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Third Frontier boss prioritizes faster returns Department of Development’s new head eyes investments that spur jobs quickly By CHUCK SODER csoder@crain.com
COLUMBUS — High-tech projects designed to create jobs within a few years will get more money if Mark Kvamme is successful in reshaping the Ohio Third Frontier program. Mr. Kvamme, interim director of the Ohio Department of Development, said he wants the Third Frontier program to put more money toward projects that can spur significant job creation in three to five years. In the past, most Third Fron-
tier grants have gone to projects with longer time horizons, including many in the range of seven to 10 years, Mr. Kvamme said. “My gut would be over 50% should be” used to finance projects with a near-term payoff, he told Crain’s last Thursday, Jan. 27, at a meeting of the Third Frontier Commission in Columbus. Kvamme, a partner with a Silicon Valley firm that makes venture capital and private equity investments, said he was uncertain what the percentage is today but suggested it is much lower. See PROJECTS Page 17
Nordson opens new doors with ‘green’ Westlake HQ High-tech home meets tougher LEED standards
RINGING IN A NEW ERA As centennial nears and membership struggles, The City Club wants to make sure it still strikes a chord with community By MICHELLE PARK mpark@crain.com
T 05
JANET CENTURY
he gong sounds and the Friday Forum begins. Here, the crowd doesn’t need e-mail, Twitter or Facebook to communicate with the founder and president of the Arab American Institute in Washington, D.C. They don’t need 24-hour news sites to tell them he’s written a book or to detail his belief that the United
States doesn’t listen to the Arab world. They sit at tables plated with lentil salads and other food and hear it straight from Dr. James Zogby. Then, they ask him questions, and a few even share observations they’ve made in their own travels to Arab countries. It’s been nearly 100 years since The City Club of Cleveland began delivering this form of forum in 1912. If the nonprofit is to endure another century, there’s work to be done. See CLUB Page 7
By DAN SHINGLER dshingler@crain.com
Nordson Corp. isn’t just staying in Westlake — it’s getting downright comfortable in the suburb and plans to stay long enough to more than recoup its investment in a high-tech, LEED-certified building that it’s unveiling today, Jan. 31. The company, which makes automated dispensing systems that it says glue together everything “from cereal boxes to semiconductors,” spent more than $5 million on the
28,000-square-foot structure it began occupying in late November and now fills. The building stands as a See NORDSON Page 6
INSIDE Alternative medicine’s benefits Parker Hannifin offers its employees benefits that cover most of the cost of alternative medicine treatments, including on-site massages and acupuncture. Read Tim Magaw’s story on Page 3.
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FINANCE Healthy banks may go on a shopping spree this year ■ Page 13 PLUS: Q&A ■ TAX SEASON ■ ACCOUNTING RULES ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 5
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LOOKING TO GET OUT
CORRECTIONS In a Jan. 17, Page 9 story about The Plain Dealer’s plans to develop its mobile strategy, Denise Polverine, editor of Cleveland.com, should have been quoted as saying, “We started focusing heavily on mobile last year,” not “We started focusing heavily on digital last year,” as the story stated.
WWW.CRAINSCLEVELAND.COM
A Jan. 24, Page 12 story incorrectly stated the ability of colleges competing in the National Association of Intercollegiate Athletics to offer athletic scholarships to students. NAIA schools, such as Walsh University in North Canton and Malone University in Canton, can offer scholarships.
The Great Lakes and Plains regions lead the nation in outbound migration, according to data compiled by United Van Lines. The company for the last 34 years has tracked rates at which customers move to and from particular states. In 2010, six of the seven states with the highest outbound migration rates are in the Midwest or the Plains. At least this region didn’t take the top spot, a designation that belongs to New Jersey.
State New Jersey
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Best of the Blogs .........19 Classified ....................18 Editorial ......................10 Going Places .................8 Letters ........................10 Reporters’ Notebook....19 What’s New..................19
It’s a small world when it comes to health care. We explore in our Health Care section the prevalence of patients traveling to Northeast Ohio for medical treatment, a concept often referred to as medical tourism.
% of 2010 moves that were outbound 62.5%
Michigan
62.0
North Dakota
60.8
Missouri
60.1
Illinois
57.3
Kansas
56.6
Ohio
55.6
SOURCE: UNITED VAN LINES
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) Dirk Kruger (dkruger@crain.com) Nicole Mastrangelo (nmastrangelo@crain.com) Dawn Donegan (ddonegan@crain.com) Business development manager & classified advertising: Genny Donley (gdonley@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Production manager: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Kristen Wilson (klwilson@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Circulation manager: Erin Miller (emiller@crain.com) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com) 1-877-824-9373
Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing Kathy Henry: Corporate circulation/audience development director G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 136 Audit Bureau of Circulation
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Jacobs Group considers Avon outlet center Development would add to suburb already loaded with retail By STAN BULLARD sbullard@crain.com
The Richard E. Jacobs Group, the developer that owns more than 200 acres near the planned Lear Nagle Road interchange with Interstate 90 in Avon, is in the early stages of considering construction of an outlet store shopping center in the retaildense western suburb. An outlet center concept is on the
drawing board at the developer’s Westlake office, according to four sources familiar with the plans. None of the people were willing to be identified by name as they are not authorized to speak for Jacobs Group. Plans clearly are nascent. Avon Mayor Jim Smith and planning coordinator Jim Piazza say such a concept for the acreage is new to them. However, a concentration of
outlet stores would not be a stretch for the sites in Avon that Jacobs Group has accumulated over the past decade with stated plans for stores, offices and interchangerelated services such as hotels. Pondering plans for an outlet center shows how little room there is for positioning more retail in Avon. The past few years, Jacobs Group has created Avon Crossing, a big-
box retail center with a J.C. Penney and Lowe’s home improvement store on the north side of I-90 at state Route 83. Walmart and Best Buy stores for nearly a decade have occupied the north side of the highway at Route 83. And First Interstate Properties Inc. of Lyndhurst early in the new millennium established Avon’s retail presence with its Avon Commons shopping center on the highway’s south side. Jacobs Group spokesman Bill Fullington said the company is reviewing its options for its Avon
THE WEEK IN QUOTES
Kasich push for contract rule changes faces pitfalls In past, public workers ignored no-strike edict By JAY MILLER jmiller@crain.com
— Jim Foster, executive director, The City Club of Cleveland. Page One
— Susann Geithner, a LEED (Leadership in Energy and Environmental Design) design/ project manager for Hengst Streff Bajko Architects + Engineers. Page One
“In some cases, companies sell from a position of strength, and in some cases they sell because they really don’t see better options.” — Charlie Crowley, managing director, Paragon Capital Group. Page 13
“Firms are sensitive to the burnout factor and therefore seek to make the workload palatable and promote work-life balance.” — Gerald Weinstein, professor and chairman of the accounting department, John Carroll University’s Boler School of Business. Page 14
See OUTLETS Page 17
INSIGHT
“We’re here every week presenting … interesting, compelling speakers. Only some of them might interest you, but others interest other people. We need to have membership support that enables us to do that.”
“The thing with LEED is that it not only looks at energy. It looks at people, too.”
land and that it’s “too early to speculate on what will eventually occur.” Keith Hamulak, a senior associate in retail leasing at the Cleveland office of CB Richard Ellis, said he is unfamiliar with plans for outlet shops by Jacobs Group. However, Mr. Hamulak finds the concept sensible. “That location would be an excellent one for an outlet mall,” he said. “Look at the geography. Aurora Premium Outlets in Aurora serves the southeast side. Lodi Station serves
JASON MILLER
Dr. Helen Kwon, the new holistic medicine specialist at Parker Hannifin Corp., performs acupuncture and other alternative medicine procedures at the company’s corporate headquarters.
AT PARKER, ANOTHER WAY TO GET WELL Producer of motion and control technologies leads charge to incorporate more alternative medicine into employee care By TIMOTHY MAGAW tmagaw@crain.com
S
ome of Parker Hannifin Corp.’s employees are on pins and needles. Not because of a hostile work environment, but because Parker offers an out-of-the-ordinary benefits package that covers 80% of the cost of various alternative medicine treatments, such as on-site massage and acupuncture services. Offering wellness programs as part of benefits packages has become the norm at many Northeast Ohio businesses. But Parker is going one step further.
Parker CEO Don Washkewicz is passionate about the program and has tried to ingrain alternative medicine and wellness approaches into the culture at the producer of motion and control technologies. Investing in this type of program, he said, allows Parker’s employees to get holistic treatment that gets to the underlying cause of a health problem rather than the “inand-out” approach offered by traditional medical providers. The next step, Parker’s leaders say, is expanding the company’s base of credentialed complementary and alternative medicine practitioners — at See PARKER Page 18
THAT HEALING FEELING Led by CEO Don Washkewicz, Parker Hannifin Corp. is offering a benefits package that covers alternative medicine. The numbers behind the program: ■ About 15% of the company’s
U.S. employees currently are using the program ■ The company’s stable of credentialed practicioners numbers 1,900 in the United States ■ Participation has risen since the program was piloted in 2003; in
2010, 62,801 claims were made for alternative treatments, up from 32,670 in 2009 ■ From Mr. Washkewicz: “You have to have an interest. We can’t force you, but it’s not a hard sell. The message resonates.”
If Republican Gov. John Kasich gets the changes he wants in the way unionized public employees negotiate contracts with government bosses, he may find a friend in Akron’s Democratic mayor, Don Plusquellic — though neither may be happy with the end result. Kasich Gov. Kasich wants to eliminate binding arbitration from the contract negotiation process with public employees and to forbid public employee strikes. However, others familiar with the laws that govern public employees’ right to bargain for higher wages and to strike are skeptical of anything that upsets the delicate balance between police, firefighters and teachers and their bosses. That’s because many remember a time before 1984 when public employees were striking at record levels even though they legally were not permitted to do so. Since collective bargaining was allowed and binding arbitration was added to the negotiation process, the number of strikes by public employees has dwindled; the state employment board reported no public employee strikes in 2010. Rob Nichols, the governor’s spokesman, said the Kasich administration is not ready to expand on the governor’s intentions. “The governor is committed to reducing the cost of government so that we can begin to reduce taxes, make Ohio business friendly and create jobs for Ohioans,” Mr. Nichols said in an e-mail last week.
