Crain's Cleveland Business by Crain's Cleveland Business

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$2.00/FEBRUARY 20 - 26, 2012

County sales tax gains can’t dull pains Growth outpaces budgeted numbers, but cuts in state support for local governments still hurt SALES TAX RECEIPTS BY THE NUMBERS

By JAY MILLER jmiller@crain.com

Northeast Ohio counties saw marked increases in sales tax receipts in 2011 over 2010. Below, a closer look at the percentage increases in each county, with data tracked from January through November of each year: 8% 2011: $18.2M

2011: $23.4M

2011: $15.1M

Medina County

Data show 16% rise at biggest firms in 2011

2011: $14.2M

Local software makers continue to add jobs The software business in Northeast Ohio is bigger today than it was before the recession began — and it likely will keep growing. The 20 largest local software companies based on employment added 450 jobs in the region last year, for a total of 3,300 workers as of Jan 1, 2012. Those additions mean job levels in the aggregate at those 20 companies climbed nearly 16% from about 2,850 workers a year ago, according to an analysis of

2011: $10.2M

2011: $33.1M

See GAINS Page 21

By CHUCK SODER csoder@crain.com

2011: $200.6M

6% Percentage increase

ales tax revenues are rising above budget expectations in Northeast Ohio, offering a small ray of sunshine amid what has been a flood of discouraging revenue news for the region’s county governments. However, the higher-than-expected sales tax receipts are not enough to overcome broader financial pressures most counties face. Counties still are shrinking their work forces and are cutting other costs as they contend with decreases in state support to local governments. The stress has led to a sales tax increase in Lake County and an unsuccessful attempt at a sales tax increase in Lorain County.

INSIDE: Tracking software company employment since 2002 through Crain’s research. Page 6 data collected for Crain’s 2012 list of the region’s largest local software developers. The gap widens when the latest aggregate job figure is compared with employment numbers companies reported in previous years. For instance, the 20 largest software companies by employment in Crain’s 2004 list said they employed about 1,680 workers in total. The 20

Cuyahoga County

Geauga County

INSIDE All in the genes The Cleveland Clinic’s Genomic Medicine Institute continues to grow behind the efforts of Dr. Charis Eng (right), who hopes in the future to expand the institute’s reach beyond the Clinic’s walls. PAGE 3 ALSO: The Cavaliers are benefiting at the box office from a restricted secondary ticket market. PAGE 3 State Industrial Products will move from its current Cleveland location to Landerbrook Place in Mayfield Heights. PAGE 3

See JOBS Page 6

Lake County

Lorain County

Summit County

Portage County

Northeast Ohio companies take interest in Pinterest Social media site unites users by common interests By CHUCK SODER csoder@crain.com

Jackie Jordan can’t ignore the growing power of Pinterest. For one, the social media site is packed with potential SherwinWilliams Co. customers — the type of people who want their living rooms to look juuuust right. Not to mention that Pinterest, by one measure, is the fastest-growing U.S. website in history. “The popularity has gotten to a point where we definitely need to pay attention to it,” said Ms. Jordan,

director of color marketing for the Cleveland-based paint maker. Sherwin-Williams is one of many Northeast Ohio companies creating a presence on Pinterest, a site that encourages people to post pictures of anything they find interesting. For one person, that might mean See PINTEREST Page 21

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EVENT PLANNING The Greater Cleveland Aquarium already is a hot spot for meetings and events ■ Page 13 PLUS: A NEW BREED OF CRAFT SHOWS ■ & MORE

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FEBRUARY 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

State Industrial sets sights on East Side By STAN BULLARD sbullard@crain.com

The magnet of empty contemporary offices in a ritzy corporate park — at a bargain price, too — is pulling State Industrial Products to Mayfield Heights from its home of a century near downtown Cleveland. Hal Urhrman, CEO of family-owned State Industrial, said his company

was the high bidder for Landerbrook Place, 5915 Landerbrook Drive, in a Feb. 9 auction on the Auction .com website. The company, a supplier of industrial cleaning products for commercial and institutional clients, is preparing to close the purchase soon. After the property is updated, State Industrial this fall will move all 110 of its office employees to Mayfield Heights from

the company’s office-warehouse complex at 3100 Hamilton Ave. The move completes an exit process that began two years ago, after State Industrial learned it would lose 10% of its property to the Ohio Department of Transportation for the updating and widening of Cleveland’s Inner Belt as part of the replacement of the Inner Belt Bridge. Mr. Uhrman sheds no tears when

discussing the company’s exit from its longtime home. “It’s a magnificent location,” Mr. Uhrman said of the new headquarters, which dates from 1988 and boasts a shiny metallic exterior that has given it the nickname of the “diner building” among motorists who see it from Interstate 271. “Our current building is 100 years old,” Mr. Uhrman said. “I’m not looking at it as moving out. I’m looking at it as moving closer. I live in Hunting See STATE Page 21

THE WEEK IN QUOTES

INSIGHT

Clinic’s genomics growth no accident

“If we can hold this trend through six months, I’m golden, because I know I can make my (2012 budget estimate) number.” — Wade Steen, Cuyahoga County’s fiscal officer. Page One

“In this part of the state, business lending has not been a very active service for credit unions. Some of us have been doing some of it for a while, but not in this concentrated effort. There’s an opportunity, and there’s a need.”

Department conducts research, teaches docs By CHUCK SODER csoder@crain.com

DAVID RICHARD

Daniel Gibson celebrates with fans after a 3-pointer during the Cavaliers’ Feb. 8 win over the Los Angeles Clippers.

BOX OFFICE BUMP While the Cavaliers’ attendance has declined, the team has benefited from a restricted secondary ticket market

— Robin D. Thomas, president and CEO, Taleris Credit Union. Page 10

By JOEL HAMMOND jmhammond@crain.com

efore LeBron James left the Cleveland Cavaliers for Miami two summers ago, the Cavs built themselves a safety net. Season ticket buyers were forced to decide whether to renew their seats four months before Mr. James’ widely panned “Decision,” and most did. The Cavaliers, even without Mr. James, officially averaged 20,112 fans at Quicken Loans Arena on their way to a mere 19 wins in the 2010-2011 NBA season.

“It’s just really a cool, cool venue to have an event. … It has entertainment along with space.” — Kayla Ott, marketing and sponsorship manager, Greater Cleveland Aquarium. Page 15

Fast forward to this season, and the Cavaliers predictably have fallen off the attendance pace: Entering last Friday’s game against Mr. James’ Miami Heat — a contest that would raise the average — they were drawing 15,771 fans per game, 20th in the 30-team league. Yet a funny thing has happened: The team is seeing increased traffic at the box office and tickets on the secondary market are selling at double last year’s price, as a confluence of factors has restricted severely the resale market for Cavs games. See TICKETS Page 9

— Bethany Homrighaus, Beethings Studio, Mentor-on-theLake. Page 17

With a restricted secondary ticket market, the Cleveland Cavaliers are benefiting at the box office, with the team reporting a 300% increase in walkup ticket sales. Overall attendance still remains modest, though. Here, a look at the Cavs’ Quicken Loans Arena attendance over the last five years (2012 numbers are through 13 home games and 27 games overall):

Year

Average attendance per game

Record

2011-12

15,771

11-16

2010-11

20,112

19-63

2009-10

20,562

61-21

2008-09

20,010

66-16

2007-08

20,465

45-37

SOURCE: WWW.BASKETBALL-REFERENCE.COM

Dr. Charis Eng is embedding genomics into the Cleveland Clinic’s DNA. Over the past six years, Dr. Eng has led an effort to build from scratch a genomics department at the Clinic. Now that department, the Genomic Medicine Institute, employs the equivalent of 75 full-time researchers, genetic counselors and administrative staff. Last year, those employees worked with about 4,000 patients, which is more than double the amount of patients they served in 2008 and far exceeds the throughput of most other institutions that analyze patients’ genomes, said Dr. Eng, director of the Genomic Medicine Institute. See GENOMICS Page 13

FEATURES Classified ....................22 Editorial ........................4 Going Places................14 List: Venture capital firms ........................19 Personal View ................5 Tax Liens ....................12

CORRECTIONS

A TRIP DOWN MEMORY LANE “Without these new higher-end art fairs, I don’t think people would be able to find me. … Without those opportunities, it feels like you’re working in a vacuum.”

LAUREN RAFFERTY

Cleaning products supplier lured by ‘magnificent’ location in Mayfield Hts.

■ A Feb. 13, Page 7 story on potential renovations at the University of Akron’s James A. Rhodes Arena misspelled the name of the university’s associate vice president of capital planning and architectural services, David Pierson. ■ Due to incorrect information submitted to Crain’s, the Feb. 6 list of Northeast Ohio Software Developers reported incorrect employee numbers for Hyland Software Inc. Hyland had 1,000 full-time local employees as of Jan. 1, 2012, and 881 full-time local employees as of Jan. 1, 2011.

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

FEBRUARY 20 - 26, 2012

PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

Fish story

arack Obama in 2008 was elected president of the United States, not mayor of Chicago, yet he has put the parochial interests of shippers who use Chicago’s waterway system ahead of the broader interests of eight states and two Canadian provinces that border the Great Lakes. Unless he wants to preside over an ecological tragedy, he should quit the stall tactics and should act now to end the threat posed by Asian carp to the largest freshwater body in the world. High-ranking members of Mr. Obama’s own party have begged him for two years to stop ASAP the potential invasion of Asian carp into the Great Lakes via the waterways in and around Chicago, the president’s hometown. U.S. Sen. Sherrod Brown added to the chorus two weeks ago when his office announced Feb. 6 that the president’s “carp czar,” John Goss, would be traveling that day to the Firelands campus of Bowling Green State University for an Asian carp public forum. “Ohioans cannot afford excuses and foot-dragging any longer,” the Ohio Democrat said. Sen. Brown’s comment followed the Jan. 31 release of “Restoring the Natural Divide,” a new report from the Great Lakes Commission and the Great Lakes and St. Lawrence Cities Initiative. The report shows that the physical separation of the Great Lakes from the Mississippi River water basin, where the carp lurk, “is the best long-term solution for preventing the movement of Asian carp and other aquatic invasive species” into the lakes. As the report notes, the threat of Asian carp looms large for communities in the Great Lakes region. The lakes provide nearly 35 million people with drinking water and support thriving tourism and fishing industries, which generate an estimated $7 billion in economic activity annually. Voracious feeders that they are, the hefty Asian carp already have overrun other ecosystems. And they aren’t the only fish that spells trouble; according to the report, the Army Corps of Engineers has identified 10 species that are poised to invade the Great Lakes from the Mississippi. Public forums with a carp czar are a waste of precious time. So are studies of how to address the carp threat that involve long timelines. Rather than placate his hometown’s maritime interests, Mr. Obama should push for passage of the Stop Asian Carp Act, of which Sen. Brown is a sponsor. It would direct the Corps of Engineers to wrap up in 18 months instead of five years its study of how best to separate the Great Lakes from the waterways around Chicago. The report Restoring the Natural Divide provides a roadmap for the corps to follow. It offers three separation alternatives, all of which not only would head off invasive species from the Great Lakes but also would improve flood control, wastewater treatment and shipping channels in the Chicago region. The solutions aren’t cheap, potentially running into billions of dollars. However, the investment is essential if we are to protect for centuries to come the wondrous natural resource that is the Great Lakes.

FROM THE PUBLISHER

This university is one hoppin’ place

their communities in new and innovahe University of Akron certainly tive ways. has been making news lately, The University of Akron would like the with its hire of a big-name coach Central-Hower High School building, to lead its football program, the which sits adjacent to its downtown hire of another big-name former coach campus, in exchange for a promise to to help with development, and an innoprovide $10,000-a-year scholarships to vative effort to get a law passed that will Akron Public Schools students who meet help the university redevelop a shuttered certain academic metrics. It city high school building. helps the city’s residents and its And all of this is going on BRIAN university, and it creates good while the school’s leadership is TUCKER redevelopment of a building running a major state university that was designed and built as and its faculty is educating an education center. thousands of students. As for the university hiring I hope the General Assembly former Ohio State football coach looks kindly on the proposal Jim Tressel, it appears it made that would allow universities to a good investment, despite the take control of decommisbaggage he might carry from the sioned school buildings in their whole memorabilia-for-tattoos service area in exchange for a fiasco that ended his Ohio State career. payment of the appraised value or His decision to keep the truth from NCAA educational services. Why wouldn’t we regulators was a mistake he openly want that possibility for any of our admits, but that shouldn’t tarnish the fact educational institutions? In our area that he elevated the academic perforalone, Cleveland State University, Kent mance of his players to levels rarely seen State University and the University of at a “football factory” such as Ohio State. Akron all have been building new facilities, Having done his graduate work at attracting better students and helping

Akron, the former Buckeyes coach has a connection, and a real ability to still open doors and be an ambassador for the university. Good for him, and the folks at the University of Akron. **** YOU’RE STARTING TO SEE notices in our newspaper, on our website and in emails of an exciting new event Crain’s is holding on April 18, in partnership with the Association of Corporate Counsel’s Cleveland chapter and the Cleveland Metropolitan Bar Association. The General & In-House Counsel Summit will feature CLE-accredited panel sessions on data privacy and risk, health care reform considerations for employers, best practices and disclosure for executive compensation and risk management for officers and directors. After a networking/ cocktail hour, we will honor the best legal minds in Northeast Ohio’s public and private companies as well as nonprofit and government organizations. Nomination and ticket information can be found at www.crainscleveland .com/counsel or by calling Jessica Snyder at 216-522-1383. ■

THE BIG ISSUE If your employer offered you added benefits if you improved your personal health, would that be enough motivation?

LAUREL PATTON

MOHAMMED MOHAMMED

DEBBIE SHEROKE

RON BARON

North Royalton

Cleveland

Brooklyn

Grafton

I feel like it’s too much monitoring of your personal health. But ... at our company, we have an opportunity to work with a personal trainer to meet our objectives. I would never have a chance to otherwise.

