mr. Frangos. Macron Investment Co., a partnership controlled by downtown property investor George Maloof, owns the Stanley Block. However, a partnership controlled by the George and Nora Maloof Family Limited Partnership sold one of the adjoining High Street parking lots to USA Parking for $1.5 million last Monday, Jan. 3. Another smaller parcel used for parking was sold to USA Parking by Halkal Investments LLC, a Lakewood investment firm, for $875,000 on Jan. 3. The parking lots can hold about 60 cars, according to aerial photos of the site. The city of Cleveland has condemned the boarded-up Stanley Block Building for violating fire safety codes and a lack of safe stairs. Tom Yablonsky, executive vice president
of Downtown Cleveland Alliance and executive director of the Historic Gateway Neighborhood, said the neighborhood group is working with the Maloofs to keep the building from being condemned because it still can be restored to new use. Mr. Yablonsky said Historic Gateway’s master plan calls for buildings on the corner to be maintained and rehabilitated similar to the way MRN Ltd. has redeveloped the nearby East 4th Street Neighborhood as restaurants, entertainment venues and lofts. The former Myers College building, also known as the Columbia Building, was owned by Mr. Maloof until Myers predecessor Dyke College acquired it. USA Parking paid $1 million to Columbia Prospect LLC, the corporation that held the 1909vintage structure, on Nov. 15, according to land records.
Stafford brothers do well A clear winner among the former property owners are brothers Joseph and Vincent Stafford. The two acquired the former St. Paul Catholic bookstore property in 2005 for $1 million. Land records show USA Parking paid the Staffords $5.9 million on Dec. 17. In a phone interview, Vincent Stafford called the sale a “win-win” for the brothers, who are wellknown as tough divorce lawyers, and the community. Vincent Stafford said he and his brother are looking for another property to buy in downtown Cleveland to help kindle additional development. He said the firm needs at least 20,000 square feet of office space for its 30-person staff. “Certain things fell into line for us,” he said. ■
Auto: Some suppliers proceed with caution continued from PAGE 1
industry came back in 2010, as sales increased by about 11% to 11.6 million units, but more improvement should come this year as the industry slowly continues to rebuild its stature. Ford is estimating U.S. industry vehicle sales this year will be in the range of 12.5 million to 13 million, which is music to the ears of auto suppliers. “We’ll grow by 42% or 43% this year. It’s just been a phenomenal year — our major customer sells to Ford, and Ford is just doing fantastic,” said Mark Swanson, head of sales for Twinsburg-based Preform Sealants, a small supplier of cork, paper and foam gaskets used in the auto industry. Just about every car company selling in the United States has seen its sales increase. Mr. Swanson said about a quarter of his products ultimately end up in Ford vehicles, but he’s also selling more to suppliers of Chrysler and General Motors, where he’s also seeing business pick up. Steve Campbell was named president of Cleveland auto supplier Prestolite Performance just last week, but he’s been in automotive for 30 years. He said a broad range of auto parts makers saw their sales increase in 2010 for the first time in many years, including those like Prestolite that make performance and replacement parts for the auto aftermarket. People not buying new cars must buy parts to maintain their older vehicles, he said. “In 2010, manufacturers and sellers of brake pads, fluids, batteries and performance parts had their best year in at least a decade,” Mr. Campbell said.
Once burned … Among the automakers themselves, only recall-plagued Toyota saw its sales decline in 2010, by 0.4%, to 1.76 million units. The industry scenario has played out well for Northeast Ohio, which has a larger stake in the Big 3 domestic automakers than it does in Toyota or other foreign transplants that do not buy as many of their parts in
this region. It’s a phenomenon that has worked against the region in the past, but appears to be working in its favor now that domestic automakers are on the offensive. Not that there isn’t some lingering skepticism and worry among auto suppliers. Auto sales picked up for the first time since 2005 last year, and it appears they will strengthen further in 2011 — but some wonder whether the trend can be sustained. That concern could be one reason many manufacturers, including auto suppliers, have not been aggressive in hiring more full-time workers in spite of a rebound in their business. Ever cautious, Die-Matic’s Mr. Zeitler says he’d love to see a strong pickup in sales this year, but he isn’t convinced it will happen just yet — at least not to the point some optimists are predicting. “I suspect the auto industry will be up slightly in 2011,” he said, though he notes, “Again, I’m baffled by the numbers.” Mr. Zeitler still worries that sales will be weighed down by high unemployment, foreclosures and tight credit. And he said he still remembers all too well the situation in December 2008, when he shut down as usual for the December holidays, only to have a rude awakening when he started up again in January amid an economy that rapidly had tanked.
Holding the jobs line So far, Mr. Zeitler and other suppliers are seeing continued improvement in the auto industry, as well as in the economy generally. They hope those trends hold up throughout the year, especially in the automotive sector, where there have been consistent estimates for U.S. vehicle sales of about 13 million this year. “That number sounds about right to us,” said Kevin Cleary, president of Cleveland-based Soundwich, a maker of heat- and sound-shielding materials used in automobiles. But, like many suppliers, Mr. Cleary said he has learned to do more with less and to react more quickly to market changes in the last two years. ■
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OPINION
Best policy
T
he late, great vaudeville comedian and movie star W.C. Fields is credited with coining the phrase, “You can’t cheat an honest man.” Others will cheat no matter what — but that shouldn’t stop new Cuyahoga County Executive Ed FitzGerald from setting ethical standards for county employees and for the vendors that do business with his government. The federal government’s ongoing public corruption investigation in Cuyahoga County shows the need for someone to draw the line between what is acceptable conduct in county government business dealings and what is not. Mr. FitzGerald is that someone, and within an hour of his first day on the job last week, he issued an executive order to make formal his commitment to ethics reform in the county. As Crain’s government reporter Jay Miller wrote last Monday, the new ethics policy requires all county employees to receive ethics training and to agree to and sign an ethics policy statement. The policy forbids county employees from soliciting or accepting anything of value — for themselves or for family members — that would influence their official duties. The new policy also says county employees have a duty to report any wrongdoing, fraud or unethical behavior they observe among county employees and vendors doing business with the county. This last admonishment may be the most important, because there always will be people who won’t play by the rules but will try to work the system for their own gain. Offenders won’t blow the whistle on themselves; however, other employees and/or vendors often are aware of the back scratching and palm greasing that occurs. Still, as the unfolding corruption investigation has revealed, people routinely don’t speak up even though they may know of or strongly suspect unethical behavior in their midst. This “see no evil, hear no evil, speak no evil” mentality must be abandoned if the self-policing part of Mr. FitzGerald’s policy is to work. Business also must adhere to a higher standard, a point Mr. FitzGerald reinforces with his plans for a vendor code of conduct. “A vendor will have an affirmative duty to report if they are asked for anything of value from a county employee,” Mr. FitzGerald stated last week. Steve Dettelbach and Toby Cosgrove recognize some business people aren’t saints when it comes to the buyer-vendor relationship. That’s why Mr. Dettelbach, the U.S. Attorney in Cleveland, and Dr. Cosgrove, CEO of the Cleveland Clinic, have taken active roles in soliciting Northeast Ohio businesses to sign a pledge to reject corruption and unethical conduct in their business affairs. Just last month, the Clinic played host to the first training seminar of the Northeast Ohio Business Ethics Coalition. As Dr. Cosgrove said at the time, he believed it was important for the Clinic, as the area’s largest employer, to take a lead role in cleaning up the region’s tarnished image. “Good ethics is good business,” he said. It’s also good for the Northeast Ohio economy, which is why we implore business people to listen to their higher angels and do what’s right, not what’s self-serving.