Call for change In Akron, Mayor Plusquellic is incensed by the results of the current See STRIKES Page 4
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Motor distributor sets up on East Side Electric motor maker and distributor Brook Crompton North America of Toronto is starting to set up a distribution center in 23,000 square feet at the Shoreway Commerce Park in Cleveland. David Ramnarine, Brook Crompton distribution manager, said the distribution center will serve six states. The company will move in-house work previously handled
by a third-party logistics operation. Eliot Kijewski, a sales associate at Cresco real estate in Independence, said Brook Crompton selected the Cleveland site over a location it considered in Detroit. Brook Crompton dates from 1878 and is part of Lindeteves-Jacoberg Group of Austria. It has served the U.S. and Canadian markets for 50 years. Shoreway Commerce Park, 842 E.
79th St., is the multimillion-dollar renovation of the former White Motors complex that First Interstate Properties Inc. of Lyndhurst will complete in phases through 2012. The makeover is designed to give the landmark industrial complex a new lease on life with new exteriors, additional access and the demolition of some older buildings at the site, Mr. Kijewski said. — Stan Bullard
Strikes: Ban enforcement would be difficult continued from PAGE 3
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system, in particular with a Jan. 3 arbitrator’s decision that he believes will hurt his city. An independent arbitrator awarded members of the Akron lodge of the Fraternal Order of Police three pay raises totaling 4.5% between April 2011 and July 2012 and gave the police union the right to seek arbitration if the city seeks police layoffs. The award did require police officers to take 14 hours of unpaid leave and pay more out of pocket for health care and some other benefits. “I was one of the most ardent, outspoken advocates for keeping the system that prevents adults from standing out picketing,” Mayor Plusquellic said of his past support for the current law, which allows labor and management to let an independent arbitrator impose a settlement when the two sides can’t reach an agreement. “But what I believe has happened (is that) the people in Columbus — Republicans and now more recently Democrats — have bastardized the system to be more and more aligned and leaning towards the public labor unions,” he said.
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Mayor Plusquellic said he believes the arbitrator failed to take fully into account the city’s eroding financial position. Mr. Kasich, as governor-elect, was giving voice back in December to Mayor Plusquellic’s lament. “You think these local governments want to be stuck with binding arbitration?” he said at a press conference Dec. 10. “Our local governments don’t want that; it drives up the cost.” The governor-to-be went further, saying he didn’t believe public employees should have the right to strike. “If they want to strike, they should be fired,” Mr. Kasich said. “Look, you can have a change in the law that says … ‘You’re not going to strike and we’re going to continue negotiations without a binding arbitrator.’”
On the other hand … Both Gov. Kasich and Mayor Plusquellic believe neutral arbitrators as a group favor the labor side. However, a recent survey by The Columbus Dispatch found that in the 20 public employee labor disputes since 2008 in which wages were an issue, arbitrators favored the union’s final offer 10 times and the employer’s offer 10 times. The newspaper reported that outside arbitrators were involved in fewer than 2% of contract negotiations. Joseph Slater, a professor of law at the University of Toledo who specializes in labor law, said Ohio is one of only a dozen states that allows public employees to strike. “On the other hand there are some states that don’t even allow public employees to bargain at all — Virginia, the two Carolinas. But most states are in the middle.” Dr. Slater said most states allow public sector workers to bargain collectively with binding arbitration as the last resort. “If you don’t have (binding arbitration), you are really gutting collective bargaining,” Dr. Slater said. “That may be what Gov. Kasich would like, but that would be a fairly radical departure from collective bargaining as it exists in Ohio and a plurality of states.” Dr. Slater noted that the number of strikes by Ohio public employees dropped dramatically after the passage of the collective bargaining law, even though strikes were illegal before then. And Susannah Muskovitz, a Cleveland lawyer who represented
the Akron police in their recent arbitration, doesn’t believe Gov. Kasich, Mayor Plusquellic or the broader public want to go back to a time when public employees went on strike more frequently. “Talk is cheap, but implementation isn’t so easy,” Ms. Muskovitz said. “Employees today have now lived under the law for 27 years, and they are used to it. You can’t turn back the clock. “There has to be some kind of final step” before a strike, she said.
Striking difference Ohio public employees did not have the right to strike and had limited power to bargain collectively until 1984. Democratic Gov. Richard Celeste and a Democratic-controlled General Assembly passed a law granting the right of collective bargaining to unionized public employees and gave a limited right to strike to all public employees, except for safety and fire forces. A study by professor Martin Malin of the Chicago-Kent College of Law found that the introduction of collective bargaining and binding arbitration significantly reduced the number of work stoppages. Though state law forbid public employee strikes, teachers and others still often went on strike, knowing that final negotiations would include an amnesty for the striking workers. Other times, public employees, notably police officers, would call in sick en masse — in a tactic that came to be called the “blue flu.” “There is no way to enforce a no-strike clause,” said Charles Wilson, associate professor of law at Ohio State University. “It’s hard to find good science and math teachers.” Ohio public employee groups went on strike 56 times in 1979 and 60 times in 1980, prior to the granting of collective bargaining to public employees, according to Mr. Malin’s 1993 research, which was published in the University of Michigan Journal of Law Reform. In the nine years after the change in the law, the number of strikes never topped 18. The pace of public sector strikes has slowed to a crawl in the last decade as the economy has teetered. In the fiscal year that ended June 30, 1998, the Ohio State Employment Relations Board counted 14 strikes by public employees. No year since has seen more than eight strikes, with no strikes recorded in fiscal 2010, two in fiscal 2009 and three in fiscal 2008. ■
Volume 32, 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 © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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Nordson: Hyland Software benefits from new HQ move continued from PAGE 1
symbol not only of Nordson’s commitment to Westlake, its home since 1986, but also its commitment to sustainability, said treasurer Ray Cushing. “It was a great solution for us, for the city and for Hyland Software,” he said. Indeed, Nordson had to move only a few hundred yards — it even worked with the city to keep its street address at 28601 Clemens Road — while Westlake got to keep it and Hyland Software Inc., a document management software company that with Nordson’s move secured the space it needed to expand. Hyland already was occupying more than half of Nordson’s former
“(Nordson has) been a corporate member of the community for a long, long time and we didn’t want to lose that corporate headquarters.” – Robert Parry, planning and economic development director, City of Westlake 73,000-square-foot headquarters next door, and now owns and occupies that entire building. Hyland has about 1,000 employees there, said Robert Parry, Westlake’s planning and economic development director. The city gave Nordson a 15-year, 50% tax abatement on the new building. Westlake is happy with the arrangement, Mr. Parry said. “Nordson’s a huge international company and it’s their corporate
headquarters,” Mr. Parry said. “We were really pleased to have that work out so well. They’ve been a corporate member of the community for a long, long time and we didn’t want to lose that corporate headquarters.”
A silver lining Nordson needed less space and wanted a building that could be better configured as a corporate
headquarters, according to Mr. Cushing, its treasurer. Its original building in Westlake was constructed as a research and engineering center and only became the headquarters as an afterthought, he said. The headquarters once had hundreds of employees, but in recent years Nordson has moved its research and engineering closer to its manufacturing plants around the world. That setup left only about 60 corporate management staffers inhabiting a building too big for them, Mr. Cushing said. Nordson will save money operating a smaller building, but the new headquarters is expected to produce savings beyond its footprint. The
building is seeking a coveted Silver certification for LEED, or Leadership in Energy and Environmental Design, under standards developed by the U.S. Green Building Council. LEED certifications are based on a point system, with simple certification being the easiest to achieve. That’s followed by Silver, Gold and Platinum certification levels, said Susann Geithner, a LEED design/ project manager for Hengst Streff Bajko Architects + Engineers in Cleveland. Usually, it’s only high-tech companies that go after Platinum certifications as part of larger branding efforts, with a Silver certification a worthy goal for a company such as Nordson, Ms. Geithner said. Nordson is pursuing its certification under what’s known as LEED Version Three, which Ms. Geithner said is the newest and toughest set of standards. A Silver LEED building today might have qualified for a Gold certification a few years ago, she said. “They are constantly being updated, and each time they become a little tougher to meet,” Ms. Geithner said. To get Silver certification, Nordson has incorporated a host of features both inside and outside of its building, said Mr. Cushing and Ron Cocco, lead architect on the project for Clark & Post Architects in Lorain.
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Inside, high-efficiency glass lets in light but still protects the building’s internal temperature, allowing for what’s known as “light harvesting,” Mr. Cocco said. When there is enough light outside, an automated system detects it and dims the internal lights — or shuts them off completely if there is no one in a room. If the amount of light falls, the lights automatically are brought up so that the lighting level inside remains the same. All the building’s construction waste was recycled. Also, the concrete that went into the building contains recycled ash, the carpets are made from recycled fibers and its contents — from wall coverings to carpet and furniture — have been designed to give off little or no volatile chemicals. The roofs of the building are either white, to reflect heat, or are plantedgreen roofs that insulate the building, provide green space and reduce the building’s carbon footprint. The parking lot is made of porous paving stones atop four feet of gravel. In even the heaviest downpours, there is no puddling in the parking lot and no run-off that can cause environmental problems, Mr. Cushing said. A computerized system runs redundant heating and cooling systems, including a hot-water heating system that provides heat to exposed windows, preventing them from becoming cold zones in the winter. All those features increased construction cost by about 10%, but will reduce operating costs by 20% or more compared with more conventional construction, Mr. Cushing said. Ms. Geithner said Nordson is including a lot of features that will earn it points toward certification. For instance, natural light creates a better work environment, and zoned heating such as Nordson is using ensures that buildings don’t have hot or cold spots — or uncomfortable employees. “The thing with LEED is that it not only looks at energy, it looks at people, too,” she said. ■
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Club: Institution strategizes with volunteer consultants continued from PAGE 1
he said, and as the world “explodes While event attendance remains with access,” it’s hard for the City quite steady, City Club membership Club to compete with the novelty of is down about 20% since the fiscal social media. In addition, the number of people year that ended June 30, 2009, said executive director Jim Foster. The who work in downtown Cleveland decline is significant because mem- has been static at best. And so, bership dues are the “lifeblood of the unlike Mr. Taft, an attorney who organization,” Mr. Foster said. They rides an elevator down 20 stories and fund roughly 20% of the club’s walks across the street from his office in the Huntington Building to budget. Mr. Foster hesitated to describe the City Club on Euclid Avenue, the City Club as struggling. However, others must come from suburbia. it has recorded a loss of roughly That commute takes time, which can $25,000 to $30,000 a year in the past be hard to find in the pressed lives two years and has tapped its reserves people live today. Mr. Foster cites another hurdle: to avoid a deficit. “You have a situation where you the City Club’s ineffective selfsee a 20% decline — it does give you marketing. The club needs to project cause for concern,” Mr. Foster why membership is important — even to those who said. “We’ve got attend only a handto address the conth “The 100 anniversary ful of events a year cern, and I don’t will provide opportuni- — and the organizawant to do it by ties to shake things up tion has not done it guesswork.” the way it should. The City Club a little.” He said the need began working last – Carrie Miller, program wasn’t obvious until fall with volunteer director, City Club the downward trend consultants who emerged. are assessing its The biggest selling point for club membership-based business model and are helping identify what it membership is its Friday Forums, can do to make membership more which are broadcast on radio stations enticing, said program director in more than 40 states and via televiCarrie Miller. The consultants’ sion and podcasts. “We’re here every week presenting preliminary findings may be shared as early as February. The engage- … interesting, compelling speakers,” ment with consultants from McKinsey Mr. Foster said. “Only some of them & Co. was arranged through Business might interest you, but others interVolunteers Unlimited in Cleveland, est other people. We need to have which connects volunteers with membership support that enables us nonprofits to assist the latter with to do that.” The City Club has discussed hiring business challenges. The City Club also hired in an outside public relations firm to December a full-time employee promote specific projects, but not whose primary responsibility is to for ongoing marketing support, Ms. develop the club’s membership and Miller said. It uses Facebook and Twitter and its marketing of membership to the community. The first year of the has a channel on YouTube. However, position is financed by a grant from it’s still working to figure out what The Mandel Foundation, Mr. Foster it wants to accomplish via those outlets and how it effectively can said. The club also plans to survey continue on the web those conversamembers on why they’re members tions started at its weekly forums, and to ask former members why Ms. Miller said. She said previous they’ve allowed their memberships efforts were unsuccessful. There’s hope the club’s 100th to lapse, Ms. Miller said. Some nonanniversary celebration, due to kick members also will be contacted. As of mid-January, individual off in October, will heighten awarememberships totaled 919, and ness. The celebration will involve corporate memberships numbered special programming and possibly the return of notable guests who’ve roughly 60. “I don’t know that I would say we spoken at past forums, Ms. Miller are doubting our model,” Ms. Miller said. said. “We are recognizing it is a very different world. The 100th anniver- The human touch sary will provide opportunities to Dr. Zogby appears frequently on shake things up a little. It’s our sec- radio and television and writes a ond century; how are we going to do weekly column on U.S. politics for things differently?” major newspapers of the Arab world.