I think people with diabetes and high cholesterol benefit greatly from going to the gym. It would be helpful to have someone review your health with you. It would give me the motivation to go to the gym.

They’re a good thing, absolutely. I wouldn’t hesitate to get to the gym if the company offered it in case of high cholesterol. It’s the same thing as offering a smoking cessation program.

To be honest, I try to take care of myself. I eat right and exercise on my own.

➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.

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FEBRUARY 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

PERSONAL VIEW

Federal policies could limit growth in oil and gas By WILLIAM O’KEEFE

rom the peacock’s distracting plumage and the aggressive head-butting display of rams to skinny jeans and the sweet sound of Barry White, life forms have been working for ages to distract from or gloss over faults when wooing potential suitors. And because Ohio is a swing state, its residents can expect to be on the receiving end of similar courtship tactics as presidential candidates attempt to win their affection (and votes). Consider President Obama’s recent

January 2012

Mr. O’Keefe is CEO of the George C. Marshall Institute in Arlington, Va., and president of Solutions Consulting Inc. campaign push to highlight and take credit for the incredible growth America has experienced in the energy industry during his presidency. Supporters love to point out that 75,000 energy jobs were created under his first term, but fail to mention that this was done in spite of his administration’s policies, not because of them. In the last 10 years, new drilling technologies have led to the discovery of a 100-year supply of natural

January 2012

gas within our borders. In Ohio, geologists suggest there could be as much as 15.7 trillion cubic feet of recoverable natural gas and 5.5 billion barrels of recoverable oil. Since the recession began, jobs in America’s oil and gas industry have grown by nearly 22%, while overall U.S. employment is down by more than 4%. In Ohio, operations such as V&M Star’s Youngstown steel factory are creating hundreds of jobs manufacturing the piping needed for natural gas drilling. Yet businesses in the Buckeye State and across the country would have been unable to create these

December 2011

new jobs if energy companies had just waited for the administration to approve development on public lands. In fact, they still would be on hold as the Interior Department has yet to grant a single new permit under this president. While job creation has been substantial despite these obstacles, there is still significant unrealized job growth. In fact, Louisiana State University economist Joseph Mason estimates that different federal land policies could lead to the creation of an additional 1.2 million longterm jobs. But this is not the only See VIEW Page 6

December 2011

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

FEBRUARY 20 - 26, 2012

Jobs: Leaders fear talent shortage continued from PAGE 1

largest companies on the software companies’ list in 2008 — before the worst of the recession hit — employed about 2,600 people. However, a few factors affect the data; perhaps the most significant is that some companies don’t report their job numbers every year. For instance, electronic parts catalog maker Snap-on Business Solutions of Richfield didn’t respond in 2008 to the Crain’s survey. The company employs 270 people in the region today. A big chunk of the growth can be attributed to Hyland Software Inc. The document management software company employs 1,000 in Westlake, up from 650 in 2008 and 305 in 2004. Other companies have had a noticeable impact, too: BrandMuscle Inc., which sells software that companies use to customize ads for local audiences, employs 154 today, up from 70 in 2008 and 47 in 2004. Virtual Hold Technology of Akron, which makes automation software call centers use to call people back instead of putting them on hold, employs 100 today, up from 65 in 2008 and 27 in 2004. The growth was enough to make up for the decline of a few local software firms, such as Computer Systems Co. of Strongsville. CSC Group, which employed 210 in 2004, filed for Chapter 11 bankruptcy in 2009 and later was acquired by Hyland Software. People in some cities wouldn’t be impressed by the level of employment by software companies in Northeast Ohio. By comparison, Microsoft Corp. employs 90,000 people worldwide, including 40,000 in Greater Seattle. Still, the growth trajectory is impressive for Northeast Ohio, said Brad Nellis, president of the Northeast Ohio Software Association.

Software hiring isn’t soft

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Data from NEOSA’s quarterly survey of information technology companies, which includes software developers, back up the trend in employment and suggest it will continue. About 18% of the people who responded to NEOSA’s surveys during the second and third quarters of 2011 said they are “not hiring,” which by far is the lowest level since NEOSA began regularly conducting the survey four years ago. Of the 50 or so people who so far have responded to NEOSA’s fourthquarter survey, 24% say they aren’t

Shawn M. Riley

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McDonald Hopkins LLC 600 Superior Avenue, East, Suite 2100 Cleveland, OH 44114 • 216.348.5400 www.mcdonaldhopkins.com Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach

hiring, which is still low compared to results from the past few years. Another 72% say they will add staff over the next 12 months, which historically is fairly high, Mr. Nellis said, noting that the survey numbers could change as more responses arrive. “We’re clearly in a tech expansion right now,” he said. The sector is growing nationwide, too: U.S. software companies have added 82,000 jobs since the first quarter of 2010 and now employ more people than they did at the start of the recession, according to a Jan. 19 report by Forrester Research Inc. of Cambridge, Mass. By comparison, private-sector employers have hired 2.2 million workers in the United States since the first quarter of 2010, but they still employ 6 million fewer people than they did at the recession’s start, according to the Forrester report, titled “The U.S. Tech Sector is Adding Jobs.” Figures from the Crain’s software developers lists include only companies that have a proprietary software product and receive most of their revenue from software sales. Thus, the lists leave out companies that employ software developers, such as large corporations with internal software teams, custom software companies and website developers. “(Web developers) are all doing application development and mobile development,” Mr. Nellis said.

Demand outpaces supply The growth doesn’t surprise

Michael DeAloia, who recently was named fundraising director for the Technology Entrepreneurial Center of Hudson, or TECHudson. He has worked for several information technology companies as well as the city of Cleveland, helping recruit IT companies to the city. The IT companies he keeps in touch with are in growth mode, Mr. DeAloia said. Officials from other area business incubators have told him they are seeing growth among IT companies, too, he said. Local software companies could have grown even more if there were more local people with the technical skills they need, said Mr. DeAloia, who is raising money to help start programs aimed at training people to develop mobile software. Mr. Nellis and others from the region’s IT community have been worrying about that problem, too, especially as the economy has improved. Local universities are trying to fill the gap, but more must be done, Mr. DeAloia said. “There needs to be a grassroots effort to train people in these types of technologies,” he said. That problem exists nationwide, according to the Forrester report. “The irony is that the growth of U.S. software and IT services firms may soon exhaust the supply of skilled workers, until the education system and young people (or older workers through retraining) replenish the country’s stock of software engineers, process analysts, and other workers with the needed skills,” Forrester stated. ■

View: Decisions will greatly impact industry continued from PAGE 5

Carl J. Grassi

LAUREN RAFFERTY

area the prolific job-creating potential of the U.S. energy industry is being stymied by executive branch policies. It’s no secret President Obama has his eye on the profits of oil and gas companies. Every single budget proposal he has put forward since taking office has included measures to significantly and selectively increase taxes on our oil and gas sector. Unfortunately for Mr. Obama’s credibility as a job creator, the credits he has targeted for elimination, which are available to all industries, are the very ones that encourage

companies to keep jobs in the United States. Rolling back just two of the provisions Mr. Obama has targeted (the manufacturers’ credit and the “dual capacity” deduction) would immediately cut as many as 3,800 jobs in Ohio, and not just in the energy industry, but among health care professionals, financial institutions and other indirectly related fields. Far from generating government funding, these job and revenue losses would equate to a net loss of $53 billion, only adding to growing debt concerns and taxpayer burdens.

Growth of our traditional fuel industry is a great boon to our struggling economy. Instead of seeing this growth as an opportunity to capture more federal funding to disburse to the next Solyndra, the president could commit to helping to propagate this growth. He can make good on 2008 campaign promises to bridge divides in the name of progress. And if the president fails to live up to the vows he swore when courting the White House last time around, his relationship to the office could end in abrupt divorce at the end of this year. ■

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Strongsville lands Canadian outfit’s landing gear operation HDI will move 36 workers from Brooklyn to site ready for expansion By DAN SHINGLER dshingler@crain.com

Strongsville is gaining a new industrial employer thanks to a Canadian aerospace company’s decision to move some of its landing gear production from nearby Brooklyn. Quebec-based Héroux-Devtek Inc., known locally as HDI Landing Gear, is in the process of preparing an existing, 60,000-square-foot building to house its operations in Strongsville, said Brent Painter, the suburb’s economic development director. Bill Brougher, vice president of HDI Landing Gear USA, said the Brooklyn operation has 36 employees who work in a leased plant just a bit smaller than the one the company bought in Strongsville at 15900 Foltz Parkway. They’ll begin moving May 1 to the Strongsville plant, which will be fully operational 30 days later, he said.

“It’s a pretty nice, steady market — and commercial aviation is strong.”

Brooklyn Mayor Richard Balbier confirmed Mr. Painter’s version of events. His economic development director, Fran Migliorino, said she tried to keep HDI. But despite offers of incentives from Brooklyn, HDI’s operation there did not provide the expansion opportunities the company found in Strongsville, she said. HDI is a private company and does not disclose its sales, but the landing gear business is its largest, Mr. Brougher said. That business alone employs more than 1,000 people, according to HDI’s website. HDI gained its local operations in

April 2010, when it bought Springfield-based Eagle Tool & Machine Co. and its Cleveland subsidiary, E-2 Precision Products, said Mr. Brougher, the former owner of Eagle. At the time of the acquisition, Eagle and its subsidiary had a combined payroll of about 180 employees, according to an HDI news release. Eagle had 2009 sales of $34 million, but also had about $125 million in backlogged orders. HDI bought the Ohio companies to add landing gear production capacity to its existing aerospace business. The company has 12 plants and more than 1,200 employees in

North America, according to its website, including seven plants engaged in producing landing gear or related components. Its Ohio operations produce complete landing gear, as well as components and replacement parts, for both military and civilian aircraft, Mr. Brougher said.

Happy landing Mr. Painter said the company was looking for space where it could expand and found it in the former Albums Inc. warehouse on Foltz Parkway. The company bought the building last fall and has been working since with contractors to turn it into a modern aerospace manufacturing plant, he said.

“It’s going to take them some time to ramp up there, but we’re excited about it,” Mr. Painter said. “They’re the kind of company we’d like to see in our community. They’re green, they’re high-tech, and that’s the kind of company we’d love to see in town.” A landing gear company that is growing is no surprise to Mike Heil, president of the Ohio Aerospace Institute in Cleveland, especially if the company is working on commercial aircraft. “Every plane has landing gear, so it’s a pretty nice, steady market — and commercial aviation is strong because of all the airliners they’re building, particularly for Pacific Rim countries,” Mr. Heil said. ■

A LOAN WITH

– Mike Heil, president, Clevelandbased Ohio Aerospace Institute Besides the benefit of owning its plant, HDI will have room to expand to 90,000 square feet to accommodate growth, Mr. Brougher said. “This is a better space for our future plans,” he said. Those plans include focusing the Strongsville operation on finishing work, including polishing and coating aerospace parts and components. It already does some of that work in Brooklyn, but HDI’s strategy is to turn the Strongsville operation into a finishing specialty shop, while its plant in Springfield, Ohio, focuses on machining, Mr. Brougher said.

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No poaching involved Mr. Painter said his city didn’t recruit HDI or violate any antipoaching agreements with Brooklyn. He said HDI approached Strongsville looking to expand. “We called Brooklyn and said, ‘Just so you know, they are looking in Strongsville, but by no means did we contact them,’” Mr. Painter said. “Brooklyn already knew. They knew before we knew that (HDI officials) were already looking in Strongsville.”

GET DAILY NEWS ALERTS FROM CRAIN’S ! Register for free e-mail alerts and receive: ■ The Morning Roundup: A collection of the day’s business news from Ohio’s daily papers ■ Breaking news alerts: When major news happens, you’ll know ■ Daily headlines: A collection of Crain’s-produced news and blog items from the day ■ Small Business Report: A weekly guide to small business news

SIGN UP NOW AT: CrainsCleveland.com/register ■ Crain’s on Twitter: @CrainsCleveland ■ Crain’s on Facebook: Facebook.com/CrainsCleveland

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Beachwood hedge fund shuttered after poor 2011 Lake Front, others hurt by Europe turmoil By MICHELLE PARK mpark@crain.com

Beachwood hedge fund Lake Front Partners LP is no more after firm executives decided to close the fund because of poor performance last year. The 6-year-old shop, a subsidiary of private equity firm CapitalWorks LLC, closed in December because its investment performance “substantially lagged the market,” according to a communication to investors. Portfolio managers Ed Matuszak and Brent Luce no longer work for CapitalWorks. “Their performance in 2011 put them in a position where we were quite concerned about their ability to recover,” said Dick Hollington, president of CapitalWorks, in an interview last week with Crain’s. “Ed and Brent are very good investment guys (and) did a good job for a long time. Unfortunately, last year, their performance put them in a position where it was very difficult to proceed.” Lake Front has returned 95% of investors’ funds and will distribute the balance following the annual audit of the fund. Mr. Hollington declined to disclose the fund’s assets under management. He also wouldn’t say how many investors Lake Front had, nor would he discuss specific performance numbers. “Let’s leave it to say that it was the

first time the performance had veered as dramatically in its history as it had,” Mr. Hollington said. “It was an extremely difficult market,” he added. “With what occurred in Europe with the Greece crisis, there was a great deal of fear in the market in the summer of 2011. That really, more than anything else, drove the performance. I think if you look across the hedge fund universe across 2011, it was a very difficult year.”

Fundamental issues Lake Front Partners, formed in 2005, was a long/short hedge fund, meaning it invested long in the stocks of companies that it expected would increase in value and sold short the stocks of companies that it expected would decrease in value. Lake Front invested in liquid domestic equity securities and was CapitalWorks’ only hedge fund subsidiary, Mr. Hollington said. A source with knowledge of Lake Front’s operations said its returns dropped more than 30% during the second and third quarters combined. Mr. Hollington said the decision to close the fund “was difficult, but reinforced our commitment to putting our investors’ interests ahead of our own and strengthened the firm. “Anytime you close a business you worry about your firm’s reputation,”

TRACKING RETURNS The numbers below show yearly returns from the HFN Long/Short Equity Index, an equal weighted benchmark of global long/short equity hedge funds.