FROM THE PUBLISHER
Ted’s sorry exit, and John’s bad start
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administration’s bad moves were in ed Strickland and John Kasich large part why his re-election effort fared are veteran politicians. Both so poorly in Cuyahoga County, and served in the U.S. Congress probably why he lost the election. before they were elected as Second, it gave the newspaper a reason, Ohio’s chief executive. Both seem to be in a subsequent editorial, to enumerate smart, energetic and intellectually engaged all the ways the Strickland administrain their chosen field of public service. tion messed things up in Northeast Why, oh why, then, do they do and/or Ohio, the state’s largest consay such dumb things? centration of urban centers. Take Mr. Strickland, the one- BRIAN Then there’s Mr. Kasich, the term Democrat forced to leave TUCKER governor-elect who rode a tide the governor’s office by Mr. of voter disgust with the Kasich, a Republican. In his 60s, Democrats’ nationally forceMr. Strickland seems to have fed reforms to a statewide plenty of enthusiasm left for sweep by the GOP. One of the public service, and it’s been first things he did was attempt speculated that he might even to keep reporters out of his offirun for governor again. cial swearing-in ceremony, as So then explain to me why he well as most inaugural events. takes the opportunity in a lengthy “I think there’s a lot of people that are recent interview with The Plain Dealer to going to come to my event (the swearingcomplain about its coverage and how it in, originally scheduled for his private tainted the public’s view of the man from residence) that don’t want you sticking a Appalachia and his administration’s notebook and pencil in their face,” he work on behalf of Ohio’s cities. told reporters. I heard a radio interview That was a bad move for a couple reain which he defended restricting access to sons. First, it’s a valid criticism that his
inaugural events because he didn’t want to see reporting about “how some man or woman maybe drinking a little too much or is a bad dancer.” I expect more from those who would lead our state. I want someone with a thick skin who can absorb criticism. I want someone who has a sensitivity to the need for openness in government and a respect for the news media’s role as the eyes and ears of the voters. Remember when Browns fans used to long for a quarterback with Vinny Testaverde’s body and Bernie Kosar’s brain? I’d like a governor with Dick Celeste’s coolness and Mike White’s drive. Gov. Celeste had a vision for Ohio and didn’t let his critics faze him. Mayor White let every criticism bother him, but had immense skills as an orator and leader. We can only hope that Ted Strickland uses his “off time” to do an honest assessment of his administration’s record, and that our new governor learns to temper his inclinations in order to rally the support he will sorely need to survive Ohio’s looming financial firestorm. ■
LETTER
EPA missteps lead to rise in sewer bills ■ I call upon the new U.S. Congress, the Ohio Legislature and the new Cuyahoga County Executive and County Council to fight in concert against the power of the Environmental Protection Agency, both federal and Ohio. Here in Ohio, the larger cities and sewer districts are being pushed to make billion-dollar settlements with the EPA for the handling of sewage. The EPA has been suing cities and regional sewer districts and forcing these huge settlements. The Clean Water Act of 1977 is the legal basis for these actions, but for the last 33 years, our citizens have dutifully paid their water and sewer bills while those who manage these systems and the politicians to whom they answer sat on their hands and did absolutely nothing about changing the law, or complying with it. Their endemic inaction has left the citizens unfortunate enough to live
in these sewer districts holding a huge bag they may not be able to even lift. Citizens are going to see a doubling or tripling of their sewer bills over the next few years because of this. In the current economic climate, this will cause the financial ruin of many people, including many retirees on fixed incomes. Yet no one says a thing about the fact that the politicians in our area have frittered away billions of public dollars since 1977, when the Clean Water Act was passed, rather than dealing with the problem responsibly and proactively. Something must be done, and it must be soon, or people are going to really get hurt by the monolithic, omnipotent Ohio and U.S. EPAs. Our elected leaders can do several things to remedy this awful situation: 1. Notify the U.S. EPA that our sewer district will not be entering into any con-
sent decrees with either EPA in the foreseeable future. 2. File lawsuits against the EPAs for violation of constitutional limitations of authority. 3. Sue the Board of Cuyahoga County Commissioners for dereliction of duty for failing to direct the Northeast Ohio Regional Sewer District to make infrastructure improvements to comply with the Clean Water Act of 1977. 4. Introduce legislation prohibiting the EPAs from forcing sewer districts into these settlements. There may be other strategies available to our elected leaders to fight against this unconscionable usurpation of our wealth and power. I would ask concerned citizens to contact their elected representative at all levels and demand action immediately. Henry T. Holtkamp Richfield
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CEO: Early time with bank helped new exec prepare
THE BIG ISSUE Do you think pay and benefits packages of public employees are too generous?
continued from PAGE 3
DARYL JOHNSON
BRENT TEAGUE
GREGG CRESPY
MILO HEGER
Euclid
Brunswick
Westlake
Westlake
No. You work hard throughout the year. You work hard for your benefits. They’re entitled to them like anyone else.
My wife’s a teacher. If you look at pay packages, they’re not. But if you look at benefits ... they don’t have to take the risk of managing their retirement money like those of us with 401(k)s.
No. I’m a federal employee myself. I believe anyone in the public sector earns less than they would in the private sector for the same job.
No. Government workers are not paid too much. Google the Office of Personnel Management salary schedules and see what they make — and the salary is far less than in the private sector.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
Revol: Analyst downgrades rating continued from PAGE 3
Revol began negotiations with its bondholders when it appeared the regulatory issue wouldn’t be decided before the $150 million came due. The company, founded in 2005, took on the debt roughly five years ago, Mr. Bergs said. “It’s (like) a classic home loan with a balloon, and we fully anticipated refinancing before the balloon came about,” Mr. Bergs said. The company is exploring the possibility of trying to refinance its debt without merging with Mobi PCS, but in the meantime it’s waiting for the Hawaii Public Utilities Commission to make a decision that could impact Revol’s sister company. Wireless provider T-Mobile has applied for the right to receive federal money that Hawaii gives to phone companies that serve rural areas. The Federal Communications Commission in 2008 put a temporary cap on the size of each state’s allotment, so any money T-Mobile receives likely would mean less revenue for Mobi PCS and two other companies approved to serve rural areas in Hawaii. In a phone conversation with Crain’s Cleveland Business, Hawaii PUC chairman Carlito Caliboso
gave no indication as to when the commission would decide on TMobile’s application. “There’s no expressed timeline, but we’re working on it,” he said.
Moody’s reacts Moody’s Investors Service downgraded Revol’s credit ratings after it missed the Dec. 15 payment. For instance, its corporate family rating fell two notches to Ca — which is assigned to debt in or near default — from Caa2. The new rating reflects Moody’s expectation that secured lenders would receive “at least an average recovery (50%) in a bankruptcy or restructuring scenario,” according to a report the ratings firm released Dec. 23. The ratings reduction also reflects Revol’s “weak operating performance, including subscriber losses and high churn,” the report stated. The company’s annual revenue is about $135 million, according to the document. Mr. Bergs said Revol’s performance was not why the company was unable to refinance its debt. He would not comment on the Moody’s report, but he said he is happy with Revol’s performance. He noted that Revol in August
The Name To Trust
broadened its coverage to include almost all metropolitan areas within the United States, and that Revol’s services now are sold at more than 600 retailers across the nation, as opposed to just 390 last summer. Revol in October 2009 announced plans to lay off 17 people, and since then the company has cut the size of its staff to about 350 by attrition. The company has employed roughly the same number of people since at least August, Mr. Bergs said. During an interview with Crain’s at that time, Mr. Bergs referred to subscriber levels as “stable.” “We’re pretty pleased with the trajectory we’re on,” he said last week. Mr. Bergs would not say last week whether the lower ratings from Moody’s would hurt Revol’s efforts to refinance its debt. ■
EMBA
Huntington National Bank until July. Fifth Third officials declined comment on whether Mr. Kelsheimer had signed a non-compete agreement with Huntington. At Fifth Third, Mr. Clossin noted, local staffers and business lines report to their affiliate leaders, not headquarters or elsewhere. That empowerment of the local team was one reason Mr. Kelsheimer was attracted to the position.
Strategic move Fifth Third first hired Mr. Kelsheimer in late August to direct strategic planning in five regions. The way Mr. Kelsheimer “assimilated” into the role and the insight he provided early in his time as managing director for strategic planning convinced Mr. Clossin he was the right man to lead Northeast Ohio, Mr. Clossin said. “He really impressed me as somebody who clearly has good hands-on operational skills,” he said. Working in strategic planning first, Mr. Kelsheimer said, better prepared him for his new role at Fifth Third because it enabled him to become familiar with the company culture and to connect with Fifth Third leaders in multiple geographic markets. “The transition into the (regional CEO) role itself feels a natural one to me,” he said. The market president role in Cleveland, Mr. Clossin said, had been used as a development role for Fifth Third affiliate presidents. Mr. Clossin said he made the decision to transition presidents through
“You’ve got to be nimble going forward. I think that gets back to having daily, on-site management running the bank.” – Todd F. Clossin, regional president, eight Fifth Third Bank markets Cleveland no longer because he believes there’s a need for a longtime CEO in this marketplace. The Northeast Ohio region, he said, is regarded as one of the top affiliates in the company in terms of financial performance. Fifth Third has 19 markets. “I think the marketplace and the industry continue to change,” Mr. Clossin said, citing regulatory changes. “I do think you’ve got to be more nimble going forward. I think that gets back again to having daily, on-site management running the bank.” As CEO, Mr. Kelsheimer said he will support the execution of the strategic plan written for the marketplace. He said he could not share specific initiatives, though his vision includes adding infrastructure and distribution points to capture market share. He’ll gauge his success, he noted, on continued growth, customer satisfaction and employee engagement. Mr. Kelsheimer continues to live in Westlake with his wife, Julie, and their four children. He is a director on several boards, including University Hospital Case Medical Center, United Way of Greater Cleveland and Tri-C Foundation. ■
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referred to as “thin client” computers — over the next few years, said Brad Chilton, chief technology officer in the hospital system’s information technology department. Those thin clients don’t do much heavy lifting: Their main function is to serve as a connection between the user’s monitor and servers that run the software, including operating systems such as Windows. University Hospitals wants to virtualize its desktops for many of the same reasons other companies and organizations cite. Desktop virtualization gave the hospital system a way to let employees access UH software on home computers, smart phones or even their iPads,
which with special software can serve as a display for a Windows desktop running on a server. The technology also should help the hospital system save money on hardware and computer maintenance, Mr. Chilton said. “Everything that can go wrong is really inside the data center,” he said. Other organizations want to virtualize their desktops, too. More than half of the 70 information technology executives who participated in a survey conducted at the Northeast Ohio Software Association’s annual CIO Symposium in mid-November say they plan to virtualize in 2011. Interest in desktop virtualization
is on the rise partly because many companies are in the process of refreshing their computers, either because they delayed doing so during the recession or because they want to upgrade to Windows 7, said Jack Wilson, business director at virtualization services firm Dynamix Technology Inc. of Parma. The iPad is a big driver, too: Many top executives already own the tablet computers, and now they want to use them to access the software their businesses use, Mr. Wilson said. “That woke up the executives to what is possible,” he said.