Mr. Taft’s assessment Rick Taft, a City Club member since the late 1970s and a regular at the lunchtime lectures, calls the City Club’s current challenges a triple whammy. The strained economy has curbed discretionary expenditures,
He’d spoken at The City Club of Cleveland two times before his Jan. 14 appearance, Mr. Foster recalled. In closing remarks to the crowd that day, Dr. Zogby lauded organizations such as the City Club, where he said he meets engaged citizens.
Annual membership prices ■ Regular members (ages 41 to 64), $200 ■ Seniors (65 and older) and New Leaders (40 and younger), $140
Later, after the room had emptied, he stressed that venues like the City Club “(are) what stand between us and ignorance.” Mr. Taft, the decades-long City Club member and club president from 1990 to 1991, said he believes there’s a “magic” to the “human-tohuman, real flesh-and-blood con-
tact.” He was the first person to pose a question to Dr. Zogby — something he considers a “heartpounding opportunity,” every time. Mr. Taft is confident the City Club will see another 100 years. Every institution, he said, must renew itself for the next generation. “It may be that we need to become
extremely explicit about the special power of the in-person encounter — how it feels to be here,” said Mr. Taft, a business lawyer with Spieth, Bell, McCurdy & Newell in Cleveland. “There is still a special power and magic. (The City Club’s) health, though, will depend on how it can market the magic.” ■
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CLIFTON STEEL CO.: Peter Hallahan to sales manager, commercial products division.
GOING PLACES JOB CHANGES
LEGAL
EDUCATION
BAKER & HOSTETLER LLP: Michael P. DeMinico, Grant A. Monachino and Douglas R. Sergent to partners.
CUYAHOGA COMMUNITY COLLEGE: Susan Muha to executive vice president, Workforce and Economic Development Division.
HEALTH CARE AKRON GENERAL HEALTH SYSTEM: Stephen M. Gary to senior vice president, CFO. THE GREENS NURSING & REHABILITATION CENTER: Dr. Fatima M. Pozuelo to pulmonary medical director. PRIORITY HOME HEALTH CARE INC.: Benita Harris to medical records coordinator.
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CORSARO & ASSOCIATES LPA: Joseph M. Corsaro to attorney. VORYS, SATER, SEYMOUR AND PEASE LLP: Elia O. Woyt to partner.
GRAFTECH INTERNATIONAL LTD.: Mark R. Widmar to president, engineered solutions segment. MALCO PRODUCTS INC.: Seth Glauberman to vice president, sales; Tim White to vice president, operations.
MARKETING
MANUFACTURING
LANDAU PUBLIC RELATIONS: Carrie Scully to account executive, social media manager.
B’LASTER CORP.: David Pate to executive vice president, sales.
ROSENBERG ADVERTISING: Samantha Oertel to art director.
CLIFFS NATURAL RESOURCES INC.: James Graham to general counsel, global operations; Gina Gunning to general counsel, corporate affairs, and secretary.
NONPROFIT HABITAT FOR HUMANITY OF SUMMIT COUNTY: Jim Sukys to director of development.
JANUARY 31 - FEBRUARY 6, 2011
JEWISH FAMILY SERVICE ASSOCIATION: Eileen L. Yates to director, older adults services, JFSA Care at Home. NEIGHBORHOOD HOUSING SERVICES OF GREATER CLEVELAND: Darren Hamm to deputy director. OPERA PER TUTTI: Scott Skiba to operations director.
Gary
Corsaro
Scully
Yates
Hamm
Pavelek
SERVICE CORPORATE SCREENING: Matt Jaye to sales manager; Tom Turner to client services manager. MARKETVISION RESEARCH: Kelly Pavelek to research manager. PROFORMA: Jason Cooper and Marianne Crawford to sales representatives; Jade Green-Gamble to graphic designer.
BOARDS AMERICAN INSTITUTE OF CHEMICAL ENGINEERS CLEVELAND SECTION: Charles Roe (Agilysys Inc.); John Kukwa to vice chairman; Michael Galgoczy to secretary; Sam Datta to treasurer. COMMERCIAL REAL ESTATE WOMEN CLEVELAND: Laura Hengle (Bock & Clark) to president; Kathleen Nitschke to president-elect; Romona Davis to treasurer; Cheri Henson to immediate past president. GREATER CLEVELAND BETTER BUSINESS BUREAU: Leslie Dickson (Voice-Pro Inc.) to chairman; Ingrid Halpert and Marleen Herman to vice chairman; Bill Mann to secretary; Mike Filarski to treasurer.
I don’t see what the fuss is about motorcycles.
MUSICAL ARTS ASSOCIATION: Dennis W. LaBarre to president; Richard J. Bogomolny to chairman; John D. Ong to vice president; Norma Lerner to honorary chair; Raymond T. Sawyer to secretary; Beth E. Mooney to treasurer.
So they’re supposed to make you feel “free.� I feel that way already.
PRESS CLUB OF CLEVELAND: Ed Byers (Medical Mutual of Ohio) to president; Stuart Warner to vice president; Wendy Kertesz, Carol Saferin, Pat Panchak and Dustin Klein to vice presidents; Carol Kovach to treasurer and secretary. ROCKY RIVER CHAMBER OF COMMERCE: Paul Hvizda (Admiral Products) to chairman; Cliff Obrock, George Hihn, Debra Bernard and Ellen Todia to vice chairmen; Mike Trifiletti to treasurer; Rusty Deane to secretary. YOUTH CHALLENGE: Ernest E. Vargo and Colleen Murnane to at-large members, executive committee.
AWARDS AMERICAN ASSOCIATION FOR THE ADVANCEMENT OF SCIENCE: Coleen Pugh (University of Akron) was named a fellow. AMERICAN PHYSICAL SOCIETY: Ali Dhinojwala was named a fellow. INSTITUTE OF REAL ESTATE MANAGEMENT: Emily Mogen (KeyBank) received the CPM of the Year Award.
Send information for Going Places to dhillyer@crain.com.
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Kent Displays writing a growth story On strength of ‘Boogie Board’ tablet, company far exceeds projections By CHUCK SODER csoder@crain.com
Walk into a Brookstone store, and you’ll likely see a stack of “Boogie Board� writing tablets made by Kent Displays Inc. right up front. That is, if they aren’t sold out. Sales of the liquid-crystal based writing tablet have exceeded the expectations of both Kent Displays, based just south of Kent, and Brookstone, which sells the Boogie Board online and at more than 300 stores. The success of the product, released a year ago this month, has helped Kent Displays expand its work force to nearly 100 from 45 at the start of 2010, said communications director Kevin Oswald. Though Mr. Oswald wouldn’t reveal revenue figures nor disclose whether the company is profitable, he said Kent Displays’ revenue doubled in 2010 on the strength of Boogie Board sales. The product exceeded the company’s original forecast tenfold. While giving a tour of Kent Displays’ 30,000-square-foot factory, Mr. Oswald said in order to meet ongoing demand for the device, which works like an electronic dry erase board, the company is running three shifts five days a week for some processes and seven days a week for others, Mr. Oswald said. Kent Displays expects to double its revenue again in 2011, he said. “We are where we want to be right now,� he added. Before releasing the Boogie Board, the 18-year-old company previously focused on developing and selling glass liquid crystal displays made by contractors. The Boogie Board, however, is the first Kent Displays product to use a proprietary plastic display designed to be flexible and light. The Reflex LCD technology also uses power only when the user pushes the “erase� button, which sends a jolt of electricity through the liquid crystals. The release of the product marked Kent Displays’ first foray into mass production. The company makes the Boogie Board’s display on a roll-toroll manufacturing line that stretches most of the length of the factory. The proprietary machine is hidden in a clean room that is off limits to visitors. The plastic rim around the display is made in China. From there, many of them go back to Kent Displays’ headquarters, which is a distribution center for most orders placed by Brookstone and by U.S. customers buying the Boogie Board online through sites such as Amazon.com and MyBoogieBoard.com, set up by Kent Displays. Kent Displays also has formed partnerships with five resellers in Japan after seeing strong online sales to customers in the country, Mr. Oswald said. The company plans to form more partnerships in foreign countries over time, he said. “We are definitely looking to expand on that front,� he said.
