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Manufacturing workers back in the game Local firms shore up production staffs as order levels escalate, confidence builds By DAN SHINGLER dshingler@crain.com

LAUREN RAFFERTY ILLUSTRATION

Budget observers give tepid nods of approval

12

The early reaction in the business, civic and nonprofit communities to the broad outlines of Gov. John Kasich’s 2012-2013 state budget has been generally complimentary, with some observers joining the governor and calling the budget “transformational.” But the comments turn cautious and questioning when the conversation focuses on specific elements that hit close to home. With the exception of the Ohio Chamber of Commerce, none of the budget watchers reached by Crain’s Cleveland Business

INSIDE: Gov. John Kasich, nursing home operators at odds over plans to slash industry funding. Page 3 are yet ready to join fully with the governor in his plan to create jobs and force state and local governments to operate effectively on less money. Local communities have been sharply critical of cuts in the local government funds that have accounted, in some cases, for 10% of local budgets. And some groups, such as hospitals and nursing home operators, are clearly unhappy with the governor’s plans for cutting Medicaid.

See JOBS Page 9

Strategic buyers satiate appetites for acquisitions

INSIDE

Business, government leaders wary of details By JAY MILLER jmiller@crain.com

It’s on! After a nearly three-year lull, Northeast Ohio manufacturers are hiring in earnest, say both the companies and observers who watch the sector and its effect on the local economy. Local help wanted ads in The Plain Dealer and on Craigslist back those observations with the hard evidence of postings for jobs ranging from computer numerical control (CNC) machinists to floor sweepers. “This is genuinely good news — let’s all hold hands and break into a group smile,” said Ned Hill, an

economist and dean of Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. His droll humor aside, Dr. Hill indicated manufacturers appear poised to spur real job creation because they’re seeing sustained order levels. “They weren’t going to hire anybody until they were assured of at least six months worth of work on their books,” Dr. Hill said. “The pain of laying off (employees) and the legal challenges of laying off were too great.” That’s no longer the case. The employment section of The Plain Dealer’s classified ads March

JANET CENTURY

Fund times Elizabeth Park Capital Management has some admirers in financial circles, thanks to the efforts of Fred Cummings, who in 2008 founded the Beachwoodbased investment management firm. The company began with about 20 investors and $3 million in assets under management. It now has 90 investors, and assets have grown to $43 million. See Michelle Park’s story on Page 3.

See KASICH Page 20

More public companies throughout NE Ohio expected to go private By DAN SHINGLER dshingler@crain.com

There’s going to be a whirlwind of deal-making this year, say financial experts and strategic buyers. And when the dust settles, there probably will be fewer public companies left in Northeast Ohio than there are today. That’s because there is ample money available for private equity firms and strategic buyers to make acquisitions — along with a hunger

in both of those camps to do deals — but no appetite for initial public stock offerings on the part of investors or issuers. The results are deals such as Wickliffe-based specialty chemicals maker Lubrizol Corp.’s acquisition last week by Berkshire Hathaway Inc. or the acquisition last October of Cleveland-based Hawk Corp. by the North Carolina private equity firm Carlisle Cos. Both transactions will result in a public company retiring its stock and becoming part of a larger entity. Expect more such deals, say those watching closely. “There are funds out there, private equity funds, and also other strategic See DEALS Page 8

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NEWSPAPER

71486 01032

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SPECIAL SECTION

REAL ESTATE Contractors benefit from out-of-market construction projects ■ Page 15 PLUS: ELECTRIC RATES ■ ADA CHANGES ■ & MORE

Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 12

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CORRECTION A March 14, Page 3 story on the involvement of law firms and banks with social media gave an incorrect title for Tom Smanik of Hahn, Loeser & Parks LLP. He is the law firm’s chief marketing officer.

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MIDDLE GROUND Manufacturing hourly compensation costs in 2009 in the United States were lower than in 12 European countries and Australia, but higher than in 20 other countries, according to data from the U.S. Bureau of Labor Statistics. U.S. costs rose about 4% from the previous year to $33.53. The eight countries with the highest costs in Europe were 30% to 60% higher than the U.S. level, but costs in Canada and Japan were about 10% lower than the United States. Here’s how the numbers break down (in U.S. dollars) for the four most expensive countries, plus the United States and the two countries directly after it:

Country

2009 manufacturing hourly compensation

Norway

$53.89

Denmark

49.56

Austria

48.04

Germany

46.52

United States

33.53

United Kingdom

30.78

Japan

30.36

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NE Ohio banks back in the driver’s seat Lenders say auto loan business accelerates as dealerships’ car sales rise, credit access eases By MICHELLE PARK mpark@crain.com

JANET CENTURY

“We’ve gotten a little momentum going, and we hope to build upon that,” said Fred Cummings, president of Elizabeth Park Capital Management.

HEDGE FUND HOME RUN Investors sing praises of Fred Cummings, who has beaten the odds with company started in teeth of downturn By MICHELLE PARK mpark@crain.com

T

he way Fred Cummings has performed, one of his investors says, is akin to a sportscaster becoming head coach and winning the Super Bowl within three years’ time. Previously a bank securities analyst and now a hedge fund manager investing in bank stocks, Mr. Cummings, president of Elizabeth Park Capital Management, has created through his efforts several admirers, including Umberto P. Fedeli, president and CEO of The Fedeli Group, a business insurance brokerage in Independence. “His performance has been phe-

The money that fuels many a vehicle sale is back. Several lenders in Northeast Ohio have increased their auto lending, boosting their portfolios, consumers’ access to credit and local dealership sales. Cleveland-headquartered KeyBank has seen a 20% increase in the dollar volume of new loans for autos in Northeast Ohio early this year over the year-ago period, said Cynthia Balser, senior vice president in product management. And First Federal of Lakewood recorded roughly the same percentage increase in auto loan originations both in 2010 over 2009, and 2009 over 2008, according to Thomas J.

Fraser, executive vice president and chief lending officer. Auto financing is rebounding more quickly than mortgage financing, said Mark Edelman, a consumer finance attorney and managing partner for the Cleveland office of McGlinchey Stafford. People typically will make their car payments before they do their mortgage payments, which renders auto lending less volatile, Mr. Edelman said. “When there’s more credit available for customers, the entire industry benefits,” he remarked, noting that when people buy cars, they make other purchases, further driving the economy.

