Crain's Cleveland Business by Crain's Cleveland Business

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New state Medicaid plan based on quality

Kasich team renews push to collect muni taxes Communities still balk at turning over control By JAY MILLER jmiller@crain.com

After lying low since the fall, the Kasich administration intends to renew its push to streamline municipal income tax filing for businesses across Ohio by bringing the collection of municipal taxes under state control. Presently, 600 communities collect their own taxes, devise their own forms and even define for themselves what income is subject to municipal tax. Putting the collection of those taxes in the state’s hands is part of an effort, led by Lt. Gov. Mary Taylor, to make it easier to do business in Ohio. “Ideally, making Ohio a better place to do business includes makTaylor ing it easier to do business on the local level,” Ms. Taylor said on a visit to Cleveland last Tuesday, Jan. 24. “We have heard (fragmented local tax collection) is an impediment to business growth in Ohio.” According to the Ohio Municipal League, 540 communities in Ohio collect income taxes. Some have joined together in collection agencies to handle their tax collections. The Brecksville-based Regional Income Tax Agency collects taxes for 207 communities; the city of Cleveland’s Central Collection Agency serves 63 taxing districts. Municipalities have reacted strongly to what they see as the state once again usurping home rule, and they’re especially concerned about turning over tax collection to the state. The lieutenant governor said no legislation has been drafted, though she and Ohio tax commissioner Joe Testa have been airing the idea since last summer. “We’d like to have an open discussion of what are our options are,” she said

See TAX Page 4

Cleveland

Buffalo*

Branches: 121 Branch share: 11% Deposits: $10.93 billion Market share: 21.67%

Branches: 41 Branch share: 13.6% Deposits: $2.50 billion Market share: 9.55%

HEALTHIER KEY KEYS ON ‘GO-TO’ MARKETS As bank’s capital level and economy have improved, its acquisition activity also may rise By MICHELLE PARK mpark@crain.com

hough he’s quick to emphasize that acquisitions like the one KeyCorp announced this month are only one lever the bank will use to achieve growth, Bill Koehler, Key’s No. 2 executive, said the banking giant is in a far better position to swing deals now than it has been in recent years. “We are much stronger financially,” Mr. Koehler, president of Key Community Bank and KeyBank N.A., said in an interview last Wednesday, Jan. 25, with

Crain’s. “We should be viewed by a potential seller as an attractive partner, somebody who is going to be a responsible employer of their employees, somebody who will support the community in the way that that organization probably has over time.” Key signaled its interest in possible acquisitions while reporting its fourthquarter earnings last week. In Key’s earnings release, KeyCorp chairman and CEO Beth Mooney commented on KeyBank’s agreement to acquire 37 HSBC Bank branches in Buffalo and See KEY Page 5

Kasich proposal would reward providers with best outcomes By TIMOTHY MAGAW tmagaw@crain.com

Gov. John Kasich’s administration quietly is laying the groundwork for a Medicaid program that pays doctors for providing good care rather than lots of care. A novel approach? Not entirely, but health care observers say the governor’s office appears to be backing up its rhetoric with the state’s checkbook. The state recently announced plans to rebid contracts with its Medicaid managed care providers, which coordinate care for nearly 70% of the people on Ohio’s Medicaid rolls. Under the new contracts, the state expects to pay more money to managed care groups that are able to demonstrate better outcomes for patients. Moreover, the state is working to ANALYSIS transform the criteria by which it reimburses hospitals and physicians. Now, providers are paid differing rates based on a patient’s diagnosis. However, state Medicaid director John McCarthy told Crain’s the state is looking at “quality data and trying to figure out how to incorporate that into the payment methodology.” While still short on details, these initial steps of overhauling the Medicaid program are just the start of significant changes on the way, according to state officials leading the efforts. The push has hospitals, doctors and managed care plans bracing for what the changes could mean for them. “Kasich is putting some money behind this, and isn’t just saying, ‘This is the right thing to do,’” said J.B. Silvers, a health care finance expert and professor of See MEDICAID Page 6

INSIDE Still in the club at Progressive Field Portland

Seattle

Branches: 52 Branch share: 10.1% Deposits: $2.49 billion Market share: 6.15%

Branches: 112 Branch share: 11.4% Deposits: $6.48 billion Market share: 9.23%

* — BUFFALO DATA DO NOT INCLUDE RECENT ACQUISITION OF 37 HSBC BRANCHES; BRANCH/BRANCH SHARE DATA FROM KEYCORP AS OF YEAR-END 2011; DEPOSITS/MARKET SHARE DATA FROM FDIC AS OF JUNE 30, 2011

The Indians have maintained the all-inclusive food feature in Progressive Field’s luxury club seating area. PAGE 7 ALSO INSIDE: ■ A replacement advocacy group for the Flats is in the planning stages. PAGE 6

NEWSPAPER

74470 01032

SPECIAL SECTION

FINANCE Chief financial officers often are asked to take on human resources duties ■ Page 13 PLUS: WATCHING EUROPE ■ SEC RULE CHANGES ■ & MORE

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THE GAP IS CLOSING

COMING NEXT WEEK

Women who worked full time in wage and salary jobs in 2010 had median weekly earnings of $669, which is 81.2% of men’s median weekly earnings — $824 — that year, according to new data from the United States Bureau of Labor Statistics. The finding continued a pattern of women posting gains each decade that bring their earnings closer to those of men. By racial groups, women’s-to-men’s earnings ratios in 2010 were higher among blacks and Hispanics than among Asians and whites. Here’s the data breakdown:

Metro mechanics Cuyahoga County-owned MetroHealth System continues to face challenges; we analyze whether the business model is realistic and talk to similarly structured hospitals.

Women’s earnings as a percentage of men’s earnings, 1980-2010 NEWSCOM

REGULAR FEATURES Best of the Blogs......19 Big Issue..................11 Classified ................18 Editorial ..................10 Going Places............12

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List: Engineering firms ..................17 Personal View ..........10 Reporters’ Notebook ..19 Tax Liens ................11

Year

Total

White

Black

Hispanic

Asian

2010

81.2%

80.5%

93.5%

90.7%

82.6%

2000

76.9

75.8

84.1

87.8

79.9

1990

71.9

71.5

85.3

87.4

1980

64.2

63.4

75.8

73.5

SOURCE: U.S. BUREAU OF LABOR STATISTICS; WWW.BLS.GOV

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editors: Joel Hammond (jmhammond@crain.com) Sports Kathy Carr (kcarr@crain.com) Marketing and food Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Tim Magaw (tmagaw@crain.com) Health care & education Michelle Park (mpark@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing/Events coordinator: Jessica Snyder (jdsnyder@crain.com) Advertising sales director: Mike Malley (mmalley@crain.com) Account executives: Adam Mandell (amandell@crain.com) Nicole Mastrangelo (nmastrangelo@crain.com) Dawn Donegan (ddonegan@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Digital strategy and development manager: Stephen Herron (sherron@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Lauren M. Rafferty (lrafferty@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Audience development manager: Erin Miller (emiller@crain.com)

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Medical biller gets paid by making ’em pay MedData moved its headquarters to Northeast Ohio from Seattle in 2008 after said MedData is on the acquiring Summit Healthverge of rounding out its care Services, a billing service offerings to turn the and coding company in company into a medical Brecksville. billing powerhouse. Since then, MedData “For us, this has been a Thompson has nearly doubled the size great journey so far, and of its employee base at the we’re definitely picking up steam,” former Summit Healthcare location he said. on Snowville Road in Brecksville to Founded more than 30 years ago, about 215 — a number expected to

With two acquisitions, Brecksville’s MedData ‘picking up steam’ By TIMOTHY MAGAW tmagaw@crain.com

MedData Inc. CEO Douglas Thompson characterized the explosive growth of his Brecksville-based medical billing company as a result of just “getting better at what we do.” To put it simply, that means getting

people, insurance companies and government programs to pay doctors for their efforts. Indeed, the company claims its services will boost a physician group’s revenue by 10% to 15%. But with the recent acquisition of two other medical billing outfits — one in Peoria, Ill., and another in Grand Rapids, Mich. — Mr. Thompson

INSIGHT

grow, albeit modestly, as the company continues to line up acquisitions. “There’s always quite a list of (potential acquisitions),” Mr. Thompson said. “They come in fits and spurts, but the company right now is focused on ensuring the acquisitions we’ve made recently are integrated correctly.” Mr. Thompson took the helm of MedData after Baird Capital Partners, See MEDDATA Page 8

Dawson Cos. interrupts acquisitions just long enough to be bought Purchase by Fla. firm to provide capital for growth By MICHELLE PARK mpark@crain.com

JASON MILLER

Tina Haddad, owner of Green Rock Lighting, at the company’s headquarters on the West Side of Cleveland

BRIGHT FUTURE IN LEDs Green Rock Lighting sees opportunities at home, elsewhere for high-tech, cost-saving lighting products By DAN SHINGLER dshingler@crain.com

ina Haddad thinks her Green Rock Lighting has a bright future — and not just because it’s producing fixtures for LEDs, or lightemitting diodes. Her optimism, she says, is based on the growing number of U.S. cities preparing to upgrade their street lighting. Cleveland is among them, and she hopes the city that installed the first electric street lights also will be one that

modernizes them by using her homegrown products. Ms. Haddad is investing in new equipment, hiring engineers and making space to produce what by this time next year could be her biggest product. “I have wholeheartedly put our eggs in this basket, knowing it’s the way of the future,” Ms. Haddad said. Latching on to a new product and producing it on what many companies would consider a shoestring is nothing new to Ms. See LIGHTS Page 8

NOT JUST A CLEVELAND THING Cities nationwide are aiming to replace existing street lights with the kind of LED fixtures manufactured by Green Rock Lighting, an affiliate of Cleveland-based R H Industries. A sampling of cities that are looking into the change:

■ Cleveland, where spokeswoman Andrea Taylor estimates about 70,000 older lights need replacing. Green Rock’s Tina Haddad says her lights cost about $800 apiece, for a possible price tag of $56 million. ■ Pittsburgh ■ Baltimore

■ Des Moines, Iowa According to Mark Kelly, a regional director of sales at Bridgelux, a company that has partnered with Green Rock, LEDs use far less power than traditional street lights and can pay for themselves in two or three years. — Dan Shingler

Last July, following his firm’s 12th acquisition or merger since 2001, D. Michael Sherman wasn’t shy about stating his intention to keep buying businesses. Sherman As proof, Dawson Cos. bought another company in Columbus last September. But now, in a surprising twist, the company that so often was the acquirer has become the acquired. Mr. Sherman, chairman and CEO of Dawson, sold the insurance broker-agent based in Rocky River to AssuredPartners Inc. of Lake Mary, Fla., effective Dec. 31. Terms of the deal were not disclosed. Day-to-day operations won’t change for Dawson, which has six offices in Ohio, two in Florida and one in Virginia and employs about 250. Its name stays, and its leadership

remains the same. Gone, though, is Dawson’s concern for where it will obtain capital to grow. AssuredPartners is a company formed last March by a Chicago-based private equity firm, GTCR, and backed by an initial investment commitment of $250 million. Mr. Sherman said a sale of Dawson “was not planned all along, but what I did know was that as we were making acquisitions as a closely held company … we would hit the wall at some point.” “What we started to encounter as we moved forward is that we were exhausting our own ability to continue to borrow money to fund that expansion,” Mr. Sherman said. “We are in a position now that any acquisition that we might entertain in our geographic territories, we See DAWSON Page 4

THE WEEK IN QUOTES “Ideally, making Ohio a better place to do business includes making it easier to do business on the local level. (Fragmented local tax collection) is an impediment to business growth in Ohio.”

“Product innovation is one of the most important aspects of economic development for the city of Cleveland.” — Tracey Nichols, economic development director, city of Cleveland. Page 11

— Lt. Gov. Mary Taylor. Page One

“Our business is red hot. … We’re working our brains off.” — Mark A. Filippell, managing director, Western Reserve Partners LLC. Page 13

“Having the objective finance hat on and exercising that against the personal relationship HR hat is sometimes a bit taxing. But you need to do what needs to be done.” — Bill Chorba, CFO, NineSigma. Page 13

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Tax: Communities fear state control continued from PAGE 1

last week. Those discussions will be getting under way next month. State Rep. Cheryl Grossman, a Republican from Grove City and assistant majority whip in the Ohio House, has scheduled a meeting to discuss the issue for Feb. 9.

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Ms. Taylor said the administration’s concern focuses on problems of uniformity. She said tax forms and even the definition of what income is taxed can vary from community to community. Some communities, she said, tax a portion of health insurance plans, such as the amount set aside for a health savings account. There is also variation in the way municipalities tax pensions, deferred compensation and even lottery winnings. Some communities also allow sole proprietors a net operating loss carryforward, while others do not. Employers must file monthly or quarterly forms reporting how much municipal income tax has been withheld from employee paychecks and to pay that tax to each municipality, unless a community

have the capacity to do that,” he continued. “In the past, we would have had to have been selective.”