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Father’s Day. Sales “blew past� what Steve Schwartz of Brookstone described as “aggressive� sales projections. Mr. Schwartz, operational vice president in merchandise, said the retailer was immediately impressed by the product, describing it as unique, innovative and fun. It also is priced right at $40, he said. “We don’t put a bad product in the front of the store,� he said. Kent Displays this year plans to release another consumer product that uses the company’s Reflex LCD technology. Mr. Oswald described the product as “decorative� and said it would be released under the Improv Electronics brand, the same
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brand used to market the Boogie Board. The company aims eventually to build flexible displays for other manufacturers’ products, he said. Kent Displays also is working to increase production. The company in December received a $3 million federal grant to study how to make drastic improvements to its rollto-roll manufacturing process. The company plans to spend a total of $6 million on the effort, which also will involve the University of Akron and the Cleveland-based Manufacturing Advocacy and Growth Network, or Magnet. “We’re going to have to make giant leaps in how we do that,â€? Mr. Oswald said. â–
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JANUARY 31 - FEBRUARY 6, 2011
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
All wet
A
dvocates of cities and towns sharing services in order to hold down the cost of government can’t be encouraged by what they see at the city of Cleveland’s Division of Water. The ongoing billing problems at the water department are an embarrassment that Cleveland Mayor Frank Jackson needs to address with a firm hand if his call for more collaboration among communities in the region is to have any credibility. Way too many homeowners tied to Cleveland’s water system have received “Dear Valued Customer” letters that apologize for the late arrival of their quarterly water and sewer bills. The letters blame the late bills on a “technical error,” but that’s a tough excuse to swallow the longer the city hides behind it. Barry Withers, the city’s public utilities director, recently told The Plain Dealer that “issues” arose when Cleveland changed billing systems in September 2009. Just why those “issues” still are as prevalent as they are more than a year later is hard to understand. Add to the late bills the horror stories that crop up of homeowners who receive water and sewer bills in the thousands of dollars because of faulty meter readings and it’s no mystery why the Division of Water isn’t held up as a model of customer service. Suburban mayors whose constituents rely on city water appear to be running out of patience with the system. A Plain Dealer survey found leaders of two dozen suburbs rate Cleveland’s performance in meter readings, maintenance or billing as “bad” or “terrible.” And the city of Solon has decided it won’t use Cleveland’s services to bill for its sewer system any longer, thanks in part to the large volume of past-due accounts that were piling up. As 2011 kicked off, Mayor Jackson announced a realignment of city departments that was motivated in part by his desire to put Cleveland in a better position to offer its services to neighboring communities if a bill the mayor has promoted passes the state Legislature this year. State Sen. Nina Turner, D-Cleveland, already has indicated that she plans to reintroduce the bill, which first appeared late last session and would allow cities and villages to enter into agreements to perform services for other communities — a practice currently prohibited by state law. Mayor Jackson said the bill would put Cleveland in a position to offer the suburbs lower-cost services while spreading the cost of administering its public works department to a broader base. Among the services the city could offer, the mayor said, are snowplowing and street salting, motor vehicle maintenance, street sweeping and even fixing potholes. “We already have the infrastructure in place,” he said. “It’s just a matter of us adding a little (capacity).” It’s an excellent idea in theory. However, the performance of the Division of Water hardly would give suburban communities confidence that Cleveland could be relied upon as a trusted vendor of services. Mayor Jackson needs to mop up the mess in the water department before pursuing grander collaboration plans.
FROM THE PUBLISHER
Congress must go beyond the symbolic
H
Now, there’s a duh moment, if ever we ere it is, nearly a week later, had one. The congressmen and senators and I find myself still thinking decided on the bipartisan seating about a State of the Union arrangement in honor of Rep. Gabrielle speech that really didn’t give Giffords, who was gravely wounded in the us much info we didn’t already know. recent Tucson shooting spree. They left a This year’s speech by President Barack seat vacant in honor of the congressObama was marked by a new tone and woman, who has staged a significant, mood, brought on by a senseless tragedy. hopeful recovery after she was But irrespective of the reasons, shot by a troubled young man does anyone disagree that the BRIAN at a public event. Six died; 13 2011 version of the president’s TUCKER others were wounded. annual message to the people So lawmakers sat with colwasn’t more pleasant? leagues and friends from the Regardless of your political other side. Reaction to parts of persuasion, I don’t think anythe speech were more meaone could challenge the assesssured, and involved both parties. ment by Ohio’s newly elected Ohio’s senior senator, Democrat senator, Republican Rob PortSherrod Brown, sat with Sen. man, who said that lawmakers Portman and most other memof different parties sitting bers of the Buckeye State’s delegation. together made for a different experience. “It’s not the ‘D’ or the ‘R’ next to our In previous speeches, the two parties names, but the ‘OH’ that is important,” Sen. sat in blocks, with each standing together Brown said in one of the best lines of the to applaud the most partisan parts of the evening. His spokeswoman said later president’s speech. This time, folks rose that he planned to continue the practice together to applaud those messages that next year and sit on the Republican side. appealed to all Americans.
I know it’s only a symbolic gesture, but Ohioans should be proud of how our lawmakers acted that evening, and the comments they made later. They were a sharp contrast to a couple I heard the next morning on my drive into our downtown Cleveland offices. Rep. Anthony Weiner of New York told National Public Radio that Americans shouldn’t get accustomed to this year’s civil approach to the State of the Union. A bit later in the newscast, I was aggravated to hear some yahoo congressman from Florida disparage the whole thing as a “kumbaya” moment that he wouldn’t have a part in next year. I think most Americans are sick and tired — or worse — of the partisan bickering, name-calling and denunciations that have commandeered our political discourse. They want better from our elected representatives. Office holders who pander to the extremist wings of their parties should be thrown out. America deserves better from those fortunate enough to be chosen to serve. ■
LETTERS
Jackson’s plan for schools deserves an ‘F’ ■ I am upset about Cleveland Mayor Frank Jackson’s view of education as reported in your Jan. 17, Page One story, “Jackson: Fix schools first.” Mayor Jackson probably gets blank stares when he talks about education because his listeners are stunned. His ideas are the very opposite of what Cleveland needs, which is anything that even remotely smells like a larger county district under common — let’s face facts, Cleveland — control. Cleveland schools are so sick they need to be quarantined, not given an opportunity to spread their viral ineptitude countywide. Better yet, while maintaining collaborative buying and minimizing duplicative services, the Cleveland schools would be better served by dividing up the district into smaller, neighborhoodcontrolled districts with principals and
teachers accountable to the nearby families they serve, not multiple layers of bureaucrats and union organizers in a far-off building. Expanding your influence is what you do when you’re succeeding — not when you are failing. Kim Moore Mom of five Bay Village
Thanks for nothing ■ The New York Times recently reported that after receiving over $43 million from the state of Massachusetts, Evergreen Solar is closing its main American factory, laying off 800 workers, and moving production to China. Evergreen cited much higher government support in China.
The management of Evergreen can be proud of its contribution to increasing unemployment in our nation. To discourage other companies from outsourcing jobs to foreign lands, the federal and state governments should make financial assistance to a company conditional on a commitment by a recipient company to remain in its current location for at least five years. If a recipient company abandons its original location in less than five years, the company should be obligated to repay all government aid plus a 10% penalty. In addition, the company should fund unemployment compensation and worker retraining. Theodore J. Sheskin Professor emeritus of industrial engineering Cleveland State University See LETTERS Page 11
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CRAIN’S CLEVELAND BUSINESS
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THE BIG ISSUE With the explosion of a gas main in Fairport Harbor and water main breaks elsewhere this winter, signs of the region’s aging infrastructure keep cropping up. Would you support higher taxes to improve that infrastructure?
Catalyst Ohio shutters as funds for publication dry up By TIMOTHY MAGAW tmagaw@crain.com
CHUCK HEINDRICHS
PAT NORTZ
ALPHONSO TIDWELL
ROB WEEKS
Avon Lake
Bay Village
Cleveland
Aurora
Yes. I’ve always thought about infrastructure, I’m an old maintenance guy. In all probability, I’d support it.
Yes, I would because we have to.
No, I wouldn’t. (Government) should be on top of these things.
It depends. I don’t think new taxes should support maintenance.
➤➤ View more of these comments by visiting the Multimedia section at www.CrainsCleveland.com.
LETTERS continued from PAGE 10
Indians owner a problem ■ It is very rare that I write to a newspaper or anyone about what they have published. However, I feel it’s important to write for the city of Cleveland and to the Cleveland Indians after reading your Jan. 24, Page One story, “The Lack of Luxury.” This city loves a competitor — you really don’t even have to win it all, just be there and in the fight. There is a reason the Indians sold out every game for years. Even in a bad economy, the Cavs flourished. Stated simply, the problem today is the Indians’ ownership. The team must be competitive at any price or it will die in Cleveland. The mathematics of ownership are also incorrect: If the team were to be competitive, it easily could get back to 40,000 fans per game. That’s 25,000 more than they draw now, times 81 games a season, for an additional 2 million fans. Factor in about $25 each considering food and parking, and that’s an additional $50 million per year to be spent wisely on free agents. Instead, the team’s current business model absolutely guarantees a loss, and if the Dolans can’t front the money, they should sell the team. Clearly there is an owner here in Cleveland to whom the team should be sold — Dan Gilbert. It makes perfect dollars and cents that he would be interested: He will own the casino, and a winning team will put 3 million people in his backyard as potential casino customers. Yes, the economy is bad and there are difficulties all over the country with sports facilities. But baseball is the best bargain by far and in this city, if you provide a competitive team, you will get the
If the Dolans can’t front the money, they should sell the team. support. That’s a proven fact. I’m a perfect example. During the Indians’ heyday, I attended 30 to 35 games, and spent every night in the Terrace Club — such that I was kiddingly called “Mr. Terrace Club.” Last year, I went to two games because it was simply no fun watching the Indians. There is nothing wrong with our facility. Before last year, if I did not attend a game it was always in my “ear” or I watched it on TV; the last two years have been a total abomination. I stopped watching in favor of reruns. The problem is ownership! Michael A. Simms Beachwood
Get tough, but do it strategically ■ Regarding Brian Tucker’s Jan. 24 commentary and Ohio’s huge budget deficit, tough love program cuts are one part of the remedy that cannot be avoided. Cuts across the board have to be made leaving many people unhappy. But tough love cuts are not enough. In the end, the only sure thing program cuts will get us is a more divided electorate. That is why creative thinking/changes like those offered by Cleveland State’s Ned Hill (reducing the number of counties and regionalization) need to be at the heart of the budget deficit solution, and they need to have a strategic framework, not a political one. Philip M. Dawson Pepper Pike
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: editor@crainscleveland.com
11
joined the magazine in 2008, said because of the small staff and the organization’s inability to attract Catalyst Ohio, a local nonprofit financial support during the recesmagazine focused on urban educasion, the magazine couldn’t continue tion issues, has shut down due to an to publish. inability to secure new “We needed new sources of money after ON THE WEB Story from money now, and we the major foundations www.crainscleveland.com were expected to raise that backed the venit in a short amount of ture halted their support. time,” Mr. Reed said. The magazine, which employed The Cleveland Foundation, for four people and had a circulation of instance, provided $1.7 million in about 11,000, published its last issue operating support to Catalyst for this winter. Catalyst was founded in almost 10 years. Helen Williams, the 1999 and was a collaboration among foundation’s director for education, the Community Renewal Society, a said in a prepared statement that service organization based in Illithe Cleveland Foundation provided nois, and the George Gund Foundagrant money with the expectation tion, the Cleveland Foundation and that Catalyst would be able to find the Joyce Foundation in Chicago. new sources of support over time. The Joyce Foundation pulled its “For a variety of reasons, it was support in 2008 when the group never able to do so in a way that stopped supporting education allowed it to provide a quality initiatives in Ohio, and the onus was product in a difficult time for print left to both the Gund and Cleveland media,” Ms. Williams said. foundations. The grantmaking bodies’ Mr. Reed said the magazine was expectation was that Catalyst evenwell received in the community and tually would be able to diversify its that its absence is unfortunate given financial support. the important issues facing K-12 Catalyst editor Keith Reed, who education across the state. ■
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JANUARY 31 - FEBRUARY 6, 2011