Fueling the growth A number of institutions had See AUTO Page 6

THE WEEK IN QUOTES

nomenal,” said Mr. Fedeli, who said his investment in Elizabeth Park Capital is up more than 90% since early 2008, when the fund began. “If everybody’s performance was as good as Fred’s, they’d never hear from me other than, ‘Thank you,’” said Mr. Fedeli, who in some instances has been an activist shareholder, urging change at the companies in which he’s invested. “Other bank stocks I own are not up; they’re significantly down. Fred has knocked the cover off the ball in terms of outperforming bank indexes.” Robert J. King Jr., president and CEO of PVF Capital Corp. and Park View Federal Savings Bank in Solon, said the return on his investment in

“We’re still seeing a lot of the older workers who are applying. I would love to see the younger generation learn the skills of machining and take on that interest and run with it.” — Rebecca Brunswick, president of Cleveland staffing agency HirePro. Page One

See FUND Page 12

START THEM UP 2010

2009

2008

2007

2006

2005

2004

Funds launched

935

784

659

1,197

1,518

2,073

1,435

“We’re spreading our wings geography-wise because of the lack of work in the area.”

Funds liquidated

743

1,023

1,471

563

717

848

296

— George J. Palko, CEO, Great Lakes Construction Co. Page 15

The number of hedge funds started has increased the last two years after decreases in 2006, 2007 and 2008, according to Chicago-based Hedge Fund Research Inc. A look at the numbers of those started and liquidated:

“Budgets are just numbers and policies, and they’re all very important, but the budget sets a stage for our vision of what we want to be like in this state.” — Gov. John Kasich, during a presentation last week to a group of seniors at the Fairhill campus on Cleveland’s East Side. Page One

“If you buy with location in mind, then everything else is going to follow.” — Robert Nieto, president, R.G. Nieto Co. Page 19

INSIGHT

Nursing home operators don’t care for Kasich’s plan to cut funding Budget proposal aims to reduce Medicaid exposure, keep residents at home By TIMOTHY MAGAW tmagaw@crain.com

Gov. John Kasich has long railed against the powerful nursing home lobby, and he’s about to face some heavy-handed resistance as he tries to push a budget through the Legislature that slashes funding for the nursing home industry. The governor proposed cutting funding for nursing homes by

about 7% — or about $427 million — over the next two years, as he tries to shift more patients into athome care, an option his administration insists is a cheaper and more desirable option. Nursing homes were among the hardest hit in the governor’s plan to rein in $1.4 billion in Medicaid spending. As he tries to plug an $8 billion budget shortfall, Gov. Kasich has targeted the Medicaid

UP FRONT: Business, government leaders assess Kasich’s budget plan. Page 1 program, which provides health care for the state’s poorest citizens, as it dominates about 30% of the state’s total spending. Administration officials contend the role of nursing homes has changed dramatically and that Ohioans largely would prefer to

remain in their homes. The current cost structure doesn’t reflect that adjustment, and Gov. Kasich hopes to shift Medicaid dollars from nursing home care toward home and community-based services. Tom Campanella, the director of the health care MBA program at Baldwin-Wallace College, said more people are looking for longterm care at home rather than the traditional route of a nursing home. The governor’s proposed budget, he said, takes that into consideration in a way that has

never been addressed. “The long-term care industry really has to start thinking out of the box and have a better sense of cost efficiencies and how to be market attractive,” he said. “Now more than ever there’s going to be winners and losers in that industry. Winners are going to be the ones who provide affordability and meet the needs of the elderly.”

Feeling the brunt Under Gov. Kasich’s proposal, See CARE Page 22

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Wright Tool makes right decisions Barberton outfit withstands recession under careful management, now primed for growth By DAN SHINGLER dshingler@crain.com

Wright Tool in Barberton might not be doing anything new by forging hand tools from American steel in the heart of the Rust Belt — but its old-fashioned forges and some modern management helped it survive the recession and come out looking for acquisitions. The company was bought out in 2007 by a group of its long-time managers, including current CEO Terry Taylor. It makes professional

hand tools for big jobs — wrenches, ratchets and sockets and the like, each weighing 10, 20 or 30 pounds and designed to turn nuts and bolts bigger than some tool boxes. Mr. Taylor said Wright Tool has staved off both foreign and domestic competition with better-designed tools, faster delivery and by watching its costs and production flow like a tiger minding her cubs, its executive says. Workers still take molten metal from the forge with tongs, put it into dies and then drop giant hammers

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down to shape wrenches and sockets, just as they did when the company was founded in 1927. No one so far has come up with a better tool than can be made by the forging process, Mr. Taylor said. What’s more modern at Wright Tool are concepts such as having a fully integrated computer system that can control functions such as inventory and deliveries, allowing the company to fill 98% of its orders in two days or less in a world that’s constantly in more of a hurry than it was yesterday. So when Mr. Taylor; his wife and vice president, Patricia Taylor; and chief financial officer Tom Futey bought Wright Tool in 2007, they had the systems they needed to operate efficiently and to react quickly to market changes, the three said. They needed them, too. A year after their purchase, the recession hit Wright Tool as hard as its own forging hammers, beating sales down by about 40%. Painful moves had to be made. Some workers’ hours were reduced, while others had to be laid off. But the company came through virtually unscathed and was able to earn a profit throughout the downturn, Mr. Futey said, though the private company does not disclose its sales or net income. It has called back 20 of the 24 workers it laid off, bringing payroll to about 120 people, and sales are nearly back to where they were before the recession. That has left the company not only still standing, but stronger than before, with lower costs, cash on hand, no long-term debt and an appetite to grow. Today, it’s looking for acquisitions, just like much larger companies in similar financial situations. Mr. Taylor said the acquisition targets could be — but don’t have to be — other tool companies. Wright Tool also will look for companies in other realms of the industrial supply business so it can leverage new products with its distributor relationships around the world. It’s looking at a few prospects now, but it’s too early to disclose them or announce a deal, Messrs. Taylor and Futey said. Their timing might be right though, as it’s the best time in recent memory to buy an industrial company, said Craig Bouchard, a well-known Chicago financier who has made a name for himself buying and selling first steel companies and, more recently, steelbased manufacturers in the Midwest. In September 2010, he formed ShaleInland, a holding company, and has since been looking for deals. Ohio is a favorite hunting ground. Not only are good companies for sale, but conditions favor manufacturing in the Midwest, he said. Decreasing labor and energy costs relative to foreign markets, coupled with a rebounding domestic economy and more Americans buying U.S. goods all will make today’s manufacturing acquisitions fruitful in the years ahead if they are well-managed, he said. ■