Building blocks AssuredPartners has acquired four platform insurance brokerages, including Neace Lukens in Kentucky,

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Worried? You bet Most communities aren’t keen on turning over tax collection to the state. Kent Scarrett, director of communications for the Ohio Municipal League, said league members worry that if businesses file and pay their municipal taxes to the state, it will slow the flow of tax revenue to communities. “Our main concern is the loss of

Dawson: Firm ‘will be active’ continued from PAGE 3

PRESENTED BY:

outsources its tax services to one of the two tax collection agencies. One of the main proponents of municipal tax uniformity is the Ohio Society of Certified Public Accountants. David Reape, senior manager in the tax department of Beachwood CPA firm Ciuni & Panichi Inc., who has been involved in shaping the society’s legislative policy, said many client small businesses are filing 20 to 30 different municipal tax withholding forms for employees. Mr. Reape said one client, a construction company, files returns with 100 different communities. “What we’d like to see is just simplification in complying with the rules we have now,” he said.

growing its annualized revenue to roughly $164 million from nothing last March. Dawson and the others now are brand names of AssuredPartners. However, in the Virginia market, Dawson uses the name Tabb, Brockenbrough & Ragland, or TB&R, the name of the firm it acquired last July. AssuredPartners’ priority has shifted from buying platform companies to using its team and its capital to grow those that have joined it, said Jim Henderson, chairman and CEO of AssuredPartners. Doubling Dawson’s revenue over the next five years is the goal, Mr. Henderson said. Crain’s Book of Lists, published Dec. 19, listed Dawson as the second-largest business insurance agency in Northeast Ohio with 208 full-time equivalent employees as of July 1, 2011. Mr. Sherman has assumed responsibility for expanding the business into New England in addition to growing Dawson’s existing markets. Dawson’s expansion should begin “very, very quickly,” Mr. Sherman said, noting that he’d spoken on one day last week with four owners of firms in northern Ohio about joining the operation. He said Dawson will be active throughout 2012. In seeking to add other companies to the network, Dawson will consider firms’ existing clients, financial performance and the tenure and experience of their employees. Already, the Dawson acquisition makes AssuredPartners the largest insurance brokerage firm in Ohio and the 13th largest in the nation, according to firm executives. The overarching goal is to grow AssuredPartners to a top 10 agent-

local control of revenue,” he said. “There would be a lag time in control of (income tax) revenue.” Mr. Scarrett said his members are concerned about waiting for quarterly or monthly checks from the state for tax withholding payments that businesses make throughout the year. “There’s obviously an interruption in cash flow that could lead to the need for borrowing” by municipalities that are used to receiving the withholding payments directly, he said. Mr. Scarrett said communities also worry that the state wouldn’t be as diligent as the communities themselves in auditing employers’ tax payments and in pursuing non-payers. “The state can’t do the job of (tracking down businesses) obligated to make tax payments,” he said. Since the issue first arose last summer, many communities have passed resolutions or more informally expressed their disagreement with state control over municipal taxes. Cleveland was one of those cities but, through a spokeswoman, the city declined to comment, preferring to wait for specific legislation. ■

broker in the United States with $400 million or $500 million in annual revenue, then potentially take the company public, Mr. Henderson said. But that’s down the road, “probably more than five to eight years,” he said. Mr. Sherman now is a board member and investor in AssuredPartners; many Dawson executives will invest, too, he said. Leaders of the other companies bought by AssuredPartners also are investors, Mr. Sherman noted. He declined to say how much his investment was other than to characterize it as a seven-figure number.

High anxiety Mr. Sherman initiated the conversations that ultimately led to Dawson’s sale. He’d discovered that AssuredPartners had been formed, and that Mr. Henderson, whom he’d known for some time, was leading the charge. Mr. Sherman believed that it might make sense to join forces. He never had been on the sell side of a deal before. He had purchased Dawson Cos. in December 1986 and had been the acquirer more than 15 times, growing Dawson to $33 million in annual revenue from $2.7 million. Now that he’s stood in their shoes, Mr. Sherman said, he has an increased empathy for other potential sellers. “The one thing I took from it that I never experienced when I was acquiring is the high degree of anxiety that you go through as the seller,” Mr. Sherman said. “When I was going through the final quarter of 2011, there was not a morning when I did not ask myself those three questions: Am I doing the right thing for all of the shareholders? The employees? The clients?” Ultimately, he and other Dawson executives determined the answer was, “Yes.” “It perpetuates the company into the future,” Mr. Sherman said. ■

Volume 33, Number 5 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 © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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Key: Reaching branch share goal helps in many ways continued from PAGE 1

Rochester, N.Y., from First Niagara Bank. “Viewed in a broader perspective, this acquisition marks an important milestone for Key,” Ms. Mooney said of the $110 million deal. “During the challenging last few years, we have focused on taking actions to strengthen our balance sheet, fortify our capital, effectively manage risk and expenses, and focus on our core relationship business. Those actions, while sometimes difficult, have now positioned us so that we can, in a disciplined manner, act on opportunities to strengthen our franchise.” The Jan. 12 acquisition announcement came eight months after Key’s new leadership team, led by Ms. Mooney, took over. It’s the first acquisition announced by Key since July 2007. Does this signal that new leadership is ushering in a more acquisitive era? “I wouldn’t read into that,” Mr. Koehler said. “There have been a lot of factors in the marketplace and in the economy that have, over time, had an impact on M&A activity in the market, and the reality is there have not been a lot of transactions over the last three years as the most recent recession and the liquidity crisis took hold.” Nonetheless, Key has capital to deploy, and questions about the company’s plans for its money

“The reality is that ... we can’t wait for an acquisition to come up. We have to focus on making our business better ... and then being ready to respond to those acquisition activities that come up that do make sense.”

on making our business better, branch by branch, market by market, and then being ready to respond to those acquisition activities that come up that do make sense.”

– Bill Koehler, president, Key Community Bank and KeyBank N.A.

A deal here, a deal there

were not in short supply during the bank’s earnings conference call last Tuesday, Jan. 24. “Key from a capital standpoint is in fabulous shape,” said Jeff Davis, an equity analyst with Guggenheim Securities who has followed Key for 11 years. Responding to such questions during the conference, Ms. Mooney said, “Our priorities around capital have not changed.” The primary use of capital, Ms. Mooney said, is investing in Key’s businesses and loan growth. Second, she said, would be the bank’s common stock dividend, third would be a share repurchase and fourth would be selective acquisitions over time.

The 10% threshold Mr. Koehler did acknowledge in the interview with Crain’s that the current leadership team wants to be ready to respond to the right acquisition opportunities when they arise. Key does not have an asset size range, Mr. Koehler said, but when it eyes a deal, it considers the branch share, market share, branch prof-

itability and returns. The institution would consider acquisitions across its footprint, which extends from Alaska to Maine, he said. “Any market that we’re in, there’s logic to investing in the market,” he said. “Our strategic plan in our consumer business is to, in each of our markets, drive to 10% or better branch share,” he added. Branch share is the number of branches a bank operates in a given market as a percentage of all bank branches in the market. Once 10% share or greater is achieved, Mr. Koehler said, institutions can derive increased efficiency in their investments, and they command better brand name recognition and better sales impact. While it would like to achieve such branch share everywhere, Key in 2008 identified six priority markets: Cleveland, Buffalo, Denver, Indianapolis, Portland and Seattle. It aims to grow in the West because growth demographics there are attractive, and it aims to grow in the other markets because its presence, as measured by branch density and market share, is strong, he said.

Key already has achieved 10% or more branch share in four of its priority markets; only Denver and Indianapolis trail the 10% mark, according to the bank.

Market-by-market focus Acquisition is only one part of achieving growth in today’s regulatory, competitive and economic landscape, Mr. Koehler stressed. Now, when acquiring and retaining customers is more important than ever, building new branches to achieve greater branch density is critical, as is improving the performance of existing branches. Key over the past three years has opened 30 to 40 branches across the country each year, and has opened 16 in the Cleveland area over the past four years. The bank also is using relocations, consolidations and technology investments to strengthen its business in particular markets. In Cleveland, for example, it’s moving branches to areas where its customers have moved, Mr. Koehler said. “The reality is that … we can’t wait for an acquisition to come up,” Mr. Koehler said. “We have to focus

So why did buying the branches in Buffalo and Rochester make sense? Key saw a chance to enhance its existing presence and provide customers better convenience, Mr. Koehler said. “(HSBC is) a client-centric organization that had a lot of the same sales management and risk disciplines that we have,” he said. “So that was attractive to us. We think there are things that we can learn from them.” The deal nicely adds density in those existing markets, observed Guggenheim’s Mr. Davis, who said he wasn’t surprised to see Key spend money on expanding in the East and not the West, where the population growth is. “Properties are sold, not bought,” Mr. Davis said. “The sellers determine what’s for sale, not the buyer. That’s what was for sale.” There’s a lot for sale in the banking world, Mr. Davis said, and he expects some of the same size moves by Key in the future. “I think we’ll see Key as an incremental buyer here or there,” he said. “I don’t look for any sort of transformative acquisition for them.” ■

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In planning for new Flats group, industrial reps feel minimized By JAY MILLER jmiller@crain.com

Plans are under way to re-create an advocacy group for Cleveland’s Flats, but a spokesman for maritime and industrial interests in the district says the planners aren’t paying enough attention to the concerns of companies in those sectors. At a meeting of the ClevelandCuyahoga County Port Authority last Wednesday, Jan. 25, Jim Cox, executive director of the Flats Industry Association, complained that his group and its 40 member companies — including Cargill Deicing Technology’s Cleveland salt mine, LaFarge North America’s cement operations and Ontario Stone Co. — have not been included on the advisory board that is creating a new Flats advocacy group called Flats Forward Inc. Steelmaker ArcelorMittal, the biggest employer in the Flats, has been involved directly in those discussions. Mr. Cox said he has been invited to attend presentations about the new organization, but has not had input in the decision-making process. At the meeting, Joe Marinucci, president of Downtown Cleveland

Alliance, made a presentation about Flats Forward. The Port Authority is taking on a growing role on the Cuyahoga River, and Mr. Marinucci is asking that the Port Authority house whatever staff Flats Forward might have eventually. The presentation to the Port Authority board was informational only, and the board took no action on the presentation. Mr. Cox explained briefly to the Port Authority board, and more extensively in a subsequent interview with Crain’s, that his members are particularly troubled that their concerns about safety along the planned Towpath Trail are not being heeded. “Nobody’s relating to industry,” he said, noting that industrial property owners in the Flats pay property taxes while most residential property there is subject to tax abatement. “Everybody’s got security issues. We’re seen as obstructionists, but we’re not.” The Towpath Trail is a planned hiking and bicycling path that is mapped to extend to Wendy Park on Whiskey Island. Mr. Cox said the path, as now planned, would use the Willow Street Bridge, which connects the Cargill salt mine and Ontario Stone property to highways

beyond the Flats. Mr. Cox said his members are concerned that adding hikers and bikers will create serious safety hazards and security problems.

Forget the past Councilman Joe Cimperman, who has been driving the creation of Flats Forward, dismisses Mr. Cox’s assertions that industrial interests aren’t sufficiently represented, noting that Mr. Cox had attended some of the earlier organizational meetings. “Maybe Mr. Cox is wondering whether or not he is welcome to participate in the organization and the answer is a hearty yes,” Mr. Cimperman said. “But unlike the days of old, we are not going to be pitting people against each other, because we don’t profit from conflict. We will be asking (representatives from) industry, maritime, residential, recreational, commercial and entertainment” to participate on Flats Forward’s board of directors, he said. An organization chart Mr. Marinucci presented to the Port Authority board showed a 25-person board with nine seats to be occupied by industrial and maritime interests. Flats Forward has been in the planning stages for about a year,

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since an earlier organization, the Flats Oxbow Association, was in its death throes. Cleveland has a long history of well-organized neighborhood advocacy and development groups. The Flats Oxbow group lost the city’s confidence and financial support several years ago and had its own internal problems. The Flats Oxbow group was formed in the late 1970s when the Flats became dominated by the bars and restaurants that made the area a lively entertainment district. Flats Industry Association was formed in 1988 to provide the traditional heavy industries their own voice. Eventually, Flats Oxbow embraced the area’s heavy industries.

‘A lost city’ However, in the last decade, a residential population has taken hold in the Flats, creating a constituency that never felt it was represented adequately in Flats Oxbow. At the same time, the industrial base in the Flats has declined, and some of those remaining feel threatened by the way the area is changing. “We’re a lost city down here,” said James Plotz, president of Wm. Plotz Machine and Forge Co., which has been in the Flats for 24 years. Mr. Plotz said he, too, feels in the dark about plans for the new Flats organization. “It’s all behind-thescenes stuff, and you can’t get a straight answer,” he said. ■

Medicaid: Past coordination efforts have made few inroads continued from PAGE 1

health systems management at Case Western Reserve University. “It’s a big signal.”