Goal: Be ‘hardware agnostic’ The popularity of the iPad and
JANUARY 10 - 16, 2011
other consumer devices helped push Forest City Enterprises Inc. to begin running tests on desktop virtualization technology last year, said Bruce Garlitz, director of IT infrastructure for the Cleveland-based real estate giant. Forest City is in the process of testing the technology with about 100 employees. If the pilot goes well, the company likely will virtualize most of its desktops in the second half of 2011. Then the company will have achieved its goal of becoming “hardware agnostic,” Mr. Garlitz said. “Now, as an IT department, I don’t have to tell you, ‘I’m sorry, you have to use this. It’s all we support,’” he said. Other factors also helped push Forest City to pursue desktop virtualization. The technology should save the company more than 10% on computer hardware if it replaces almost all its PCs, which cost more
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than thin clients and become obsolete sooner. In that scenario, the company also would save more than 40% on computer maintenance and support, Mr. Garlitz said. The savings are high because two-thirds of Forest City’s 3,000-plus employees work outside of its Cleveland headquarters. “If I had a lot of people at one location I may use a different approach,” Mr. Garlitz said. New York Community Bancorp Inc., the parent company of Cleveland-based Ohio Savings Bank, plans to start virtualizing its desktops in 2011 as well. Doing so will help it quickly deploy company software, which will be particularly useful as the bank acquires other companies, according to an e-mail statement from spokeswoman Ilene Angarola. The system also will make it easier for employees to work from home, she said. The number of companies that already have virtualized their desktops is small but growing, said Lukasz Karapuda, sales engineer for OneLink Technical Services LLC of Westlake. In addition to the release of the iPad and Windows 7, improved desktop virtualization software also is driving the trend, Mr. Karapuda said. “Almost everybody is open to this,” he said. Large and midsize businesses are more likely to pull the trigger, though, given the cost of implementing the software and buying the necessary computing equipment, Mr. Karapuda said. “For a small business there might be a hurdle as far as the up-front costs,” he said.
True believer For Artisan Industries, however, there was more than enough reason to virtualize. The metalworking company in Streetsboro finished the process in mid-2010, said chief financial officer Ken Quinn. Before virtualizing, Artisan’s remote offices in Cuyahoga Heights and Florida would connect to the company’s server in Streetsboro using older “terminal server” technology. Mr. Quinn said he wanted to throw the old system into a retention pond in front of the company’s headquarters: It let remote employees access software running in Streetsboro, but their connections were extremely slow and often would fail. The new system is far better, even when running computer-aided design programs that need a lot of processing power, he said. “It’s paid for itself already,” he said, adding that the company spent about $250,000 to make the switch. The transition can cause problems, though. Companies that make the conversion need to remember to do plenty of training to prepare employees for the new system, said Mr. Chilton of UH’s IT department. Even if done right, it’s still hard to support new technology while phasing out old systems, he said. Mr. Wilson, of Dynamix, said it’s particularly important for companies to virtualize as many of their PCs as possible. He cited his past experience as chief information officer at Amerisure Mutual Insurance Co.: The Farmington Hills, Mich., company not only had nine remote locations with their own PCs and servers, but also different departments had adopted various technologies over the year that made life complex for the IT department. Virtualizing 100% of those computers removed the complexity, Mr. Wilson said. “If we had just done a piece it would be another layer of technology,” he said. ■
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GOING PLACES LORAIN NATIONAL BANK: CherylAnn Madsen to vice president, commercial banking.
JOB CHANGES EDUCATION CASE WESTERN RESERVE UNIVERSITY: Suzanne M. Rivera to associate vice president for research. KENT STATE UNIVERSITY: Mary Ann Stephens to dean, graduate studies. UNIVERSITY OF AKRON: Ravi Krovi to dean, College of Business Administration.
FINANCIAL SERVICE 212 CAPITAL GROUP: Derrick W. Ransom to financial adviser. BCG & CO.: Stacy Collier to senior associate. CIUNI & PANICHI INC.: Anthony J. Constantine to manager, tax department.
ENGINEERING
HEALTH CARE
ALPHAPORT INC.: Daniel Owens to chief technology officer.
LUTHERAN HOME AT CONCORD RESERVE: Julie Swindell to wellness director.
FINANCE CHARTER ONE: Mark Weber Jr. and Tom Weiss to mortgage loan officers.
INSURANCE BRUNSWICK COS.: Connie Reeder
WWW.CRAINSCLEVELAND.COM
JANUARY 10 - 16, 2011
to personal lines account manager; Jessica M. Palivoda to commercial lines account manager; S. Lewis Patrick to chief operations and financial officer.
MANUFACTURING
CBIZ BENEFITS & INSURANCE SERVICES INC.: Chuck Adamczyk to senior benefits consultant.
A. SCHULMAN INC.: Andrean R. Horton to senior corporate counsel, Americas.
HYLANT GROUP: Lou Ann Watson to senior client service specialist; Andrea Stegmaier to client service assistant.
EATON CORP.: Brian Edwards to manager, engine business unit, Aerospace Group.
MEDICAL MUTUAL: Lois Mann to manager of underwriting, schools business unit; Kerry Smith to manager of underwriting, labor/government business unit.
LEGAL HAHN LOESER & PARKS LLP: Brian D. Kenney, Meghan E. Sheehan and Christopher W. St. Marie to associates.
TAFT STETTINIUS & HOLLISTER LLP: Majeed G. Makhlouf and Peter S. Nealis to partners.
Constantine Mann
Smith
Kenney
Sheehan
St. Marie
Makhlouf
Nealis
Horton
Lombardi
Merritt
Rayburn
FAIRMOUNT MINERALS LTD.: Jenniffer Deckard to president. PSC METALS INC.: David Spector to president; Mark Shapiro to executive vice president, non-ferrous products; Edward Lehner to chief administrative officer. SWAGELOK CO.: Michelle Massey to director, financial reporting and accounting; Jay Nordholt to director, fitting services group; Neil Smith to
I don’t see what the fuss is about motorcycles.
director, quality and continuous improvement.
So they’re supposed to make you feel “free.�
MARKETING
I feel that way already.
ADCOM COMMUNICATIONS INC.: Jennifer Lombardi to art director; Doug Merritt to assistant account executive.
NONPROFIT GREAT LAKES SCIENCE CENTER: Laura Klein Rayburn to campaign director. LUTHERAN HOME AT CONCORD RESERVE: Christine Saner to director of life enrichment.
TECHNOLOGY INFORCE TECHNOLOGIES LLC: Joseph Wilson to vice president, client services.
BOARDS GREATER CLEVELAND AUTOMOBILE DEALERS’ ASSOCIATION: Brian O’Donnell (Valley Auto Group) to chairman; Daniel Sanders to first vice chairman; Ed Babcock to second vice chairman; Colin MacLean to treasurer.
AWARDS FASHION ART BIENNALE 2010: J.R. Campbell and Vincent Quevedo (Kent State University) received the International Artist of the Year Award. LAKE COMMUNICATORS: Phil Stella (Effective Training & Communication) received the APEX Gold Award for Writing.
HOME
THERE ARE PEOPLE WHO DON’T UNDERSTAND THE WAY
AUTO
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MOTORCYCLE
OHIO HOTEL & LODGING ASSOCIATION: Michael Cooper (InterContinental Hotels Cleveland) received the Manager of the Year Award; Gary McGauley (Renaissance Cleveland) received the General Manager of the Year Award.
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RETIREMENT
7R JHW WKH SROLF\ \RX QHHG IRU WKH OLIH \RX ZDQW WDON WR DQ LQGHSHQGHQW 6DIHFR DJHQW DW Š 2011 Safeco Insurance Company of America, Member of Liberty Mutual Group, 1001 4th Ave., Seattle, WA 98154. All rights reserved.
Lake Shore Insurance
CLEVELAND MUSEUM OF ART: Tom Hinson, curator of photography, after 38 years of service.
%HWD 'U 0D\Âż HOG 9LOODJH 2+ ODNHVKRUHLQVXUDQFH FRP _
Send information for Going Places to dhillyer@crain.com.