Volume 32, Number 12 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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Auto: Banks pass up credit unions continued from PAGE 3

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applied, or pumped, the brakes to auto lending in recent years. Some, like KeyBank, exited indirect auto lending, which is done at dealerships, not banks. A Key spokesman said it did so because direct-to-consumer lending better fits Key’s desire to work closely with clients. Even so, Key has increased its direct lending and seen applications for auto loans quadruple year over year, Ms. Balser said. Huntington National Bank stayed put as competitors withdrew from indirect lending in 2008 and 2009, said Richard Porrello, senior vice president and director of automotive finance and dealer services. Most of the bank’s auto lending is done indirectly. The Columbus-headquartered bank has recorded a 29% increase in auto loan originations during early 2011 over the year-ago period across its six-state footprint. That increase doesn’t include the growth that’s occurred since the bank expanded its auto lending into the New England market in fourth quarter 2010, Mr. Porrello said. (Including that, the increase is 33%.) “There’s a couple dynamics behind that number,� he said. “Dealers are selling more cars, and there’s more optimism in the marketplace.� Another reason for the auto loan growth at First Federal of Lakewood, Mr. Fraser said, is that fewer people are using home equity lines to buy cars. Auto loans, which are some of the bank’s higher-margin business products, offer fixed rates and fixed repayment periods while home equity line rates are variable, he explained. Ms. Balser with Key noted the same trend.

“Dealers are selling more cars, and there’s more optimism in the marketplace.� – Richard Porrello, senior vice president and director of automotive finance and dealer services, Huntington National Bank “In the past, a client who might want to purchase an automobile might have selected a home equity line of credit,� she said. “Today, they’re coming in saying, ‘I’m buying a car. I want a car loan.’ � Home values aren’t appreciating like they did in the early 2000s, Ms. Balser continued, so “all of a sudden equity is gone, and people have been naturally reluctant. (They) say, ‘Wait, my house in on the line. Am I really comfortable with that?’ � At Cardinal Community Credit Union in Mentor, new auto loans were up 40% in the first quarter of 2011 over first quarter 2010, predominantly for used vehicles, president and CEO Christine Blake said. She attributed the institution’s increased auto loan originations to increased advertising and more competitive rates. “The profit will increase as we generate more volume, but we’re also generating more volume at a lower interest rate so it won’t increase as substantially as you might think,� she said.

Dealerships revved up Local dealerships are happy witnesses to the credit thaw. Credit scores that had been historically acceptable — those in the 500 range, for example — had become almost impossible when the market bottomed out in 2008, said Alan Spitzer, chairman and CEO of Spitzer Management Inc., a dealership chain headquartered in Elyria. It was the tightest Mr. Spitzer said he’s seen credit. “Our business is a capital-intensive, low-margin business, so when ‌ business goes away because of a lack of credit availability, that’s huge,â€? he said. Over the past several months, however, “we’re seeing lower credit scores being able to get the deals done,â€? Mr. Spitzer said, and the

:+<

percentage of completed sales is back up over 80% like it used to be. It had dropped some 10 percentage points. As a luxury car dealer, Collection Auto Group never saw a problem with credit extension to its customers, said Bernie Moreno, president. But he has noticed banks have become very aggressive with their rates. Both the banks and credit unions with which Spitzer dealerships work have loosened up in terms of credit extension, Mr. Spitzer said.

Driving change Not all credit unions are filling up on auto loans, though. Some are trying. Credit unions are getting fewer looks, asserted Robin Thomas, president and CEO of Taleris Credit Union in Brooklyn Heights, because banks are getting back into the business they “got out ofâ€? two years ago. Taleris began indirect auto lending in January — a late start, Mr. Thomas acknowledged — because the institution’s direct lending had dropped. During each of the past two years, the institution recorded about 350 loans for $5 million — down from roughly 500 loans for $7.5 million between March 2008 and February 2009. Taleris also has lowered interest rates and become more sensitive and creative today in its borrowing requirements, Mr. Thomas said, for example, considering the equity an unemployed person may have. According to the third-quarter report by the Ohio Credit Union League (the most recent data available), credit unions in the state saw auto loan balances decline 2% in the 12 months preceding the report. Mr. Fraser of First Federal predicts smaller institutions likely will see less of the auto financing pie as regional banks and the finance arms of larger auto makers extend credit at very competitive rates, including 0%. “I think for community banks, the auto window has peaked,â€? he said. Higher gas prices also may slow the lending activity, too, Ms. Balser said. Huntington, meanwhile, plans to expand its auto lending into other markets within six months, Mr. Porrello said. â–

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Deals: IPOs not as desirable as they once were continued from PAGE 1

buyers, other companies — they are all looking for acquisitions and searching for companies that they think are trading below their fair value,” said Mark Bober, a partner at the accounting firm Bober, Markey, Fedorovich & Co. in Fairlawn. “We’re definitely seeing an uptick in activity,” said Mr. Bober, who works with private equity firms on merger and acquisition projects.

Sky’s the limit One perfect storm is piling on another in the skies above the dealmaking world, say Mr. Bober and others, and it’s raining both buyers and sellers.