Pinching pennies The Kasich administration’s quest to change — or as the governor’s health care czar, Greg Moody, characterized it, “modernize” — Ohio’s Medicaid program largely is driven by its status as an unmanageable drain on the state’s resources. In fiscal 2011, which ended last June 30, the Medicaid program, which covers 2.2 million Ohioans, cost taxpayers roughly $17.5 billion. That total was an 11% increase over 2010 and a nearly 30% jump over 2008, according to data provided by the governor’s Office of Health Transformation. On a basic level, the hope is that stronger case management on the part of the managed care plans and health care providers will stave off serious, more costly health problems and drive down the cost of the Medicaid program. Part of the state’s managed care reorganization would lead to the assignment of fewer patients to each case manager — a number that now reaches as high as 150 patients per manager. “We’re systematically starting to pay for performance,” Mr. Moody, officially dubbed director of the governor’s Office of Health Transformation, told Crain’s. “Our intention is to continue that process of transitioning into models of care that pay for someone to take risks for better outcomes.” Managed care plans serving Northeast Ohio, such as UnitedHealthcare Community Plan of Ohio and Buckeye Community Health Plan, have remained largely mum on what the Kasich administration’s changes could mean for their operations, other than saying through statements they broadly support the governor’s efforts to rein in costs. However, physicians note that patient hand-holding only can go so far. Some responsibility for spiraling Medicaid costs rests on patients who don’t heed medical advice — something the Kasich administration’s proposals don’t take into account. “Something we have to recognize is that we — hospitals, physicians, everyone else — have a part in this as stakeholders, but patients are

stakeholders, too,” said Dr. Anthony Bacevice Jr., who runs an OB/GYN practice in Avon.

Private sector principles While the state’s effort to beef up care coordination is admirable, some health care observers also question whether such moves would get a handle on skyrocketing Medicaid costs. For instance, Dr. Silvers noted that a large portion of Medicaid enrollees are on the rolls for only a short time because they might be between jobs, which would make it hard to coordinate care over a long period of time. Likewise, Bill Ryan, president of the Center for Health Affairs, a Cleveland-based advocacy group representing area hospitals, said similar efforts to coordinate care have been implemented in the past with little to show in terms of success. “I’m not so sure anymore that managing care saves money,” said Mr. Ryan, who was deputy director and chief operating officer of the state’s Medicaid program from 1993 to 1996. “I don’t believe any of this stuff has controlled the rate of growth of Medicaid expenditures in the past, so I’ve got to scratch my head and say, ‘Geez, what are we supposed to do here?’” But given the Kasich administration’s decision to put some muscle — aka, money — behind the changes, state officials are optimistic they’ve found the winning formula. Mr. Moody, for one, said he prefers to view the state as a “health care purchaser” — one looking for the best bang for its buck, rather than an institution that blindly doles out checks for thousands of unnecessary procedures and tests. In lockstep with that theme, the state plans to lift language for the quality measures included in its new managed care contracts from the Catalyst for Payment Reform, a national coalition made up of large health care purchasers. The San Francisco nonprofit has unveiled a sample contract for companies — and in Ohio’s case, Medicaid — to draw inspiration from as they develop new contracts with health plans. “It’s very hard for one purchaser to make a difference in the health care market, even when you’re as big as a state Medicaid program,” said Suzanne Delbanco, executive of the Catalyst for Payment Reform. ■

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Commercial Indians club seats retain all-inclusive feature gauged customersâ&#x20AC;&#x2122; opinions on potential insurance Team changes to luxury seating area this offseason rate climb continues By JOEL HAMMOND jmhammond@crain.com

Carriers, in turn, will underwrite cautiously By MARK A. HOFFMAN Business Insurance

U.S. commercial insurance rates are expected to climb across many lines of business in 2012, according to an analysis released last week by Marsh & McLennan Cos.â&#x20AC;&#x2122; Marsh Inc. unit. The expected rise would continue a trend that began in the second half of 2011, according to Marshâ&#x20AC;&#x2122;s â&#x20AC;&#x153;Navigating the Risk and Insurance Landscape: U.S. Insurance Market Report 2012.â&#x20AC;? The report notes that the global property-and-casualty insurance industry sustained more than $105 billion in insured catastrophe losses last year. While the losses had a â&#x20AC;&#x153;minimalâ&#x20AC;? impact on the industryâ&#x20AC;&#x2122;s capital position, the losses hit earnings, the report said. â&#x20AC;&#x153;Carriers are expected to be extremely disciplined in their underwriting and seek rate increases where they can,â&#x20AC;? said David Bidmead, Marsh U.S. CEO, in a statement accompanying the report. In his introduction to the report, Mr. Bidmead wrote that many insurers are saying publicly that they will hold the line on rates and are â&#x20AC;&#x153;showing more willingness to lose a particular account rather than risk underpricing.â&#x20AC;? For risk managers purchasing various lines of insurance, â&#x20AC;&#x153;supplying comprehensive, up-to-date dataâ&#x20AC;? to insurers, along with renewing insurance programs early, are some strategies to cope with a market in transition this year, Mr. Bidmead said. â&#x2013; Mark A. Hoffman is a senior editor with Business Insurance, a sister publication of Crainâ&#x20AC;&#x2122;s Cleveland Business.

For those with big appetites, the club seating area at Progressive Field still may be your best bet. After an offseason studying potential changes for the luxury seating area in the second deck along the firstbase line, the Cleveland Indians officially announced last week that club seat ticket buyers in 2012 would enjoy the same all-inclusive food and non-alcoholic beverage perks they have for many years, but at a slightly lower price than last season. The Indians in October distributed a survey to past club seat customers, asking for their thoughts on six new pricing options, some of which included the all-inclusive food option and some of which did not. At that point, the team said the survey simply was part of standard research conducted by the team each offseason, and there were no plans in place to alter the area. The team listed on its website last week the finalized options for 2012: â&#x2013; $50 to $65 per ticket for full season club seats, with the higher prices for seats closer to home plate; â&#x2013; $55 to $65 per ticket for 40-game plans; and â&#x2013; $65 to $75 per ticket for 10-game plans. â&#x20AC;&#x153;Value of the all-inclusive program and price were both clear factors in the purchase decision that were highlighted in the fansâ&#x20AC;&#x2122; response to the survey, which helped frame our club strategy for 2012,â&#x20AC;? Indians senior director of communications Curtis Danburg wrote in an email. In 2011, prices for club seats ranged from more than $65 (for full-season tickets) to more than $80 (for 10game packs and single-game tickets). The seats include gourmet food options not found elsewhere in the ballpark, plus access to a climatecontrolled lounge. The Indians in their October survey listed possible prices from $40 to $60. The Indians last January raised eyebrows when they included a â&#x20AC;&#x153;club seat test driveâ&#x20AC;? as part of new and renewed season ticket packages last season; the offer also included a

suite rental and access to the Terrace Club, the swank restaurant that overlooks left field. Combined, those perks encompass the most expensive real estate at Progressive Field, as the Indians continue their efforts to retain season ticket holders, the lifeblood of pro sports teams. Just last week, the Atlanta Braves made a similarly surprising move, as they offered a 33% food and beverage discount â&#x20AC;&#x201D; excluding alcohol â&#x20AC;&#x201D; to season ticket holders who renew for 2012. Changes also may be in the offing for the ballparkâ&#x20AC;&#x2122;s kids play area in the mezzanine section in right field â&#x20AC;&#x201D; a change that may include redone suites. One portion of a survey distributed last week read, â&#x20AC;&#x153;The Indians are considering enhancing the kids play area at Progressive Field. This new area will include an outdoor space on the Mezzanine Level (including speed pitch, waffle ball, batting cage, and video games) and an adjacent indoor space in the suites with a childrenâ&#x20AC;&#x2122;s jungle gym and play area.â&#x20AC;? Mr. Danburg said there currently

The Cleveland Indians had considered changes to their club seating area this offseason, but opted to retain the same structure, which features unlimited gourmet food options. ZUMA PRESS

are no concrete plans for any changes in the mezzanine area. The Indians have been after more revenue sources inside Progressive Field since March 2010, when they asked nine architectural firms, including seven in Northeast Ohio, to submit ideas on how they could repurpose different areas within the stadium. The Indians have altered a handful of suites since then, including

turning two into a â&#x20AC;&#x153;Championship Suite,â&#x20AC;? remodeling one into their â&#x20AC;&#x153;Fan Caveâ&#x20AC;? and moving their popular â&#x20AC;&#x153;Tribe Social Deckâ&#x20AC;? to a suite and rebranding it the â&#x20AC;&#x153;Indians Social Suiteâ&#x20AC;? last year. Progressive Field has upwards of 115 suites, second most in baseball to the Texas Rangers and widely viewed by stadium experts as far too many. â&#x2013;

THE SMALL BUSINESS LENDING FUND DIDNâ&#x20AC;&#x2122;T GET HERE ON ITS OWN. IT CAME WITH GUIDELINES. THERE WERE THE FORMAL GUIDELINES. THERE WERE THE INFORMAL GUIDELINES THAT EXPLAINED THE FORMAL GUIDELINES. AND THERE WAS A 30-DAY DEADLINE. SO, THERE WERE EMERGENCY SHAREHOLDER MEETINGS, AND DISCLOSURES AND NON-STANDARD PROXY STATEMENTS, AND CHANGES IN CHARTERS AND CORPORATE STRUCTURES. ALL TO MEET, YOU GUESSED IT, THE GUIDELINES. SO HOW DID WE HELP OUR FINANCIAL SERVICES CLIENTS MEET THOSE GUIDELINES, INCREASE LENDING TO SMALL BUSINESSES AND HELP COMMUNITIES GROW?

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Urban League rolls out accelerator Lights: Green Rock says Tenants hope to collaborate on projects, clients By JAY MILLER jmiller@crain.com

The Urban League of Cleveland is adding a business accelerator, which it will call UBiz Connect, to the line of business services it offers. UBiz Connect will offer a dozen businesses discounted professional consulting services in human resources, marketing and accounting as well as office space and computer and Wi-Fi service. The tenant companies, all existing businesses, will use the space at the Urban League’s Cleveland office as satellite offices in the hope the businesses will collaborate on projects or with clients they might not be

able to serve individually, said N. Michael Obi, the Urban League’s director of its Multi-Cultural Business Development Center. Mr. Obi said the Urban League hopes that new, bigger businesses might grow from those collaborations. Mr. Obi said seven tenants already have been identified. The accelerator businesses will share space with the business development center, a federally sponsored small business development center the Urban League has run since 2009. UBiz Connect is funded by a $50,000 grant from the JP Morgan Chase Foundation. “Clearly we see small business

as the engine of the American economy, so supporting small business and making sure that they are successful is an important part of that (effort),” said Cinnamon Pelly, a Columbus-based vice president of the bank foundation. “Our support (of UBiz Connect) is an important piece to help seed some of that work.” Ms. Pelly said the bank would be interested in financing new businesses that grow from the accelerator. Business accelerators are similar to incubators, but they usually focus on companies entering or growing in a national or global market. UBiz Connect will subsidize some support services for client businesses. Those businesses will pay a $150 monthly membership fee. ■

MedData: Growth draws more investors continued from PAGE 3

the U.S.-based buyout fund of Baird Private Equity, acquired the company in late 2007. While he wouldn’t share exact figures, Mr. Thompson said the company’s average annual revenue growth rate has been about 30% since 2007. Also, the company’s average annual profit growth hovers at about 40%. Moreover, Mr. Thompson noted MedData’s continued growth has also caught the eye of several additional investors. Baird currently owns a majority stake in the company, with current employees and a sundry of the company’s original investors rounding out the owner-

ship. “When we first started, we did business with 100 facilities, and now have about 700,” he said. “We’ve driven a national presence, and we’re very well known in the specialties we do business.” This month, MedData acquired MedDirect Inc., a billing company in Grand Rapids that specializes in collecting from patients, for an undisclosed sum. The move, Mr. Thompson said, allows MedData to carry a “very significant” differentiation from any other major billing company. For one MedData hadn’t focused on patient collections, but given the growing trend of patients having to stomach more of their own health

care costs, Mr. Thompson said the MedDirect acquisition positions his firm to tap into that growing market. MedDirect CEO Ken Bloem, now chairman of MedData’s board of directors, said patient fees historically have accounted for about 5% of a physician’s revenue, but today can account for as much as 20%. That’s due, in part, to patients having to contribute more for insurance co-pays and deductibles. “We’re not in business just to collect the bill, but we are in business to engage patients more effectively to link them with their physician office or individual physician so they know why they’re getting a bill,” Mr. Bloem said. ■

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‘Made in USA’ should help continued from PAGE 3

Haddad and her manufacturing company, R H Industries. With a staff of only 15 and 100,000 square feet on Cleveland’s West Side, she says she’s always had to fight above her weight. Ms. Haddad’s business used its machining and fabrication shop on West 33rd Street to make fixtures and protective cages for outdoor lighting systems when infrastructure spending was boosted by federal stimulus dollars as few years ago. When defense spending was strong and predictable, she cast brass drain fixtures for the decks of Navy ships at her nearby foundry. Now, through Green Rock Lighting — an R H subsidiary Ms. Haddad formed last year — she’s looking to capitalize on a new opportunity in the lighting business. Ms. Haddad said she spent about $250,000 on the equipment she needs to start production, keeping the cost down by buying used equipment and by using machinery she already owns. She already has hired three engineers in 2012 to continue design and testing work on the new products, and said she expects to hire production staff this year, beginning with five new hires she hopes to complete by midFebruary.