Year

Returns

2011

-6.67%

2010

10.06

2009

21.83

2008

-20.47

2007

11.35

2006

12.10

SOURCE: EVESTMENT | HFN

he said. “In this case, I believe we are stronger and more focused on our private equity funds.” The overwhelming response from investors has been supportive, according to Mr. Hollington. “I think our investors appreciated our approach to dealing with a difficult situation,” he said. “I think they felt we dealt with it in a very straightforward manner.” Mr. Matuszak declined to discuss specifics about the hedge fund’s performance, citing an employment agreement he has with his former employer. “It was a difficult market for people who are fundamental-based stock pickers like Brent and I are,” he said. “The market really became

disconnected from those fundamental valuations due to a lot of the headlines coming out of Europe and the fears associated with that.” Mr. Matuszak said he and Mr. Luce, who also worked together at Shaker Investments from 1996 to 2002, are exploring the option of opening a new fund and hope to get a better sense of whether they can do so over the next few months. He does not anticipate fundraising difficulty for them, despite Lake Front’s closure. “In the investment world, these things happen fairly regularly,” he said. “I think we have pretty good reputations. “For Brent and I, it’s just another opportunity to look forward and do something different,” Mr. Matuszak added. “One door closes, and another opens.”

It was a very tough year By most accounts, last year was challenging for hedge funds. Average hedge fund performance, which is an indication of average returns, was down 5.2% in 2011, according to data from Hedge Fund Research Inc., the leading provider of data, indices and analysis of the global hedge fund business. The decline marks only the third calendar year decline since the company’s index performance inception in 1990, but it’s the second decline in the last four years. “2011 was a very weak year for hedge fund returns,” said Michael

Wager, a partner with Taft Stettinius & Hollister LLP in Cleveland whose focus is private equity and hedge fund representation. “Some hedge funds have done great, but on average, the hedge fund industry is under pressure.” Mr. Wager cited increased competition and market volatility, which can create opportunity for hedge funds but also can set the stage for bad bets. Last year was particularly tough for funds such as Lake Front that employ long/short equity strategies, said Peter Laurelli, vice president of eVestment Alliance in Atlanta, a provider of institutional investment data and analytic solutions. The company’s long/short equity index, an equal-weighted benchmark of global long/short equity hedge funds, revealed 2011 was the second-worst year for such funds since 1983. “If your primary market exposure is equity markets, and those markets are going up and down and all over the place as they were in 2011, you are directly exposed to that volatility,” Mr. Laurelli said. Some hedge funds, though, had another good year, including those investing in mortgage-related products, he said. January ushered in a bit of good news: The Hedge Fund Research index showed an average gain of 2.64%. Mr. Wager, however, expects unpredictable market dynamics to continue in 2012. ■

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CRAIN’S CLEVELAND BUSINESS

Tickets: Supply drops; prices rise continued from PAGE 3

The Cavaliers two years ago canceled season ticket accounts of out-of-state buyers, and this season — the first without LeBron or the possibility of him playing here — only 45% of the team’s season ticket base renewed, according to a source. (Previous reports placed that number at 30%.) That combination has resulted in a dearth of Cavs tickets available through resellers such as FlashSeats, owned by Cavaliers owner Dan Gilbert, and StubHub. On FlashSeats, through which Cavs’ customers can resell or transfer their tickets, rare is the future game where more than two pages of tickets are available. Last season, the site often was flooded, with ticket listings spanning 10 to 12 pages. StubHub generally has had 60 to 100 tickets available for coming games. In turn, with prized rookie Kyrie Irving’s hot start and the Cavs’ initial contention for a long-shot playoff spot, customers without seats have been forced to flock to the Cavaliers’ box office if they want to take in a game. Tad Carper, the team’s senior vice president of communications, said walkup sales at the box office have jumped 300% this season. “There is a lower transaction volume” in the secondary market, Mr. Carper said. “We view it as part

“There aren’t a lot of people stocking Cavs tickets, but the ones who are are making money. It’s way better than I expected.” – Scott Merk, owner, Merk’s Tickets of the open market dynamic. There’s a natural ebb and flow to it; it goes from season to season, month to month, game to game.”

Prices pumped up The Cavaliers’ offseason pricing decisions may be spurring boxoffice sales, too. The team this offseason lowered ticket prices for season tickets and single-game seats anywhere from the “low single digits into the low double digits” on a percentage basis, Crain’s reported last December before this lockoutshortened NBA season began. That number depends on length of relationship with the team and a host of other factors. The team, coming off a poor season and with another one predicted, received some criticism for not lowering prices more; its average price ranks 10th in the NBA at $48.62, according to Chicago-based research firm Team Marketing Report. Keeping prices relatively firm and the supply of tickets relatively tight has had its benefits for resellers. A spokesman from San Franciscobased StubHub said that through the first nine home games of this season compared to the like number

ERC’s new health plan helps guide customers After positive feedback, Mayfield Village outfit to expand presence in clinics here, other markets By TIMOTHY MAGAW tmagaw@crain.com

ERC president Pat Perry characterized his group’s latest insurance offering as “health care reform done right” — it’s cheaper, increases access and offers a taste of the VIP lifestyle. ERC, a human resources services organization based in Mayfield Village, last fall staffed six family physicians’ offices in the Cleveland area with ERC-employed nurses, also dubbed “care guides,” to offer concierge care for those covered under the group’s new insurance option, ERC Health Select. Given the positive feedback the group has received, Mr. Perry said his organization over the next year plans to double the number of ERCstaffed clinics in Northeast Ohio, and also to expand the “care guide” model to Columbus and Cincinnati. “‘Care guide’ is a great descriptive title,” Mr. Perry said. “They’re going to guide you through your care from the moment you make an appointment and make sure you don’t get lost.” The care guides are charged with keeping tabs on enrollees to make sure they’re keeping their appointments and taking their medications. ERC members also can reach their care guides by phone or email with any medical questions. Mr. Perry said about 80% of the

employers covered under ERC’s traditional health insurance offerings in the Cleveland area signed up for the ERC Health Select option thus far. For patients enrolled in the program, co-pays for services and generic prescriptions are $5 apiece. ERC’s work is a local example of the emerging “patient-centered medical home” care delivery model taking root across the country. A so-called “medical home” is designed to encourage physicians to manage closely a patient’s health with the help of someone such as an ERC care guide in exchange for higher reimbursements. “We did some research into patient-centered medical homes, and we liked the concept of incentivizing doctors to help our employees make right decisions and get healthier,” said Robert Klonk, one of ERC Health’s developers. As the model continues to take hold, ERC hopes to build at some point its own freestanding clinics, according to Mr. Klonk, who also is president and chief sales officer of insurance brokerage firm Oswald Cos. in Cleveland. “I expect a lot of growth in this over the next 12 to 18 months because it works,” Mr. Klonk said. “It reduces the cost for employers, provides better experiences for the employees and helps them better manage their health.” ■

of games last season, a third fewer Cavaliers tickets had been sold on the site. The average price that those tickets fetched, though, had doubled. Mr. Carper said FlashSeats numbers are similar. For FlashSeats, though, there is a flip side to the significantly lower sales volume: less revenue to the reseller from fees. The site does not charge when customers transfer tickets to another FlashSeats member, but charges 25% for every sale, no matter how big or small. Meanwhile, Scott Merk, the owner of Merk’s Tickets in Brook Park, said he’s busy with the Cavaliers as interest has jumped along with the team’s surprising start. He said the agency sold a four-pack of upperdeck tickets for 300% over face value for last Wednesday’s win over the Indiana Pacers. “There aren’t a lot of people stocking Cavs tickets, but the ones who are are making money,” Mr. Merk said. “It’s way better than I expected.” ■

DAVID RICHARD

The Quicken Loans Arena crowd celebrates along with forward Alonzo Gee on Jan. 31 during the Cavs’ 93-90 loss to the Boston Celtics.

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In the first arrangement of its kind in this region, six Northeast Ohio credit unions are sharing a business loan officer. It appears Jonathan Mokri is meeting expectations so far: Hired last September, the shared business development officer has closed at least two loans and is building a pipeline for the credit unions for which he now works. â&#x20AC;&#x153;He is probably more successful than we had expected him to be at this juncture,â&#x20AC;? said Robin D. Thomas, president and CEO of Taleris Credit Union in Brooklyn Heights. â&#x20AC;&#x153;Heâ&#x20AC;&#x2122;s out there and heâ&#x20AC;&#x2122;s generating some business.â&#x20AC;? Area credit union executives are confident this arrangement will enable them to better compete with banks while meeting the credit needs of small businesses. â&#x20AC;&#x153;In this part of the state, business lending has not been a very active service for credit unions,â&#x20AC;? Mr. Thomas said. â&#x20AC;&#x153;Some of us have been doing some of it for a while, but not in this concentrated effort. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s an opportunity, and thereâ&#x20AC;&#x2122;s a need,â&#x20AC;? he said. Taleris Credit Union, which began business lending about four years ago, has several loans in the pipeline that Mr. Mokri helped generate, Mr. Thomas said. Mr. Thomas became interested in a sharing arrangement locally because a Taleris employee â&#x20AC;&#x201D; who, to be fair, had other responsibilities, he said â&#x20AC;&#x201D; produced â&#x20AC;&#x153;mediocreâ&#x20AC;? business lending results. Mr. Thomas said Taleris also was unsuccessful in joining another sharing model in central Ohio.

â&#x20AC;&#x153;The (geographic) distance prohibited us from fitting into the other programs, so I did the next best thing. I said, â&#x20AC;&#x2DC;Let me get started here, find other credit unions that are interested and letâ&#x20AC;&#x2122;s go about this in Northeast Ohio.â&#x20AC;&#x2122;â&#x20AC;?

Mokri

Share and share alike The shared business development officer in Northeast Ohio brings to five the number of such arrangements among credit unions in the state. All of them are coordinated and managed by Cincinnati-based Cooperative Business Services LLC, a credit union service organization. The other models have been operating in Columbus since 2006; Cincinnati and Toledo since 2009; and Dayton since September 2011, said Keith D. Reed, president and CEO of Cooperative Business Services, which provides business loan support, such as underwriting, for more than 60 credit union clients in six states. Each sharing arrangement on average involves six credit unions, Mr. Reed said. Cooperative Business Services employs the shared business development officers, though the participating credit unions pay their salaries, Mr. Reed said. Mr. Thomas spearheaded the local effort because heâ&#x20AC;&#x2122;d heard the central Ohio arrangement had enjoyed success. Mr. Reed confirmed the â&#x20AC;&#x153;very successfulâ&#x20AC;? model in Columbus has originated more than $70 million in business loans to date.

The gang of six Mr. Thomas contacted area credit unions to gauge their interest, and five joined Taleris: Cardinal Community Credit Union in Mentor, Community First Credit Union in Ashtabula, Golden Circle Credit Union in Canton, Stark Federal Credit Union in Alliance and Towpath Credit Union in Fairlawn. Christine Blake was among those

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Implementing a comprehensive fatigue risk management system could improve workplace safety and efficiency, according to a paper released by the American College of Occupational and Environmental Medicine in Elk Grove Village, Ill. About 38% of U.S. workers suffer from fatigue, which can be defined as feeling weariness, tiredness or a lack of energy and is associated with many health conditions, including physical and psychological disorders, according to the paper, â&#x20AC;&#x153;Fatigue Risk Management in the Workplace,â&#x20AC;? by the organization. Related issues, such as the correlation between inadequate sleep and injury rates, are costly for employers. Sleep disorders, for example, cost employers $60 billion annually in lost productivity, industrial accidents and medical expenses, according to data from the paper.

â&#x20AC;&#x153;Fatigue and decreased alertness resulting from insufficient or poorquality sleep can have several safetyrelated consequences, including slowed reaction time, reduced vigilance, reduced decision-making ability ... (and) distraction during complex tasks,â&#x20AC;? the paper states. But risk assessment and key mitigation measures as part of a fatigue risk management system can help, the college said in its paper. Such a system can include collecting information on fatigue hazards, analyzing their risk, and initiating controls to mitigate the risks. It also can include developing a fatigue reporting system for employees; conducting fatigue incident investigations; and conducting fatigue management training and education for employees. â&#x2013; Roberto Ceniceros is a senior editor with Business Insurance, a sister publication of Crainâ&#x20AC;&#x2122;s Cleveland Business.

who said yes. â&#x20AC;&#x153;I always think itâ&#x20AC;&#x2122;s fantastic if we could share resources,â&#x20AC;? said Ms. Blake, president and CEO of Cardinal, which started business lending last year and at present is processing the second business loan Mr. Mokri originated for it. A big plus in hiring Mr. Mokri, she said, is the availability of someone who can spend the time to walk businesses through the loan process. â&#x20AC;&#x153;Otherwise, that would fall on myself and my VP of lending,â&#x20AC;? Ms. Blake said. Cooperative Business Servicesâ&#x20AC;&#x2122; Mr. Reed declined to make Mr. Mokri available for an interview, but he said Mr. Mokri has commercial financing experience. â&#x20AC;&#x153;The reason why we felt Jonathan is a good fit is he is from Cleveland,â&#x20AC;? Mr. Reed said. â&#x20AC;&#x153;He understands the market we are asking him to serve.â&#x20AC;?