INSIDE
14 SOME FIRMS REMAIN FLEXIBLE DURING BUSY TIMES.
13
FINANCE THEINTERVIEW LINDA LYNCH President Northeast Ohio chapter of Financial Executives International By AMY ANN STOESSEL astoessel@crain.com
T Industry analysts expect healthy banks to be more aggressive in courting competitors in 2011 By MICHELLE PARK mpark@crain.com
T
he stage is set. Who’s taking the stage is anyone’s educated guess. With financial reform impacting bank costs and revenues and some banks returning to health while others continue to struggle, more bank mergers and acquisitions are expected nationally this year. It’s hard to say whether Northeast Ohio banks will be among those consolidating in
2011, said Charlie Crowley, managing director for Paragon Capital Group in Mayfield Heights. But considering the number headquartered and operating here, one or two probably will consider a sale this year, he predicted. Local mergers and acquisitions can mean gains for local shareholders, and not just “fat cat millionaires,” Mr. Crowley said. Deals also could mean increases in local employment, or decreases See BANKS Page 16
he finance sector is no stranger to change. So the recession — and the regulations and scrutiny that followed — in many ways just added even more uncertainty to an industry that’s already often in a state of flux. As such, Crain’s Cleveland Business asked Linda A. Lynch, president of the Northeast Ohio chapter of Financial Executives International, to share some thoughts on the challenges and environment facing those working in the sector. The FEI is an international association for chief financial officers and senior finance executives; its local membership totals about 180. Ms. Lynch — with the help of fellow FEI board members — compiled the following responses, offering their insight and perspective on some of the broader issues facing those working in the financial sector.
INSIDE: Changes in the pipeline include converged reporting standards and new regulation for money managers. Page 15 Q: What would you identify as the top issues facing financial executives in 2011? A: There is a wide breadth of issues facing financial executives. The issues vary by factors such as company diversification, global perspective, company profile and cyclicality of markets. The issues are as follows: ■ Locating, recruiting and retaining top talent; ■ Optimizing cash balances; ■ Contingency planning with limited forward visibility; ■ Effective tax rate management; ■ Managing accounting and reporting standards convergence; ■ Economic conditions driven by weakness/uncertainty in the financial markets; ■ Government regulations; ■ Rising commodity costs with limited ability to recapture rising costs; ■ Low consumer confidence; and ■ Weak employment conditions. And, finally, the inability of our government to govern. This inability is evidenced in bloated government budgets, unsustainable spending, excessive debt and interest burden. Q: Are there any challenges that are unique to those working in Northeast Ohio? See INTERVIEW Page 14
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Well-being top of mind as tax-season hours pile up By KATHY AMES CARR kcarr@crain.com
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he most rigorous time of the year has descended on the accounting industry, but that doesn’t necessarily mean all the watchdogs of the books are going to disappear from reality for the next three months. The well-being of accountants is a priority at Middleburg Heightsbased McManus, Dosen & Co., and that means workplace flexibility is the order of the season. “We bend over backwards for our employees,” said Michael D. McManus, managing partner of the 18-person accounting firm. “As a business, employees are our most valuable asset. Clients are a close No. 2.” Mr. McManus is not alone in his assessment. A number of Northeast Ohio accounting firms large and small say workplace flexibility is part of the formula in accounting for a months-long tax season filled with prolonged workweeks and hundreds of deadlines that must be met. Mr. McManus expects over the next three months his firm will complete the bulk of the year’s work — including more than half its 65 annual audits, 740 of its approximately 900 individual tax returns and 200 of 350 business tax returns, while closing the books for 200 companies. “There’s a lot of work to be done, but we cap the workweek at 55 hours and in the nonpeak season, the average workweek is in the high 30s to low 40s,” Mr. McManus said. “I’ve heard of some people at larger firms working 70 to 80 hours per week, and my personal feeling is that’s too much.” Some companies say scheduling flexibility is part of a larger corporate philosophy that empowers employees to decide just how heavy their workloads will be during crunch time.
Interview continued from PAGE 13
A: ■ Attracting talent to the area, which is exacerbated by the local school systems along with location reputation. ■ Lack of a capable and competent local government, which leads to the breakdown of the public-private partnership that is necessary for business to thrive in the area. ■ The business tax structure, which inhibits new business growth. Q: How would you compare the overall environment in 2011 for CFOs and other financial executives to that of the recent past? A: Generally, responses are that the environment is somewhat better than previous years. Certainly the tone has changed from, ‘How deeply should I cut and how much cash do we have?’ to, ‘Where should we invest and how much cash should we have?’
What a week Local accounting firms say the need for workplace flexibility, even during the relentless peak season, is necessary to maintain employee morale and acuteness; it also benefits the company’s retention rates. Mr. McManus said he partially credits the average employee’s 10to 12-year career there to its manageable scheduling parameters. “Especially among the younger people, time and quality of life are critical,” he said. Similarly, 80% of employees at Westlake-based Corrigan Krause have been with that 32-person outfit for at least five years, said Thomas L. Harrison, managing director. Even though their associates over the next four months will complete about 60% of Corrigan Krause’s assurance services — including audits, reviews and compilations, and business tax work — necessitating a 50- to 55-hour workweek, the accounting firm offers a flex policy with a less-demanding schedule during slower times of the year. “Everything we do at our firm is based on achieving the client’s goals and needs,” Mr. Harrison said. The clients’ needs are the bottom line, other industry professionals said, and thus must be considered when work-life balance needs arise. “Flexibility is both an individual, team and client issue,” said Anne Weisberg, director of talent at international accounting and consulting firm Deloitte. The firm, which has about 442 employees at its Cleveland office, makes sure scheduling is communicated at all levels, from the individual, to the supervisor to the client. But the company said it works with, not against, personal conflicts that may interfere with nonflexible tax deadlines. Indeed, the company began rolling out in 2005-2006 a mass career customization program that provides each employee the op-
Some companies have started to hire and have reinstated ‘cuts’ from previous years. This feels like ‘business as usual’ but with a cautionary approach. But to some companies, the overall environment will appear better simply because business has had time to adjust to the lower level of business activity. Conditions remain unfavorable due to the uncertainty due to government anti-business policies and high tax rates, short-term tax policy and the potential for commodity price increases and inflation. Q: What were some of the biggest challenges that financial executives faced during the recent recession? A: ■ Lack of customary access to the financial markets in spite of low interest rates. ■ Maintaining liquidity along with managing banking relationships. ■ Ability to forecast economic
“Especially among the younger people, time and quality of life are critical.” – Michael D. McManus managing partner, McManus, Dosen & Co. portunity to dial up or dial down throughout his or her career, depending on personal life obligations, without hindering the employee’s career goals. It’s that corporate philosophy that enabled Fiona Chambers to “dial down” earlier last decade to raise children before ascending into her current role as managing partner of the tax practice at Cleveland’s Deloitte office. On a macro scale, the flexibility fosters strong working relationships with clients while improving employees’ productivity, Ms. Chambers said. Accounting giant PricewaterhouseCoopers also offers a more flexible work arrangement policy beyond the informal flexible workweek approach. This program allows employees to reduce hours and telecommute if need be, even during crunch time, said Ann Adkins, human resources leader at the company’s Cleveland office.
Easy does it Accounting firms did not always freely offer the workplace flexibility necessary to better manage one’s personal and professional life, said Gerald Weinstein, professor and chairman of the accounting department at John Carroll University’s Boler School of Business. But as more women entered the work force and as more firms desired to retain them, the idea of flex time gained prominence, he said. Technology also has made it easier for accounting firms to employ some degree of flexibility, even during a demanding workweek. “Firms are sensitive to the burnout factor and therefore seek to make the workload palatable and promote work-life balance,” he said. ■
and market conditions. ■ Controlling costs to compensate for declining market conditions. ■ Ability to motivate and keep employees engaged during periods of uncertainty. Q: The full impact of such regulatory measures as the Dodd-Frank Wall Street Reform and Consumer Protection Act is yet to be seen. How does such uncertainty affect the work of a financial executive? A: Many companies are waiting for the dust to settle on all of the new regulatory measures. The uncertainty makes any work in this area suspect from a return-on-effort standpoint. If you don’t know what you’re aiming at, how do you know if you have hit the target? At the end of the day, as with many of the current administration’s policies, the reform acts will add another layer of bureaucracy, cost and regulation that will potentially decrease competitiveness with limited benefit to any of the intended parties.