Seeing the light Ms. Haddad probably will need to fight larger competitors to get the business she wants. She thinks she can do it, though, in part because she’ll be marketing her products as “Made in the USA,” from the parts she sources elsewhere to her own fabrication and final assembly in Cleveland. Ms. Haddad also won’t be going it alone. She’s partnering with California-based Bridgelux, a manufacturer of LED arrays that will provide the critical light-emitting diodes Ms. Haddad will need to make her lights work. Bridgelux doubled its revenues in 2011, when it posted sales of about $60 million, said Mark Kelly, director of sales for the company’s MidAtlantic region, which includes Ohio. It got there not by producing lighting systems itself, Mr. Kelly said, but by providing arrays to about 250 smaller manufacturers such as Ms. Haddad — similar to the way computer chip makers sell their products to other manufacturers. “I want to be the Intel, not the Dell” of the LED lighting business, Mr. Kelly said. Mr. Kelly said he thinks Ms. Haddad can succeed, in part because Bridgelux is providing Green Rock not only with LED arrays, but also with engineering support and connections with other vendors.

Cleveland’s a plum One reason Bridgelux believes in Ms. Haddad is because she is dedicated to making her products in the United States — something Bridgelux not only supports itself, but which it also sees as a marketing advantage when it comes to selling to cities and U.S. government entities, Mr. Kelly said. The first big test for Green Rock might come right in its own back yard. Ms. Haddad said she is one of the companies bidding to supply street lights to the city of Cleveland. She said she believes Green Rock is one of three finalists who will begin working with the city this year as Cleveland evaluates both the lights and the companies that provide them. The city’s business will be a plum for whatever company wins it. According to Andrea Taylor, spokeswoman for Cleveland Mayor Frank Jackson, Cleveland has about 70,000 incandescent or other old-style lights, which it hopes to replace with efficient and longerlasting LED fixtures beginning this year. Bids are under evaluation so that the city can contract out the first phases of the work this year, Ms. Taylor said. That’s a lot of lights — and a lot of money to be made replacing them.

Do the math The fixtures must be heavy duty and able not only to hold lights, but stand up to harsh outdoor conditions for years. Ms. Haddad estimates her fixtures will cost $800 or $900 each but will last for decades due to their cast aluminum construction. If anyone is counting, 70,000 lights at $800 apiece add up to a price tag of about $56 million. And Cleveland is not the only city to begin thinking about more efficient lighting. Because they use far less power than traditional street lights, LED lights can pay for themselves in two or three years, then provide continued energy savings indefinitely, Mr. Kelly said. While a traditional streetlight burns out after about 10,000 hours of use, an LED lasts about 50,000 hours. “In 11 years, if you didn’t do anything, only about 30% of your (LED) lights would go down,” Mr. Kelly said. Cities such as Pittsburgh, Baltimore, Des Moines and dozens of others already have begun replacing their lights, but hundreds of others also will do so in the next few years, Mr. Kelly predicts. That changeover creates opportunities for not only Bridgelux, but for smaller companies such as Green Rock. As Ms. Haddad notes, “I just want a piece of that pie.” ■

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PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Get to it

epublicans in Columbus have a big piece of unfinished business they must attend to in the weeks ahead. It is the job of holding down the cost of government by limiting the extent to which pension and health care costs are subject to collective bargaining in contract talks between public employees and their employers. Gov. John Kasich and the Republican members of the Legislature owe local governments and school districts across Ohio for the mess they made of Senate Bill 5, last year’s failed attempt to address the collective bargaining issue. Instead of focusing on benefit costs, Republicans created a broad, anti-union bill that riled up labor leaders and their Democratic allies, who together got behind a successful ballot initiative to repeal the bill in November. SB 5 was supposed to be a lifeline to cities and schools, both of which suffered when Gov. Kasich and the Legislature brought Ohio’s budget into balance last summer by reducing their levels of state assistance. The governor’s justification for those cuts was that the new collective bargaining bill would provide local public bodies with the cover they’d need to bring down their employee benefit costs, thus lessening the need for state dollars. Now, as a new year begins, municipalities and school districts must deal with the worst of both worlds — less state money and no bill that puts caps on how much they can pay in the way of their employees’ health care and pension benefits. That wasn’t the deal. At a Dec. 19 press conference that looked back at his first year in office and outlined his agenda for 2012, Gov. Kasich indicated he had little appetite for revisiting the collective bargaining issue. On the repeal of SB 5, the governor said: “I don’t always get it right. I make mistakes. It’s the way it goes. If you cannot lose something and take it like a man — or like a leader — and learn from it, then you haven’t learned anything about life. They just said ‘no.’ I’m OK with that. It’s cool. You move to the next thing.” But it’s not cool, governor — at least not with the communities and schools that a reasonable collective bargaining bill would have helped. It also comes off as more than a bit cavalier to chalk up the SB 5 debacle to, “It’s the way it goes.” It didn’t need to go that way, especially if Republican leaders had shown restraint in their use of power as they addressed what was by far the most important issue they tackled in 2011. Rather than move on to the next thing, Gov. Kasich and the Legislature should make amends for their mistakes and should take another crack at crafting a collective bargaining bill. The bill shouldn’t be a catch-all measure, but instead should focus on health care and pension benefits and seniority rules, all of which have tremendous impact on cities and school districts. Republicans pushed the state’s budget pain down to the local level last year. They should help relieve that pain this year by not reneging on their implicit promise to lend local bodies a helping hand by easing their contract dealings with unionized employees.

MY VIEW

Manufacturing requires fresh approach

all of its old jobs back with it. s someone who makes his living Yet policymakers act as if new manuwriting about manufacturing, facturing plants will provide jobs to I’m happy to hear it get positive those former steel workers, millions of play in any president’s State other workers laid off from out-of-date of the Union speech. But I worry we’re plants and a few million able bodies with losing touch with how manufacturing high school educations (or less). works and what it needs. Anyone who thinks that is probably We have a cultural memory of the days smoking something that would when factories employed thouprevent them from getting a job sands of relatively low-skilled DAN in manufacturing themselves. But, workers and provided them SHINGLER if I had 100 skilled machinists, I with relatively high wages. But could probably find them all jobs these are not those days, and the in a week. recession has put them further As manufacturers love to point behind us because, to survive, out, the factory jobs of today are companies must increase their not like the ones our fathers had. efficiencies. The shops are clean, the pay Look at the ArcelorMittal steel is better and the work requires mill in Cleveland. a strong mind, rather than a The mill has been through sturdy back. The jobs they provide many recessions, owners, shutdowns and require far more education than the jobs retoolings, and it has emerged as one of of old, and only a highly trained worker the most efficient mills in the world. can make a contribution on a modern Today, its 1,500 steelworkers make the plant floor. I couldn’t do it, not without same amount of steel as 5,000 of their some substantial training, including some predecessors, which is why the mill surserious refresher courses in mathematics. vives. So fostering manufacturing with trade So, while manufacturing is coming policies, tax incentives and other tools is back, it’s not correct to assume it’s bringing

all good, and it will increase the sector’s need for employees. But, I wonder, where will it get them? In some other countries, a manufacturer can call the union and they’ll send him a machinist, welder or a skilled worker from whatever trade they represent. Here, industrial unions don’t generally work that way and there is little cooperation between them and employers. Meanwhile, the days when large U.S. factories offered apprenticeships to teach skills to new hires are nearly gone. If the United States is going to build its manufacturing sector, we have to prepare ourselves and our children to work in it. This will require both individual effort and policies that make adequate training available to those who would make good use of it. Perhaps instead of just handing someone an unemployment check, we should also train them to be a machinist or welder or computer programmer or … something. Ask a manufacturer, they’ll tell you. And perhaps instead of asking what manufacturing can do for us and our country, we first should ask what we should be doing for it. ■

PERSONAL VIEW

State commits error in clean energy game By LANCE S. TRAVES

s reported in a recent Crain’s Cleveland Business story, the Lake Erie Energy Development Corp. (LEEDCo) is lobbying Ohio legislators to force state-regulated utilities to buy electricity generated by a proposed Lake Erie wind farm at a price high enough to pay for the project. What Crain’s did not report was how high the actual costs will be, and it failed to compare these high costs to other alternative clean energy opportunities in Ohio. These facts shine a spotlight on the irrational distortions systemic in Ohio’s current clean energy policies that favor “renewable” energy over alternative clean energy sources, to the detriment of Ohio’s economic future.

Mr. Traves is president of Labyrinth Management Group Inc. in Medina. LEEDCo estimates that the wind farm’s electricity must be sold at a wholesale rate of $175 to $225 per megawatt hour for the project to be economically viable. In contrast, average wholesale electrical generation rates in Ohio are less than $50 per megawatt hour and are not projected to exceed $80 per megawatt hour in the next 10 years. No wonder LEEDCo is lobbying Ohio legislators to force power companies to buy electricity from the proposed project. Supporters say the per-megawatt-hour costs for the wind farm do not reflect positive economic impacts to Ohio from the development of technologies and industry suppliers to build freshwater

wind farms throughout the United States. However, at anything near these costs, freshwater wind farms are not likely to become a realistic growth industry. As reported by The Plain Dealer, high offshore generation costs even have resulted in the Dutch falling out of love with wind farms. Which brings me to the crux of the issue with Ohio’s clean energy policies. The Ohio Legislature should not use Ohio taxpayer (or ratepayer) dollars to pick clean energy winners and losers. It perverts the rational marketplace and harms Ohio’s greatest assets — our industrial manufacturing sector and low cost of electricity. All zero-emission energy is clean energy. An estimated 5,000 to 8,000 megawatts See VIEW Page 11

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THE BIG ISSUE

TAX LIENS

Each pack of cigarettes sold in Cuyahoga County carries a 30-cent excise tax to support local arts organizations. Should voters support a renewal of the tax if it is on the ballot in 2015?

The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

LIENS FILED RAYSHAWN JORDAN

GINA CIRINO

MARY MCCAHON

JAN MILLER

Cleveland

Lyndhurst

Cleveland

Lakewood

They should reject the tax. (The price) is already too high and expensive.

Tax them. Cigarettes are unhealthy products, and it would help people stop buying them. And the tax money is helping the arts community.

Yes, a cigarette tax is awesome. I think more people should quit smoking, and I like that the tax dollars go to good things that help the community.

I’m not sure. I’m a big supporter of the arts, but cigarette prices are already too high.

➤➤ To watch past installments of Big Issue, visit the Multimedia section at www.CrainsCleveland.com.

NASA assists Magnet’s latest loans 10 awardees will get help from Glenn By DAN SHINGLER dshingler@crain.com

As it has in previous years, manufacturing advocacy group Magnet is helping to administer local government loans intended to help manufacturers bring new products to market. But this time, the loans come with free engineering help from Cleveland’s NASA Glenn Research Center. About 10 businesses ultimately will be awarded low-interest loans of up to $50,000, along with 40 hours of engineering help from NASA’s technology experts. The loans jointly are financed by the city of Cleveland and Cuyahoga County; businesses that receive them must promise to manufacture products that come out of the effort in either the city or the county. NASA has committed 400 hours of services to the program, while the city and county have committed a combined $450,000 to fund the loans. “It’s an excellent opportunity for you, as manufacturers, to use (NASA’s) services,” Magnet strategic program officer Greg Zucca told a group of about 40 manufacturers last Wednesday, Jan. 25, when the program was unveiled. Audience members expressed interest in the program, for help with

such products as advanced sensors or special materials, and one even asked if companies could submit more than one application. (They can, but are only eligible for one loan and one NASA services contract, according to Magnet.) To win the loans and NASA contracts, businesses must show they have a product in development that has the potential to be brought to market in three to five years. They also must demonstrate a need for specific help from NASA. On that last point, the parameters are broad, according to NASA lead systems engineer Eric Baumann, who said the agency works in fields such as electronic shielding, turbo and jet engines, biomedical technologies and specialized materials and structures. “We do a little of everything,” Mr. Baumann said.