Doing what banks donâ&#x20AC;&#x2122;t Local credit union executives and Mr. Reed emphasized that the sharing arrangement isnâ&#x20AC;&#x2122;t intended to drive dramatic volumes of loans. â&#x20AC;&#x153;We just want Jonathan to find viable credits that meet the risk appetitesâ&#x20AC;? of the credit unions, Mr. Reed said. â&#x20AC;&#x153;We want Jonathan to find opportunities that are good asset quality.â&#x20AC;? Still, the origination of loans obviously will be a prime indication of the arrangementâ&#x20AC;&#x2122;s success, Talerisâ&#x20AC;&#x2122; Mr. Thomas said. Collaborating is a unique advantage for credit unions, Mr. Thomas noted. Banks â&#x20AC;&#x153;very seldom, if everâ&#x20AC;? work together like this, he said. â&#x20AC;&#x153;This type of cooperative effort helps put credit unions in this part of the state on par with other commercial lenders to provide business loans to the small business community,â&#x20AC;? he said. The Northeast Ohio model will entertain other credit unionsâ&#x20AC;&#x2122; requests to join, which Mr. Thomas said he already has received. If others join, he noted, the expense of the arrangement will be diluted further. â&#x2013;

ON THE WEB

Story from www.CrainsCleveland.com.

Biotech firm gets $250K A Cleveland company that is developing a therapy for muscular dystrophy patients has received a $250,000 investment from JumpStart Inc., a Cleveland nonprofit that assists and invests in startups. The company, Milo Biotechnology LLC, last month began testing its therapy on patients at Nationwide Childrenâ&#x20AC;&#x2122;s Hospital in Columbus, where the technology was developed. The companyâ&#x20AC;&#x2122;s therapy is based on a protein called follistatin that stimulates muscle growth and prevents muscle scarring after injury. It does so by inhibiting the activity of myostatin, a protein that impedes muscle differentiation and growth. The protein is delivered by an adeno-associated virus, a type of virus that is believed to be harmless. â&#x20AC;&#x201D; Chuck Soder

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TAX LIENS

Creepy.

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

LIENS FILED 123 & ABC Inc. P.O. Box 18310, Cleveland Heights ID: 74-3128849 Date filed: Nov. 10, 2011 Type: Employer’s withholding, corporate income Amount: $14,995 Anthony Forde, D.D.S., Inc. 6820 Ridge Road, Suite 101, Parma ID: 34-1346657 Date filed: Nov. 22, 2011 Type: Employer’s withholding Amount: $14,278

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Wednesdays noon – 12:50pm

February 29 – March 7 – March 14 – March 21 – March 28 –

2012 SPEAKER SCHEDULE Elizabeth Kucinich Director of Public and Government Affairs Physicians Committee for Responsible Medicine Monica Robins Anchor/Senior Health Correspondent, WKYC-TV Eileen Sheil Executive Director, Corporate Communications Cleveland Clinic Rev. Dr. Mark Giuliano Senior Pastor, Old Stone Church Colette Jones Vice President of Marketing, Positively Cleveland

91 Public Square | Cleveland, Ohio | 216.241.6145

www.OldStoneChurch.org

State Meat Market Inc. 5338 State Road, Parma ID: 34-1149581 Date filed: Nov. 22, 2011 Type: Employer’s withholding Amount: $10,130 Monaco Plating 3555 E. 91st St., Cleveland ID: 26-1992160 Date filed: Nov. 1, 2011 Type: Employer’s withholding, unemployment Amount: $9,946 Pramukh Inc. 11837 Edgewater Drive, Lakewood ID: 34-1852948 Date filed: Nov. 10, 2011 Type: Employer’s withholding Amount: $9,620

Terra Serra LLC Café Ah-Roma 38 W. Bridge St., Berea ID: 34-1943631 Date filed: Nov. 22, 2011 Type: Employer’s withholding Amount: $13,617

Westfall Legal Services Co. LPA 75 Public Square, Suite 914, Cleveland ID: 20-2368829 Date filed: Nov. 1, 2011 Type: Employer’s withholding Amount: $9,226

Architectural Sheet Metals LLC 1457 E. 39th St., Cleveland ID: 20-4733935 Date filed: Nov. 16, 2011 Type: Employer’s withholding Amount: $12,546

Herbs Plumbing & Heating Inc. 2562 Noble Road, Cleveland Heights ID: 34-1785963 Date filed: Nov. 8, 2011 Type: Employer’s withholding Amount: $9,036

Ohliger Drug of Fairview Park Inc. 21720 Lorain Road, Fairview Park ID: 34-1121297 Date filed: Nov. 10, 2011 Type: Employer’s withholding, corporate income Amount: $12,283

Merchant Services Hardesty Enterprises Inc. 9545 Midwest Ave., Cleveland ID: 01-0575712 Date filed: Nov. 30, 2011 Type: Employer’s withholding Amount: $8,438

Gellner Engineering Inc. 2827 Brookpark Road, Parma ID: 34-1383557 Date filed: Nov. 10, 2011 Type: Employer’s withholding Amount: $12,163

Benjamin P. Wright & Associates LLC Wright Renovations & Kitchens Corp. 1387 Mathews Ave., Lakewood ID: 20-3175433 Date filed: Nov. 29, 2011 Type: Employer’s withholding Amount: $8,310

Daniel E. Soucie, D.D.S., Inc. 6611 Rockside Road, Independence ID: 34-1057741 Date filed: Nov. 10, 2011 Type: Employer’s withholding Amount: $11,450

The Old Stone Church

Ralph Siegenthaler Inc. 5584 Mayfield Road, Lyndhurst ID: 34-1292394 Date filed: Nov. 3, 2011 Type: Employer’s withholding Amount: $10,173

Reeder Properties Inc. 1192 Holmden Ave., Cleveland ID: 34-1834472 Date filed: Nov. 22, 2011 Type: Employer’s withholding, corporate income Amount: $10,998 Special Transport & Rigging Inc. 4730 Warner Road, Garfield Heights ID: 34-1898934 Date filed: Nov. 18, 2011 Type: Employer’s withholding Amount: $10,981 Pioneer Environmental Systems Inc. 20536 Krick Road, Walton Hills ID: 06-1682390 Date filed: Nov. 29, 2011 Type: Employer’s withholding Amount: $10,375 Little Blessings Enrichment Center Inc. 3230 E. 90th St., Cleveland ID: 61-1512189 Date filed: Nov. 18, 2011 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $10,244

Good Harvest Foods Market Inc. 14501 Industrial Ave. S., Maple Heights ID: 34-1943972 Date filed: Nov. 10, 2011 Type: Employer’s withholding Amount: $7,981 Kidz Corner Inc. 3749 E. 142nd St., Cleveland ID: 26-0385951 Date filed: Nov. 18, 2011 Type: Employer’s withholding Amount: $7,778 O Savage Biomechanics Inc. 7027 Mill Road, Suite 201, Cleveland ID: 34-1907634 Date filed: Nov. 10, 2011 Type: Employer’s withholding Amount: $7,129 Helping Handz Inc. 24600 Center Ridge Road, Building 3, Suite 120, Westlake ID: 26-2945844 Date filed: Nov. 16, 2011 Type: Employer’s withholding Amount: $6,986 Cementitious Artisan LLC 19446 Westwood Drive, Strongsville ID: 59-3814096 Date filed: Nov. 29, 2011 Type: Employer’s withholding, unemployment Amount: $6,510

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

BRIGHT SPOTS Bright Spots is a periodic feature in Crain’s that highlights positive business developments that have flown under the radar. To submit information for inclusion, email managing editor Scott Suttell at ssuttell @crain.com.

Dr. Charis Eng of the Cleveland Clinic’s Genomic Medicine Institute FILE PHOTO/ MARC GOLUB

Genomics: Reimbursement dogs progress continued from PAGE 3

The institute should keep growing, too, Dr. Eng said. That’s partly because she and her colleagues there don’t just conduct research on the genes that influence diseases and work with patients at risk of carrying those genes. They also educate doctors throughout the Clinic on the benefits of working with the institute, hoping that they’ll be more likely to refer patients to its genetic counselors or to come up with their own ideas for research projects related to the human genome. The institute one day even could grow beyond the Clinic. Dr. Eng — who has published more than 350 peer-reviewed papers and won countless awards for her work in genomics — said she eventually would like the institute to work with patients from other hospitals. Dr. Eng said she’s still working to expand the infrastructure and money available to the genomic institute, though she wouldn’t go into details about future growth plans. Even so, the organization has come a long way since 2005. “Six years ago there wasn’t much of a genetics or a genomics practice,” she said. At the institute, roughly 50 people spend the majority of their time conducting research projects related to the human genome. Another 20 or so work with Clinic doctors and consult with patients who might benefit from the institute analyzing portions of their genomes.

Warding off ‘fatal errors’ Scientists over the past two decades have learned a lot about the human genome, with the most notable achievement being the 2003 completion of the Human Genome Project, a 13-year effort to identify all the genes that appear in human DNA and make the data available for analysis. Many of those genes are known to influence whether someone is likely to get a disease. Dr. Eng has discovered a few herself: For instance, in 2010 she published a paper describing how a gene called KILLIN, when not working properly, can cause Cowden syndrome, a condition associated with an increased risk of breast and thyroid cancers. Someone who has a gene that puts them at risk of getting a certain disease often can take steps to prevent the disease or lessen its effects. For instance, Google co-founder Sergey Brin has a genetic variant that puts him at an increased risk of Parkinson’s disease, so he has altered his diet and exercise habits to ward

off the condition. Dr. Eng likens analyzing a person’s genome to analyzing the business plan of a new company. “You’re reading it to look for any fatal errors before they occur,” she said. The Genomic Medicine Institute has an advocate in the Clinic’s president and CEO, Dr. Delos “Toby” Cosgrove. It was Dr. Cosgrove who persuaded Dr. Eng to come to the Clinic from Ohio State University, where she was director of the division of human genetics in the school’s department of internal medicine. In an email statement, Dr. Cosgrove said the hospital system has committed itself to being “on the forefront of genomic medicine.” “There are a major set of diseases that are caused genetically and we are now for the first time able to begin understanding these diseases,” Dr. Cosgrove stated.

Boughman, executive director of the American Society of Human Genetics of Bethesda, Md. She lauded Dr. Eng, who served a three-year term on the organization’s board of directors. “Not only is she a really smart lady, she doesn’t let go. She’s a bulldog,” Dr. Boughman said. Both Dr. Boughman and Dr. Eng noted that the practice of genomic medicine is only going to grow as a tool to promote wellness, prevention and graceful aging. It one day could touch everyone on the planet, Dr. Eng said. For that to happen, though, research would need to increase to the point where scientists can figure out how people are affected by all of the thousands of variations and mutations normally found in the human genome. “If we do it right everyone hopefully in the world would have their whole genome read shortly after birth,” she said. ■

■ Western Reserve Public Media has produced a program called “Micro Business for Teens: Starting a Micro Business,” that will air this Thursday, Feb. 23, at 8 p.m and 10 p.m. on Western Reserve PBS (WNEO 45.1/WEAO 49.1). Carol Topp, a Cincinnatibased certified public accountant, hosts the 90-minute program, which is based on her “Micro Business for Teens” book series. The program recently was taped at Kent State University with a studio audience of students, parents and educators from throughout Northeast Ohio. Smith Students from Gilmour Academy, Firestone High School, Theodore Roosevelt High School in Kent and Stow-Munroe Falls High School participated in a Q-and-A session with Ms. Topp. Western Reserve Media said the program “makes the very notion of creating a micro business an achievable goal for those who have a good idea and the enthusiasm to design and implement a plan of action. It discusses what a micro business is, gives examples of businesses suitable for teenagers, offers instruction on writing a business plan and financing the business and more.”

The program will be released nationally to PBS affiliates this spring. ■ Accounting and business services firm Skoda Minotti has launched a new website, at www.marketing .skodaminotti.com, for its Skoda Minotti Strategic Marketing unit. In addition to information about the group’s service offerings, which include brand marketing and online marketing, the site offers several free marketing reports geared toward helping companies benchmark their current online marketing efforts. Among the free reports available are a social media audit, a pay-perclick advertising analysis and a web design evaluation. ■ Ohio Northern University’s James F. Dicke College of Business Administration honored Robert C. Smith, president and CEO of Spero-Smith Investment Advisers Inc., with the inaugural Pinnacle Award at a banquet held Feb. 3. Mr. Smith was one of five recipients of the award, which honors individuals who have made the highest commitment to the business college. “Through their generosity, they’ve had a tremendous and transformative impact on our students,” said dean James Fenton. Mr. Smith earned a bachelor’s degree in accounting from Ohio Northern and an MBA in finance from Duquesne University. He chairs the boards of trustees of ideastream (WVIZ/WCPN) and the board of directors of the Cleveland-Cuyahoga County Port Authority. He’s also on the board of the Ohio Bureau of Workers’ Compensation.

Now, about the money … The adoption of genomic medicine has been slowed, however, by a reimbursement system that Dr. Eng and other doctors say is inadequate. Dr. Eng notes that the institute’s clinical arm, the Center for Personalized Genetic Healthcare, loses money, which she said is the norm for facilities that conduct genetic counseling and testing. Her goal, for now, is to get the institute to a point where it breaks even. The Center for Human Genetics at University Hospitals Case Medical Center also is a “loss leader,” said center director Shawn McCandless. The center employs seven physician geneticists and nine counselors. Dr. McCandless in mid-January testified before the Ohio House of Representatives in favor of a bill that would create a procedure to license genetic counselors in the state of Ohio, which he described as a step toward improving reimbursements. Many states lack licensing laws, and the federal law regulating who can bill Medicare for services was created before genetic counselors existed, according to a paper that Dr. Eng and two of her colleagues published in December. There is one code that allows genetic counselors to bill private insurers directly, but most hospitals get more money by bundling the service with other services provided by the doctor, they noted in the paper, which provided an argument for occasionally using the genetic counselor code. The issue won’t stop Dr. Eng or the genomic institute, said Joann

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Cleveland entry helps gas distributor After expansion here, Sandusky-based O.E. Meyer keeping pace with industry’s other regional players By DAN SHINGLER dshingler@crain.com

Shale gas might be driving a good chunk of Ohio’s economy lately, but it’s good old-fashioned gases such as carbon dioxide, helium and argon that are driving the business of O.E. Meyer Co. — along with some recent acquisitions. The Sandusky-based distributor of gases for industrial and medical customers across much of Northern Ohio made its entrance into the Cleveland market last year via its acquisition of the gas distribution business of Linden Welding and Safety Supply in Westlake. Linden still is in business, making cylinders that hold industrial and medical gases. O.E. Meyer last fall moved Linden’s former gas distribution business to Garfield Heights, where it built a 10,000-square-foot building on NEO Parkway to house the operation. The company wanted to enter Cleveland because demand for its gases here is on the rise, with buyers

The company wanted to survive ... where independents and regional players still hold sway. from hospitals to manufacturing plants and infrastructure projects adding to the demand. O.E. Meyer had been serving customers in the Cleveland area from its location in Lorain, said president Craig Wood. But in the business of hauling heavy steel tanks full of industrial gases to customers that often need them in a hurry, it pays to be close to clients, he said. “We are in the trucking business, at the end of the day,” Mr. Wood said. The company also wanted to survive in an industry where a few large players dominate the national landscape, but where independents and regional players still hold sway in many individual markets, including Cleveland. There has been a wave of consolidation sweeping the industry as independent, one-location operations disappear, and O.E.