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Reporting may be on Money managers face potential new costs verge of convergence State regulation, more detailed disclosure on tap By DAN SHINGLER dshingler@crain.com
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h-oh. The world is well into the process of globalizing its economies, and we still haven’t agreed on what a financial statement should look like. Accountants everywhere are boning up on how books are kept in Europe and elsewhere in order to prepare their clients for something called “convergence” — the merging of the world’s major accounting systems into a single set of rules and principles. Because right now, the CPAs say, the world’s businesses still use vastly different accounting systems and what passes for a generally accepted accounting principle in, say, Germany, might not fly in the U.S. or even some other European countries. There’s no doubt a movement afoot at the highest levels of government and business to bring convergence about — and it’s been endorsed by everyone from the U.S. Securities and Exchange Commission to both domestic and European accounting standards boards. What’s all that mean to the average business person in Northeast Ohio? That depends a lot on what sort of business they have, where it operates and who owns it — or whether the present owners want to sell to foreign buyers, say both local accountants and national firms. “The public companies will go first,” predicts Carol McNerney, a director at the Solon-based accounting firm SS&G Financial Services. “Then the private companies will come behind, later.” Public companies have many reasons to go first — they are more regulated than private companies, typically have more foreign ownership or operations and they have the in-house accounting horsepower and big outside firms to help them with the switch, Ms. McNerney said. But even they don’t know when, or even if they’ll have to adopt a new standard — or what that new standard will be, said Allen Waddle, a shareholder at the Cleveland-based accounting firm Maloney + Novotny. “People are still thinking about it,” Mr. Waddle said. “The SEC supports it … but the decision (to converge) has still not been made. It’s supposed to be made later this year.”
Until then … In the meantime, public companies will be positioning themselves and beginning the process of conversion. Ms. McNerney said most if not all of them are already “in process.” A recent survey by the U.S. accounting firm Grant Thornton found that U.S. firms are waking up to the benefits of the European International Financial Reporting Standards, but more work needs to be done. About 40% of those surveyed support convergence. A quarter say IFRS should never be adopted, but even the firm’s CEO Stephen Chipman sees substantial benefit in getting everyone on the same system. “Just as international business has benefited over the last 30-odd
REPORTING TIMELINE ■ September 2002: U.S. and International accounting standards boards issue a memorandum of understanding acknowledging their commitment to internationally compatible accounting standards with the “Norwalk Agreement.” ■ February 2006: The boards issue a “Roadmap for Convergence” and reaffirm their commitment to a single system. ■ November 2008: The U.S. Securities and Exchange Commission issues its own “roadmap” for U.S. companies to begin using international standards. It proposes assessing milestones in 2011 to determine when and whether to proceed with rule making on the matter. ■ February 2010: The SEC reaffirms its support for convergence, but says more information is needed before a decision can be made. The SEC staff continues to evaluate plans for convergence and to report its findings to the commission.
By MICHELLE PARK mpark@crain.com
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ortheast Ohio’s money managers are facing more regulatory change than they’ve seen in at least a decade, insiders say, and investors may end up with diminished choices and increased fees as a result. One change under way will mean some 4,100 investment advisers nationwide will need to withdraw registration with the Securities and Exchange Commission and register this year with states instead. That will require firms to pay fees, file paperwork and be subject to examination in the states where they do business, and different states may not regulate consistently, noted Paul Edwards, member with Day Ketterer Ltd., a Canton law firm that assists investment advisers with compliance. The switch to state regulation is required by a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Per
the act, advisers with $100 million or more of assets under management will register with the SEC. Previously, advisers with $25 million or more under management could register with the SEC. Another change, effected by an SEC vote in July, revised the principal disclosure document that investment advisers must provide to clients and prospective clients. Among other changes, the SEC now requires that advisers provide résumé-like information about the people who work for their firm, including advisers’ disciplinary histories. The SEC reported that most investment advisers will begin distributing the new brochures in the first quarter of this year. One possible consequence of the changes is increased costs, said Mark Tepper, managing partner for Strategic Wealth Partners, a Seven Hills investment advisory firm. Some money managers may outsource or hire attorneys to ensure registration and compliance
and could pass the costs down through fees to their clients, he said. Others may choose to avoid working with smaller accounts to avoid charging fees that would be cost-prohibitive to those accounts, Mr. Tepper said. That could result in less wealthy clients having fewer options, he said. Already, the compliance consulting firm, RIA In A Box, which specializes in the registration of investment advisers, has seen increased demand: The New York firm’s sales were up 99.7% in 2010 over 2009 and already are up 75% January over January, said president Zachary Gronich. The firm has 33 Ohio clients. “People are starting to worry about all the new regulation changes,” Mr. Gronich said, speaking of the growth. Dennis R. Marvin of Marvin Wealth Management in Westlake is one who has concerns; he said he already is spending more to handle his compliance needs. “You’re going to end up having great big companies and no small See MANAGERS Page 16
SOURCE: GRANT THORNTON
years from the increased shared used of English, so too will global companies reap the benefits of one financial reporting language,” he said in the firm’s January report on IFRS issues. Most experts believe convergence will largely entail converting U.S. businesses over to the European system. While public companies might be the logical place to start getting financial statements on some sort of common footing, there are other companies that already have to deal with foreign accounting standards, because they have foreign owners, said Ms. McNerney. They might not have to produce full-fledged IFRS-compliant financial statements and records themselves just yet. But they at least need to provide financial information to their foreign owners in a format that the owners can use, she said, and that means putting that information into an IFRS format.
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The good and the bad But for the average mid-sized company with no foreign owners, there is not so much urgency. That’s probably a good thing, since it means that big companies, accounting boards and regulators will hash out the differences between the two systems long before smaller companies have to adapt. The differences aren’t slight, For example, there is no last-in-first-out or LIFO accounting method under IFRS — and many U.S. companies use LIFO to manage their inventories and taxes, Ms. McNerney said. The good news might be that U.S. businesses get a simpler system. Because the U.S. system is “rules based,” it spells out exactly how all accounting should be done, often with painstaking minutia. The European system, on the other hand, is “principle based,” said Mr. Waddle — it tells users what principles should be adhered to, but does not give a specific rule for every accounting procedure. ■
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Banks: Local deals quiet since 2008 continued from PAGE 13
if a bank merges and realizes overlap after the deal. Analysts seem to agree: PNC Financial Services Group Inc., Huntington Bancshares and FirstMerit Corp. are likely buyers. FirstMerit in Akron already has proven active, closing last year a trio of acquisitions in the Chicago market. Cleveland’s KeyCorp and Fifth Third Bank of Cincinnati also received mention as buyers, though analysts noted those institutions still owe billions they received from the U.S. Treasury’s Troubled Asset Relief Program, or TARP. Huntington repaid TARP in December. KeyCorp still owes $2.5 billion it received in November 2008. Fifth Third announced in mid-January its public offering of $1.7 billion of common stock, the proceeds of which will help fund its repayment of the $3.4 billion it received in December 2008. Banks with higher capital and healthier assets are potential buyers, insiders said. However, it’s trickier to identify the potential sellers. “In some cases, companies sell from a position of strength, and in some cases they sell because they really don’t see better options,” Mr. Crowley said.
In the buying mood Some executives have identified general intentions for mergers and acquisitions. First Federal of Lakewood acquired Century Bank in Parma in late 2010 and is actively considering ways to expand its branch network and footprint in Northeast Ohio, said Thomas J. Fraser, executive vice president and chief lending officer. It would consider expansion elsewhere in the state, too, he noted. FirstMerit chairman, president and CEO Paul G. Greig has said the bank continues to seek acquisition opportunities in the Midwest. Huntington National Bank officials emphasized that the Columbus-headquartered institution is focused on organic growth, but would consider acquisitions, though only in the bank’s footprint: Ohio, Indiana, Michigan, Kentucky, West Virginia and western Pennsylvania. When asked during a fourthquarter earnings call in January whether PNC would rather use capital for mergers and acquisitions or to generate shareholder returns, CEO Jim Rohr said the Pittsburghbased bank remains interested in fill-in acquisitions, but must do right by its shareholders.
ROLL CALL As banks become more certain of their own balance sheets and those of potential acquisitions, M&A activity might increase. Here’s a look at some local institutions’ recent activity or comments on the subject: ■ First Federal of Lakewood made an acquisition late in 2010 and is actively trying to increase its footprint ■ FirstMerit of Akron, which recently made a big push into Chicago, still is looking for opportunities in the Midwest. ■ Huntington National Bank would consider opportunities in its footprint in Ohio, Indiana, Michigan, Kentucky, West Virginia and western Pennsylvania. Northeast Ohio banks have been quiet in terms of making acquisitions since the market began “cracking” in 2008, Mr. Crowley said. Exceptions, he noted, are the acquisitions by FirstMerit and First Federal of Lakewood. Still fresh in local bankers’ minds, of course, is the sale of Cleveland-based National City Corp. to PNC in late 2008. Increasingly, potential buyers are more comfortable with their own credit quality and with the balance sheets of banks they’d consider buying, explained Fred Cummings, a bank analyst and president of Elizabeth Park Capital Management of Beachwood. The entire banking industry faces revenue pressures, and mergers and acquisitions are one way to achieve cost savings while increasing earnings, he noted. Sellers may feel pressed to sell by asset quality issues, shareholders and regulators. Institutions that can’t raise capital on their own terms are likely sellers, particularly now that regulators are scrutinizing capital levels, said Francis X. Grady of Grady & Associates, a Rocky River bank regulatory law firm. While Mr. Crowley noted that PVF Capital Corp., the parent company of Park View Federal Savings Bank in Solon, and LNB Bancorp Inc., the parent company of Lorain National Bank, are focused on improving credit quality and their stock prices, he stopped short of calling them potential sellers. Lorain National actually has expressed interest in making acquisitions. Some companies also decide to sell because an executive, such as a
CEO, is retiring and they’d rather sell than search for and trust someone else, Mr. Crowley said. That’s why some analysts characterized KeyCorp’s announcement late last year that Henry L. Meyer III would retire and Beth Mooney would assume leadership as reason to believe the bank may not sell, he explained — though there have been cases in which a company sold shortly after such a transition.