Advice for applicants The 40 hours of help is meant to address specific challenges, not to develop a product fully, said Ed Nolan, Magnet vice president of product development. Winning businesses likely will be those that are specific in their applications about their technological challenges, he said. “Don’t just write, ‘It breaks when I use it.’ Be as specific as you can,” Mr. Nolan advised applicants. Manufacturers interested in applying for the loan and technology help,

which come as a package, have until Feb. 15 to apply. They can find more information about the program and NASA’s areas of expertise at Magnet’s website, www.magnetwork.org, where they also can apply for the program. Magnet and NASA said they hope to announce the program’s awards in April. Cleveland economic development director Tracey Nichols said the city hopes the program will foster the growth of manufacturing in Cleveland. The sector has been cited nationally, of late, for helping to lead the United States out of recession, and it remains a crucial part of Cleveland’s economy, she said. “Product innovation is one of the most important aspects of economic development for the city of Cleveland,” Ms. Nichols said. “And we’re going to put some funds together to ensure these products are funded and brought to market.” The program is the most recent example of NASA’s efforts to reach out to the local manufacturing community. Last year, it teamed up with Magnet to provide technical assistance specifically to companies in the automotive supply chain. That effort drew requests from more than 90 manufacturers for assistance and resulted in companies using NASA technology for products such as truck tire sensors and the development of new welding electrodes, NASA representatives said. ■

Ohio Sauce Corp. Hot Sauce Williams 12310 Superior Ave., Cleveland ID: 34-1286996 Date filed: Nov. 3, 2011 Type: Employer’s withholding, unemployment Amount: $31,910 William E. Crowe, M.D., Inc. 6681 Ridge Road, Suite 204, Parma ID: 30-0019966 Date filed: Nov. 3, 2011 Type: Employer’s withholding, failure to file complete return Amount: $30,886 Le Clairs Custom Cabinetry Inc. 21706 Lunn Road, Strongsville ID: 34-1712180 Date filed: Nov. 30, 2011 Type: Employer’s withholding Amount: $28,967 Ran-Dan Transport Inc. 2506 Grovewood Ave., Parma ID: 92-0184993 Date filed: Nov. 10, 2011 Type: Employer’s withholding Amount: $27,002 J & M Home Improvement & Insulation 5485 Ridge Road, Cleveland ID: 34-1517191 Date filed: Nov. 3, 2011 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $26,932 Accounting Services 2 1285 W. Ninth St., Cleveland ID: 26-3550329 Date filed: Nov. 30, 2011 Type: Employer’s withholding Amount: $24,318 Canvas Specialty Manufacturing Co. 4045 Saint Clair Ave., Cleveland ID: 34-0890218 Date filed: Nov. 16, 2011 Type: Employer’s withholding Amount: $24,050 AAA Municipal Services LLC 7277 Bessemer Ave., Cleveland ID: 86-1070006 Date filed: Nov. 22, 2011 Type: Unemployment Amount: $23,666 Diamond Construction Co. 6560 Royalton Road, Suite 2, North Royalton

ID: 34-1806442 Date filed: Nov. 10, 2011 Type: Employer’s withholding, unemployment, corporate income Amount: $23,516 Charlestown Sand & Gravel, David B Orlean General Partner, a Partnership 9304 Highland Drive, Brecksville ID: 20-4271853 Date filed: Nov. 22, 2011 Type: Employer’s withholding, unemployment Amount: $22,862 Green Thumb Florists Garden Center and Landscapers Inc. 11515 Lorain Ave., Cleveland ID: 34-1824632 Date filed: Nov. 18, 2011 Type: Employer’s withholding, failure to file complete return Amount: $22,817 Farohs Candies & Gifts LLC 7223 Pearl Road, Cleveland ID: 01-0851289 Date filed: Nov. 30, 2011 Type: Federal tax return Amount: $22,742 K & B Construction & Mechanical Corp. 7550 James Drive, North Royalton ID: 34-1799897 Date filed: Nov. 10, 2011 Type: Employer’s withholding Amount: $21,391 York Gym Inc. 845 Theora Drive, Brunswick ID: 34-1714634 Date filed: Nov. 16, 2011 Type: Employer’s withholding Amount: $20,740 York Gym Inc. 845 Theora Drive, Brunswick ID: 34-1714634 Date filed: Nov. 16, 2011 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $19,909 Haylo Manufacturing Co. 5100 Richmond Road, Bedford Heights ID: 34-0905327 Date filed: Nov. 22, 2011 Type: Employer’s withholding Amount: $19,705 J Schrader Co. 4603 Fenwick Ave., Cleveland ID: 34-0207795 Date filed: Nov. 29, 2011 Type: Employer’s withholding Amount: $19,477 RNC Subway Inc. Subway Sandwich 16122 Lakeside Blvd., Cleveland ID: 36-4504071 Date filed: Nov. 3, 2011 Type: Employer’s withholding, unemployment Amount: $19,332

View: Taxpayers have more cost-effective options than wind power continued from PAGE 10

of clean energy from industrial cogeneration is available in Ohio. The cost of this net zero emission electricity typically ranges from $65 to $80 per megawatt hour, well below costs for land-based renewable energy sources and light years away from a Lake Erie wind farm’s costs. If clean energy from industrial co-generation increased in Ohio from less than 1% currently to 20%, or about 5,000 megawatts, Ohioans could realize more than $10 billion

in capital investment, $2.9 billion in annual energy savings, 40,000 new jobs and reductions in air pollutant emissions of 36 million metric tons (a net negative). One example of the adverse impact of Ohio’s current clean energy policy is AK Steel’s proposed electrical co-generation project in Middletown that was put on hold in 2011. This clean energy project was carbon neutral and would have produced 827,820 megawatt hours of electricity annually at a net neg-

ative air pollution emission rate. I estimate that the cost per megawatt hour of electricity produced by the project was probably close to $70 or $80, less than half the “viability” rate for the Lake Erie wind farm. Still, AK Steel mothballed the project, I expect because the Midwest is currently blessed with wholesale electricity costs that are at recordlow prices. As a result, the company could buy electricity and pay transmission costs at a cheaper rate than the project’s internal cost of gener-

ation (even as competitive as it is). This may be OK for AK Steel, but Ohioans lost $300 million in private sector investment, a huge number of construction jobs, a net reduction in air pollutant emissions, and additional cost-effective zero emission electricity. So, if private companies and foundations want to continue tilting at Lake Erie windmills, I’ll cheer them on. Just don’t ask Ohio taxpayers or electricity ratepayers to continue subsidizing renewable energy projects

over more cost-effective industrial co-generation and combined heat and power. To do so puts Ohio’s industrial manufacturing sector at a competitive disadvantage and will increase Ohio’s electricity rates more than a market-based clean energy policy. Low-cost electricity can be part of Ohio’s competitive advantage to revitalize manufacturing. To keep clean energy policies in Ohio that work against this goal is bad for Ohio and bad for our country. ■

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GOING PLACES JOB CHANGES EDUCATION CLEVELAND STATE UNIVERSITY: Peggy Gries Wager to executive in residence, advancement. LORAIN COUNTY COMMUNITY COLLEGE: Terri Burgess Sandu to director, Entrepreneurship Innovation Institute and executive director, Workforce Development. NOTRE DAME COLLEGE: David A. Armstrong to vice president of development.

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INSURANCE HYLANT GROUP: Scott Dillabaugh to president, Cleveland office.

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SERVICE DIGITAL COLOR INTERNATIONAL: Jim Hoffman to vice president, sales and marketing. DIRECT CONSULTING ASSOCATES: Frank Myeroff to managing partner and vice president, business development and operations. EMPLOYEESCREENIQ: Angela Bosworth to vice president of compliance and general counsel.

TECHNOLOGY MCPC INC.: Paul Gulden and Eric Webber to managed services engineers; Amanda Lockhart to events management specialist; Kevin McCarthy to director, business development and partner management; Daniel Juris to controller; Kevin Ford to delivery engineer; Michelle

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SWAGELOK CO.: Jill Whelan to vice president, corporate communications.

HOME TEAM MARKETING: Lorien Parry to associate account supervisor; Andrea Essig to account manager; Terry Maruna to account executive.

PEASE & ASSOCIATES INC.: Christopher Szuch to senior manager; Megan Haldi to staff accountant; Megan Valencic to administrative assistant.

Dillabaugh

LASZERAY TECHNOLOGY INC.: Steven Patton to president; Michael Brodnik to general manager; Kevin Goergen to manufacturing analyst.

CFBANK: Michele R. Guildoo to vice president, human resources and deposit operations; Paul A. Manghillis to vice president, commercial lending; Sharon K. Farris to manager, mortgage operations.

KPMG LLP: Michael Gavigan to principal.

Armstrong Jira

AUTO BOLT CO.: Leo McNeeley to operations manager.

MARKETING

WILLIS NORTH AMERICA: Casey Petersen to managing partner.

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CW WEALTH ADVISORS: Deborah C. Jira to partner.

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WELTMAN, WEINBERG & REIS CO. LPA: Scott D. Fink, Amy Clum Holbrook and Jennifer Monty Rieker to partners.

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Murphy, Christopher Dottavio and Thomas Adkins to project managers; Eric Laurence to contract manager; Douglas Jones to account manager; Jason Turner and Ronnie Munn to virtualization engineers; Howard Creed to solution consultant.

BOARDS FEDERAL RESERVE BANK OF CLEVELAND: Alfred M. Rankin Jr. (Nacco Industries Inc.) to chairman; Richard K. Smucker to deputy chairman. FRIENDS OF WESTLAKE PORTER PUBLIC LIBRARY: Karen Alfred to president; Carol Welo to vice president; Melanie Alban to treasurer; Jennifer Cirincione to recording secretary; Dr. Jeanne Bishop to corresponding secretary. LEGAL AID SOCIETY OF CLEVELAND: Adrian Thompson (Taft) to president; Ann Bergen and Rick Petrulis to vice presidents; Karen Giffen to secretary/treasurer. MARKET DISTRICT IMPROVEMENT CORP.: Darrell A. Young (Darrell A. Young Enterprises) to president; Mike Foran to vice president; Gregory S. Gacka to treasurer; Greg Patt to secretary. NORTHERN OHIO REGIONAL MULTIPLE LISTING SERVICE: Dennis Steed to chairman; Alan Hallock to vice chairman; Karen O’Donnell to treasurer.

Send information for Going Places to dhillyer@crain.com.

BRIGHT SPOTS Bright Spots is a periodic feature in Crain’s that highlights positive business developments. Send information to managing editor Scott Suttell at ssuttell@crain.com. ■ Robert J. Klonk, president and chief sales officer at Oswald Cos. of Cleveland, was named chairman of the Council of Employee Benefits Executives. Mr. Klonk, who had been serving as the council’s vice chairman, succeeds Vinnie Daboul, who resigned as chairman in December after changing companies. The Council of Employee Benefits Executives is a standing committee of the Council of Insurance Agents & Brokers, representing the benefits business interests of council member firms. Mr. Klonk will serve as its chairman through the 2013 Employee Benefits Leadership Forum. ■ Catacel Corp. of Garrettsville said it elected Gary McDaniel to its five-member board of directors to tap into his “wide-ranging expertise within the petroleum refining and

industrial gas processing sectors.” That background, coupled with Mr. McDaniel’s “proven track record of growing startup/early-stage companies,” should help Catacel grow in the hydrocarbon processing business, the company said. Mr. McDaniel has spent more than 20 years in leadership and management posts in energy and hydrocarbon companies. ■ TOA Technologies of Cleveland, a provider of mobile work force management and scheduling software, has named a Hyland Software executive as its new vice president of worldwide marketing. John Opdycke will manage TOA Technologies’ corporate communications, demand-generation and product marketing programs “targeted at new business acquisition, industry thought leadership and the overall advancement of solutions that deliver increased efficiency, reduced costs and enhanced customer experience,” the company said. Mr. Opdycke has more than 20 years’ experience in b-to-b marketing. Previously, he was vice president of marketing for Westlake-based Hyland.

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INSIDE

FINANCE

16 SOME PRIVATE EQUITY FIRMS BALKING AT NEW SEC RULE.

With more deals done, adviser work multiplies Investment banking is ‘red hot’ with cash now more accessible By MICHELLE PARK mpark@crain.com

JANET CENTURY

Bill Chorba, the chief financial officer of Beachwood-based NineSigma, since April 2010 also has overseen the company’s human resources duties. “You need to do what needs to be done and sometimes that requires hard decisions,” Mr. Chorba said.

CFOS SEE THE HUMAN SIDE Financial executives now more often asked to apply skills to HR duties By CHRISSY KADLECK clbfreelancer@crain.com

ive months after joining NineSigma as its chief financial officer, Bill Chorba spearheaded a strategic move to unbundle the organization’s human resources services from a third-party provider and oversee those functions internally. The decision not only made good financial sense, but it also aligned with the professional services firm’s focus on intellec-

tual capital and maintaining its lean corporate structure. Since April 2010, Mr. Chorba has been engaged in HR administration and compliance issues as well as recruitment, training and personnel development. He also works closely with insurance brokers on benefits and health care plan design. And he recently introduced a new wellness program at the Beachwood company. “As CFOs, if we’re good at See HUMAN Page 15

WHAT CFOs ARE SAYING “A lot of HR decisions require a true cost-benefit analysis anyways, and that really becomes a budgetary issue or concern.”

— Tim McEldowney, Buckingham Doolittle & Burroughs LLP

“When issues arise with employees, I tend to look at them more objectively and from a financial standpoint.”

— Todd Rossman, Mortgage Information Services Inc.