Meyer has been working to become a regional powerhouse rather than be swallowed up, Mr. Wood said. Toward that end, the company recently bought another independent gas distributor. On Feb. 1, it purchased Smith Machine & Welding in Bowling Green, adding a new territory to O.E. Meyer’s network, which already includes operations in Sandusky, Lorain, Galion, Fremont and Maumee. It will do more deals if it finds the right opportunity, but intends to keep its operations in and around northern Ohio, Mr. Wood said. One person who won’t mind if Mr. Wood finds more acquisitions is Jim Lisiecki, distribution manager for Linde LLC in Murray Hill, N.J. Linde is a national producer of industrial and medical gases, and it uses O.E. Meyer as one of its distributors. Successful regional players such as O.E. Meyer are doing well, Mr. Lisiecki said, because they can combine the service of a local company with the resources of a larger company affiliated with major suppliers such as Linde. “Large independent distributors like O.E. Meyer are growing through acquisitions, as well as organic growth,” as the industry continues to consolidate, Mr. Lisiecki said. ■

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GOING PLACES JOB CHANGES DISTRIBUTION ROSCOE MEDICAL INC.: Dan Starks to assistant sales manager; Jenny Meske to product manager; Claudette DeLuca, April Guy, Amy Hensel, Michael Herdmann, Karryn Zarife, Lindsay Young, John Palkovits, Broderick Kelker, Jacob Tolley, Jennifer Bornemann and Brook Wilhelm to account executives; Courtney Edmonds and Mark Rodriguez to senior account executives; Chera Latiolais to regional account representative.

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ANDRYSCO & ASSOCIATES INC.: Shelley L. Plas to associate.

Roberts

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BELLINI, STEFANEK & BONFIGLIO: Jennifer Heikkila and Susan Kline to tax managers; LeAnne Holland to staff accountant; Sandra Colosi to administrative assistant.

Scott to program director, disability services.

D’AMORE TATMAN GROUP LLC: William D. Allamon to staff accountant; Frank D. Childs to senior accountant.

GREAT LAKES SCIENCE CENTER: David Munson to director, corporate and individual giving.

DELOITTE & TOUCHE LLP: Kevin Murphy to director, M&A transaction services.

NATURE CONSERVANCY: Elisa Demis to community representative, Northern Ohio.

RETIREMENT SOLUTIONS: Kristine Tornstrom to associate financial consultant.

REAL ESTATE

EDUCATION CLEVELAND STATE UNIVERSITY: Byron White to vice president, university engagement. KENT STATE UNIVERSITY: Said Sewell to dean, ungergraduate studies.

FINANCIAL SERVICE

SKODA MINOTTI: Galina Velcheva to senior manager; Christian Ibrahim and David Silverman to staff accountants. WELLS FARGO ADVISORS: Stephen Reagh to branch manager, Chagrin Falls.

LEGAL FRANTZ WARD LLP: Kelley J. Barnett, Mark J. Stockman and Jennifer L. Whitney to partners; Douglas N. Barr to of counsel; Angela Daling and Jennifer L. Isaacs to associates. OGLETREE, DEAKINS, NASH, SMOAK & STEWART P.C.: Jason Rothman to shareholder.

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ADCOM GROUP: Nick Dyko to interactive designer; James Abrams to account executive; Benjamin Murphy to assistant account executive. FATHOM: Joe Castro to director, online advertising; Joe Moran to manager, research and strategy; Joe Soltis to vice president, operations and product development; Tracie Roberts to vice president, client services. POSITIVELY CLEVELAND: Michael E. Mulhall to director of partnerships. SKODA MINOTTI STRATEGIC MARKETING: Ali Swink to marketing coordinator. WHITESPACE CREATIVE: Stacey Zur to senior account supervisor; Robbie Schneider to web programmer.

MEDICAL EQUIPMENT PARTSSOURCE: Jeff Dalton to chief operating officer.

NONPROFIT CATHOLIC CHARITIES: Marilyn

CLEVELAND METROPARKS ZOO: Christopher Lowe to manager of horticulture.

CBRE INC.: Steve Ross to senior associate.

SERVICE INFOCISION: Stefanie Bates to senior account executive. ON SEARCH PARTNERS: Jaime Singley to director.

TECHNOLOGY CENTRIC CONSULTING: Carmen Fontana and Melissa Lucarelli to project managers. OECONNECTION: Michael Manley to director, applications. TANGO HEALTH: Tom Cox to regional sales manager. TOA TECHNOLOGIES: John Opdycke to vice president, worldwide marketing.

BOARDS GENERATION FOUNDATION: William R. Seelbach and Heather B. Moore to vice presidents. GREAT LAKES SCIENCE CENTER: Paul Clark (PNC Northern Ohio) to chair; Paul J. Dolan to vice chair; Linda Abraham-Silver to president, CEO; Mark A. Filippell to secretary; Elaine Wilkins-Copeland to assistant secretary; Jack D. Myslenski to treasurer; Donald B. Paterson to assistant treasurer. NAIOP, NORTHERN OHIO CHAPTER: Scott McCready (ATC Associates Inc.) to president; Amy Whitacre to president-elect; Traci MockbeeHunt to treasurer; Jeff Wherry to secretary. SPECIAL NEEDS ALLIANCE: Janet Lowder (Hickman & Lowder Co. LPA) to president.

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

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INSIDE

UPSCALE CRAFT SHOWS TAKE HOLD IN NE OHIO.

EVENT PLANNING THE NEWEST PLACE TO BE IN CLE Just a month after opening, aquarium reports robust interest in bookings By AMY ANN STOESSEL astoessel@crain.com

JASON MILLER PHOTOS

Greater Cleveland Aquarium patrons enjoy a tour through the facility earlier this month. Event planners already are showing interest in the aquarium, which opened in January.

elly Baker and her fiancé, Jesse Hamilton, likely will have a lot of extra eyes peering out at them May 11 when they get married. That’s because the nuptials are sure to make a big splash with some of the underwater residents living in the 35 exhibit tanks at the Greater Cleveland Aquarium, where Ms. Baker and Mr. Hamilton are on tap to be married. “My fiancé has always been really into aquatics,” said Ms. Baker, who works as a teacher’s assistant at Monarch School in Cleveland. In fact, Ms. Baker was in touch about using the space for her vows when work on the 70,000-square-foot attraction was just in the beginning stages. Of course, Ms. Baker isn’t the only one eager to take advantage of Cleveland’s newest event venue. “We’ve been booking like crazy,” See PLACE Page 18

Caterers find more clients eat up local food craze Event attendees more mindful of food’s origin, so planners must adapt By KIMBERLY BONVISSUTO clbfreelancer@crain.com

uy local, eat local. It’s a mantra that has taken off in Northeast Ohio and across the country — and it’s one that planners and caterers are hearing more often as they field requests for locally sourced foods. Event consultant Stacey Rusher, who has catered such events as Topography, the annual fundraiser for the Conservancy for the Cuyahoga Valley National Park, said more people are asking who is catering an event and if they are

using locally sourced foods — something she attributes to the health and wellness movement across the country. “It’s important to people what they eat,” she said, adding that a $250 ticket to a fundraising event is a huge commitment. “People want to know, ‘What am I eating?’ They want to make sure it’s good and memorable and fresh.” Nicole Gillota, meanwhile, owner of Gypsy Beans & Baking Co. in the Gordon Square Arts District of the Detroit Shoreway Neighborhood, grew up knowing exactly from where her food came. Ms. Gillota was raised on a 100-

acre farm in southern Ohio, where her family grew or made all its food, and she said she’s seeing more people today attracted to the same values she learned during childhood. “We were avid hunters and gardeners — the whole nine yards. It was a whole lifestyle,” said Ms. Gillota, noting that consumers often are turning to homegrown businesses that use local products. “I think it’s really become a trend, but I’m hoping it becomes a society lifestyle.”

Worth the price For Chef Mary Wills of The

Good Fork in Independence, it took honing her culinary craft in Italy to help drive home the value of farmto-table techniques. “They didn’t have Costco and Sam’s Club. They really use what’s on their farms,” she said, adding that Ohioans are buying into the movement of wanting to know where their food comes from and how farms are run. She said anyone in the restaurant and catering business is learning that going local is just a way of doing business today. “People don’t like to hear horror stories of chickens and cows being treated like garbage,” Mrs. Wills said of catering clients. “They are excited about the stuff they are See LOCAL Page 18

PHOTO PROVIDED

Event consultant Stacey Rusher has used locally sourced food for events such as Topography, the annual fundraiser for the Conservancy for the Cuyahoga Valley National Park.

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

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FEBRUARY 20 - 26, 2012

EVENT PLANNING

Job fairs offer companies another recruiting tool Firms in search of talent host their own events By STAN BULLARD sbullard@crain.com

tephen McHale, CEO of Explorys Inc., took a break from playing drums on the House of Blues stage in downtown Cleveland to take a mike to sing, â&#x20AC;&#x153;Sick of You.â&#x20AC;? The crowd of nearly 500 ate it up, along with food ranging from

appetizers to burgers and tickets for two free drinks. Although the University Circle-based health care data company promoted the Feb. 1 â&#x20AC;&#x153;Rockinâ&#x20AC;&#x2122; Big Dataâ&#x20AC;? event as networking to reward employees, customers and supporters, it shared an objective of aiding its recruiting efforts. Welcome to recruiting in the information technology world,

where job and career fairs are growing as companies vie for talent with skills in high demand from programming to data mining, regardless of how high general unemployment rates rise. The mass meetings also are gaining favor among the few less technology-oriented employers with large numbers of jobs to fill or fill fast. Charlie Lougheed, Explorys president and chief technology officer, said including prospective candidates at the party was worthwhile to fight brain drain in the region as well as to woo talent for the company whose mission is to bring â&#x20AC;&#x153;big dataâ&#x20AC;? resources to health care. â&#x20AC;&#x153;One of the toughest things to do is recruit exceptional talent, whether you have 50 employees or 5,000,â&#x20AC;? Mr. Lougheed said. â&#x20AC;&#x153;We are seeking the best and the brightest to build this company and already recruit at major colleges,. We compete with Google in Pittsburgh and Ann Arbor. Both Facebook and Yahoo use similar technologies. Moreover, unemployment is virtually nonexistent in the big data field.â&#x20AC;?

Fair fight for talent In the case of Explorys, it hopes to hire as many as 50 people over the next year to double its 50employee staff. The company already sees recruiting becoming more competitive than it was three years ago when it first set up shop with three employees, Mr. Lougheed said. About one-third of the House of Blues crowd was prospective hires, and Explorys has extended offers to

EYE-CATCHING

AWE-INSPIRING

two people it met through the event. Setting the tone that Explorys is a challenging and rewarding place to work paid off unexpectedly, he added: Hits on Explorysâ&#x20AC;&#x2122; website climbed. Twitter mentions of the show abounded. Other recruiting-oriented events may lack the panache of House of Blues, but are providing more bookings for local hotels and other meeting places by companies with specialized or large head-count hiring needs. At Hyland Software, the fastexpanding software company deliberately chose its Westlake headquarters as the site for its recent career expos. While known for having a slide and other amenities popular at tech employers, the companyâ&#x20AC;&#x2122;s decision went beyond that, to shake up its traditional recruiting efforts at colleges. â&#x20AC;&#x153;With any new job, I encourage people to check out the environment they would be working in,â&#x20AC;? said Sarah Justice, Hylandâ&#x20AC;&#x2122;s team leader of employee programs and recruiting. â&#x20AC;&#x153;But the people (such as executives and team leaders) at the event are the selling feature.â&#x20AC;? Hyland developed its career expo to play on the idea of college career fairs where students meet a large number of employers, she said, and extends it to its varied job openings. Its events are held in the evenings to attract people already in the work force or with daytime commitments. However, the purpose of the session was to add a personal touch to Hylandâ&#x20AC;&#x2122;s recruiting efforts. â&#x20AC;&#x153;It gives candidates a chance to network beyond the website,â&#x20AC;? Ms. Justice said. â&#x20AC;&#x153;Sometimes people fill out an application online and they feel it goes into the abyss. The events also give prospects a chance to sell themselves beyond the standard introductory interview.â&#x20AC;? While tech specs abound in jobs, Hyland wants to look beyond that. â&#x20AC;&#x153;As a tech company, we want to find candidates with a passion for technology,â&#x20AC;? Ms. Justice said. â&#x20AC;&#x153;They may have a technology education, work in technology or work with computers on their own.â&#x20AC;? Hylandâ&#x20AC;&#x2122;s first expo last March

drew more than 500 people; it hired 30. The event worked so well that Hyland will hold another one March 24. Its hiring needs are great: The 1,500-person company had to fill 200 jobs last year and it has 150 to fill this year.