Getting to know each other Bank mergers and acquisitions result from courtships that can last years, insiders say. Such courtships commonly include friendly requests that one bank keep another bank in mind should it ever look to team up with someone else. Larger banks typically employ people who spearhead the acquisition process. At smaller banks, it’s a hat the chief financial officer tends to wear. Ken Haffey says he was one of maybe five people at Security Federal Bank who knew the Mayfield Heights institution was being courted in the late 1980s and early 1990s. Mr. Haffey left the bank in late 1994, and Security Federal was acquired by FirstMerit in 1998. As the bank’s chief financial officer, Mr. Haffey said he was privy to a number of acquisition conversations. The courtship involved confidential meetings, and sometimes a potential buyer would come inside the bank to get a sense for its operations, recalled Mr. Haffey, who now works for Skoda Minotti & Co. in Mayfield Village. The process of bank merger and acquisition is a gentile one, Mr. Crowley said, since buyers need sellers in order to conduct their due diligence. Once a deal is closed, it takes some time before the full impact on the buyer is realized. In the case of First Federal of Lakewood, there’s been nearly 100% customer retention after the Century Bank absorption, according to Mr. Fraser. Customers have access to more products, he said, and the mutual is developing good lending leads out of the five branches it acquired, he explained, noting loan officers have been added in each branch. FirstMerit picked up some $4 billion in assets and 47 net branches in Chicago through its three acquisitions, according to bank officials. PNC bank officials revealed in their fourth-quarter earnings call in January that the bank had shaved $1.8 billion in costs following its acquisition of National City. ■
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Managers: Transparency benefits consumers continued from PAGE 15
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ones because the burden, the cost of just trying to handle the regulations … it’s going to be more than it’s worth trying to run the business,” he predicted. There is a positive, though, to some of the change, money managers agreed. Consumers will benefit from the increased transparency the revised disclosures afford, as they’ll be better able to compare providers and evaluate
risk. Arguably the biggest change to money managers hovers yet on the horizon: The SEC this month submitted to Congress a staff study recommending a uniform fiduciary standard of conduct for broker-dealers and investment advisers when they provide investment advice to retail customers. Dodd-Frank mandated the study. Currently, registered investment advisers are held to a fiduciary
standard to do what’s in the best interest for clients, and brokerdealers follow a suitability standard to do what’s reasonable for clients. If the SEC chooses to hold both to a fiduciary standard, brokerdealers who aren’t also advisers would have to change their business model, Mr. Tepper predicted. That could make it necessary for them to raise their account minimums or exit the business. ■
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Projects: Long-term targets still vital Outlets: Concept remains continued from PAGE 1
Gov. John Kasich on Jan. 7 said Mr. Kvamme (pronounced KWAHmee) would lead an effort to phase out the Ohio Department of Development and replace it with JobsOhio, a private organization that would take over the department’s economic development duties. Mr. Kvamme’s position also makes him chair of the Third Frontier Commission, which administers the technology-focused economic development program. By law, the often-praised Third Frontier will continue: Voters last November passed a $700 million bond issue that extended it through the fiscal year that ends June 30, 2015. The commission already is discussing how it might change the program before it begins awarding the new money later this year. Gov. Kasich and Mr. Kvamme have said they support the Third Frontier, which funds collaborative research-and-development projects involving private companies and research institutions with the goal of creating new products and new jobs. However, both have said the program should focus more on product development and less on research. They also have said they would like to see the state take equity in businesses that receive Third Frontier money, which today is given in the form of grants.
By the numbers Mr. Kvamme, who attended his first Third Frontier Commission meeting last week, admits he still has much to learn about the program. Still, it was clear during the meeting that Mr. Kvamme, a partner at Sequoia Capital in Menlo Park, Calif., plans to bring more of a venture capitalist’s mindset to the organization. For instance, Mr. Kvamme said during the meeting that he wants the commission to see more detailed information — such as the projected size of the market for a new technology and a description of the competitive landscape — before deciding on an application. “It’s going to be a lot more numerical,” he said during the meeting. Mr. Kvamme told Crain’s he
supports the shift to near-term projects because so far they have produced the most jobs and attracted the most private capital. State figures provided to Crain’s a year ago showed that two Third Frontier programs that focus more on near-term projects — the Entrepreneurial Signature Program, which provides grants to programs that help entrepreneurs, and the Pre-Seed Fund Capitalization Program, which finances investment funds that back high-tech startups — at the time had attracted $20.40 in private money for each state dollar spent. The Third Frontier’s overall average was $8.80 for each state dollar. The Third Frontier Commission already had been moving to put more money toward near-term projects, and several people familiar with the Third Frontier program said it might make sense to move further in that direction. Among them is Dorothy Baunach, who worked to promote the bond issue to renew the Third Frontier. “As long as the deal flow is there, you might want to do that,” said Ms. Baunach, who today is Cuyahoga County’s interim economic development director. However, both Ms. Baunach and Baiju Shah, president of BioEnterprise Corp., which works with health care companies throughout Northeast Ohio, said it’s important for the Third Frontier program to continue to finance near-, mediumand long-term investments. That approach ensures a steady stream of new technologies that can be turned into products, Mr. Shah said. For instance, he said he expects a number of innovative technologies to come out of the Global Advanced Imaging Innovation Center, a collaboration between Philips Healthcare of Highland Heights and University Hospitals Case Medical Center. The $37 million project includes a $5 million Third Frontier grant. “I think you have to invest in all three time horizons,” Mr. Shah said.
Divergent interests? Instead of giving grants, the Third Frontier program could give loans
Local firms buy plastics companies By FRANK ESPOSITO Plastics News
A pair of Cleveland-based private equity firms and plastics industry veteran Chris Scarazzo have combined to buy a pair of related plastics businesses in Latrobe, Pa. Capital Works LLC and Little Mountain Industries Inc. are involved in the deal, along with Mr. Scarazzo, who has more than 20 years of materials and processing experience, most recently with Solvay Advanced Polymers. They’re buying blow molder Premium Molding Inc. and its sister firm, blow molding toolmaker Accu-Mold Inc. No purchase price was disclosed. Both Premium Molding and AccuMold are housed at a 115,000-squarefoot location in Latrobe. The combined businesses have been renamed Premium Plastic Solutions LLC. “This facility is one of the best blow molding facilities I’ve seen in the entire country,” Mr. Scarazzo said in a Jan. 27 phone interview.
“We can start with concept and part design, and carry that through to prototypes and production molding.” The investors are buying the companies from an ownership group that included Premium Molding president Ron Mehta, who has left the company. Mr. Mehta and partners bought the business in 2002 from Francis Bradley and Michael Nicely, who had launched Premium Molding in 1987 in Derry, Pa. The company moved to Latrobe in 2003. Previous ownership reported sales of $16 million for Premium Molding in 2009, according to the most recent blow molders ranking by Plastics News. The business employed 90 and operated 20 blow molding machines, according to the ranking. Mr. Scarazzo declined to comment on current totals. Polymer Transaction Advisors Inc. of Newbury initiated the sale. ■ Frank Esposito is a senior reporter for Plastics News, a sister publication of Crain’s Cleveland Business.
or take equity in companies indirectly by becoming a partner in investment funds such as those in the pre-seed program, Mr. Shah said. However, he said taking direct equity in private companies is a “bad idea.” Doing so could cause conflicts, he said, because the state’s main goal is to create jobs, while the main goal of investors is to make money. “Are the interests of the state truly aligned with the rest of the investors?” he said. Michael Goldberg, managing partner of Cleveland’s Bridge Investment Fund, agreed the state shouldn’t take direct equity in companies through the Third Frontier program, adding that it might be a good idea to require successful recipients eventually to pay back the state’s money. Mr. Goldberg said he has confidence Mr. Kvamme will make good decisions thanks to his venture capital background. Sequoia Capital’s investments over the years have included Google, LinkedIn, YouTube and Apple. “The fact that we have a development director with a background in venture capital I think is a good thing,” Mr. Goldberg said. ■
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the southwest. What do you have to serve outlet tenants and shoppers out in the west suburbs and Lorain County?” Mr. Hamulak said the success of outlet centers around the country largely is dependent on their location and the quality of its operations. He said with Jacobs Group’s depth of experience, retailer contacts and reputation for doing strong due diligence on proposed projects, “they’ll know if demand exists for one” before proceeding.
Outlets break out Aside from capturing dollars of more value-conscious shoppers, there is an “outlet-center mania” among the nation’s shopping center developers, said Rich Moore, a Solon-based analyst who follows public real estate companies for RBC Capital Markets. “Outlet centers used to be the dregs of the (shopping center) industry,” Mr. Moore said. “That has changed.” Outlet centers originally carried just overstocks and were in cornfields. Retailers would not go into them if they were within 50 miles of
one of their standard locations. “Now, retailers see outlet centers as another channel of distribution. The 50-mile rule is gone,” Mr. Moore said. “Manufacturers go into outlet centers directly. They’ll provide a vehicle for European retailers to enter the United States.” Mr. Moore estimates there are 150 outlet centers that are large enough and provide returns strong enough to attract institutional investors. He classifies another 75 as weaker-performing centers. He said some insiders estimate there may be room for as many as 100 more outlet centers nationwide, including some at urban sites. Mr. Moore said when he considers the retail mix in Cleveland’s western suburbs, “a high-quality, destination-oriented outlet center would have the twin benefit of capturing the outlet center mania that’s going on and you would have a nice shopping location.” Another key development could provide an incentive for Jacobs Group. Mayor Smith said construction of the proposed I-90 interchange at Lear Nagle Road would begin this year. ■
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Parker: Company hopes others in Northeast Ohio follow its path 2009. “You have to have an interest,” Mr. Washkewicz said about employees’ use of the program. “We can’t force you, but it’s not a hard sell. The message resonates.” Daniel Serbin, Parker vice president for human resources, said participation in the program varies depending on the region. He said it’s typically more difficult to promote the program and find providers in the more rural areas where Parker operates. Parker hasn’t achieved major cost savings by adopting its preventive medicine programs, though company officials have reported lower prescription costs for those
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present, there are about 1,900 in the country — and rolling out the program to the company’s employees in Europe.
Spread the word Participation in Parker’s complementary and alternative medicine program is still relatively low, with only 15% of the company’s U.S. employees using the program to date. Still, the number of claims for alternative services has risen since the program was rolled out as a pilot venture in 2003. Last year, for instance, Parker saw 62,801 claims for alternative medicine treatments, nearly double the 32,670 claims in
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largely has been led locally by Dr. James Frackelton, who founded the Preventive Medicine Group in Cleveland that works with Parker. These types of treatments don’t focus on pumping prescription drugs into a person but rather using the body as a “self-healing instrument,” Mr. Serbin said. The Preventive Medicine Group said it treats the underlying biochemistry of the body rather than a particular medical condition. The idea is to improve nutrition and balance the hormones in the body, which it says ultimately will lead to greater wellness. Holistic medicine also focuses on removing toxic metals from the body.
taking advantage of the initiatives. As participation grows, they say, health care costs will start to decline. The hope is that other companies take note of what Parker is doing and will offer their own complementary and alternative medicine programs. “We would like other companies in Northeast Ohio to follow our lead because it’s the right thing to do,” said Christopher Farage, Parker’s vice president for communications and external affairs.