“Over the last two years we have seen an increasing number of CFOs with increasing frequency bringing issues regarding human capital and HR to the forefront of our discussion.” — Nick Araco Jr., president and CEO of the CFO Alliance, a national professional network

he investment banking business is bouncing back in a big way. A couple years ago, companies’ earnings were depressed or nonexistent and money for acquisitions was hard to find. However, it appears 2011 was a turning point: Now that many businesses’ balance sheets have improved and capital is more available, the people who make their living advising companies on deals and financing have more work to do. It’s hard to find a Northeast Ohio investment banker that hasn’t expanded its work force recently. “Our business is red hot,” said Mark A. Filippell, managing director for Western Reserve Partners LLC, a Cleveland firm that added five people in 2011, increasing its staff to 28. “We’re working our brains off.” Western Reserve PartFilippell ners expects to bring its total staff to 35 by June and for the first time in its eight-year history is expanding outside Cleveland, with the planned February launch of a valuations business in Columbus and a Dallas office slated to open later this year. KeyBanc Capital Markets — the investment banking business of KeyCorp — last year increased its staff by a net 40 for a total of about 530, including significant additions to its senior investment banking ranks, said Randy Paine, executive vice president and head of KeyBanc Capital Markets Corporate and Investment Banking. KeyBanc last year raised $125 billion in various markets for its clients, an 18% increase from the $106 billion it raised in 2010. It had record volume in its debt capital markets and syndicated loan work, and its number of transactions, including merger and acquisition deals, increased 10%. KeyBanc also opened an 11th office, in Houston, in late 2011.

Riding the wave Strategic and financial buyers are flush with cash, thanks in part to an improving economy. Plus, super low interest rates make for attractive financing terms for buyers. “There’s a ton of available cash to be deployed,” said Tony Amador, managing director of BellMark Partners LLC, a Cleveland investment bank that saw revenues in 2011 climb 55% to 60% over 2010. BellMark last year hired three investment bankers, bringing its total staff to nine. Some of that growth is likely the result of growing name recognition for BellMark, which started in 2009 and also has an office in Boston, Mr. Amador said. More companies have resumed playing offense, not just defense, observed Charlie Crowley, See ADVISERS Page 14

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FINANCE

Advisers: Recent activity ‘not just a blip’ As eurozone teeters, continued from PAGE 13

managing director of Paragon Capital Group LLC in Mayfield Heights, which also had a better year in 2011 than 2010. “There’s just less fear in the market,” Mr. Crowley said. “There is a sense for many CEOs and board members that the worst is over in this recession, and it’s time to get back and focus on growth and building value.” Mr. Filippell expects business to stay steady, in part, because he said there’s a pent-up supply of companies that have needed to sell but couldn’t for a few years because their owners would not have fetched the prices they wanted. “Now, those are coming out of the woodwork,” he said. League Park Advisors LLC, which opened in June 2010, sees the recent growth in its business as proof its founders were right there’d be a surge in the market. The Beachwood firm closed two deals in 2010 and 11 in 2011, six of which wrapped up in the last quarter, said Sean Dorsey, founder and managing director. League

Park added six people in late 2011 and now stands at 10. Mr. Dorsey sees the pattern as sustainable for a few reasons, namely the wave of baby boomers retiring and the preference of the next generation to inherit cash rather than the family business. “This is not just a blip in the market,” said Brian Powers, managing director for League Park. “There are some sustainable, societal and market-driven trends that should keep this wave going forward for at least the next couple years.”

Good signs If investment bankers’ backlogs are the crystal ball, 2012 should prove busy. Though revenues were relatively flat from 2010 to 2011, Western Reserve Partners has “a ton of things that will close quickly in 2012,” Mr. Filippell said. He expects the firm’s revenues to at least double in 2012 over 2011, which would result in the strongest revenue year in its history. KeyBanc Capital Markets’ backlog of work is the best it has

been since the economic downturn, Mr. Paine said. It’s up 50% over the firm’s backlog at the end of 2010. One driver of KeyBanc’s growth, Mr. Paine said, is the strategic plan it set for itself in 2009, when it identified areas it wanted to “beef up” in its ability to serve clients. In accordance with that plan, the company has grown its leverage finance business significantly, in addition to adding greatly to its investment banking staff. There’s a domino effect when investment bankers are busy, BellMark’s Mr. Amador said. A host of other professionals, including lawyers and accountants, get busier, too, because they’re needed to perform due diligence for deals. Though he also anticipates a busier 2012, Mr. Crowley noted there’s reason for caution. “We’re still in an environment where for many of our clients, the right advice is to just ride out the storm and not pursue a transaction in the near term, whether it’s capital raising or a merger,” said Mr. Crowley, whose firm largely serves financial institutions. ■

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export fears intensify Weakened demand from one of United States’ big customers could slow domestic turnaround By JAY MILLER jmiller@crain.com

t year’s end, manufacturers told Crain’s Cleveland Business that unless Europe implodes, the economy here should keep gaining steam and keep local plants humming. European business, through exports and U.S.-owned European production, had been bright spots for American manufacturers in 2011. But there is concern that a European economic collapse may be under way. According to a Jan. 24 report in the International Business Times, a New York City-based online news organization, “there is little doubt now that the eurozone is in a recession, with real GDP expected to decline through the second quarter of this year.” The story cited economists from IHS, a Colorado-based information and economics consulting firm. “For several countries (Italy, Spain, Greece and Portugal), the downturn will extend through the summer or beyond. Even Germany will be hard pressed to avoid the pain.

due to the fact that Northeast Ohio firms focus on business equipment, rather than making products for consumer markets. A Jan. 20 report by the International Trade Administration of the U.S. Department of Commerce said that demand for business equipment has been particularly robust. Still, the concern for the future of the European economy is real. Exports to Europe from the United States have been falling and economists and trade observers are concerned that a recession in Europe will slow down recovery in the United States as European firms curtail purchase of U.S. goods. Europe consumes nearly onefifth of America’s exports and a weakening Europe could further shrink demand for American goods and slow the U.S. economy just as the job market has started to strengthen. Overall exports from the United States dropped 0.9%, according to the U.S. Department of Commerce’s most recent monthly trade report. But American exports to Europe alone fell more sharply, by nearly 6%. That decline is being felt at

“Definitely things in Europe are slowing down, and we’re seeing that effect on our business.” – Aidan Gormley director of corporate communications, Parker Hannifin “Fiscal austerity, very tight credit conditions and fragile confidence have afflicted the majority of European economies, even some of the least troubled,” the story said. Similarly, Paul Dales, senior U.S. economist for Capital Economists, a London-based consultancy, is estimating that annual export growth to the 17 nations that use the euro has slowed from 15% in August to 2.5% in November. “If the eurozone is on the verge of as deep a recession as we think it is, then it makes sense that U.S. exports would be falling,” he said in his report. The impact on local firms, however, does not yet appear to be serious, according to a Clevelandbased federal trade official. “I haven’t heard anything negative, which is somewhat surprising,” said Susan Whitney, office director of the Cleveland office of the U.S. Commercial Service, a part of the federal commerce department. “Whether people are slowing down in Greece and Portugal and Italy, I would assume that’s happening. “But clients aren’t calling and saying, ‘We’re not getting paid by our customers in Greece,’” she said. “It probably means that all they are doing is changing their terms of payment. Maybe they are now asking for letters of credit or payments in cash or smaller orders.”

Properly equipped That restrained concern may be

Parker Hannifin Corp., a Mayfield Heights-based firm that makes hydraulic and pneumatic controls for manufacturing equipment and vehicles. “Our international business, including Europe, is weaker than we anticipated,” said Aidan Gormley, Parker Hannifin’s director of corporate communications. “Definitely things in Europe are slowing down, and we’re seeing that effect on our business.” Mr. Gormley said Parker Hannifin does little exporting, but it has manufacturing and distribution centers across Europe. By contrast, Don Esarove, president of the Cleveland-based Cypress Corp., said the manufacturing firms his holding company owns aren’t seeing a significant decline in European business. “It’s a mixed bag,” he said. “We both buy and sell into Europe through our six small (manufacturing) companies and our businesses are doing pretty well right now. The manufacturing sectors are doing pretty well.” Mr. Esarove, who is a member of the board of directors of the International Business Network, a Cleveland nonprofit that encourages business growth into international markets, said many industries are doing well in Europe and he cited the strong business one of Cypress’s companies, Riley Gear Co. based in St. Augustine, Fla. “We supply transmission supply boxes for oil rigs off Norway, that’s still pretty strong,” he said. ■

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FINANCE

Human: Skills required for CFO job make transition smooth continued from PAGE 13

asset management and working with balance sheets to generate future opportunities of growth and value for the business, it’s natural to also be able to do that with people, particularly when they are the chief asset of the organization,” he said. Mr. Chorba is one of a growing number of CFOs nationwide and here in Northeast Ohio who are assuming tactical human resources responsibilities within their respective organizations. According to a survey last year by Robert Half Management Resources, about one-fifth of 1,400 CFOs surveyed have taken on more HR duties in the past three years. There always has been a required level of collaboration between the CFO and HR department, especially because HR typically oversees many of the company’s highest-cost centers, said Eugene Lodato, division director for Robert Half’s Cleveland office. “It has become more prevalent over the last few years with the increased emphasis on reducing cost and managing expenses, especially in those areas that have the most financial impact to the company, such as health care

costs, staffing levels, benefits and the structure of their compensation,” Mr. Lodato said. Nick Araco Jr., president and CEO of the CFO Alliance, a national professional network, said his membership of nearly 3,000 CFOs identified this expanded role in HR as one of the most pressing so far in 2012. “I interact with CFOs on a daily basis, and we get them to tell us what’s keeping them up at night from an opportunity and issue standpoint,” said Mr. Araco, who just weeks ago held a discussion on this very topic in Dallas. “Over the last two years we have seen an increasing number of CFOs with increasing frequency bringing issues regarding human capital and HR to the forefront of our discussion.”

Driven by necessity CFOs, especially those in privately held, midsize companies, are taking an active role in duties that range from the hiring and selection process of key talent to performance-related decisions and the creation of a corporate culture that promotes professional development and growth, Mr. Araco said. It’s a natural fit for a CFO because many of these HR roles

dovetail nicely into the inherent strengths needed in the job of top fiscal officer of a company. And that’s good, because oftentimes CFOs take over the duties out of necessity. “CFOs are very process-driven and compliance-driven, so managing the pension plan, insurance plan or workers’ comp is an easy transition for them,” said Rob Gaglione, president of Financial Resources Group in Broadview Heights. Mr. Gaglione, a certified public accountant by trade, specializes in recruiting and placing highly qualified financial candidates. “And CFOs are always looking to control costs and find additional revenue streams. With HR, you are never going to have a revenue stream. It’s always a cost center, and it is typically the first function to go when a company needs to reduce staff and cut expenses,” he said. A strategic restructuring at Buckingham Doolittle & Burroughs LLP in late 2009 and early 2010 led the multioffice law firm to eliminate its director of human resources and delegate those responsibilities among key people in the organization, including the firm’s administrator, a new human resources manager and the CFO.

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The firm’s culture of collaboration has made the transition of duties quite painless, said CFO Tim McEldowney, who is involved in decision making regarding staffing, recruiting new attorneys and compensation decisions. “We’re fortunate to have a top employment attorney, Susan Rodgers, in our firm, so we just have to go down the hall to ask her a question,” he said. His new HR responsibilities take a considerable amount of his time, but Mr. McEldowney doesn’t have a negative view of his expanded role. “A lot of HR decisions require a true cost-benefit analysis anyways, and that really becomes a budgetary issue or concern,” he said. “It almost took the one step out of the mix … and it almost made communication flow easier.”

Numbers vs. people skills Todd Rossman, CFO at Mortgage Information Services Inc. in Warrensville Heights, said he spends a lot of time on benefit design and implementation of plans, including medical and voluntary plans and 401(k)s. His company doesn’t have an HR manager and hasn’t since he joined it in 2004. “As the CFO, you’ve got a viewpoint of the financial condition of

the entire organization, so I think the analysis of how costly a plan is and how much of the burden the company wants to take on versus pass on to the employees, it’s a little easier for a financial person to work through,” Mr. Rossman said. The drawback of the dual role? Well, quite simply, he’s an accountant, not an HR person. “There are probably some soft skills that I lack,” Mr. Rossman said, adding that all his HR training has been on the job, though he does rely on his company’s internal legal department for compliance guidance when new employment laws are passed. “When issues arise with employees, I tend to look at them more objectively and from a financial standpoint.” For Mr. Chorba, the main challenge is time management. In addition to all the information he must process and apply regarding accounting and financial reporting, he must be equally diligent about HR management and compliance information. In addition, he said, “having the objective finance hat on and exercising that against the personal relationship HR hat is sometimes a bit taxing personally, but you need to do what needs to be done and sometimes that requires hard decisions.” ■

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20120130-NEWS--16-NAT-CCI-CL_--

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Insiders say new SEC registration requirement is misplaced, fear higher costs of compliance By MICHELLE PARK mpark@crain.com

ost private equity firms by March 31 must register with the Securities and Exchange Commission — a requirement that has them chugging obediently toward compliance, even though many, if not all, see it as a senseless exercise. The vast majority of private equity firms never have had to register with the SEC as investment advisers. But now, funds with $150 million or more in assets under management must do so, which means they also will incur legal costs, must name or hire compliance officers and potentially will be subject to yearly audits. And they’re not happy about it. “It’s a pit bull on a gnat’s ass,” Mark Mansour, senior managing partner of MCM Capital Partners in Beachwood, said, referring to the SEC regulating funds of that size. He and officials at other firms argue the threshold for registration is M. Mansour senselessly low. “Somebody has yet to explain to me how private equity funds that have an AUM (assets under management) of $150 million or $250 million or $1 billion can have a material impact” on the health of the U.S. economy, Mr. Mansour said. The registration requirement is part of the sweeping Dodd-Frank Wall Street Reform and Consumer Protection Act. Private equity insiders say the mandate is an ill-fitting Band-Aid stuck on their industry to mitigate risks private equity doesn’t create. Forcing private equity firms — which raise millions of dollars and aim to generate returns for investors by buying, operating and selling companies — to register with the SEC, they say, will not lower systemic risk or protect consumers. “Each transaction is independent of the other,” said Pam Hendrickson, chief operating officer of The Riverside Co., this region’s most prolific firm. “The bankruptcy of one private equity-owned company — while it would be very unfortunate — in no way could it harm the

whole economy.” Plus, general consumers aren’t involved in private equity, noted Bassem A. Mansour, co-CEO of Resilience Capital Partners, a Beachwood private equity firm. (He is not related to Mark Mansour.) That’s because private equity invests only the money of accredited investors, such as high-net-worth individuals, pension funds and endowments.