Chance to stand out Companies with lesser tech requirements but large hiring goals also take the job fair route. The northern Ohio and western Pennsylvania region of Time Warner Cable has held recruiting events both at a large call center it operates in Garfield Heights and at the Crowne Plaza in Independence. The company found job fairs allow it to fill more positions at once than waiting for applicants through its website and develop a pool of prospective hires for the future. At a Sept. 28 job fair in Garfield Heights, Time Warner was hiring customer service personnel so it wanted to give prospects a feel for the work environment, according to Travis Reynolds, Time Warnerâ&#x20AC;&#x2122;s communications manager. The event drew 329 people and helped the company fill 47 positions. Time Warner used the Independence hotel for a Feb. 8 job fair to hire people for outside sales of its cable, phone and Internet services, Mr. Reynolds said. During that fair, Time Warner interviewed candidates on the spot and filled three jobs of 27 available at the event, he said. When planning a job fair or career expo, most companies require advance registration, if only to ensure they have enough staff available to handle the number of people who may attend. â&#x20AC;&#x153;We ask for registration to know the number of attendees, then step aside,â&#x20AC;? Ms. Justice said of Hyland. â&#x20AC;&#x153;We did not want individuals to feel like they were pre-screened. We want to give them a chance to say, â&#x20AC;&#x2DC;This makes me different.â&#x20AC;&#x2122;â&#x20AC;? Others require registration to ensure applicants have the correct skills to eschew job seekers trying to win work on their personality alone. Explorys tapped a very broad job network with its party. Mr. Lougheed said that in the days since, it has gotten applications from relatives of customers or health care personnel who were there. â&#x2013;

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CRAIN’S CLEVELAND BUSINESS 17

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EVENT PLANNING

New breed of upscale craft show feeds changing tastes Unemployment surge, consumer desire for locally made products fuel shift By MICHELLE PARK mpark@crain.com

ecki Cooper felt out of place. There she stood at a traditional mom-and-pop craft show, selling custom cupcakes, and all around her were vendors selling items such as pot holders and doilies. The experience planted a seed, and Ms. Cooper began to search out others who might want to sell their wares at a different breed of show. She did not come up short. The Avant-Garde Art & Craft Show — the event she started last year with 45 vendors in June 2011 — is on track to showcase 165 vendors this July, she said. Local shows like it are growing in number and vendors, and those who’ve crafted this movement will tell you it’s no coincidence that this has emerged in recent years. The recession and high unemployment coupled with the launch of Internet marketplaces and increased demand for items not mass produced have led to a surge in upscale artisan shows in Northeast Ohio and nationwide. Shows emerging on the Cleveland scene include Avant-Garde; Cleveland Craft Coalition, which is marking its third year; and Cleveland

Handmade Markets, which began nearly four years ago. They set up shop in varied places, some at bars and coffee houses and others at art studios like the Screw Factory in Lakewood. The vendors at these newer shows aren’t selling the expected, but they also aren’t necessarily selling things that are weird or “super artsy,” said Kathy Patton, who organizes Cleveland Handmade Markets LLC. That’s different than five or 10 years ago, she said, when what existed were very artisan shows, the church basement shows and nothing much in the middle. Ms. Patton, who makes sterling silver jewelry herself under her brand name, Smashing, thinks the crop of new shows is part of a do-it-yourself movement driven by the weak economy and reality television shows that empower people to do their own crafts and interior design. “So many people have lost their jobs, I think a lot of people have said, ‘Well, you know what, I can make my own money,’” Ms. Patton said. “I know many people who finally have the time to explore what they were doing because they were laid off from work. “And I think people are upset,” she added. “A lot of jobs have gone

and disappeared to China. I think in some ways, people feel like they can grab some of that back: ‘We can make things here, (and) I can support people who are doing this.’”

Crafting a movement Applications to sell at Cleveland Handmade Markets are up significantly. The organization received nearly 200 applications for its biggest show, dubbed the “Last Minute Market,” in 2011 compared to a little more than 100 in 2010, Ms. Patton estimated. Cleveland Handmade may add a spring show by 2013. Cleveland Craft Coalition has grown, too, since its launch in 2010 and is moving from the monthly show schedule it has kept for two years to hosting half as many shows, but making them bigger, said Chris Sorensen, one of the four core organizers and a potter herself. The organization received the highest number of applications it ever has for its last show, noted Ms. Sorensen, also the owner of a newer store called Crafty Goodness in Lakewood. Cleveland Craft Coalition’s tagline is, “It’s not your grandma’s craft show.” Artisans at these local shows sell a wide variety of items, from jewelry and zombie-inspired items to handmade cards, “snarky cross

stitch” and bread dough art. Ms. Patton credits the Internet — especially Etsy, a virtual craft marketplace — for spreading awareness of local creators and for spurring a demand to see those creators’ items in the flesh. “People want to see this stuff,” she said. “It isn’t always enough to see it online.” When an online marketplace like Etsy grows to more than $460 million in revenue since its launch in 2005, the interest in high-end craft shows grows with it, agreed Victor Domine, public relations manager for the Craft & Hobby Association in Elmwood Park, N.J. Crafting is a very tactile experience, he said, and potential customers often want to feel a yarn or see the exact color of a scrapbook paper. Some call this a “craft renaissance,” Mr. Domine said. “We’ve seen this whole emergence of a new and modern crafter,” he said. “We’re looking at a much younger crafter coming in and doing things that their grandmothers would never have thought of.”

A new generation The Internet is not the only driver of this trend. People in general have grown tired of mass-produced items, Mr. Domine said. Additionally, consumers have an affection for reused and recycled

items, which artisans offer in any number of crafts, including beer bottle candles and jewelry made of old records, Ms. Sorensen said. Another motivation for buyers: “You’re just supporting your own community,” Ms. Sorensen said. Cleveland Handmade’s Ms. Patton believes the surge in craft shows can be sustained because it’s likely that buying local will become a lasting habit for those who do it. Local shows certainly resonate with local businesspeople. “Without these new higher-end art fairs, I don’t think people would be able to find me,” said Bethany Homrighaus, who creates beaded jewelry from her Beethings Studio in Mentor-on-the-Lake. “Without those opportunities, it feels like you’re working in a vacuum.” Though sites like Etsy are great, Ms. Homrighaus said they’re saturated to the point where someone searching for beaded jewelry like hers probably would find millions of things to peruse. Ms. Homrighaus sold her jewelry at probably 60 shows in Northeast Ohio during 2011, including the newer, more upscale shows. “It’s wonderful because you’re attracting a very specific kind of customer,” she said. “They’re not coming to buy $500 paintings but they’re also not coming to buy $3 doilies.” ■

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18 CRAIN’S CLEVELAND BUSINESS

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FEBRUARY 20 - 26, 2012

EVENT PLANNING

Local: Higher prices gradually accepted Place: Space offers continued from PAGE 15

eating being raised humanely.” Chef Ben Bebenroth, founder of Spice of Life Catering Co., said when he first started out he spent 60% of his time convincing people in sales meetings that locally sourced foods were worth the extra 10% to 15% price tag. Today, his 16-person company finds couples willing to move their wedding dates to fit into his booking schedule, and he just opened a restaurant, Spice Kitchen + Bar, on Detroit Avenue in Cleveland. “You don’t see many farmers driving around in a Mercedes,” he said, adding that he doesn’t haggle with farmers over price because he knows the variables that go into it, including hard work, crop failure and fickle weather patterns. “The price they ask is the price they need to keep doing what they do.” Ms. Gillota’s bistro and bakery uses sugar from Michigan, eggs from a farm in eastern Ohio, meats from the West Side Market and chicken from a local farm. While she experienced grumblings in the past over higher prices for local

ingredients, she said there has been a gradual acceptance in the past few years as local sourcing has gone more mainstream. Event consultant Mrs. Rusher said she only uses local caterers for her events and asks them to use local products as much as possible. The higher cost of local products sometimes requires a balancing act to meet the desires and budgets of clients. “If I can only go local with cheese or beer or wine, I’ll take it wherever we can get it,” she said.

Plans A, B and C Mr. Bebenroth, whose Spice of Life Catering Co. sources 95% of its ingredients from small family farms within a 100-mile radius of Cleveland, said catering with locally sourced food means establishing relationships with regional farmers. He may draw asparagus from three different farms and cheese from five different vendors just for one event. “If you don’t have that network of relationships set up, you can’t do this from an event-to-event

basis,” he said, adding that he’ll have a Plan A, B and C just for his lettuce supply for one event. “It’s a lot more legwork.” He said anyone looking for a caterer using locally sourced foods should ask the radius from which they pull their food; whether those farms or providers practice sustainable means of agriculture; and what their waste procedures are — do they recycle, compost or re-use vessels? Lanny Chin, chef at the Market Café & Wine Bar in Cleveland, said buying a chicken sandwich from a fast food establishment may be cheaper, but it might mean paying for a chicken that was forced to grow bigger and faster than Mother Nature intended, was force fed, mistreated, slaughtered months ago, frozen, shipped and held. “Who knows what you’re getting,” he said, adding that a chicken sandwich from a locally sourced restaurant or caterer means bread from a local baker, cheese from Great Lakes Cheese Inc. and lettuce, tomatoes and onions grown in Ohio. “People can taste and see the quality.” ■

many unique features continued from PAGE 15

said Kayla Ott, marketing and sponsorship manager for the aquarium, who said she’s fielded inquiries regarding other weddings, rehearsal dinners, fundraisers and corporate events. She’s even had interest from at least one out-ofstate organization. As of Feb. 14, six events already had taken place in the space since its Jan. 21 opening, and there are another 20 already booked.

Details, details Events at the aquarium are coordinated in connection with Windows on the River, which — like the aquarium — is located in the FirstEnergy Powerhouse at the Nautica Entertainment Complex. “It’s a really great partnership to work with them,” Ms. Ott said. An event planner, for example, might choose to have a sit-down dinner at Windows, with other parts of the event, like a cocktail hour and hors d’oeuvres, taking place throughout the aquarium.

photos for guests. There are a few limitations: While music can be played through the facility’s system, disc jockeys and dance floors are not permitted. “We offer a unique space and experience,” Ms. Ott said. “We cater to everybody.” The biggest event to date at the aquarium was its grand opening gala, which hosted 1,200 visitors and raised funds for the Ronald McDonald House and the Aquarium Education Fund “The space itself has so much history … it almost absorbs you,” said Mary Horoszko, director of development for the Ronald McDonald House of Cleveland. The Young Professionals Group of the Ronald McDonald House also is slated to host a happy hour later this month at the aquarium. Ms. Horoszko said the space was utilized during the gala in a variety of ways. For example, the lobby was used for VIP registration, coat check and a sponsor thank-you circle, with more than 350 people

“It’s just really a cool, cool venue to have an event.” – Kayla Ott, marketing and sponsorship manager Greater Cleveland Aquarium The aquarium’s narrow hallways make it most ideal for a standing event that allows people to flow and move. The full facility can be reserved as early as 6 p.m., and it can accommodate 600 people. “It’s just really a cool, cool venue to have an event,” Ms. Ott said. “It has entertainment along with space.” The touch tank area — which allows visitors to lean in and touch marine life including stingrays, baby sharks and starfish — is an especially good setting for tables, food and drinks. It costs $2,000 to rent the aquarium, plus an additional $12 per person, which includes two security guards and two guest associates. An additional $20 an hour also is required to cover the expense of an aquarist, who is required to be present during all events. Other add-ons available include additional guest service associates ($30/hour); a diver in the touch pool ($100/hour); captain characters ($100/hour); and green screen

welcomed in that area. “It really lends to almost anything you would want to do,” she said of the venue. “It’s very event-friendly.”

Here comes the bride As for Ms. Baker and Mr. Hamilton, the couple is still working out the details of what roughly 80 guests will experience on their big day. The aquarium’s Ms. Ott said the shark tank could serve as a backdrop to the ceremony, while the 500,000-gallon, 149-foot-long sea tube could serve as a pseudounderwater aisle down which the bride could walk. “We’re ready to try things,” Ms. Ott said. “We’re finding a lot of things work.” The bride-to-be — who already has had engagement photos taken at the aquarium and has designed save-the-date cards featuring, you guessed it, fish — is excited about the uniqueness of her venue. “I just love the artistic value of it,” she said. ■

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FEBRUARY 20 - 26, 2012

WWW.CRAINSCLEVELAND.COM

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

OHIO VENTURE CAPITAL & BUYOUT FIRMS LISTED ALPHABETICALLY

Name Address Phone/Website Allos Ventures 250 E. Fifth St., Suite 1100, Cincinnati 45202 (513) 456-1001/www.allosventures.com

Minimum Preferred project investment investment (thousands) (thousands)

Capital under management (millions)

5,000-10,000

MCM Capital Partners 25201 Chagrin Blvd., Suite 360, Beachwood 44122 (216) 514-1840/www.mcmcapital.com

$3,000

5,000

$100.0

Morgenthaler 50 Public Square, Suite 2700, Cleveland 44113 (216) 416-7500/www.morgenthaler.com

$500

5,000-15,000

$2,800.0

$1,000

3,000-10,000

$31.0

$500

1,000

Peppertree Capital Management Inc. 86 West St., Chagrin Falls 44022 (440) 528-0333/www.peppertreecapital.com

$2,000

10,000

$150.0

Plymouth Venture Partners 300 Madison Ave., Suite 1525, Toledo 43604 (419) 205-9000/www.plymouthvc.com

$1,000

2,000

$41.0

PNC Erieview Capital(2) 1900 E. Ninth St., 17th floor, Cleveland 44114 (216) 222-2491/www.pncerieview.com

$3,000

5,000-35,000

$1,000.0

Primus Capital Funds 5900 Landerbrook Drive, Suite 200, Cleveland 44124 (440) 684-7300/www.primuscapital.com

$15,000

15,000-40,000

$724.0

Redline Capital, Midwest Capital 20600 Chagrin Blvd., Suite 495, Cleveland 44122 (216) 991-1201/www.redlinecapital.com

$500

1,000

Reservoir Venture Partners 400 W. Wilson Bridge Road, Suite 130, Columbus 43085 (614) 846-7241/www.reservoirvp.com