Employee, heal thyself The idea behind this type of medicine is encouraging good health among employees rather than just curing disease. The movement
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Dr. Frackelton has said for years metal fillings could pose a detrimental risk to one’s health. In 2009, the U.S. Food and Drug Administration said such fillings didn’t present a risk, but late last year federal regulators announced they would seek a second opinion about their risks. Parker in recent years steadily reduced the amount it would cover for metal fillings under its dental plan and instead encouraged employees to get composite fillings. Now, the company will cover the complete cost of composite fillings and won’t put a dime toward metal fillings. “It was nuts that we were paying dentists to put mercury in our mouths,” Mr. Washkewicz said. ■
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THEINSIDER
THEWEEK JANUARY 24 - 30 The big story: Companies and organizations in the seven counties that comprise Greater Cleveland received more than $20 million in awards from the Ohio Third Frontier program. The Third Frontier Commission also postponed making all but one award under its fuel cell program because the market for the technology is growing slowly. The 11 awards, which will support advanced energy research and development projects as well as several investment and entrepreneurial support programs, account for more than half the money the commission distributed.
Split decision: Cedar Fair Entertainment Co. of Sandusky split its board chairman and CEO roles in the wake of a shareholder vote for a change in the amusement park operator’s leadership structure. The company named C. Thomas Harvie as non-executive, independent chairman of the board. Mr. Harvie, a member of Cedar Fair’s board since 2008, succeeds Dick Kinzel as chairman. Mr. Kinzel “voluntarily relinquished his chairman position in response to unitholders’ support of the proposal regarding the separation of the chairman and chief executive roles,” Cedar Fair said. Mr. Kinzel will remain as president and CEO of Cedar Fair through the end of his contract on Jan. 3, 2012.
Go fish:
A groundbreaking is set for this Wednesday, Feb. 2, for the $33 million first phase of what’s called the Greater Cleveland Aquarium. It will be housed in the Powerhouse on the west bank of the Flats. The aquarium is a joint venture of Cleveland’s Jacobs Entertainment Inc. and Marinescape NZ Ltd. of New Zealand. The centerpiece of the 70,000-squarefoot complex will be the SeaTube, an acrylicwalled passageway that will allow visitors to walk underneath the marine environment. The opening is expected in the fall.
Getting personal: Specialty chemicals maker Lubrizol Corp. bought Nalco Performance Products Group, the cosmetic and consumer products division of Nalco Holding Co., for $166 million. The acquisition will expand the portfolio of Lubrizol’s Noveon Consumer Specialties Home and Personal Care product line. Lubrizol said the Nalco personal care business, which makes ingredients used by cosmetic and consumer goods companies, had sales of about $45 million in 2010.
Going to the farm team: The chief financial officer of A. Schulman Inc. is leaving the supplier of plastic resins to take a job with the same title at restaurant operator and food distributor Bob Evans Farms Inc. Paul F. DeSantis will remain with A. Schulman until Feb. 28. He then will join Columbus-based Bob Evans. A. Schulman’s corporate controller, Donald B. McMillan, will handle oversight of financial responsibilities on an interim basis. A million here, a million there: The University of Akron and the Austen BioInnovation Institute will share a $1 million grant from the U.S. Department of Commerce to spur economic development by turning university-based research into new products, companies and jobs. … Ursuline College in Pepper Pike received a $1 million donation that will help finance the construction of a building to house nursing, art therapy and other programs at the all-women’s college. The gift is from Chicago residents John and Mary Jo Boler, who also are major donors to John Carroll University, where the Boler School of Business bears their name.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
St. Paddy would love this promotion ■ After a five-year hiatus, Howard Hanna is putting a pot of gold back in residential real estate. Visitors to Sunday open houses held through March 13 by the big, Pittsburghbased brokerage can register for its “Pot of Gold” drawing March 17. Top prize is a 42-inch flat screen TV, while three winners will receive $1,700 and two will receive $500 towards closing costs — if they buy through Howard Hanna’s title, mortgage and brokerage units. A news release from the broker says the contest rewards prospective buyers for braving cold weather. The timing of the drawing pays homage to St. Patrick’s Day, but brings to mind the wish that gold lingered in the long-suffering housing market. Howard “Hoby” Hanna IV, president of the company’s Ohio unit, said he hopes the prizes “jumpstart” the spring selling season. — Stan Bullard
sity and Ms. Karan’s Urban Zen Foundation, which advocates the introduction of eastern and alternative healing therapies into traditional western medicine. The partnership is the first of its kind in the country. The initiative launched on a pilot basis last fall when about 30 Kent State nursing students participated in a “Care for the Caregiver” program to learn about ways to cope with the stresses that go along with the health care profession. Eventually, the plan is to offer the program to all the nursing college’s students. “This collaboration is a good fit because, as one of the largest nursing schools in the country, we have an opportunity to impact a lot of students,” said Tracey Motter, senior undergraduate program director for Kent State’s College of Nursing. — Timothy Magaw
If you love downtown, this group may be for you
■ Kent State University has partnered with fashion mogul Donna Karan to form a program to help address the job-related challenges nurses face, such as burnout and stress, with the hope that the effort ultimately will boost the quality of care patients receive. The collaboration is between the univer-
■ The Downtown Cleveland Alliance is looking for a few good young professionals who have ideas about how to promote and develop the center city. The nonprofit development organization has sent out a call for volunteers for the 2011-2013 class of its City Advocates program. The program, begun in 2009, sets its participants free to come up with projects that will help attract businesses, residents, restaurant goers and shoppers downtown. Among the City Advocate efforts is a YouTube channel (www.youtube.com/
WHAT’S NEW
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COMPANY: Meyer Products, Cleveland PRODUCT: Home Plow
Excerpts from recent blog entries on CrainsCleveland.com.
Donna Karan helps fashion new Kent State program
The last thing you probably want to think about now is more snow, but given that it’s an inevitability, Meyer Products wants to help you cope with all the white stuff. Meyer pitches the Home Plow as a product for the PIY — that’s plow it yourself — market. The “simple-to-install and operate” Home Plow mounts to most standard SUVs, pickup trucks or utility vehicles, the company says, so homeowners “can quickly plow whenever and wherever they need.” The company says the 245-pound Home Plow is the “only fully automated snow plow on the market for less than $3,000.” A remote control handles hydraulic up/down movement, while a patented Auto-Angling system controls the direction of the blade. That system “senses the weight of the snow and automatically angles to push snow off to the side,” Meyer says. A Quick Link receiver mount allows the plow to be connected or disconnected in less than a minute without the need for any tools, according to the company. The product is available through web sites including HomeDepot.com and Sears.com, as well as through local authorized dealers. For information, visit www.MeyerProducts .com. Send new product information to managing editor Scott Suttell at ssuttell@crain.com.
If you’re looking for work, Cleveland a good place to be ■ Cleveland has one of the country’s hottest job markets, according to a report from Monster.com. We’re in good company, as others in the jobmatching engine’s 10 hottest markets are Washington, D.C., San Francisco, Boston and Seattle. (Cleveland ranks No. 7 nationally.) There’s not a lot of detail. Monster.com said its hot markets/hot jobs ranking is “based on the relative abundance of job openings for the given local work force — the higher the rank, the more jobs available per person in the market.” Jesse Harriott, senior vice president and chief knowledge officer for Monster Worldwide, said the jobs most in demand are in health care and IT — areas where Cleveland is stronger than many cities its size.
Parker is part of ‘pitched battle’ to protect profits ■ Parker Hannifin Corp. was among the companies mentioned in a Wall Street Journal story about the “pitched battle” Corporate America is waging to protect profit margins from sharply rising costs. “Since the recession’s end, businesses largely have avoided price increases, concerned about driving away price-conscious consumers or hoping to hold onto market share,” the newspaper reported. “But with commodities and other costs rising, more
user/DwntwnCLE#p/a) with videos of residents and business owners talking about the advantages they have found in being downtown. Other City Advocates have helped to build downtown Cleveland’s Wikipedia page (en.wikipedia.org/wiki/Downtown_Cleveland). “The goal of the program is to give motivated young professionals an opportunity to get meaningfully involved in the future of downtown,” said Laura Kushnick, the group’s manager of development and community relations. About the only carrot for those who give up some time over two years — beyond the satisfaction of helping build downtown — is the opportunity to run for a seat on the alliance’s board of directors. — Jay Miller
Former counsel to port sets sail on his own ■ A new boutique law firm has opened in Cleveland. Housed in leased space in the Fifth Third Center, Kaufman & Co. LLC opened in midJanuary and is focused on business litigation and trial work in the areas of real estate, financial services and intellectual property. Steven S. Kaufman, who served as lead counsel for the Cleveland-Cuyahoga County Port Authority in its eminent domain bench trial to acquire land for the Flats East Bank project in Cleveland, is managing member of the firm. Four or five lawyers are joining him, though he said he could not yet identify them publicly. Mr. Kaufman most recently was partner for more than eight years at Thompson Hine LLC. — Michelle Park
companies plan to raise prices to protect margins.” Adding surcharges to product prices is one move under consideration at Parker, “because we’re not going to absorb these increases,” said CEO Donald Washkewicz, citing higher raw materials prices. “We can’t absorb them, and we’re just going to have to pass them on.”
Fox News’ blue-collar style has blood-red Ohio roots ■ There’s a Cleveland tie in Esquire magazine’s much-noticed profile of Fox News chief Roger Ailes. Writer Tom Junod offers a telling anecdote about a young Mr. Ailes, who grew up in Warren. Mr. Ailes suffered from hemophilia in an era when “there was not much that could be done about it, except transfusions,” Mr. Junod wrote. When Mr. Ailes was eight, he bit his tongue when he jumped off the roof of the garage. “His mouth filled with blood and the blood would not stop, the blood soaked the sheets of his bed, and he heard the doctor tell his father that there was nothing he could do,” according to the profile. Mr. Ailes’ father picked up his son, swaddled in bloody bedclothes, and drove him to the Cleveland Clinic with a police escort. “At the factory where he worked, the old man tracked down everybody who had type-O-positive blood, and now he called upon all of them to come to Cleveland for his son,” Mr. Junod wrote. “They did, and Roger can still remember their names, Dirtyneck Watson and the rest, men filthy from work who lined up one after another to give Roger their blood, arm to arm.” Mr. Ailes told the magazine that his father told him, “Son, you have a lot of blue-collar blood in you, never forget that,” and he hasn’t. “A lot of what we do at Fox is blue-collar stuff,” Mr. Ailes said.
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