Sellers are finally able to stomach the offers they’re getting because those offers are based on sales and profits from 2010, which was a much better year for most companies than 2008 or 2009, Mr. Bober said. Many companies, particularly manufacturers, also are emerging from the recession with fewer competitors — another selling point. On the buy side, there are both public companies and other large corporations laden with cash after cutting costs and holding off on deal-making during the recession, only to see their revenues come back and fill their coffers. Along side of those are private equity firms that raised money just

before the recession but then could not get financing to make acquisitions. Both of those groups not only are back in the market, but are finding insurance companies and banks willing to finance their next deals, Mr. Bober said. Activity might be particularly robust in manufacturing, a sector where decreasing labor costs and advantageous energy costs relative to the rest of the world are combining with a brightening U.S. economic outlook, said Craig Bouchard, a Chicago-based financier and private equity buyer. Mr. Bouchard, who built the steel company Esmark in the 2000s via a string of acquisitions, now is purchasing

steel-based manufacturing companies through his new holding company, Shale-Inland. The conditions are right for Rust Belt manufacturers to make a comeback, Mr. Bouchard recently told Crain’s, and he is scouring Ohio and other Midwest states looking to acquire mid-sized manufacturers. “You put (all the factors) together, and I think we’re on the verge of a renaissance in manufacturing, particularly in the Midwest,” he said. “To me, now is even a better time to buy than 2003, when we started Esmark.”

A whole new world But things are different with this round of merger and acquisition

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activity. In previous decades, particularly the 1980s and ’90s, when transactions picked up, so did the number of companies selling public stock. Today, there are no IPOs to accompany all of the off-exchange buying and selling of companies. Mark Filippell, managing director of the Cleveland investment banking firm Western Reserve Partners, said he has counted the number of companies crossing the line from private to public, and vice versa, over the last 20 years, and he’s seen a sharp trend toward private ownership. From 1990 to 2000, there were 152 Ohio companies that went public while 166 went private, generally through an acquisition. From 2000 to 2010, however, only 40 Ohio companies went public and 111 went private. Going forward, at least over the near term, Mr. Filippell said he expects the number of companies going private to increase, while stock offerings dwindle further. There are two primary reasons for the change, according to Mr. Filippell. For one thing, sellers of companies want cash, not stock in an IPO that they can’t sell — and that’s even more true for private equity firms selling companies, because they want to return cash to their investors. Firms that go private can sell stock, but their original owners often receive stock that they must agree to hold, and if they ever do try to sell, the stock often is so illiquid that any block-selling by the original owners causes the price to tank. In days past, a midsize company could get analyst coverage and ample market liquidity, Mr. Filippell said. That’s not the case today. On top of that, he said, a slew of regulations that have come out in the last 10 years, including the Sarbanes-Oxley Act of 2002, have made it more cumbersome and expensive to be a public company. Such cost savings were a consideration when Carlisle purchased Hawk last year, said former Hawk president Chris DiSantis. So with the advantages of being publicly traded waning and the costs increasing, it’s only natural that fewer companies are deciding to sell public stock, Mr. Filippell said. “You don’t dream of being public — you dream about what you’ll do with the money from going public,” he said. “That’s like saying, ‘My dream is to have a mortgage with crushing interest payments.’ No, you dream about the wonderful estate you’ll have, not the mortgage payments.”

What’s it mean?

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But is it a bad thing if companies continue to go private, while no others issue stock? Perhaps not. True, it will be more difficult to find out details about companies that have been taken private, such as Hawk, Lubrizol or Solon-based Keithley Instruments Inc., which last November agreed to be acquired by Washington, D.C.-based Danaher Corp. But those companies generally don’t employ fewer people than before, and they might do even better as private companies then when they were publicly traded. If they become part of another public company, the cost of being public is spread out over a larger revenue base, and regardless of who buys them, they are freed from the work and exposure of being publicly traded, Mr. Filippell said. “All the disclosure you have to do — and every year it’s more and more — you have to tell the world, as well as your shareholders, what you’re doing, how you’re working and where you’re going,” he said. “The competition just eats this stuff up. They love it.” ■

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Jobs: Manufacturers selective in searching for talent continued from PAGE 1

7 listed jobs for machinists, welders, steamfitters, press operators and mold makers at companies ranging from welding equipment giant Lincoln Electric Co. to small machine shops. Machinists seem to be most in demand. A count of the job ads on the Cleveland Craigslist web site, also on March 7, turned up 23 ads for manufacturing jobs; seven were for CNC machinists. In some cases, companies finally are replenishing the ranks at their existing operations. In other cases, they’re expanding outright. Ameco USA, a metal fabricator that works with heavy, plate steel, in January bought a 51,000-squarefoot plant on Cleveland’s West Side, said vice president Thom McLaughlin. Since then, it has worked to staff the plant and get it running. The company formerly used subcontractors to do much of its work, relying on local machine shops, welders and other fabricators. However, those vendors have become busy with their work for larger, more regular customers and Ameco decided to bring all its work inhouse, Mr. McLaughlin said. The company this year has hired 11 people so far, most of whom were out of work, but were known to Ameco because they worked for its subcontractors, Mr. McLaughlin said. The company will hire at least another six based on its existing order flow — and possibly another 20 if it wins a wind energy job for which it’s competing, he said.

Replenishing the ranks Lincoln Electric, on the other hand, is trying to re-staff after letting attrition thin its ranks for the last two years. “We are hiring and — no doubt about it — we’re going to continue to hire,” said George Blankenship, president of Lincoln Electric’s North American operations. The company is seeking 145 employees, including 45 production workers and 100 who will work in the skilled trades, technical or management areas of the company. “When you see us hiring that many professional people, that’s really a sign of confidence in the

business,” Mr. Blankenship said. Work is picking up at Wright Tool in Barberton, too. Like nearly every manufacturer — with the exception of Lincoln Electric, which stood by its “guaranteed employment” policy throughout the recession — Wright Tool laid off workers when the economic slump cut its sales by about 40% in 2009. It reduced staff to 100 in 2009 from about 125 in 2008, but in the last 12 months it has been able to call back 20 workers. It still needs 10 more workers. Wright Tool especially needs people to run its forges — taking hot, glowing metal from the furnace, inserting it into a die and then triggering a massive forging hammer to come down upon it, leaving behind a socket, wrench or other forged tool. The job doesn’t require a lot of technical skill, said vice president of human resources Patricia Taylor, but it does require a good work ethic and the ability to concentrate and perform in a demanding environment. So far, the company has found the people it needs, but it’s often challenging, Ms. Taylor said. “I can find a CNC person faster than I can find a forge person,” she said. That’s because while many people can be taught to operate a CNC machine, Ms. Taylor said, the work ethic and fortitude required to work a forge are inherent and not easily teachable.