$500

1,000

$60.0

Resilience Capital Partners 25101 Chagrin Blvd., Suite 350, Cleveland 44122 (216) 292-0200/www.resiliencecapital.com

$5,000

15,000

$275.0

The Riverside Co. 50 Public Square, 29th floor, Cleveland 44113 (216) 344-1040/www.riversidecompany.com

$1,000

1,000-75,000

$3,200.0

RiverVest Venture Partners 11000 Cedar Ave., Suite 100, Cleveland 44106 (216) 658-3982/www.rivervest.com

$500

500-6,000

$195.8

$100

500

$98.0

Rocket Ventures LLC 2600 Dorr St., Toledo 43606 (419) 530-6083/www.rocketventures.org

$2,000

4,000-10,000

$100.0

$53.0

RockWood Equity Partners LLC 3201 Enterprise Pkwy., Suite 370, Beachwood 44122 (216) 342-1790/www.rockwoodequity.com

$1,000

5,000-20,000

$22.0

Arboretum Ventures 11000 Cedar Ave., Cleveland 44106 (216) 658-3989/www.arboretumvc.com

Athenian Venture Partners 20 E. Circle Drive, Suite 229 #37146, Athens 45701-3751 (614) 360-1155/www.athenianvp.com

$500

1,000-4,000

$15.0

Mutual Capital Partners Funds 5805 Bridge Ave., Cleveland 44102 (216) 928-1908/www.mutualcapitalpartners.com

Blue Chip Venture Co. 250 E. Fifth St., Cincinnati 45202 (513) 723-2300/www.bcvc.com

$1,000

2,000-5,000

$600.0

Blue Point Capital Partners 127 Public Square, Suite 5100, Cleveland 44114 (216) 535-4700/www.bluepointcapital.com

MWV Pinnacle Capital Fund LP P.O. Box 241065, Cleveland 44124 (216) 502-4740

$10,000

Brantley Partners 3550 Lander Road, Suite 300, Pepper Pike 44124 (216) 464-8400/www.brantleypartners.com

$5,000

Bridge Investment Fund LP 11000 Cedar Ave., Suite 100, Cleveland 44106 (216) 658-5470/www.bridgefundllc.com CapitalWorks LLC 3000 Auburn Drive, Suite 430, Beachwood 44122 (216) 781-3233/www.capitalworks.net Charter Life Sciences 2120 E. Galbraith Road, Building A, Suite 161, Cincinnati 45237 (513) 558-6397/www.clsvc.com Chrysalis Ventures 737 Bolivar Road, Suite 1500, Cleveland 44115 (216) 453-1299/www.chrysalisventures.com

$250

$3,000

$500

$2,000

CID Capital 400 West Wilson Bridge Road, Suite 130, Columbus 43085 (614) 429-4236/www.cidcap.com

$500

CoreNetwork 300 Madison Ave., Suite 1525, Toledo 43604 (419) 697-9696/www.core-network.org

$100

Cyprium Investment Partners LLC(1) 200 Public Square, Suite 2020, Cleveland 44114 (216) 453-4500/www.cyprium.com

$10,000

Draper Triangle Ventures 737 Bolivar Road, Suite 1500, Cleveland 44115 (216) 363-5300/www.drapertriangle.com

$500

Early Stage Partners LP 1801 E. Ninth St., Cleveland 44114 (216) 781-4600/www.esplp.com

$500

Edgewater Capital Partners 28601 Chagrin Blvd., Suite 205, Cleveland 44122 (216) 292-3838/www.edgewatercapital.com

$1,000

20,000

10,000-20,000

250-1,000

4,000-8,000

2,000-3,000

2,000-5,000

2,000-10,000

250

15,000-60,000

2,000

1,000

4,000

Capital under management (millions)

$2,000

1,000-5,000

Austin Capital Partners LP 1422 Euclid Ave., Suite 500, Cleveland 44115 (216) 574-2284/www.austincapitalpartners.com

Minimum Preferred project investment investment (thousands) (thousands)

Max-Ventures LLC 4400 Renaissance Parkway, Suite 4, Cleveland 44128-5794 (216) 765-2505/www.max-ventures.com

$1,000

Name Address Phone/Website

$816.0

$150.0

$8.0

$100.0

$110.0

$375.0

$250.0

$1,125.0

$125.0

$1,500

2,000-8,000

$60.0

Signet Enterprises LLC 75 E. Market St., Akron 44308 (330) 762-9102/www.signet-enterprises.com

$500

2,000-6,000

$130.9

South Franklin Street Partners 10 1/2 E. Washington St., Chagrin Falls 44022 (440) 264-8040/www.sfspartners.com

$2,000

2,000-10,000

$60.0

Gates Group Capital Partners 6120 Parkland Blvd., Suite 202, Mayfield Heights 44124 (440) 684-9900/www.gatesgroupcp.com

$1,000

5,000-25,000

$60.0

Sunbridge Partners 3659 Green Road, Suite 118, Beachwood 44122 (216) 360-0151/www.sbpvc.com

$1,000

2,500

$100.0

Glengary LLC 3201 Enterprise Parkway, Suite 430, Beachwood 44122 (216) 378-9200/www.glengaryllc.com

$100

500

Triathlon Medical Ventures 300 E-Business Way, Suite 200, Cincinnati 45241 (513) 723-2600/www.tmvp.com

$250

3,000-5,000

$105.0

Kirtland Capital Partners 3201 Enterprise Pkwy., Suite 200, Beachwood 44122 (216) 593-0100/www.kirtlandcapital.com

$10,000

10,000-30,000

$145.0

Zapis Capital Group LLC 26202 Detroit Road, Suite 300, Westlake 44145 (440) 871-1300/www.zapiscapital.com

$50

100-500

Linsalata Capital Partners 5900 Landerbrook Drive, Suite 280, Mayfield Heights 44124 (440) 684-1400/www.linsalatacapital.com

$10,000

20,000-35,000

$882.0

$500

1,000-10,000

Evolution Capital Partners LLC 29325 Chagrin Blvd., Suite 302, Pepper Pike 44122 (216) 593-0402/www.evolutioncp.com Fletcher Spaght Ventures 180 E. Broad St., Suite 810, Columbus 43215 (614) 429-4236/www.fletcherspaght.com

Main Market Partners LLC 39 E. Market St.., Suite 401, Akron 44308 (216) 409-8983/www.mainmarketpartners.com

Source: Information is supplied by the companies unless footnoted. Capital under management as of Dec. 31, 2011. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Formerly Key Principal Partners Corp. (2) Previously National City Equity Partners.

RESEARCHED BY Deborah W. Hillyer

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CRAIN’S CLEVELAND BUSINESS

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Gains: Counties push tax increases to cover state cuts continued from PAGE 1

Most counties in Northeast Ohio budgeted for 2011 with the expectation of sales tax receipts increasing in the range of 2% to 3%. But retail sales have been rising at a faster rate, which translates into higher tax receipts for counties. The increases in sales tax receipts for the first 11 months of 2011 ranged from 3.4% in Portage County to 7.1% in Medina County, according to figures from the Ohio Department of Taxation. A key part of the increase in sales taxes across the state is a rise in auto sales, which have accelerated faster than other taxed retail sales. The state Office of Budget and Management reports that non-auto sales tax receipts rose 1.3% for the first six months of fiscal 2012, which ends next June 30, compared with those same receipts in the first half of fiscal 2011. Auto sales taxes in those comparable periods, though, climbed 7.3%.

In Cuyahoga County, the fiscal office budgeted for an increase in sales tax receipts of 2% to 3%, said Wade Steen, the county’s fiscal officer. For the first 11 months of 2011, sales taxes collected by the state and forwarded to Cuyahoga County increased about 6.7%. Sales taxes collected by the state take two months to reach the counties. As a result, revenue collected in November and December of last year will show up in county bank accounts in January and February of the new budget year. “If we can hold this trend through six months, I’m golden, because I know I can make my (2012 budget estimate) number,” Mr. Steen said. “If we hold this trend through six months and it continues, then I can report to the (county) executive and council, ‘Hey, this is going to be another good year.’” Cuyahoga County has the highest county sales tax, 1.25%, which

includes a one-quarter percentage point tax for the new convention center and medical mart in downtown Cleveland. State law permits counties to add a local sales tax of up to 1.5% onto the state’s 5.5% sales tax, either by a vote of county commissioners or by a ballot issue. All counties in Northeast Ohio add at least one-half percentage point to the state tax. Transit systems also can add a local component to the sales tax.

Balancing act Despite an increase in sales tax receipts of about 6% in 2011 over 2010, Lake County commissioners voted last month to double the county sales tax to 1.0% from 0.5%. Laketran, the county’s transit system, has its own 0.25% sales tax. As a result, the sales tax in Lake County will rise to 6.75% overall, compared with 7.75% in Cuyahoga County. The increase will take

effect April 1. To soften the blow to residents, the county has lowered a portion of its property tax rates. County commissioners estimated the sales tax increase will net the county at least $8 million after the property tax decrease offset. County Auditor Ed Zupancic said the increase will help stabilize county finances. He said without a rate increase, the rise in sales tax receipts would be offset by cuts in state funds to local governments. “The state did not do local government any favors in my opinion,” Mr. Zupancic said. “They balanced their budget but they unbalanced our budget.” Brad Cole, managing director of research for the Columbus-based County Commissioners Association of Ohio, said state cuts in funds to local governments in the fiscal 2012-2013 budget that went into effect last July 1 have taken their toll

on county governments. Mr. Cole said the Kasich administration cut the amount of Local Government Fund money that goes to cities and counties and retained for itself a utility tax, a personal property tax and some commercial activity tax revenues originally destined for counties. In addition, he said, investment income that counties traditionally relied on has declined significantly. A sales tax increase is attractive, he said, because its effect is felt more quickly than some other tax increases that could be put in place. Lorain County also sought a sales tax increase, but the ballot issue failed last November. County commissioners there had hoped to replace a temporary sales tax approved to pay jail expenses that expired in April 2010 with a fiveyear, 0.25% tax, said Lisa Hobart, the county’s county budget director. ■

Pinterest: Small, large companies use site State: Sale of current continued from PAGE 1

creating a group of photos that showcase beautiful sunsets. Someone else might post pictures of cats making funny faces. Other people, though, post images of things they like: clothes, jewelry, home accessories, cars, even food. People who have similar interests see those pictures, which contain links back to the websites from which they came. Sherwin-Williams aims to use Pinterest to get in front of people looking to decorate or take on some other project involving paint. Next month, the company’s paint stores division plans to create several picture boards, or “pinboards,” of its own. Its diversified brands division — which includes Dutch Boy and Pratt & Lambertt paints as well as Krylon spray paint — is working on a Pinterest strategy, too. The company’s paint stores division could create one pinboard that shows off interior rooms colored with Sherwin-Williams paint and another that focuses on exteriors, Ms. Jordan said. One board could highlight colors that work well in kids’ rooms, she added. Using the site herself for the past month or so, Ms. Jordan has had a few of her posts “repinned” by other people and is getting a sense of why the site is becoming popular. “It’s incredibly fun,” she said.

An inspirational spark On Pinterest, there are pictures of Moen faucets, Cedar Point roller coasters and Smucker’s jelly, sometimes as part of recipes on the site. The people who post such pictures often have no relationship with the companies. You can find products from smaller businesses on Pinterest, too. About a month ago, Shannon Okey placed Pinterest’s “Pin It” button on the website for her independent publishing company, Cooperative Press of Lakewood. The button allows visitors quickly to pin images of Cooperative Press’ books, which revolve around knit-

ting. Those pins include links back to CooperativePress.com, where they can buy the books. Ms. Okey has seen firsthand that people other than the authors are using the Pin It button. “I’ve seen (pictures of Cooperative Press books) popping up in my own feed on Pinterest,” she said. Wedding planner Valarie Kirkbride Falvey of Mentor plans to create themed pinboards designed to drive traffic to her blog. For now, though, Ms. Falvey, the owner of Kirkbrides LLC, uses the site to store online photos that give her ideas and to hunt for new photos. For instance, she used Pinterest to find a picture of a country-style bouquet that she thought would go well with a wedding she’s planning. She showed the picture to a florist earlier this month with the goal of finding something similar. “It definitely helps spark inspiration,” she said. Ms. Falvey’s target audience appears to be using the social media site: 80% of Pinterest users are women, and 75% are between the ages of 25 and 54, according to information from Google’s DoubleClick Ad Planner.

Soft sell The site is growing at an explosive rate. Pinterest had 11.7 million unique monthly users in January, according to data that comScore provided to the online news site TechCrunch. Pinterest had just 418,000 unique monthly users last May and passed the 10 million mark faster than any other U.S. website in history, TechCrunch reported this month. Even so, Pinterest still is relatively small compared to, say, Facebook, which is visited by hundreds of millions of people each month. Todd Mesek late last year told some of his colleagues in the marketing department at the Rock and Roll Hall of Fame and Museum to check out Pinterest after he saw a few photos from the site popping up in his news feed on Facebook.

Mr. Mesek, vice president of marketing for the Rock Hall, figured Pinterest would have staying power after some of those same colleagues then became big fans of the site. One reason Mr. Mesek likes Pinterest is that it allows the Rock Hall to connect with people based on their interests. For instance, the Rock Hall’s profile includes a pinboard of photos highlighting its education programs, which could appeal to teachers who might want to visit the Rock Hall with their students. The Rock Hall also has a pinboard that shows off a few items people can buy from its gift shop. The nonprofit tries not to sell itself too hard, though, which Mr. Mesek equated to walking up to someone at a party and immediately handing them a business card. “People who try to do that will fail,” he said.