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CRAIN’S CLEVELAND BUSINESS
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INSIDE
14 TAX TIPS: LEGISLATION LIKELY BENEFITS SMALL FIRMS.
13
SMALL BUSINESS NORTHEAST OHIO TOYMAKERS: WHO T H E Y A R E A N D W H AT THEY MAKE ■ Build a Dream Playhouses: The Wickliffe company makes cardboard play structures meant to be colored and customized by kids and their parents.
■ Fast Ball: A baseball simulation game developed by Dan Squires and Scott Demers, it includes an electronic component and is played by rolls of dice and strategically choosing cards representing manager decisions.
RUGGERO FATICA
Ryan Hamilton (left) and Bret Faber last fall developed their first toy idea, the Topozoo line of animals, seen below, manufactured by an Independence company. The founders of Geared for Imagination previously only distributed European toy lines.
NOT PLAYING AROUND For NE Ohio’s toy entrepreneurs, building a business is more than just fun and games
By JOHN BOOTH clbfreelancer@crain.com
T
here’s nothing small about next month’s American International Toy Fair: 25,000 attendees are expected at the Feb. 13-16 show in New York, and the 2011 edition will include 100,000 products from more than 1,200 exhibitors. But as several Northeast Ohio toy innovators are out to prove, you don’t have to be big to think big — or to hit it big. When Ryan Hamilton and
Bret Faber started Geared for Imagination in 2009, they put their shared toy industry purchasing and retail experience to work, founding the Fairlawn company as a distributor for European toy lines such as the quirky animal Deglingos. This fall, though, they saw their own toy ideas come to fruition with the Topozoo line of mix-and-match animals manufactured by Chmura Custom Woodworks in Independence. “Most of our products come from
■ BowWowMeow: The Cleveland Heights company, run by son-mother team Mike and Evelyn Greenwald, offers pet-themed children’s craft kits. ■ The Party Animal Inc.: The Avon company in 2010 stepped beyond its sports team collectibles and paraphenalia with Lil’ Teammates, a line of collectible action figures.
See TOYS Page 15
Local company bosses share their resolutions for new year
I
n honor of the start of 2011, we asked several small business owners to share with us their resolutions for the coming year as well as what their biggest regrets were from 2010. And from the sound of things, it looks like the order of the day might be to move full speed ahead, setting aside many of the reservations of the past. — Amy Ann Stoessel
Mario Jurcic was born and raised on the East Side, the same place he returned to operate his business after attending Ohio State University. Mr. Jurcic, 26, founded Mentor-
based Secure IT Asset Disposition Services in 2009, building off experience from a previous entrepreneurial venture he started while still in college. The company aims to provide secure and compliant data destruction services, assisting companies and organizations with end-of-life technology needs, Mr. Jurcic said. Other services of the firm include electronics recy-
cling and equipment remarketing and refurbishing. ■ What is your New Year’s resolution for 2011 as it relates to your business? “I have a great team to lead, wonderful clients and a growing book of business … the resolution is to continue to build upon the solid foundation.” Specifically, Mr. Jurcic said he hopes to add both employees and coverage area to his business. ■ What is your biggest business regret from 2011? “Not giving up sooner. ... And by that I mean giving up activities I enjoyed that diverted my attention from taking the necessary steps to be the best in our industry.”
He explained that he realized that it is “OK to quit” one thing in order to focus on another. In Mr. Jurcic’s case, he made the decision to give up other pursuits, such as soccer, in favor of his business. “I was pursuing so many things at once, I wasn’t doing anything great,” he said. Laura Williams, owner of LaBella Cupcakes, spends 40 hours a week baking cupcakes — specializing in such tantalizing flavors as Red Velvet, Molten Lava, Mocha Madness and Wedding Whisper. Ms. Williams, with the help of her husband, Mike, opened a Lake-
wood storefront in October, after a period of selling cupcakes by delivery and marketing through word of mouth and social media channels. The cupcake entrepreneur originally began the business as a result of unemployment. Now, her husband has left his job in construction to focus on the baking business as well. ■ New Year’s resolution: “Our See RESOLUTIONS Page 15
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SMALL BUSINESS
GRANDOPENINGS
donating 10% of her law firm’s profits to philanthropy, with the largest percentage to support The Ruby Shoes Fund.
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27219 Wolf Road Bay Village 44140 http://paceexpressfitness.com Pace Express Fitness is a co-ed express fitness program that combines a total strength and cardio workout in 40 minutes. Anyone at any fitness level can participate in the program, including beginners and athletes in training. The operation is not a franchise; there is a master trainer based in California, but each studio is independently owned. The Bay Village studio is open every day but Sunday. The program is or has been used by the New England Patriots, Phoenix Suns and U.S. military, among others. 440-822-7737 info@paceexpressfitness.com
CHARNA E. SHERMAN LAW OFFICES CO. LPA 5310 Key Tower, 127 Public Square Cleveland 44114 www.charnalaw.com Cleveland attorney Charna E. Sherman
MAXOUT SPORTS LLC 23860 Miles Road Bedford Heights 44128 www.maxout-sports.com
PHOTO PROVIDED
Charna E. Sherman has established her own practice. The female-owned boutique will focus on complex commercial litigation, including toxic tort, environmental, health and safety, product liability, intellectual property and white-collar defense. Ms. Sherman, previously an equity partner with Squire, Sanders & Dempsey LLP, launches her firm with more than 25 years of experience as a litigator and trial lawyer, as well as a strategic negotiator in complex mediation and settlements. Ms. Sherman also is launching The Ruby Shoes Fund to support new initiatives to empower women in the legal profession. She is committed to
MaxOut Sports is a martial arts and fitness center offering training for children and adults in mixed martial arts, judo/jujitsu, Muay Thai kickboxing, tae kwon do and self-defense. The center also provides personal training by certified strength and conditioning specialists, as well as certified instruction to law enforcement officers. 440-781-3444 info@maxout-sports.com To submit a new business, send the following information by e-mail to Amy Ann Stoessel at astoessel@ crain.com: business name; address; city and ZIP; web site; brief description of business; business phone number; business fax number; business e-mail address; and date that business opened. Call 216-7715155 with questions.
Recent legislation aimed at benefiting small firms
T
o some degree, Washington is looking to small business owners to help jump-start the sluggish economy, and it’s readily apparent in the long list of tax benefits provided under recent legislation — most notably the Small Business Jobs and Tax Act of 2010 and more recently the 2010 Tax Relief Act passed by Congress in mid-December. The SBJA focuses heavily on providing small business owners with tax benefits that are intended to inspire investment and spending. Perhaps one of the most significant examples is a dramatic expansion of depreciation allowances under Section 179 of the Internal Revenue Code. Section 179 allows a taxpayer to deduct the cost of certain types of assets as an expense rather than requiring depreciation so the cost would be written down gradually over the life of the asset. The SBJA increases the maximum amount that a taxpayer can expense under Section 179 from $250,000 to $500,000 and increases a phase-out limitation associated with the benefit from $800,000 to $2 million. The law also expands the definition of assets that would qualify for the Section 179 allowance to permit things that previously were prohibited. That includes, for example, an immediate write-off for up to $250,000 of restaurant property, retail property or certain improvements to leased property. The Tax Relief Act expanded even further the write-offs available to all businesses by changing the 50% first-year bonus depreciation rules to 100% for qualified investments made from Sept. 8, 2010, to Jan. 1, 2012. That means businesses can write off the entire cost of most new assets, other than buildings and building improvements that are acquired during the effective dates. The phase-out rules applicable to Section 179 do not apply under the bonus depreciation provisions. The effect is an immediate tax savings for small business owners who have made investments in their operations in 2010 or plan to do so in 2011. As an example, assume the owner of a small, independent bakery decides to expand to include an eat-in café. The project requires leasing an adjacent storefront and investing $300,000 in renovations and kitchen equipment. Before the 2010 Act, the owner was allowed a Section 179 deduction of $50,000 for the new equipment
PETERDEMARCO
TAX TIPS and a depreciation deduction for the leasehold improvements over 39 years. Under the new provisions, the entire investment of $300,000 can be deducted in the year expended. Other significant benefits of the SBJA include: ■ Carrying back credits: Tax law allows taxpayers to carry unused general business credits back to offset taxes paid in a prior year or forward to offset future tax liabilities. The SBJA expands the carryback allowance from one year to five years and allows taxpayers to use eligible small business credits to offset both regular income tax and alternative minimum tax. ■ Self-employment and health insurance: Typically, a selfemployed individual such as a small business owner can deduct the cost of their health insurance for income tax purposes, but not for purposes of calculating selfemployment tax. For the 2010 tax year, however, the SBJA will permit it. ■ Rollovers to Roth accounts: The SBJA allows employers to offer participants in 401(k) retirements savings plans to make rollovers of eligible distributions from those accounts to Roth 401(k) accounts. While traditional retirement savings plans provide an up-front tax benefit, Roth accounts forego the deduction at the time an employee defers salary into the plan, providing the tax advantage at the time of withdrawal. The Small Business Jobs and Tax Act and the 2010 Tax Relief Act include a number of other provisions that small business owners should explore carefully. Depending on a given company’s financial position, they could contain a nugget of opportunity that could be leveraged in preparing the 2010 tax return or explored in the upcoming tax year. ■ Mr. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.