“We are hiring — no doubt about it — we’re going to continue to hire.” – George Blankenship, president, Lincoln Electric’s North American operations assemblers, is busy and getting busier, said president Rebecca Brunswick. Ms. Brunswick opened her business just last August and now hopes to be “in the right place at the right time” as hiring picks up, she said. So far, Ms. Brunswick said, she has met her clients’ demands for workers, though positions such as skilled machinists can take longer to fill. There are simply not enough new machinists entering the job market, Ms. Brunswick said. “We’re still seeing a lot of the older workers who are applying,” she said. “That’s fine for now, but I would love to see the younger generation learn the skills of machining and take on that interest and run with it, because there is a lot of opportunity in the machining industry.”

In search of purple squirrels Cleveland State’s Dr. Hill, who

recently interviewed 80 C-level executives at about 70 manufacturing companies, said there is a right way and a wrong way for companies to approach the job market — and the right way is to pay a little more for the best people. “If a company was trying to find someone at $10 or $11 an hour, they couldn’t find anyone,” Dr. Hill said. “If they offered $14 of $15 an hour, they said it was the best labor market they’ve ever seen.” Some employers are probably too choosy, he said — after all, the best and most skilled workers are the ones who never were laid off, or were the first to be called back to work. “They’re out looking for purple squirrels,” Dr. Hill said. “They’re looking for that ideal person, even if that person doesn’t exist in the labor market.” But Ms. Brunswick said some manufacturers also are doing something many have not done in a long time — training employees to have the skills they need. It’s a sure sign the labor market not only is tightening, but also that an employer thinks they are making a long-term hire. “They’re often looking for mechanical aptitude, and then

they’re willing to train,” she said.

Back to the future Manufacturers have been hiring in dribs and drabs since probably the middle of 2010, but this latest round of hiring has the feel of something bigger, Dr. Hill said. Even though the economy was picking up, manufacturers often waited to hire until their order flow absolutely demanded that they bring on more help, Dr. Hill said. Now, as they become confident in more long-term growth, they’re hiring like they did before the recession in anticipation of more business. That’s true of Lincoln Electric, which maintained its policy of not laying off any employee with three or more years of service throughout the recession, even though it meant cutting all workers’ hours along with executive pay, Mr. Blankenship said. Now, he said, almost all the industries Lincoln Electric serves from all corners of the globe are coming back strong. “It’s a rising tide lifting all the boats at once,” Mr. Blankenship said. “We serve a global market from here, so we see the world” economy picking up, he said. ■

‘Where did they all go?’ Manufacturers and staffing agencies report various levels of success in finding the people they need. Some say they’re disappointed more good workers don’t answer their ads, given the number of manufacturing people laid off in the recession. “Where did they all go?” asks Wright Tool chief financial officer Tom Futey. But all say they’re holding out for the best employees, either in terms of the skills they possess or their willingness to work hard and be part of a team. The Cleveland staffing agency HirePro, which works with manufacturers filling positions from advanced machinists to low-level

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PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

How goofy

I

t’s tough to live in a boom town like Cleveland. So many people are flocking to move within its borders that developers are tripping over themselves to build new housing stock to accommodate them all. What? That’s not the Cleveland you know? Oh, you must have been reading those stories from a couple weeks back about the latest census figures, and how they show Cleveland’s population fell 17% over the last decade. The same stories that show Cleveland lost more than 80,000 residents from 2000 to 2010, and that its population of a little less than 397,000 is the lowest it has been since 1900. Well, that stuff must be overblown. Why else would a Cleveland city councilman block, at least temporarily, a residential development project at University Circle? Oh, we forgot. Jeff Johnson would prefer we not use the word “block” to describe his decision several weeks ago to delay the submission of a rezoning request that would clear the way for Hazel on the Circle. It’s a 59-unit apartment community planned by WXZ Development Inc. for Hazel Drive, which is in Mr. Johnson’s ward. “Let’s just say I’m slowing it down,” Mr. Johnson told a Plain Dealer reporter last month. Yes, we definitely see the need to slow down a project that already has met with the approval of a city Design Review panel and the city Planning Commission. A project that is favored by University Circle Inc., the nonprofit group that promotes the neighborhood that is Cleveland’s cultural center. A project that seeks zero public financing. A project that would bring new residents to a site that currently is zoned for single-family housing, which hardly anyone is building right now — and won’t be for the foreseeable future — because of the overabundance of abandoned, foreclosed homes in the city. How goofy. Mr. Johnson’s foot-dragging only has perpetuated the long-held belief by many developers and business people that Cleveland is a hard place in which to do business, in part because of the hoops through which they often must jump in their dealings with city government. It also calls into question the City Council “tradition” of giving council members some sort of final say on projects in their wards. WXZ has lined up $8.5 million in private financing and is prepared to commit another $1.8 million of its own money to make this apartment project happen. It wants to begin construction this spring in order to hit a completion target in summer 2012. Unfortunately, Mr. Johnson has created a nervous waiting game for WXZ’s investors, who could pull their money from the project at any moment and put it toward a sure thing. If they do, it would bear out the old real estate adage that time kills deals. This whole episode sends a negative message that only stands to give developers and investors pause when considering whether to do business in Cleveland. Mr. Johnson can help change that message by moving the rezoning measure forward.