Don’t forget the fellas Even with an audience that is largely female, the site shouldn’t be ignored by companies that target males, said Melissa Carney, a public relations account supervisor with the Cleveland office of Columbus-based Fahlgren Mortine. For one, she said, women often make purchasing decisions for the men in their lives. Companies that provide a product or service with visual appeal can get a lot out of Pinterest, Ms. Carney said, noting that she is helping the Hocking Hills Tourism Association of Logan, Ohio, use Pinterest to attract visitors to the picturesque region. Even companies that don’t sell something visually attractive can find ways to pin appealing, relevant pictures, Ms. Carney said. For instance, a manufacturer that makes metal parts could post pictures of cool products that contain them — assuming the company wants to reach Pinterest’s audience, she said. “Everything can be beautiful,” she said. ■

Volume 33, Number 8 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage

property could be tough continued from PAGE 3

Valley.” State Industrial considered downtown office locations, he said, but ruled them out because they require paid parking in public lots. Instead, he said, the company sought a more secure location with free adjacent parking for employees who work late. The company’s staff learned of the move last Thursday afternoon, Feb. 16, Mr. Uhrman said in a phone interview a short time later. “Some were shocked,” Mr. Uhrman said of his employees’ reactions. “A few who live in Avon in the next county (Lorain) were shell-shocked. Most seem happy to move.” State Industrial will occupy most of the empty space in Landerbrook Place, but the building will retain the handful of outside tenants already in the three-story, 80,000square-foot structure. Mr. Uhrman said he will do “what it takes” to update the 20-year-old building to contemporary standards and is in the midst of selecting an architect for the job.

The price is right An investor group that built Landerbrook Place and now is led by real estate developer Mark Munsell deeded the building last fall to JE Robert Co., a McLean, Va.-based operator and sometimes investor in lender-owned properties, after a $9 million loan expired. Mr. Munsell said his investor group couldn’t reach an agreement with the lender, a collateralized mortgage loan serviced by JP Morgan Chase, to lower the principal amount of the loan. Mr. Munsell had argued to the lender that the property needed substantial investment to outfit offices for multiple new tenants. The result was the Internet auction Feb. 8 and 9 in which the bidding began at $1 million. Mr. Munsell said in an email he had bid to buy back the property, but bowed out when he felt the price got too high.

He refused to disclose his last bid price. The $4.15 million that State Industrial submitted as a final bid for the structure looks like a swell deal. The price is less than half the $9 million market value Cuyahoga County assigned the property for tax purposes. However, a spate of deeply discounted selling prices for office buildings this past year puts the bid price for Landerbrook Place on a square-foot basis in the range of other recent sales, said Alec Pacella, a vice president at the NAI Daus brokerage, “Yes, it was (inexpensive) a few years ago,” Mr. Pacella said of the bid price of about $50 a square-foot. “That is not inexpensive today.”

In this state and beyond Although commercial real estate loans are easier to secure to purchase premium buildings with strong tenant rosters than they were a few years ago, financing is harder to come by to buy distressed properties. That situation threw open the door for a well-heeled user-buyer such as State Industrial to win the property at auction. State Industrial now must sell its Hamilton Avenue office complex and an adjacent warehouse, the latter of which has sat empty since the company moved its warehouse operations to Hebron, Ohio, in 2009. Mr. Uhrman said he does not expect the property to sell quickly because he believes there are a lot of “for sale” signs in the area. Still, the economic downturn of a few years back has worked in favor of State Industrial, which has acquired a dozen companies over the last four years. Its annual sales now are more than $100 million, Mr. Uhrman said, and it operates in 17 states. Companies are available in State Industrial’s product lines because many have older owners or lack credit, Mr. Uhrman said. “A lot of people live on the edge,” he said. “We never did.” ■

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CRAIN’S CLEVELAND BUSINESS

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FEBRUARY 20 - 26, 2012

REAL ESTATE

Toni Coleman (216) 522-1383 (216) 694-4264 tcoleman@crain.com

AUCTIONS

REAL ESTATE SERVICES

REAL ESTATE AUCTION / MARCH 29

4 MOBILE HOME PARKS IN NE OHIO Trumbull County Court of Common Pleas Orders the Immediate Sale Pursuant to Case No. 2010CV03145

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FEBRUARY 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS

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THEINSIDER

THEWEEK FEBRUARY 13 - 19 The big story: Ohio gamblers’ first chance to play at a casino in their home state will be in Cleveland. Horseshoe Casino Cleveland, being developed along with another casino in Cincinnati by a joint venture of Caesars Entertainment Corp. and Dan Gilbert-owned Rock Gaming, will be the first of four Ohio casinos to open. Its opening is set for the week of May 14. Casinos in Cleveland and Toledo, the latter being developed by Penn National Gaming, were the frontrunners to open first. Wish list: Ohio’s 37 public colleges and universities agreed on a single, $350 million list of construction projects they hope Gov. John Kasich will include in the two-year capital budget he’ll pitch to lawmakers this spring. Some of the largest requests by Northeast Ohio’s public institutions under consideration by the governor’s office include $16 million in repairs for various academic buildings and labs at Kent State University’s main campus in Kent; $16 million to renovate the University of Akron’s Zook Hall; and $12.7 million to upgrade laboratories at Cleveland State University to support its partnership with Parker Hannifin Corp.

Adding to Adcom: Landau Public Relations merged into The Adcom Group in the latest development in a rapidly shifting landscape for Cleveland PR firms. Landau becomes the fourth operating division of The Adcom Group, which comprises Adcom, a strategic marketing communications company; Optiem, an online marketing and digital media company; and Uppercut Motion + Sound, a video content and broadcast production company. Terms weren’t disclosed. Landau has a staff of 17, while The Adcom Group has more than 120 employees between its three existing divisions.

In with the new: Robert C. Helmer, president

Helmer

of Lourdes University in Sylvania, Ohio, was named the ninth president of BaldwinWallace College in Berea. The appointment is effective July 1. He will succeed Richard W. Durst, B-W’s president since 2006, who retires June 30. B-W also announced it’s changing its name and will be known as Baldwin Wallace University

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Guess they’re still getting the bugs out ■ If you’ve flown United or Continental recently, perhaps you can relate. On Feb. 4, on the way back from a trip to Mexico, my wife and I missed our connecting flight in Washington, D.C., because of the United-Continental merger. You see, in Cancun, the United agent who checked us in to our first flight could not print our boarding pass for the second one, which was operated by Continental. I didn’t seem like a big deal — until our flight landed late. So when we arrived at Dulles International in Washington, we moved through customs, grabbed our bags off the conveyor belt and took off running to find a Continental agent to check us in again. Well, it turned out that only United agents were working. They tried to check us in but couldn’t quite figure out that darn Continental information technology system. Another couple from our first flight approached the counter with the same problem — they were about to miss a flight to Syracuse, N.Y. The husband was screaming. By the time the United agents figured things out, both of our planes were long gone. We then headed to our hotel room, paid for by the airline, and a few minutes later ate a meal, paid for (well, not the alcohol) by the airline. We wrote a complaint on Continental .com and made plans to write one on United .com after we flew home the next day. Much to my delight, when we got home, waiting for me was the latest Bloomberg Businessweek — with a suggestive image of a Continental plane mounting a United

This and that: The Cleveland Clinic formed its first national affiliation in adult medical oncology. The Clinic’s Taussig Cancer Institute is entering the affiliation with Cadence Health in Winfield, Ill., outside Chicago. Both systems expect the affiliation to be implemented in full by late 2012. … David Tholt, a vice president and senior portfolio manager with Huntington National Bank, will spend a year away from the bank to serve as a loaned executive with Team NEO, the nonprofit economic development organization. … Cedar Fair Entertainment Co. said its board of directors retained Spencer Stuart, one of the world’s largest executive search consulting firms, to assist the Sandusky-based amusement park operator in reviewing the composition of its board in advance of the company’s 2012 annual meeting of unitholders.

How they keep the ‘expert’ in Davey Tree Expert Co. ■ They are examining trunks for telltale signs of destructive pests. Identifying trees. Learning how to spot various diseases of the leaf and root. This is what month-long training looks like for employees of The Davey Tree Expert Co. But because the training is taking place in Kent, those holes in local tree trunks weren’t really left by the Asian Longhorned Beetle. They’re little dabs of paint meant to simulate the holes the beetles chew into the wood. At a time when many companies have trimmed their training efforts, Davey Tree has kept cultivating its 109-year-old program, called The Davey Institute of Tree Sciences,

DREW SHIPLEY/DAVEY TREE

Scott Richens, a Davey Institute of Tree Sciences student from Jacksonville, Fla., is one of 49 students who traveled from around North America to attend the month-long training program. said R.J. Laverne, manager of education and training. The cost of the training isn’t cheap: The Kent-based company not only is paying the transportation and lodging costs of the 49 employees who have traveled to Kent to take part in the program, but also is paying their wages. Probably the biggest cost, though, is the cost of lost production, Mr. Laverne said. “We see these people as the future of our company, and so rather than cut back on education and training … we’re ramping (it) up,” he said. “We see this as an opportunity to separate ourselves further from the competition.” New this year are courses on preserving trees during development. The participating employees were selected based on nominations and following a fairly rigorous process. Training concludes this Friday, Feb. 24. — Michelle Park

WHAT’S NEW

BEST OF THE BLOGS

THE COMPANY: Ruger Industries, Streetsboro THE PRODUCT: Foldable stainless steel floor cranes

Excerpts from recent blog entries on CrainsCleveland.com.

Raise a glass to the craft brewing elite

When it comes to dividends, companies gladly take a hike

■ Craft brewers including Great Lakes Brewing Co. have generated quite a head of steam, according to a Huffington Post story based on data from Beer Marketer’s Insights. “In 2011, all top 25 U.S. craft breweries experienced increases in revenues,” the story noted. “Craft breweries recorded 15% growth in volume of barrels shipped, compared to a 1.5% decrease in the beer industry overall.” There are about 1,900 craft breweries in operation nationwide, with another 900 in the planning stages, “making great beer a more accessible treat for the 95 million beer lovers in the U.S.,” the Huffington Post said. Its slideshow of the top 20 U.S. craft brewers put Great Lakes at No. 20, with 120,000 barrels sold in 2011, a 31.9% increase from 2010.

starting July 1.

Attending to space needs: NASA Glenn Research Center plans to delay construction of several new buildings on its main campus and instead will focus on upgrading utilities. That compromise is one of many that NASA Glenn is planning to make to deal with a budget that hasn’t grown as fast as originally expected. The research center would receive $658 million for fiscal 2013, which starts Oct. 1, if Congress approves President Barack Obama’s proposed budget for the federal agency. That figure would represent an $18 million increase over fiscal 2012.

plane on the cover. The story described the huge number of issues they face in merging the two airlines, but the “biggest headache” is merging the flight information systems. The story quotes United CEO Jeff Smisek: “If I’ve got a United ticket and I go to what I believe to be a United agent and it happens to be a Continental agent, the poor Continental agent can’t even see me on the computer.” It’s good to know that the airline is paying attention and plans to merge its IT systems during first week of March. But what really makes me feel better? A) The idea that lots of people are getting the runaround and probably missing their own flights, and B) the chance that maybe — just maybe — the system that processes complaints will screw up, too, and we’ll get free flight vouchers from both Continental and United. Poetic justice! — Chuck Soder

The cranes made by Ruger, a division of The David Round Co., retract into a compact size when not in use, to save space in storage. The company will demonstrate the new hydraulic cranes at the Interphex 2012 pharmaceutical manufacturing trade show, held in New York City in May. Floor cranes “provide an ergonomic solution to many material handling challenges,” Ruger says. They are “smaller, less expensive and safer alternatives to motorized lift trucks.” Floor cranes also can be maneuvered in areas off-limits to other lifting equipment, according to the company. The cranes have no painted surfaces, as paint (even FDA-approved epoxies) is not tolerated on equipment in many clean rooms, Ruger says. In addition to pharmaceutical manufacturing environments, stainless portable cranes are employed in electronics manufacturing, food processing and other clean room uses. Ruger’s foldable cranes are available with lifting capacities of 1,000 pounds. They are built with structural tubing that’s one-quarter to one-half inch thick, large casters and totally welded fabrication, the company says. For information, visit www.RugerIndustries .com. Send information about new products to managing editor Scott Suttell at ssuttell@ crain.com.

■ Dividend increases are hot, and several Northeast Ohio companies are taking part in the trend. The Wall Street Journal reported that “more than two dozen companies have raised their dividend so far in February, according to S&P Indices, putting extra cash in investors’ pockets before the yearly gatherings of public companies and their shareholders this spring.” In just the first six weeks of this year, there have been 58 dividend increases or initiations, according to S&P. The Journal said that confirms “an annual trend whereby increases are announced during the start of the year. In 2010 and 2011, about one-fourth of the total raises fell before March.” Diebold Inc. of Canton is one of the companies that announced a dividend increase this month, The Journal said. Unnamed in the Journal story, though, was Timken Co., which on Feb. 10 said it was increasing its dividend by 15% to 23 cents per share. (And in a somewhat different category, Shiloh Industries Inc. of Valley City on Feb. 2 declared a special dividend of 50 cents per share.) In January, Applied Industrial Technologies Inc., Eaton Corp. and Parker Hannifin Corp. all announced dividend increases. Why all the dividend activity? Companies “have unprecedented amounts of cash, and those that raised investor payouts benefited from the additional luster of increasing yields during a period of nearly unprecedented market volatility,” Paul Atkinson, director of North American equities for Aberdeen Asset Management, told the newspaper.

Everything old is new again in Cleveland ■ A group called Reclaimed Cleveland received some nice attention from design blog Core77. Reclaimed Cleveland, formed in 2010, works to salvage lumber from local structures and to give it a new life as home furnishings and accessories. “The Reclaimed Cleveland website features the furniture (tables, seating, beds, storage pieces) and accessories (mirrors, chopping blocks, candleholders, and more) they’re able to turn this heirloom wood into,” according to the Core77 post. “They also show the custom commercial and residential interiors they’ve incorporated the wood into.” The post has many amazing pictures of Reclaimed Cleveland’s restoration work. At the end, a commenter also directs readers to check out the work of a similar organization, A Piece of Cleveland.

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