COMING UP NorTech Innovation Awards Crain’s third annual section honoring the best and brightest of the region’s technology sector — in conjunction with regional technology advocacy group NorTech — will be published Feb. 21, with an event honoring this year’s winners set for Thursday, Feb. 24. For more information on the event, including a list of this year’s finalists
and recaps of past events, and to buy tickets, visit www.crains cleveland.com/marketing/ nortechia.html. ■ CRAIN’S BREAKFAST SERIES: The first dates for Crain’s Ideas at Dawn breakfast series are set. Visit www.crainscleveland.com/ breakfast for details.
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SMALL BUSINESS
Toys: Area companies find Resolutions the right products, niches continued from PAGE 13
continued from PAGE 13
overseas, and everybody liked them, but we felt … people wanted things made locally,” Mr. Faber said. “We kind of reverseengineered: What could we make here, feasibly? It was really Ryan’s idea, this whole kind of puzzleanimal system.” The Topozoo line came together quickly and launched in September, selling in places like local toy stores and museum gift shops, since its eco-friendly manufacturing and other factors mean the toys cost more than most mass-market retailers are willing to pay. Thanks to strong word of mouth and mentions from both Woman’s Day and Real Simple magazines, though, Topozoo was Geared for Imagination’s top-selling fourthquarter product. “We didn’t even plan Topozoo (sales) in our 2010 forecast,” Mr. Hamilton confessed. “We didn’t want to count on it and come up short. But we shipped about 3,000 total units this fall, and none of it sat on the shelves for more than a day.”
Beyond make-believe The origins of Wickliffe-based Build a Dream Playhouses likely will sound familiar to anyone who’s been a kid: “When I was six years old, my parents bought a refrigerator,” said president and founder Michael Welsh. “I, like every other child, wanted the box.” Mr. Welsh returned to playing with boxes a few years ago when he recruited two local college students and then took his ideas for a line of cardboard play structures to Nottingham-Spirk Design Associates. Build a Dream launched in late September with six environments ranging from a one-kid spaceship to the instantconstruction “Pop N’ Play” castle. Although more playsets are slated for spring, Build a Dream is skipping the New York Toy Fair while it awaits patent approval. Mr. Welsh still has plans to exhibit at the Toy Industry Association’s Fall Preview show in Dallas. Manufactured by Ravenna packaging company SmurfitStone, the playhouses are printed in black-and-white outline form and meant to be colored and customized. Dan Squires, who, as an employee of the Richard E. Jacobs Group helped design the seating layout at the Cleveland Indians’ ballpark, is getting his cleats dirty in the toy world with Fast Ball, a baseball simulation game he developed with business partner Scott Demers. “This game incorporates a traditional board game with dice and cards, but also incorporates the electronic component to be competitive in the market,” said Mr. Squires, who said the game’s origins go back to 2005, when Mr. Demers approached him with the idea, and pencil, paper and a pair of die. Fast Ball will come with a highdefinition touch screen in a homeplate-shaped plastic case, and include recorded audio commentary, though game play is shaped through the rolls of dice and strategically played Manager Strategy
Cards representing coaching decisions. The game will make its public debut at this year’s Toy Fair, and Mr. Squires said he and Mr. Demers already have another baseball-related product in the works.
More than pet projects Mike Greenwald and his mother, Evelyn Greenwald, founded Cleveland Heights-based BowWowMeow in 2007 by combining their love for pets with their shared experience in developing children’s craft kits for Creativity for Kids. “We launched with (kits for) a dog scrapbook and a cat scrapbook,” Mr. Greenwald said. “And we’ve continually come out with more.” The product line has expanded to kits for decorating pet bowls, leashes, picture frames, collars and shrink-art plastic jewelry. And coming off the company’s best Christmas season yet, the Greenwalds are adding a bird-feeder kit to the catalog for 2011. BowWowMeow seems to have found an uncrowded market niche, but Mr. Greenwald admits that its unique position has come with its share of struggles: Pet stores, for instance, often see the products as toys or crafts, while larger toy retailers and craft stores view them as too pet-centric for their shelves. As a result, most of BowWowMeow’s nearly 400 retail customers are specialty toy stores and museum gift shops. “We’re not in any of the mass-market stores,” Mr. Greenwald said. “We’ve been approached by a lot of them, but we can’t work with the (cost) margins they need to make. And right now, we’re kind of happy being a specialty brand.” Avon-based The Party Animal Inc. has been around for two decades, but 2010 saw the company’s first steps beyond its established arena of licensed sports team and college paraphernalia with the creation of Lil’ Teammates, a line of collectible action figures. “About three years ago, we kind of looked at the kids’ market, and we saw that there really wasn’t a lot of licensed product for children,” said president Jim Cantrall. “There was apparel. And then when they got older, they had video games and things, but nothing you would call ‘toys.’” In January 2010, the 3-inch-tall Lil’ Teammates were launched, and as representative figures became available for all the NFL, MLB and NHL teams, as well as many colleges, Party Animal wound up with more than 200 products for sale its first year. Many of the 200,000 units sold came in the third and fourth quarters, Mr. Cantrall said, and Lil’ Teammates accounted for 20% of the company’s 2010 sales. The figures are sold through team shops, grocery stores and Dick’s Sporting Goods, and talks are under way for a test program with Toys R Us. Add that possibility to plans for expanding the line, and Mr. Cantrall says there may be a shift on the horizon. “Right now, we’re a flag company that happens to have a toy line,” he said. “I can see us being a toy company that does flags on the side.” ■
goal for 2011 is to become recognized as Cleveland’s best gourmet cupcake bakery. As we continue to grow and make new friends with our customers, we will also look for new ways to reward our customers by giving discounts throughout the year and other incentives.” Ms. Williams believes strongly in using social media to get the word out about her business — in fact, she said she launched her business via Twitter. ■ Biggest regret: “As we look back on 2010, we would have to say that we don’t have any business regrets. Everything doesn’t always go as planned, that’s for sure! But we always want to stay positive and any hiccups that we may have experienced this past year, we really look at it as a learning experience. We learn, we change, we grow.” Toby Maloney and his wife Melanie have helped to lead the mental _floss brand since its beginnings. Today, what was once a magazine and concept — “where people who enjoy quirky, funny could come together” — has evolved into a mini-media company and brand, Mr. Maloney said. In 2009, the company’s overall revenue came in at $2.5 million. (2010 figures are expected to exceed that.) The brand also opened its first retail location a year ago in Chesterland, and the company sells a variety of products, such as T-shirts and games, that appeal to consumers’ nerdier sides. ■ New Year’s resolution: “To make sure that every person in America has heard of the mental_floss brand.” Mr. Maloney said that one of things that mental_floss was “late to the party” on was the power of the Internet and social media, something that he hopes to take more advantage of whether it’s through Twitter or other means. ■ Biggest regret: “My biggest regret is that there aren’t more hours in the day as we have so many fabulous opportunities to grow our business.” While said tongue in cheek, Mr. Maloney is serious about looking ahead to the growth of the company. “The challenge is getting to that next stage in terms of growth and doing it in a thoughtful way,” he said. Mr. Maloney sees countless opportunities in the future, including anything from licensing to franchising — the trick will be finding what makes the most sense for the company. Bill Russell believes that starting a business part time is a good way to get an entrepreneurial venture off the ground, and that’s exactly what he did when he and his wife Staci started their CrossFit Cleveland enterprise in Lakewood. CrossFit is an instructor-led fitness program, with routines that regularly change focus. The Russells started by offering free group workouts early in 2007, and they later opened a Lakewood location. It’s now a full-time operation, and a studio also was opened on the East Side in November.
■ New Year’s resolution: “Our plan for 2011 is to move our business into a larger facility in Lakewood. This will enable us to grow by offering more of our Executive Fitness Programs during prime-time hours.” The Executive Fitness Programs feature a limited class size in a private setting. ■ Biggest regret: “2010 was a good year for us. Many business owners played it safe in 2010 due to concerns about the economy. If we could do it over again, we would open our new East Side location, Great Lakes CrossFit, earlier in the year.”
■ Biggest regret: “My biggest regret is not being more aggressive in seeking opportunities to grow my business.” Mr. McIntosh said previous preparations put the company in a good position to handle any bumps from the economy. ”It was easy just to focus on being stable,” he said.
Morgan McIntosh was 29 years old when he took over AMFM Inc., the business started by his father. The Willoughby manufacturer continues to make the same core products it has since its beginning — braid bands for fabricating metal hoses. Mr. McIntosh said his father saw a need for the company’s product more than 20 years ago, and while AMFM has added to its offerings, it also still sticks to its roots. “We’ve evolved, adapted and changed as a company,” he said. ■ New Year’s resolution: “My biggest resolution for 2011 is to take more action as far as developing growth opportunities for my business as the economy improves.” And that likely means adding staff and spending more time on activities that generate growth, Mr. McIntosh said.