FROM THE REPORTER

There are benefits to population loss

W

Cleveland Heights every day, the city ould you rather have 10 was crowded with gangs and there were neighbors who are up late crack dealers everywhere. If you ventured and loud every night, maybe more than a block from the main drag shooting at you once in in either direction, someone was likely awhile, or just one who helps you shovel to either try to sell you a rock, or throw your drive or watches your house when one at you. you’re on vacation and doesn’t steal I see fewer of those undesirable anything? elements on the street today — Then perhaps you already but far more dog walkers, little know why I think population DAN old ladies, children and other loss is NOT the worst thing ever SHINGLER people. Heck, young people to happen to the City of Clevearen’t even afraid to live Downland. In fact, it just might be the town! best thing to happen to the city There are still too many of since I’ve known her. those bad elements around, I I’ve lived in and around grant you — but at least today Cleveland for a good chunk of they don’t so vastly outnumber my life, including the last three the decent citizens of the city the years in the city itself. Frankly, way they seemingly did 20 years when this city had 600,000 resiago. Though, who knows, perhaps decent dents, I would not have even considered folks were just too afraid to come outside living in it. And I’d bet a lot of the and be noticed back in the bad old days. professionals who call Cleveland home But the number of murders in the city today would not want to live in the seems to back up my perception. larger, badder city of the past either. In 2009, there were 86 murders in the Back in the early 1990s, when I drove City of Cleveland, according to the FBI’s the Carnegie Derby to my house in

web site. That’s 86 too many — but it’s a far cry from body counts of previous years in more populous and dangerous decades. In 1972, the city had plenty of people — with a population still around 750,000. It also had 333 murders. So, I say, if this is the result of losing population, let’s lose some more. Let’s just make sure we keep those people who can contribute to a vital city, or its economy. I’ve not noticed that the West Side Market has any fewer people in it, or that the area’s bars, restaurants and businesses are having any more trouble than before in terms of attracting customers and good employees. It’s almost like the folks who left weren’t really the ones supporting such institutions, or interested in preparing for and holding the jobs they offered. At least they’re no longer scaring away visitors who would patronize institutions like those just mentioned. So, no, the number 396,000 doesn’t bother me at all, unless it’s to consider whether it should be smaller still. ■

LETTER

Bad management plagues school system ■ The March 7, page 3 story in Crain’s on Senate Bill 5 should really be directed at some overlooked problems that are more important than the elimination of collective bargaining. Better organization and management are the keys to any cost savings without loss of quality. The current school setup in Ohio has far too many districts. In Cuyahoga County (along with the rest of the state), schools districts need to be consolidated with the removal of redundancies in every aspect of the operations. The concept of local school boards also needs to be changed. Your recent story was a good example of why. People making decisions on running schools have little ability on both the academic side and the financial side. They micro-manage things they know very little about with budgets of millions

of dollars. It is not the collective bargaining process that is the problem. Poor school management is a key issue never addressed. The local boards of education are not equipped to pick good management. Bad management is what causes contract issues, not collective bargaining agreements. Good talent in many cases does not go into educational administration as it stays in the classroom or never enters the field. Politics has more to do with running schools than academic and financial expertise. We have lost our focus on what is important. The boards and leadership teams place too much emphasis on nonacademic issues. Schools in Ohio and the nation spend too much on transportation, sports, bands, food services and what every special interest group wants. This is the result of the current set

of local school boards. Good management would place the focus on strong academics and the best focus of tax dollars. The system is the problem, not collective bargaining. The dirty secret is that many of the current younger teachers are not very good. With the current situation, talent is not being attracted to the field. Why would any college student pick this field, which has a bad financial future and has lost any status of being a profession? Bad organization and bad management ruined General Motors, and it is the same in Ohio school districts. S.B. 5 has little to do with school improvement and getting more for our tax dollars, and is a political agenda, not economic. Terry Kozma Strongsville

3/17/2011

9:28 AM

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Beachwood abruptly backs off oft-envied biz development arm Center’s $500K annual cost at root of changes By JAY MILLER jmiller@crain.com

The city of Beachwood’s economic development program — long considered one of the best in the region, and one of the most copied — has almost vanished, at Adamus least temporarily. In the last month, the city closed the Beachwood Business Development Center, a trailblazing business incubator, and will not immediately fill the post of economic development director after the sudden departure of Vince Adamus, who in his year on the job launched an extensive business retention program. It also backed away from a plan to launch a county-backed Innovation Zone after accepting a $20,000 grant from Cuyahoga County for the initiative and creating a business plan for the zone, which is intended help the city attract high-tech businesses from Israel, China and elsewhere that are looking for a U.S. outpost. Mayor Merle Gorden was reluctant to comment, saying the city was exploring its options in view of the changing economy, the needs of Beachwood’s nearly 3,000 businesses and its relationships with other partners. Mr. Adamus said he decided to leave when he saw how his budget was pared. “The mayor and I had an adult sitdown and decided with the closing of the development center that I would get out and find other things to focus on,� he said earlier this month.

Why so sudden? What’s puzzling many in the real estate and economic development communities, however, is the abruptness of the moves. The city had hired Mr. Adamus and brought the business development center in-house only a year ago. Before then, Mr. Adamus was CEO of the Beachwood Chamber of Commerce, which had been the city’s de facto economic development arm. It was the chamber that created and ran the business center with financial assistance from the city. Mayor Gorden said the changes aren’t part of a belt-tightening effort, noting that Beachwood voters last November approved an increase in the city’s income tax to 2% from 1.5% after the city was forced to draw down its reserves in 2009. But later in the same interview, he said the problem with the business development center was that it cost the city too much money,

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about $500,000 a year. “We were very pleased with the impact we made, but in any business you’ve got to make decisions whether it’s financially viable,� the mayor said. The business center typically was home to an everchanging group of 15 to 20 young businesses paying a nominal $500 each for office space and support services. The expectation was that they would repay the city’s subsidy after they could afford to move out of the center by remaining in Beachwood. Tom Sudow, vice president for attraction at Team NEO, the regional business attraction nonprofit and the former executive director of the Beachwood chamber, wondered if some in the community believed Beachwood was getting too little bang for the buck. “With the economy tanking, it was a large expenditure,� Mr. Sudow said. “They were not able to show major results.� In the three years the center was open during Mr. Sudow’s tenure with the chamber, the city and the chamber attracted more than 20 international companies. Outsiders are left to wonder about the change in direction.