Price check The expense of compliance is significant — for some firms reaching into the tens, maybe hundreds, of thousands of dollars, sources say. “Those incremental costs … have to come out of somewhere, and that means the financial viability of private equity is impacted,” said John Mino, a partner who runs the private equity group for Calfee, Halter & Griswold LLP, a Cleveland law firm. The market won’t allow private equity firms to charge higher management fees, in Mr. Mino’s opinion, so the firms simply will need to eat the higher costs. “You don’t have the ability to go back to your investors and say, ‘Excuse me, investors, we have more costs so we’d like more management fee,’” Mr. Mino said. “Your costs are locked in. “Does it put anybody out of business?” he continued. “I don’t think so. I do think some of the smaller firms are saying they have to get bigger.” Even those firms that are not required to become registered investment advisers will be affected because it’s possible investors might become more inclined to invest with only those that are registered, Mr. Mino said. Plus, many smaller funds still must provide informational filings to the SEC, he noted.

Worth the expense? Critics of the new requirement note that private equity firms do not invest in a highly leveraged manner and aren’t investing in public securities, a market at which many of the accompanying regulations are targeted. “It’s time, it’s money and it’s opportunity cost — people spending time (to) comply with a set of regulations that really don’t seem to be changing the risk profile of

what you do,” Riverside’s Ms. Hendrickson said. For example, she said, private equity firms under the new regulations must hire a third-party custodian to hold their securities. However, unlike other sectors that buy securities that are tradable, private equity firms possess securities that are non-negotiable because they represent stakes in private companies. “That just seems like a waste of time and money to have to do something like that when the securities could be easily held in a safe place,” she said. “Capital is scarce, banks are under pressure, so it seems odd that you would saddle an industry whose job is to provide capital to businesses with a bunch of regulation,” Ms. Hendrickson said. “Private equity has been around for over 50 years, and in that time, I don’t think you’ve seen any creation of systemic risk.” Mr. Mino said he also believes the new requirement misses the mark. “The risk profile for private equity will not change as a result of DoddFrank regulation because they’re going to continue doing business as they always have,” he said. Several pieces of legislation have been introduced in the U.S. House in an attempt to pare back the impact of Dodd-Frank on private equity or to exempt private equity completely, Mr. Mino said. “Something like that may still happen,” Mr. Mino said. “But nobody’s really — pardon the pun — banking on it.”

Dose of transparency Though criticism abounds, some see limited benefit to the new compliance requirement. “What I do think is healthy for the industry is transparency,” Riverside’s Ms. Hendrickson said. “I think the industry needs more transparency.” Asked whether he supports the added regulation, one local institutional private equity investor who asked not to be identified replied, “If it’s not too much trouble and hassle, the more regulation, the safer most investors would feel. I’m just not sure it’s that easy of an answer.” For one, he said he worries that the regulations will be onerous for smaller firms and “likely a distraction to their business.” Though Christopher J. Mulligan, another Calfee private equity attorney, also doesn’t see much advantage to the regulations, he can see a benefit to the SEC keeping tabs on “very, very large national firms” — those he defined as holding tens of billions of dollars under management. ■

Biz owners doubt Congress’ ability to improve conditions A majority of business owners and executives expect U.S. business conditions to improve this year, but a majority of them also doubt Congress will pass legislation that will make such improvement happen, a survey by McDonald Hopkins LLC reveals. Conducted during the first three weeks of January, the law firm’s 2012 Business Outlook Survey found confidence in Congress has plummeted from one year to the next: Sixty-four percent of business leaders said they felt pessimistic

ON THE WEB Story from www.CrainsCleveland.com. about whether Congress will act to improve business conditions, whereas last year, 25% were pessimistic. Of the more than 500 respondents, 66% expect U.S. business conditions to improve modestly, down from 77% last year who expected modest improvement. Most of the survey participants are located in Ohio, Illinois, Michigan and Florida, states where McDonald

Hopkins has offices. The 10-question survey also found business leaders are less optimistic this year about the business conditions of their own organizations: 55% expect conditions to improve modestly, down from 61% in 2011. Respondents also were asked to identify the business community’s three greatest challenges. Forty-three percent cited increasing health care costs; 40% said retaining profit margins and 39% said federal, state and local regulations. — Michelle Park

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WWW.CRAINSCLEVELAND.COM

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

LARGEST ENGINEERING FIRMS

RANKED BY NUMBER OF LOCAL REGISTERED ENGINEERS(1)

Rank

Company Address Phone/Website

Number of local Number of registered local engineers employees

Corporate headquarters

Year founded 2011 projects

2011 local engineering billings ($ Top local executive millions) Title

URS Corp. 1375 Euclid Ave., Suite 600, Cleveland 44115 (216) 622-2400/www.urscorp.com

146

669

San Francisco

1904

Cleveland Convention Center and Medical Mart, Cleveland Horseshoe Casino, Flats East Build 7

304.0

Gary R. Hribar, vp, URS division; William Colt, senior vice president

GPD Group 520 S. Main St., Suite 2531, Akron 44311 (800) 955-4731/www.gpdgroup.com

325

Akron

1961

State route 94, Wadsworth; State route 261, Norton; Cedar Exchange traffic study, Akron

47.2

Dave Granger president

HWH Architects Engineers Planners Inc. 1300 E. Ninth St., Suite 900, Cleveland 44114 (216) 875-4000/www.hwhaep.com

122

Cleveland

1908

GE Energy; Goodyear Tire & Rubber Co.; Lubrizol Corp.

DLZ Ohio Inc. 614 W. Superior Ave., Cleveland 44113 (216) 771-1090/www.dlz.com

165

Columbus

1947

Cedar Ave. reconstruction, City of Cleveland; Program Management Services, City of Akron; new animal control facility, Summit County

22.6

Thomas G. Sisley senior vice president

Middough Inc. 1901 E. 13th St., Suite 400, Cleveland 44114 (216) 367-6000/www.middough.com

230

Cleveland

1950

V & M Star, Youngstown; PRO-TEC, Leipsic; Northeast Ohio Regional Sewer District, program system integration and programming services PSIM-28, Cleveland

51.0

Ronald R. Ledin president, CEO

Arcadis U.S. Inc. 1100 Superior Ave., Suite 1250, Cleveland 44114 (216) 781-6177/www.arcadis-us.com

Highlands Ranch, Colo.

1888

NEORSD-Southerly WWTC, renewable energy facility; Akron-WPCS, Step Feed process; ODOT-Anthony Wayne Suspension Bridge/Maumee River rehabilitation

Westlake Reed Leskosky 925 Euclid Ave., Suite 1900, Cleveland 44115 (216) 522-1350/www.wrldesign.com

100

Cleveland

1905

General Services Administration; Cleveland Clinic, Twinsburg Family Health and Surgery Center; Museum of Contemporary Art, Cleveland

14.5

Paul E. Westlake Jr. managing principal

CT Consultants Inc. 8150 Sterling Court, Mentor 44060 (440) 951-9000/www.ctconsultants.com

106

Mentor

1922

City of Canton WRF water quality and energy improvements; Summit DOES Upper Tuscarawas WWTP improvements; Fulton Road improvements

14.5

Dave Wiles president

MWH Global(2) 1300 E. Ninth St., Suite 1100, Cleveland 44114 (216) 621- 2407/www.mwhglobal.com

Broomfield, Colo.

1820

NEORSD tunneling, dewatering, pump station; Cleveland Water Plant enhancement program; City of Lima long-term control plan

10.8

Kristen M. Miller vice president

Osborn Engineering 1300 E. Ninth St., Suite 1500, Cleveland 44114 (216) 861-2020/www.osborn-eng.com

Cleveland

1892

Cleveland African Elephant Exhibit; Cleveland Medical Mart; Mercy Medical Center Lorain, renovation

8.0

Lee V. Hooper president

R. E. Warner & Associates Inc. 25777 Detroit Road, Suite 200, Westlake 44145 (440) 835-9400/www.rewarner.com

Westlake

1951

Cleveland Clinic Heart Center, construction staking; Westgate Mall redesign; RTI International, titanium plating facility

Theodore A. Beltavski president

The Equity Engineering Group Inc. 20600 Chagrin Blvd., Suite 1200, Shaker Heights 44122 (216) 283-9519/www.equityeng.com

Shaker Heights

2002

Westinghouse RHX/LHX design for new nuclear facility, S.C.; ADCO risk-based inspection software and consultancy; Saudi Intl Petrochemical-RBI inspection study

David A. Osage president

Thorson Baker & Associates Inc. 3030 W. Streetsboro Road, Richfield 44286 (330) 659-6688/www.thorsonbaker.com

104

Richfield

1993

Cleveland Casino; East Bank Flats; Barberton City Schools; Wadsworth City Schools

13.6

Gordon R. Baker Michael G. Thorson principals

Karpinski Engineering 3135 Euclid Ave., Cleveland 44115 (216) 391-3700/www.karpinskieng.com

Cleveland

1983

Cleveland Medical Mart & Convention Center; Eaton Corp. worldwide headquarters; Goodyear corporate headquarters

12.7

James T. Cicero president

Burgess & Niple 1300 E. Ninth St., Suite 612, Cleveland 44114 (216) 241-9600/www.burgessniple.com

Columbus

1912

Cleveland, commercial road bridge rehabilitation; ODOT, Lorain-Carnegie Bridge Cuyahoga River Crossing Trail; Akron, CSO long-term control plan program management

6.4

Charles J. Zibbel director, Great Lakes region

ms consultants inc. 9217 Midwest Ave., Suite 100, Cleveland 44125 (216) 581-4035/www.msconsultants.com

Youngstown

1963

Lakeshore Boulevard, Euclid

9.6

David J. Mosure vice president, construction services

HNTB Ohio Inc. 1100 Superior Ave., Suite 1330, Cleveland 44114 (216) 522-1140/www.hntb.com

Kansas City, Mo.

1914

Cleveland Innerbelt Bridge; Opportunity Corridor study; I-270 improvements

Scott Campbell office leader, associate vice president

Scheeser Buckley Mayfield LLC 1540 Corporate Woods Parkway, Uniontown 44685 (330) 896-4664/www.sbmce.com

Uniontown

1959

NEOMED labs expansion; Medical Center Co. 10,000 ton chiller plant addition; King's Daughters Medical Center; Portsmouth Hospital additions

James E. Eckman president

Richard L. Bowen + Associates Inc. 13000 Shaker Blvd., Cleveland 44120 (216) 491-9300/www.rlba.com

Cleveland

1959

Ohio Turnpike Twin Plazas; Kohl's Distribution Center; Vitamix expansion

Richard L. Bowen president

The Austin Co. 6095 Parkland Blvd., Cleveland 44124 (440) 544-2600/www.theaustin.com

Cleveland

1878

Hills Pet Nutrition; Allen Foods bakeries; Mitsubishi Power Systems, generator plant

6.1

Michael G. Pierce president

Euthenics Inc. 8235 Mohawk Drive, Cleveland 44136 (440) 260-1555/www.euthenics-inc.com

Strongsville

1969

Pearl Road widening, Strongsville; Pleasant Valley/Bagley Road widening, Middleburg Heights; Madison Ave./W. 61st St. RTA pedestrian bridges, Cleveland

3.3

Ronald A. Bender president, CEO

Barber & Hoffman Inc. 1100 W. Ninth St., 3rd floor, Cleveland 44113 (216) 875-0100/www.barberhoffman.com

Cleveland

1934

Cleveland Medical Mart & Convention Center foundation engineering; Goodyear Headquarters; Fairview Hospital ED & ICU addition

Robert Jordan president, treasurer

Hatch Mott MacDonald LLC 18013 Cleveland Parkway Drive, Suite 200, Cleveland 44135 (216) 535-3640/www.hatchmott.com

Millburn, N.J.