Bill Mitchell’s family has been making chocolates in the Cleveland area for more than 70 years. The original location for the store that would become Mitchell’s Fine Chocolates — at Euclid Heights Boulevard and Coventry Road — was next door to a movie theater; the business moved to its current Cleveland Heights location in 1991. ■ New Year’s resolution: “Making the business more efficient … increasing sales.” Mr. Mitchell said there has been a slow demographic shift from the inner-ring suburbs, which is one of the reasons he’s taken steps like linking up with Heinen’s during the holiday season to sell his chocolates. Of course, Mr. Mitchell noted there are challenges today with the rising cost of ingredients, decreased corporate spending and tighter budgets. ■ Biggest regret: “Technology could make us more efficient.” As such, Mr. Mitchell said he wishes he would have purchased more equipment and taken advantage of lower exchange rates.
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CSU: Pro sales staff helps ticket traffic continued from PAGE 3
In Mr. Waters’ four-plus seasons at Cleveland State, during which the Vikings have compiled a record of 88-63, the team has averaged around 2,500 fans per game. In 2008-09, when CSU won the Horizon League tournament and upset Wake Forest in the first round of the NCAA tournament before losing to Arizona, they drew 2,245 on average. But with football season over, the Cavs’ struggles and an exciting, up-tempo team on its home floor, Cleveland State and new Wolstein Center management company Global Spectrum are introducing new options to draw more fans to the arena — and in some cases draw more revenue from those fans. Ticket prices were raised to $15 from $10 for general admission for four “premium” games — against Kent (Nov. 14), St. Bonaventure (Nov. 27), South Florida (Dec. 22) and Butler (Feb. 5). And until Jan. 24, fans must buy a three-game
package if they want to see Butler, the cream of the Horizon League crop and the team that came within one bounce off the rim of beating Duke last April to win the national championship. The pricing gambit paid off for the South Florida game, which drew 4,711 — including a walkup crowd of about 3,000, said Brian McCann, CSU’s assistant athletic director for communications. The school hopes for similar interest in the Butler game; when the Bulldogs visited the Wolstein Center last year, they drew 4,681 fans, the Vikings’ second-largest crowd of the season.
Drawing on experts Cleveland State’s efforts are merely indicative of the work many teams must do to keep fans coming through their turnstiles. “I think it shows the pressure everyone is under — Cleveland State, the Cavs — to bring more revenue in,” said Jim Kahler, formerly
vice president of sales and marketing for the Cleveland Cavaliers and now executive director of the Center for Sports Administration at Ohio University. “More colleges are going to outside companies, which have expertise in this area and can take advantage of opportunities like Butler,” Mr. Kahler said. “When Michael Jordan came to Cleveland twice a year (with the Chicago Bulls), we leveraged the hell out of it.” The price hikes also are a way to offset the scheduling difficulties faced by the Vikings and other successful mid-major programs. The Vikings have strayed from their strategy of last year — a brutal nonconference schedule including Kentucky, Virginia, Ohio State, Kansas State and West Virginia — and focused on playing similar mid-major teams such as Sam Houston State, Louisiana Lafayette, St. Bonaventure and Iona. However, that strategy comes with a price: Gone is the fat guaran-
Global Spectrum also hired three full-time salespeople for the ticket office, a job handled previously by one person and interns. Since Global Spectrum took over in May, the company has sold 300 mini plans centered around the Butler game, with a goal of 500 by Feb. 1, Ms. Ott said. Mr. Kahler said without companies such as Global Spectrum, “you have students who are selling tickets for pizza.” “Salespeople are selling for commissions, and that’s how these schools can compete in pro cities,” he said. Similar strategies are employed at Kent State, another successful midmajor that has trouble getting opponents to play them, for fear of a loss. Ticket manager Joe Carr, while acknowledging the Kent and Cleveland markets are quite different, said Flashes officials market threegame plans around each year’s game between backyard rival Akron, which typically sells out. That game is packaged with less desirable games, such as Eastern Michigan (Feb. 9) and others that don’t move the ticket meter. ■
teed paycheck that big-name programs such as Kentucky pay to their opponents. Meanwhile, Cleveland State must incur the cost of traveling to Huntsville, Texas, and Lafayette, La., to get those schools to agree to so-called “home-andhome” series.
Profits vs. pizzas In another pricing ploy, Wolstein Center has created a group of courtside seats along one baseline. It’s something Global Spectrum has tried — along with mini plans and premium games — at the 10 other college arenas it manages, including those at the universities of Miami, South Carolina and Central Florida. The courtside seats go for $30 and are sold out for coming games against Wright State, Detroit and Butler. “The premium game and premium seat models are going on everywhere,” said Kayla Ott, Global Spectrum’s director of marketing at the Wolstein Center. “These are ideas we identified when we first sat down with CSU, and they seem to be working well. The team’s success also is a factor.”
NORTHEAST OHIO'S TOP SBA LENDERS RANKED BY DOLLAR VALUE OF 7(A) LOANS IN FISCAL 2010
This year
Company name Headquarters
Dollar value of approved loans fiscal 2010
Dollar value of approved loans fiscal 2009
% change
Number of loans fiscal 2010
Number of loans fiscal 2009
% change
1
Huntington National Bank Columbus
54,599,300
24,282,600
124.8%
352
195
80.5%
2
Fifth Third Bank Cincinnati
12,197,500
5,372,000
127.1%
30
14
114.3%
3
JPMorgan Chase & Co. New York
10,902,800
2,980,800
265.8%
76
23
230.4%
4
KeyBank NA Cleveland
10,521,000
12,673,700
-17.0%
71
62
14.5%
5
Lorain National Bank Lorain
6,142,900
1,129,000
444.1%
24
9
166.7%
6
CFBank Fairlawn
5,449,000
2,147,500
153.7%
23
15
53.3%
7
First Place Bank Warren
4,902,000
1,398,000
250.6%
8
6
33.3%
8
Grow America Fund Inc. New York
4,871,000
330,000
1,376.1%
7
1
600.0%
9
Ohio Commerce Bank Beachwood
4,248,500
2,780,000
52.8%
4
7
-42.9%
10
FirstMerit Bank NA Akron
4,080,300
5,976,800
-31.7%
37
54
-31.5%
11
Charter One Providence, R.I.
3,686,500
3,296,800
11.8%
65
65
0.0%
12
PNC Bank Pittsburgh
3,610,800
7,670,000
-52.9%
14
42
-66.7%
13
Westfield Bank FSB Westfield Center
3,428,400
113,000
2,934.0%
12
2
500.0%
14
Citizens Bank Flint, Mich.
3,098,100
2,658,400
16.5%
17
16
6.3%
15
Citizens Banking Co. Sandusky
2,951,000
5,278,600
-44.1%
7
25
-72.0%
16
Genoa Banking Co. Genoa
2,309,000
1,160,100
99.0%
7
14
-50.0%
17
Consumers National Bank Minerva
2,147,100
1,208,000
77.7%
10
11
-9.1%
18
United Western Bank Denver
2,103,000
800,000
162.9%
2
1
100.0%
19
First Federal Bank of the Midwest Defiance
2,059,100
2,020,000
1.9%
4
7
-42.9%
20
First Western SBLC Inc. Dallas
1,965,000
————
————
2
————
————
21
U.S. Bank NA Columbus
1,903,500
6,046,800
-68.5%
29
49
-40.8%
22
First Colorado National Bank Paonia, Colo.
1,800,000
————
————
2
————
————
23
Compass Bank Birmingham, Ala.
1,564,600
————
————
3
————
————
24
CIT Small Business Lending Corp. Livingston, N.J.
1,543,000
1,577,000
-2.2%
2
2
0.0%
25
The Henry County Bank Napoleon
1,469,500
————
————
2
————
————
This list was compiled from information provided by the Cleveland District office of the SBA for fiscal years ended 9/30/2010 and 9/30/2009. The Cleveland District covers 28 northern Ohio counties. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.
Researched by Deborah W. Hillyer
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Banks: Institutions increasing loan volumes continued from PAGE 1
In 2010, PNC Bank and Huntington both instituted a so-called second look process through which the banks are reconsidering business loan applications that didn’t qualify the first time around. Other efforts exist, too. Dollar Bank revamped its web site in 2010, in part to enable businesses to apply online for credit cards, said Bill Elliott, senior vice president of corporate banking for Cleveland. Now, the bank is working to allow online business loan applications, too. Dollar Bank also advertised its business products more in 2010 than it had in recent years, Mr. Elliott said. The goal: to make businesses aware of Dollar Bank as more companies return to borrowing. Charter One, which has 115 branches in Northeast Ohio, began allowing applicants for small business loans of $50,000 or less to apply over the telephone, said Ken Marblestone, president for Charter One, Ohio. “We wanted to make sure that they — particularly because of some of what you read in the papers — had immediate access to talk to somebody,” Mr. Marblestone said.