Surprise! “What? Vince Adamus left?� said real estate broker David Lang of the Chartwell Group, a member of the board of directors of the Beachwood chamber, when informed of the departure of Mr. Adamus. “Wow, Vince was a great guy,� Mr. Lang said. “He’s done some very good things for the city.� During his year as economic development director, Mr. Adamus and Paul Williams, the retired superintendent of the Beachwood City Schools and a chamber board member, called on about 100 of Beachwood’s larger businesses to make sure the city was meeting their needs and to inquire about future plans. Even Dr. Williams seemed mystified by the change. “If you are able to find out the exact reason, let me know,� Dr. Williams said. Mr. Lang and others suggested that an economic downturn was an odd time for a community such as Beachwood, which relies heavily on businesses and non-residents to pay for its programs, to abandon its business attraction and retention efforts. In addition, Beachwood currently is in the running for American Greetings Corp.’s headquarters

and needs to be able to manage the growth around University Hospitals’ new Ahuja Medical Center at Chagrin Highlands. They noted that nearby communities such as Shaker Heights and Cleveland Heights have been expanding their economic development programs in recent months. Both those communities are drawing on Beachwood’s experience for their business development efforts. Shaker Heights recently bought a vacant auto dealership building in the city and is turning it into Shaker LaunchHouse, a business incubator, while Cleveland Heights has hired Howard Thompson, who formerly ran the Beachwood development center, as its first economic development director. Mr. Thompson said earlier this month that Cleveland Heights expects to start its own business development center with the help of Cleveland State University’s Global Business Center, which had been supporting the Beachwood business center until it closed at the end of last month. Beachwood also has abandoned a county program that would have given the city $150,000 to bolster its international attraction program at the business development center. The city did accept a $20,000 county planning grant in 2008 to develop its business plan for the international attraction program. However, the shutdown of the development center closed off the opportunity for the additional county money, said Gregory Zucca, strategic program officer with Cuyahoga County’s development department. â–

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the fund has been similarly positive. “As an investor, I’ve been very pleased,� Mr. King said. “I think he’s in a unique position. Fred is very familiar with the industry and very well-versed in that arena. By any measures, his performance has been very good.� Named after the north Akron neighborhood in which Mr. Cummings grew up, Elizabeth Park Capital is a single-strategy hedge fund launched in Beachwood in 2008, a year when an estimated 1,471 hedge funds were liquidated, according to Hedge Fund Research Inc. That’s the highest number of liquidations since at least 1996. Despite the market in 2008, Mr. Cummings, determined to own his own business, forged forward.

Humble beginnings Elizabeth Park Capital actually started with far fewer assets under management than Mr. Cummings and others expected. The management team thought it could raise $20 million, but was stymied. Banks in 2007 were beginning to see signs of credit quality weakness, so many potential investors, including banks, were uncomfortable with investing in a bank stock fund. Plus, Elizabeth Park Capital was new and didn’t have a track record, said Mr. Cummings, who covered bank stocks for 17 years as a securities analyst starting in 1989 with McDonald & Co. Investments, which was bought by KeyCorp in 1998 and later was renamed KeyBanc Capital Markets. At the time Elizabeth Park Capital began investing in February 2008, it had about 20 investors and $3 million in assets under management.

It now counts about 90 investors and far more assets than at its start. Already this year, the fund has experienced a “big spurt,� Mr. Cummings said, with assets climbing to $43 million from roughly $32 million at the end of 2010. The increase is the result of new monies from new investors, he said. “We’ve gotten a little momentum going, and we hope to build upon that,� said Mr. Cummings, who at age 44 wants the fund to reach $100 million as soon as it can. “The rate of growth will probably slow, but I think we’re going to begin to attract larger investors,� he said. As the fund draws more institutional investors, its assets under management could grow in short order, Mr. Cummings said, because such investors typically invest millions at one time.

Hedge funds heat up The hedge fund business concluded 2010 with the largest quarterly increase in assets in its history, Hedge Fund Research reported in January. Total industry assets grew $149 billion, topping the previous record of $140 billion in the second quarter of 2007. Hedge funds that have grown their assets under management have done it because they’ve produced results, said Robert T. Clutterbuck, managing partner of Clutterbuck Funds LLC, another local independent hedge fund. Like Elizabeth Park Capital, Clutterbuck Funds and Lakefront Partners LP, both in Cleveland, have seen their assets under management increase significantly in recent years. Clutterbuck, which has been investing for nearly five years, is up

to $130 million from $7 million, and Lakefront Partners has jumped over about six years to $70 million from $1 million. That growth and the funds’ big returns are a blessing to Cleveland, Mr. Clutterbuck said, both in the money local investors make and the out-of-area investments the funds attract. Elizabeth Park Capital is the youngest of the three. Ed Matuszak, senior vice president and portfolio manager for Lakefront Partners, said Mr. Cummings’ first couple years in business “were very good years in a very difficult overall market,â€? and the impressive numbers are leading to impressive growth. Half of Elizabeth Park Capital’s investors are local, Mr. Cummings estimated, and most of them are high-net-worth individuals. With two full-time staffers, including Mr. Cummings, and one part-time analyst in New York, Elizabeth Park Capital is seeing increased interest from investors who are requesting information or coming in to observe its operations, he said. “To the extent that our fund grows, we could conceivably hire more people in Northeast Ohio,â€? he said. Mr. Cummings said the fund now is reducing its cash position, which it had kept above 20% each of its first three years, and is investing more in small banks here and nationwide. He predicts stock prices will rise this year and anticipates consolidation activity will increase. If the fund does a good job identifying undervalued banks, money can be made when those banks eventually are acquired at a premium, he said. â–

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To the newly elected 2011 Officers and Board Members

Cleveland Plumbing Contractors’ Association

President: John C. Marotta Ridge Plumbing, Inc.

Vice President:

James Roddy, Jr. Northern Ohio Plumbing Co., Inc.

Treasurer:

Robert Eville United Mechanical Contractors, Inc.

Past President & Chairman of the Board

Scott Wallenstein Neptune Plumbing & Heating Co.

Board Members: Terry Bumgarner, Coleman Spohn Corp.; Michael J. Gallagher, The John F. Gallagher Co.; James E. Jones, Jones Technologies Enterprises, Inc.; Layne Kendig, RELMEC Mechanical LLC; Terrence Kilbane, Soehnlen Piping Company; Timothy Lavelle, Gorman-Lavelle Corp.; Daniel Miller, Miller Plumbing & Heating Co.; John Roddy, Northern Ohio Plumbing Co., Inc.; Thomas Wanner, Executive Director. CPCA is a non-profit construction trade association providing education, training, labor relations, safety, government affairs, information and promotional service to its plumbing contractor members in northeast Ohio.