1966

East 55th St. Rapid Transit Station; Euclid Creek Tunnel; Stumph Road (CR266) Highway

3.0

Michael G. Vitale Michael F. McCarthy vice presidents

KS Associates Inc. 260 Burns Road, Suite 100, Elyria 44035 (440) 365-4730/www.ksassociates.com

Elyria

1987

Case Western Reserve University Tinkham Veale University Center; SR 57 corridor improvement project, Elyria; Lorain County Community College Smart Commercialization Entrepreneurship Innovation Center

Lynn S. Miggins president

The Mannik & Smith Group Inc. 23225 Mercantile Road, Beachwood 44122 (216) 378-1490/www.manniksmithgroup.com

Maumee

1955

Mercy Medical Center Avon-ecol,surv,civ,traff,geo; Alcoa 50K Press Foundation-geo,struct, mat. testing; ODOT SR91/RT2 Bridge Structure Study/Engineering

Mark A. Smoley senior vice president, director NE Ohio operations

TranSystems Corp. of Ohio 55 Public Square, Suite 1900, Cleveland 44113 (216) 861-1780/www.transystems.com

Kansas City, Mo.

1966

I-77 add lane; Columbus Road lift bridge; Avon I-90 interchange

Hamid Homaee principal, senior vice president

CDM 1468 W. Ninth St., Cleveland 44113 (216) 579-0404/www.cdmsmith.com

Cambridge, Mass.

1947

NEORSD, Southerly WWTC renewable energy facility; NEORSD, asset management implementation; Erie Water Works, RSW WTP improvements

Edward J. St. John principal

Chagrin Valley Engineering Ltd. 22999 Forbes Road, Suite B, Cleveland 44146 (440) 439-1999/www.cvelimited.com

Cleveland

1996

Engineering services and infrastructure and roadway projects for municipalities

Donald F. Sheehy president

Peters, Tschantz & Associates Inc. 275 Springside Drive, Suite 300, Akron 44333 (330) 666-3702/www.ptaengineering.com

Akron

1953

Verizon Wireless, Twinsburg Data Center expansion; Allstate, Chubbuck, Idaho call-in center; Wang Theatre upgrade, Boston

James E. Peters president

Source: Information is supplied by the companies unless footnoted. 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. (1) Numbers as of May 31, 2011. (2) Formerly MWH Americas Inc.

Peter P. Jancar chairman

Jim Crandall senior vice president, principal in charge

RESEARCHED BY Deborah W. Hillyer

20120130-NEWS--18-NAT-CCI-CL_--

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JANUARY 30 - FEBRUARY 5, 2012

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20120130-NEWS--19-NAT-CCI-CL_--

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JANUARY 30 - FEBRUARY 5, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

THEINSIDER

THEWEEK JANUARY 23 - 29 The big story: FirstEnergy Corp. said it’s retiring six coal-fired power plants, including plants in Cleveland, Eastlake and Ashtabula, by Sept. 1. The closures will affect more than 500 employees. The decision to close the plants “is based on the U.S. Environmental Protection Agency Mercury and Air Toxics Standards, which were recently finalized, and other environmental regulations,” Akron-based FirstEnergy said. The other plants to be closed are in Oregon, Ohio; Adrian, Pa.; and Williamsport, Md.

Proper restraint: TransDigm Group Inc. of Cleveland agreed to buy AmSafe Global Holdings Inc., a supplier of proprietary safety and restraint equipment used primarily in the aerospace industry, for $750 million. The seller is a group controlled by private equity firms Berkshire Partners LLC and Greenbriar Equity Group LLC. TransDigm said AmSafe, which is based in Phoenix, had revenue of about $260 million in 2011.

Take it to the bank: Cuyahoga County will use part of its new, $100 million economic development fund to guarantee private business loans that otherwise would not be bankable. County Executive Ed FitzGerald said a county loan guarantee will be available for bank loans that can’t be fully guaranteed by the U.S. Small Business Administration. Lenders that already have agreed to participate are Charter One Bank, Citizens Bank, Fifth Third Bank, the Grow America Fund, Huntington Bank, KeyBank, Lorain National Bank and PNC Bank.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Hope they get good gas mileage ■ Think your commute to work is hectic? Try on Matt LaWell’s summer driving schedule. Mr. LaWell and his wife, Carolyn, are Lakewood residents who plan to set off for Jacksonville, Fla., in early April to start a project nine years in the making: “A Minor League Season,” a nationwide, summer-long trip on which they’ll visit 117 minor-league baseball stadiums in 129 days, encompassing 26,000 miles. (Full disclosure: Mr. LaWell is a friend of mine.) The idea got started in 2003 when Mr. LaWell was a bored rising sophomore at Ohio University in Athens, Ohio, and has stayed with him through sports writing jobs in Kansas City, Mo., Rocky Mount, N.C., and, most recently, a position in Cleveland with Smart Business. “If you’ve ever visited Athens during the summer, when there aren’t something like 20,000 students wandering down Court Street and across College Green, you know there’s very little to do there those three months,” Mr. LaWell said. He and his wife will hit 40 states, with the longest stay in California — 12 games, from May 6 through May 18. Mr. LaWell said his biggest personal thrills likely will come Aug. 10, when he plans to meet childhood favorite and Hall of Fame Chicago Cubs second baseman Ryne Sandberg, who now manages the Lehigh Valley Iron Pigs, the Class AAA affiliate of the Philadelphia Phillies; and July 3, when the couple will be

in Charleston, S.C., home of the RiverDogs, in whom legendary actor Bill Murray has a financial interest. “I was Peter Venkman (Mr. Murray’s character in “GhostBusters”) for Halloween when I was 5,” he said. For a lengthy Q&A with Mr. LaWell, including more details on how the plan was hatched and has evolved, visit my sports business blog at www.CrainsCleveland.com/ section/BLOGS04. — Joel Hammond

A chip off the old IP block ■ At the ripe old age of 10, Anne Marie Murphy has filed for her first patent. It is “really helpful,” she acknowledges, that her mom is patent attorney Cindy Murphy of Cindy Murphy LLC in Cleveland. The young Ms. Murphy’s invention is a removable connector for floating rafts, distinct from other patented connectors in that it links rafts so that the pillow head rests face each other. The idea for it dawned on Ms. Murphy, a fifth-grader at Laurel School, as she was swimming with a friend who was terrified of the pool’s deep end. To help her friend, Ms. Murphy connected two floating rafts with Styrofoam noodles. The two friends then could float together on the deep end, she said. Cindy Murphy prepared and filed her daughter’s patent application in late September; it was published by the U.S. Patent and Trademark Office on Jan. 5 to inform others that Ms. Murphy is pursuing the patent. For now, the invention is dubbed

the “floating friendship assembly.” Anne Marie Murphy’s hope is to sell the patent to someone who will manufacture the product. It likely will take at least three years for the patent to be issued, considering the current backlog, Cindy Murphy said. “The strange thing was, (working with Anne Marie) wasn’t that different than my 50- and 60-year-old clients,” Cindy Murphy said. “I had to do a couple revisions on this to make my client happy,” she said with a laugh. — Michelle Park

Lots of interest in parking lots ■ Terra Park, a Toronto-based investment fund operator that focuses on buying land in downtown areas, got a foothold in downtown Cleveland with a $2.25 million deal for a parking lot near Cleveland State University. It bought the lot Jan. 20 on the northwest corner of East 22nd Street and Prospect Avenue from an investor group led by USA Parking of Cleveland, which will continue operating it. Jack Pasht, a Terra Park managing director, said in an email the purchase of the lot, which is nearly an acre, is the company’s first here. He said Terra Park is pursuing other downtown Cleveland parking lots that he declined to identify. Louis Frangos, USA Parking CEO, said he sold the property because his firm had held it a long time. He said he is impressed out-of-town groups are so interested in the city; he sold another lot on Prospect last year to a California-based buyer. — Stan Bullard

Profit flow:

The state of Ohio will get $1.4 billion upfront, and a share of profits down the road, for selling its liquor business to JobsOhio, the nonprofit created by the Legislature to spearhead the state’s job creation effort. The expectation is that JobsOhio will control about $100 million annually, its share of the liquor profits, to use for grants and low-cost loans to companies that agree to bring a business to Ohio or to expand existing operations in the state.

WHAT’S NEW

Excerpts from recent blog entries on CrainsCleveland.com.

Cleveland Fed helps employees get ahead

See what’s in store: Constantino’s Market in March plans to open a grocery store in the University Circle area with the help of a $2 million federal loan. The location at 11451 Euclid Ave. will be part of the Uptown apartment and retail complex that MRN Inc. is building, said Constantino’s owner Costas Mavromichalis. He said he expects to get some business from the apartments, but the main reason he wanted to open the store is because he sees pent-up demand for a grocery store at Case Western Reserve Mavromichalis University.

Credit for card maker: American Greetings Corp. secured an increase and extension of its revolving credit agreement. The amendment extends the term of the agreement to January 2017 from June 2015, increases the amount that can be borrowed under the credit line to $400 million from $350 million, reduces the commitment fee due on undrawn borrowings, and lowers the margins paid on borrowings.

They have some nerve: SPR Therapeutics Inc. closed on a $2.2 million Series A investment round that it will use as it works to win regulatory approval for a product designed to alleviate pain through neurostimulation. The company in Highland Hills expects in the second quarter to win approval to sell its first product, the Smartpatch Peripheral Nerve Stimulation System, in Europe. The startup expects to gain approval to sell the product in the U.S. in early 2013.

BEST OF THE BLOGS

COMPANY: The Garland Co., Cleveland PRODUCT: Tuff-Flash liquid flashing system Garland said it has introduced a singlecomponent, liquid-applied mastic that’s durable and easy to apply. The Tuff-Flash liquid flashing system “provides superior water protection and weathering capabilities,” the company says. It’s an asphalt polyurethane that adheres to asphaltic membranes as well as a variety of metal surfaces. Tuff-Flash is “well suited for complex or irregular roofing details that would present a problem for traditional flashing,” according to Garland. The system requires no mixing and can be installed with a brush or trowel. It’s also environmentally friendly, with zero VOCs and low odor. Tom Stuewe, Garland product manager, said Tuff-Flash “is ideal for sealing difficult flashing details like an I-Beam or angle iron coming through the roof. It skins over quickly in hours and completely cures in 10 to 15 days, which helps reduce project disruptions and duration.” (A reflective coating then can be applied within 15 to 30 days.) Garland has been in business for more than 100 years. It makes roofing and building maintenance systems for the commercial, industrial and institutional markets. For information, visit www.GarlandCo.com.

■ Corporate spending on worker training is up, according to Forbes.com, and the Federal Reserve Bank of Cleveland was cited as one employer that does an exemplary job in building a “learning organization.” Josh Bersin, who runs Bersin & Associates, a research firm focused on the needs of HR and training leaders, wrote that after four years of budget cuts, “spending on corporate (learning and development) increased by 9.5% last year.” He said this shows companies “now realize that they simply cannot find the skills they need in the work force and have to reinvest heavily in corporate training.” Mr. Bersin then laid out five “keys to success in building a learning organization,” and the Cleveland Fed was mentioned in a section about promoting and rewarding expertise. It gives its examiners a seven-year apprenticeship program “to help them develop into senior bank examiners,” Mr. Bersin wrote. They’re “continuously trained through apprenticeship and present the results of their work to more senior practitioners.” He wrote that such programs “tell the organization that ‘expertise matters’ and ‘we are willing to invest in your own skills.’”

As Detroit goes, so goes the Midwest ■ Auto industry employment in the United States is predicted to jump by about onethird — to 756,800 in 2015 from 566,400 in 2010 — The Wall Street Journal reported. Most of that increase will be in Michigan,

according to the Center for Automotive Research in Ann Arbor, though Great Lakes states including Ohio will see significant benefits. The Journal said while the projection “falls well short of the 1.1 million workers employed in the sector in 1999, it indicates the hemorrhaging has been stanched.” Indeed, the newspaper said the “buoyant auto industry is helping to boost the Midwest hiring outlook.” Staffing company ManpowerGroup “estimated a net 10% of Midwest employers plan to hire in the first quarter, after factoring in companies that said they would cut jobs.”

Another new project? Why thanks, boss ■ It’s probably a fair guess some of you have faced the dilemma described in a New York Times Career Couch column headlined, “When You’re the Worker Who Can’t Say No.” The column started with this question: Your plate at work is full, but your boss has asked you to take on yet another assignment. You say “yes” even though you know you don’t have time. Why? Tres Roeder, president of Roeder Consulting, a project management consultancy in Cleveland, recommended starting with an expression of gratitude that you’ve been asked to take on something new. After all, it means your boss believes in you. He told The Times that if you think you may already have more work than you can handle, tell your boss that, because you’re juggling other time-sensitive projects, you need to examine the details of this new task to determine if there’s some way you can fit it in. You may find that you won’t be able to, but automatically responding “no” without any consideration gives the impression you just don’t want to deal with it, he said.

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