Daniel P. Walsh Jr., president for the Greater Cleveland region, said the bank is ahead of schedule. The bank’s small business lending in Greater Cleveland alone increased 30% in the first three quarters of 2010 over the same period in 2009, Mr. Walsh said. “The numbers are pretty stunning,” he said. “We’re just getting started.” Mr. Walsh said the Small Business Administration’s decision to increase the size of the loans it will guarantee means larger clients now qualify for such loans, and that’s a catalyst for growth. FirstMerit Corp. in Akron revealed in its third-quarter earnings call that its commercial loan origina-
tions were up 16% over the second quarter. Likewise, Charter One’s middle-market business loan portfolio ended December 2010 up 9.3% from January 2009, Mr. Marblestone said — an increase that accounts for amortization. Then there’s Chase Bank, which operates 83 branches in Northeast Ohio. It says it increased its small business loan volume in dollars in the Cleveland market by 131% in 2010 compared with 2009, and projects a 25% increase in business loan production this year, said David Tortorella, business banking manager for the East region. The 131% increase does not reflect middle-market activity, he noted.
Chase may reintroduce in 2011 some of the business lending promotions it offered new last year, including one in which the bank offered a cash back refund of up to $4,000 to businesses that borrowed money to purchase new equipment. The bank also covered 50% of the closing costs (up to $5,000) for owner-occupied real estate loans, which are reserved for businesses that would occupy at least 50% of the real estate they’re buying. Chase has other business lending promotions in pilot stage, but Mr. Tortorella said he couldn’t divulge them.
More than ‘lip service’? Some business clients continue
to complain they’re denied the credit they’re seeking, said Joe Arnold, founder and president of Foundation Wealth Advisors LLC in Westlake. “(Banks) are trying to win clients back,” Mr. Arnold observed. “It’s much like politics. They’re trying to say and do the right things, but when it comes down to putting pencil to the paper, are they doing it?” Certified public accountant Mr. Mackert, whose clients are small businesses, said he initially believed banks’ talk of increasing business lending was merely “lip service.” However, he said he is seeing evidence that it’s happening. “Things weren’t good, but the economy’s gotten better,” said Mr. Mackert, owner of Mackert Consulting Group in Westlake. “More clients have profits. I’m actually seeing some startup businesses getting money.” ■
Finding a comfort zone In Ohio and across the nation, banks’ commercial and industrial lending numbers were fairly flat during most of 2010, according to data from the Federal Deposit Insurance Corp. That does not mean banks weren’t lending, cautioned Jeff Quayle, senior vice president and general counsel for the Ohio Bankers League. He noted amortization, or the paying down of loans, likely offset some new loans that were made. Business loan demand has improved in recent months, many bankers say. “We became increasingly comfortable with the economic situation, and our customers became increasingly comfortable with the economic situation,” Mr. Marblestone said. “Therefore they wanted to borrow money again … and so one thing leads to the other.” Banks are focusing on business lending more than they have in recent years out of necessity, said Fred Cummings, president of Elizabeth Park Capital Management. Demand for — and banks’ desire to issue — commercial real estate loans has declined, and that’s a business that used to drive growth in most small to midsize bank portfolios, Mr. Cummings said. “Banks are flush with deposits, and they’re looking for places to invest those deposits,” he said. As the economy improves and the number of creditworthy borrowers increases, commercial and industrial lending should increase, probably in the first quarter of this year, said James Thurston, Ohio Bankers League spokesman. Mr. Cummings predicted an uptick later in the year; he noted that banks still have not relaxed their underwriting standards, but anticipates they may by late 2011. An increase in business lending, Mr. Cummings said, is a win-win because banks can generate returns for shareholders while local companies are able to create much-needed jobs.
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Signs of change Some banks indicate their business loan numbers are up already. Huntington in 2010 committed to investing $4 billion in small businesses over the next three years, and
17
Loans subject to credit review and approval. Fifth Third Bank, Member FDIC.
Equal Housing Lender.
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REAL ESTATE
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FOR LEASE OFFICE/RESTAURANT/ BAR/RETAIL Tangletown/Beachcliff area Lots of parking
Tangletown/Beachcliff Rocky River
By Order of Court Appointed Receiver • GREAT INVESTMENT OPPORTUNITY • Two Industrial/Warehouse Buildings • 325,640 Sq. Ft. Total on 25+ Acres Cross Docking Ability
440-333-0000 x 777
Sealed Bids DUE Thursday, February 3, 2011 @ 5:00PM Newer A1, 18800 sq ft, 60+parking 440-333-0000x777
COMMERCIAL PROPERTY FOR LEASE
MENTOR, OH
INDEPENDENCE CORPORATE CENTER
20,000 S.F. Clear Span Building. 2 Docks, 1 drive in door. Gas heat 600 S. F. Office. Call John H. Vanas 216-481-8444 Ext. 103
7100 E. Pleasant Valley Rd. OFFERING #1 Location: 1212 E. Alexis Rd., Toledo, OH 43612 211,400 Sq. Ft. Industrial/Warehouse. 12.8+/Acres. Built 1989, renovated 1998. Large-Scale Cross Dock.
OFFERING #2 Location: 1212 E. Alexis Rd., Toledo, OH 43612 Adjoined to Offering #1. 114,240 Sq. Ft. Industrial/ Warehouse, Cross Docks, Truck & Trailer Storage. 96,000 Sq. Ft. Assembly/Warehouse. 18,300 Sq. Ft. Cross Docking. 12.8+/- Acres. Built 1998.
HIGH TRAFFIC AREA. Located on Heavy Haul Route. 1 Mile Off I-75, 2 Miles to Toledo North Assembly Plant & GM Hydramatic Plant. 52mi - Detroit, 117mi - Cleveland, 152mi - Columbus, 205mi - Pittsburgh, 229mi - Indianapolis, 254mi - Chicago, 284mi - Toronto & 563 mi to New York. Additional 17,625 Sq. Ft. in 2nd Floor. Office Area w/Restrooms, Break/Lunch & Locker Room Truck/Trailer Storage Area. Security Fencing & Guard House Steel Beam. Block Exterior. Steel Siding. Concrete Floors Great Location. Multi-Use Buildings. In Co-op w/CB Richard Ellis/Reichle Klein Marty Gallagher, SIOR -- 419-794-3956 Jerry Malek, CCIM, SIOR -- 419-794-3964 The Skutch Company, Ltd. - Receiver For More Info., Terms & Bidding Procedures go to Our Website www.wilsonauctionltd.com Or, contact any of the following for more detailed information, Due Diligence Packets & to Register for a Bidders Packet
Are you the best at what you do? Why not be in the best building in Cleveland too?
www.independencecorporatecenter.com
216-674-0525
DON’T FORGET: Crain’s Cleveland Business on-line @ CrainsCleveland.com For all the latest business news...online
Now is a great time to promote your Luxury Properties
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Auctioneers: Wayne M. Wilson, CAI Brent J. Wilson, CAI www.WilsonAuctionLtd.com
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440 951-166
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receive reduced rates on your advertising. Call Genny Donley at (216) 771-5172 for more details.
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FOR SALE OFFICE FURNITURE Herman Miller Workstations and Cubicles. L Shape Desk 6’ X 9’: Avail. in 2 depths (25” & 30”) and 2 lengths (66" & 70") Cubicles 3” D X 36” L X 54” H
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Crain’s Executive Recruiter CEO – Cleveland, OH Faith Community United Credit Union is seeking an individual to fill its CEO/Treasurer position. Faith Community is a Community Development Credit Union with approximately $12 million in assets located in Cleveland, Ohio. The ideal, successful candidate must be a visionary, ready and willing to take advantage of technological advancements in the financial industry, increase viability and reduce risks. A thorough knowledge of the credit union industry, at least 5 years of relevant experience and/or degreed college level education are preferred. The chosen candidate will also need to demonstrate effective board communication, management of risks and comfort with strategic planning initiatives for future aspirations of the credit union. Please submit an Application Packet, including a cover letter with salary requirements and resume with at least three (3) references, via regular U.S. mail to Matthew Jackson at 323 West Lakeside Avenue, Suite 420, Cleveland, Ohio, 44113. Application packets will be accepted until February 1, 2011.
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THEINSIDER
THEWEEK JANUARY 3 – 9 The big story: Dots, a women’s apparel and accessories retailer based in Glenwillow, was acquired by Irving Place Capital, a private equity firm in New York that has invested in such retailers as Aeropostale and New York & Co. The purchase price was not disclosed. Dots was founded in 1987 and has grown into a retail chain with more than 400 stores in 26 states, mainly in the Midwest, East and Southeast. Bob Glick, Dots’ founder and its departing CEO, said the acquisition “is a wonderful opportunity for Dots to capitalize on its brand and accelerate its growth.”
Mangenius no more: The Cleveland Browns fired head coach Eric Mangini after consecutive 511 seasons. Mangini reportedly had two years left on his contract. Browns president Mike Holmgren said while the team “made improvements this season, my responsibility is to ensure that we establish a program that will allow this team to compete at a championship level.” Holmgren Holmgren himself is considered a candidate to take over the coaching reins.
Fired up: Invacare Corp. received a warning letter from federal regulators last month that alleges the company didn’t properly report and respond to problems that its electric beds have caught fire and caused injury and death. The U.S. Food and Drug Administration said the Elyria-based maker of wheelchairs and other health care equipment failed to investigate recurring complaints about its adjustable beds. The letter followed an August inspection of the company’s bed manufacturing plant in Sanford, Fla. Invacare responded to the FDA’s complaints in September, but the regulators said the response was “not adequate.”
Lost opportunity: Boston Scientific Corp. paid $60 million to acquire a Cleveland Clinic spinout company that recently moved to Boston from Cleveland even though its technology was created with the help of a state grant. The company, Intelect Medical Inc., is developing software that Boston Scientific plans to combine with its Vercise deep brain stimulation system. The Guide software system is designed to help clinicians visualize stimulation fields in the brain and provide more precise targeting of stimulation therapies. The Clinic developed Intelect’s technology with the help of a $7.6 million grant the state awarded through its Third Frontier program in 2004. New opportunity: April Miller Boise, the only black female head of a major Cleveland law office, left the Thompson Hine law firm to take a corporate post with Veyance Technologies in Fairlawn. Ms. Boise was named vice president, general counsel and corporate secretary of Veyance, which makes conveyor belts and other industrial rubber products under the Goodyear Engineered Products name. Building block: The developer of the East Fourth Street Neighborhood downtown is on the move again, this time buying a small but strategic building at 413 Prospect Ave. that’s best known as the home of Volk’s Jewelry & Loan. MRN Ltd. through 413 Prospect LLC paid $325,000 to Blue Jay Realty LLC of Cleveland. The building carried an asking price of $750,000. Good work if you can get it: Turns out there’s lucrative life after the Cuyahoga County Board of Commissioners. Tim Hagan, a former commissioner, will be a senior adviser to the MetroHealth system. He will work three days a week and earn $90,000 a year.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Tribe offers suite deal on bleacher seats ■ The Cleveland Indians have upped the ante in their search for new season ticket holders. Previously, the Tribe offered buy-one-getone-free tickets in the lower and upper bowls, and those will return for 2011. This year, fans who buy two season tickets in the left field bleachers will receive even more perks: a free Terrace Club membership, one free suite rental — added last year to all new season ticket packages — and two tickets in the team’s first base-line club section, where all food and non-alcoholic drinks are free. Terrace Club membership, typically a $900 value, in 2011 will be free for all full-season ticket holders, while club seats range from $80 to $100 per game, according to spokesman Curtis Danburg. Suite rentals range from $2,200 to $6,400, depending on size and location, according to Indians.com. Those bleacher tickets for season ticket holders are $9 a game; earlier this offseason, the team announced single-game bleacher ticket prices would decrease to $10. The latest offers continue the team’s effort to drive back north its full-seasonequivalent ticket base, which dropped to a post-Municipal Stadium low of 8,000 last season. The Indians finished last in attendance, at 17,395 per game, or 1.39 million overall. That’s a decrease of nearly 28% from 2009 and a drop of almost 64% from 2007,
WHAT’S NEW
when the Indians advanced to the American League Championship Series. — Joel Hammond
Ex-ShoreBank branch may land elsewhere ■ Urban Partnership Bank isn’t necessarily going to move its Cleveland location by March 17, but it has reserved the right to do so. The bank, which last August acquired most of the assets and all the deposits of the failed ShoreBank in Chicago, has notified its approximately 300 local customers that it may close its branch in the Glenville Enterprise Center in Cleveland and move it. The Federal Deposit Insurance Corp. requires banks to notify customers 90 days before a closure, said spokesman Brian J. Berg. Urban Partnership Bank is seeking a new site and would move by March 17 if it finds one, Mr. Berg said. Building new also is a possibility. The bank will further clarify its plans next month, he said. The local branch, which employs eight, does not offer retail banking. It’s on the second floor of the building in Glenville — a location that doesn’t lend itself to fullservice banking, Mr. Berg said. Mr. Berg anticipates Urban Partnership Bank will expand its services in a more consumer-oriented way in Cleveland, but he wouldn’t elaborate. — Michelle Park
Like his ideas or not, Gov. Kasich is thinking big
Polar Products has developed a heavyduty vest for its Cool Flow System that’s designed to be worn beneath lead aprons by surgeons and their staff so they can stay comfortable during procedures in hot operating rooms. The vest “is a great addition to our line,” said Jacob Graessle, surgical cooling specialist for Polar Products, which has made body cooling systems for more than 25 years. “It’s a durable vest that can withstand long-term (and) daily O.R. conditions.” Ice water continuously circulates from a 15-quart cooling reservoir through insulated tubing sewn within the vest. High flow, quickdisconnect couplings allow freedom of movement as needed, the company says. The Heavy-Duty Cool Flow vest is made with “extra-strength tubing compared to other styles ofsurgical cooling vests,” according to Polar Products. The company last year launched CoolOR, a line of surgical products for the entire surgical team. For information, visit www.PolarProducts.com.
■ Historically, it’s been a “give” relationship: Cardinal Community Credit Union would sponsor a local sports team, affording the team money to pay for items such as uniforms, and there, the relationship ended. In late 2010, though, the credit union began asking for something in return. As a result, the girls’ varsity basketball team from Willoughby South High School, which the credit union sponsors, will help with an event later this month for children who were signed up in December for accounts, said Christine Blake, president and CEO of the Mentor-based credit union. In addition, members of the boys’ junior varsity basketball team at Lake Catholic High School, which Cardinal also sponsors, have committed to mulching the landscapes of some needy credit union members after Memorial Day. The credit union does not make a request to a school until after a sponsorship has been given, Ms. Blake said. “I don’t want to make it a condition,” she said. “(We want them) to do it because you feel it’s the right thing to do, not because we’re holding the funds over your head.” So far, the response has been good. “Community is part of our credit union philosophy, and we feel that if it is part of our philosophy, this is the best way to put it into action,” she said. “We’re helping our members, and our members are helping each other.” — Michelle Park
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
COMPANY: Polar Products Inc., Akron PRODUCT: Heavy-Duty Cool Flow Vest
One good turn deserves another
■ Ohio’s new governor, Republican John Kasich, earned a spot on a Slate.com list of “10 conservatives who will define 2011.” The web site steered clear of likely GOP presidential candidates and focused on elected officials in the states who are “sorting out their survival in a world where Medicare funding is iffy and bailout money is never going to come.” Slate.com said if Gov. Kasich does everything he campaigned on, he “will completely reshape the way Ohioans get taxed and the services they expect to get.” Among the big changes Slate.com says are possible: phasing out the state income tax, leasing the Ohio Turnpike, cuts of 15% to 20% in higher education funds and relaxing sentences for nonviolent offenders to reduce prison costs. “And unlike the governors of Florida or Georgia or Nevada, Kasich has to do this in a state few businesses or people are moving to,” Slate.com concluded.
Did your portfolio do this well in 2010? ■ Financial blog SeekingAlpha put together a couple charts — one for the top 20 price performance companies in the S&P 500 in 2010 and the second table for the bottom 20 — and two companies with Northeast Ohio operations made the chart on which you’d want to be. Columbus-based Huntington Bancshares, which has a big presence in this region, was No. 6 on the gainers list, with stock price
appreciation of 89.8% from Dec. 31, 2009, to Dec. 30, 2010. (The stock rose to $6.89 from $3.63 in that span.) Iron ore giant Cliffs Natural Resources Inc. of Cleveland was No. 19 on the list, with its stock rising 71.6%, to $78.38 from $45.68.
If you need help multitasking, consult the Cleveland Clinic ■ The Cleveland Clinic was singled out for praise in a Forbes.com blog post as one of the nation’s institutions that succeeds in pursuing “two seemingly divergent ideas at once.” The post came from Inder Sidhu, senior vice president of strategy and planning for worldwide operations at Cisco Systems Inc. Mr. Sidhu has written a book called “Doing Both: How Cisco Captures Today’s Profits and Drives Tomorrow’s Growth,” and his blog post focused on companies and institutions that are good, essentially, at multitasking. In addition to providing “top-notch medical care,” Mr. Sidhu wrote, the Clinic “is also a pioneer when it comes to health care reform.” For several years, the Clinic “has aimed to simultaneously improve patient care and cut costs,” according to Mr. Sidhu. “Doing both is impossible, some critics say. But Cleveland Clinic has proved them wrong. This month, the institution joined five other care providers, including the Mayo Clinic and Utah’s Intermountain Healthcare, in a first-of-its-kind (effort) to pursue cost savings and care breakthroughs. The organizations plan on sharing best practices, new ideas and innovations, too. Has doing both ever been more timely?”
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