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GOING PLACES diligence team leader.

JOB CHANGES

OHIO COMMERCE BANK: Sherry Fishman to loan processor.

CONSTRUCTION THE KRILL CO.: Armond A. Galmarini Jr. to project manager/ superintendent and Lynn R. Galardini to project coordinator/facilitator, Facility Resource Group.

FINANCE FIFTH THIRD BANK: Marianne Elin to officer and manager, Legacy Village Financial Center. FIRSTMERIT CORP.: Brett A. Johnson to vice president, senior capital markets banker; Ty Bretz to vice president, commercial banking; Santosh B. Podar to vice president, international banking; Dana M. Vargo to vice president, commercial due

WESTFIELD BANK: Kurt Kappa to senior vice president, market leader.

FINANCIAL SERVICE AMERIPRISE FINANCIAL SERVICES INC.: Erik Kneip to associate vice president, financial adviser. APPLE GROWTH PARTNERS: Pamela Dunlap to lead principal, assurance services; Christopher Benko to director of quality control; Ivan Mahovlic to managing director, Akron; Randall Misch to managing director, Cleveland. COHEN & CO.: Scott Lichtenstein to senior manager, tax; Tony Micheli

to principal, tax; Melissa Bish to manager, accounting and auditing; Jenna Santisi to staff accountant; Jamie Kolb to office services assistant; Mallory Strakusek to receptionist. Cohen Fund Audit Services — Chris MacLaren to manager; Tony Gallo to staff accountant; Brian Hricik to business development specialist. RETIREMENT SOLUTIONS: Anthony Kulka to associate financial consultant.

HEALTH CARE METROHEALTH: Ed Hills, D.D.S., to chief operating officer. SOUTHWEST GENERAL HEALTH CENTER: Kelly Linson to vice president, chief accounting officer. UNIVERSITY HOSPITALS CASE MEDICAL CENTER: Dr. Vikram Kashyap to chief of vascular surgery, Division of Vascular Surgery and

MARCH 21 - 27, 2011

Endovascular Therapy. VILLAGE AT MARYMOUNT: Laura Shopp to director of rehabilitation.

HOSPITALITY INTERCONTINENTAL HOTELS CLEVELAND: Cynthia Bessette to senior sales manager; Heather Gortz to sales manager.

TUCKER ELLIS & WEST LLP: Robert M. Loesch to partner.

Friscone

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DePasquale Haffey

New and Exciting Trends for High Performing Not-for-Profit Boards According to the Harvard Business Review, effective governance of not-for-profit organizations is “a rare and unnatural act.” This training session, proudly sponsored by Benesch, will focus on several rapidly emerging attributes of peak-performing boards, with a special focus on board self-assessment, committee structure, recruiting new board members, and creating more effective board meetings.

• Why should the board assess its own performance...and how does it accomplish it?

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SCHOTTENSTEIN ZOX & DUNN CO. LPA: Hayley Williams to associate.

• What is a Community Benefit Organization?

Registration 3:30 – 4:00 P.M. Program 4:00 – 5:30 P.M. Networking Reception 5:30 – 7:00 P.M.

Bessette

MANSOUR, GAVIN, GERLACK & MANOS CO. LPA: Julie E. Firestone and Timothy T. Reid to associates.

MICHAEL KUMER, the Executive Director of Duquesne University’s Nonprofit Leadership Institute (NLI) and Associate Dean of the University’s School of Leadership and Professional Advancement, will lead this highly interactive program. We invite you to attend and get answers to questions such as:

Thursday, April 14, 2011

Kneip

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Attention All Not-for-Profit Organizations and Those Who Serve on Their Boards

Elin

• How many standing committees should we have? What do they do? • Should we have term limits for board members? • What does a board member job description look like? • What’s a consent agenda...and what does “zero-based verbal reports”mean? And much more! We will conclude the program with networking, cocktails and hors d’oeuvres.

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resources administrator; Kristina Joos to accounting specialist; Mike Bartelme to production artist. LANDAU PUBLIC RELATIONS: Paula DePasquale to executive account manager and senior strategist.

NONPROFIT KARAMU HOUSE: Aimee Pomerleau Wade to director of institutional advancement.

TECHNOLOGY EGENIO EDUCATION SOLUTIONS: Dan Faciana to customer experience leader. F1-NETWORKS: Neil Haffey to director of technology; Rob Johnson to director of delivery. OECONNECTION: Brian Mooney to manager, IT infrastructure and operations. WARWICK COMMUNICATIONS INC.: Keith Blain to account executive. WRIS WEB SERVICES: Jeff Scheid to search engine marketing specialist.

BOARD CLEVELAND PLUMBING CONTRACTORS’ ASSOCIATION: John C. Marotta (Ridge Plumbing Inc.) to president; James Roddy Jr. to vice president; Robert Eville to treasurer; Scott Wallenstein to chairman; Thomas J. Wanner to executive director.

AWARDS AMERICAN ACADEMY OF HOSPICE AND PALLIATIVE MEDICINE: Dr. Charles V. Wellman (Hospice of the Western Reserve) received the 2011 Josefina B. Magno Distinguished Hospice Physician Award. FUCHS MIZRACHI SCHOOL: Rebecca Bar-Shain (Cedar Brook Financial Partners LLC) and Dr. David Bar-Shain (MetroHealth and Case Western Reserve University School of Medicine) received the Mike & Peppy Senders Outstanding Service Award.

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

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18 DEBATE ON DISCOUNT FOR ALL-ELECTRIC HOMES GOES ON.

SEEKING OUTSIDE HELP Contractors find recessionary relief from building projects beyond NE Ohio’s borders By STAN BULLARD sbullard@crain.com

A

s the massive national building slowdown put many construction contractors into survival mode, some — such as Donley’s and Marous Brothers — have thrived thanks to packing their hard hats and laptops to land work far afield from home. In most cases, the larger contractors already were operating in out-of-town markets before the downturn, and they have continued to harvest those seeds after the 2008 banking crisis and recession decimated the building business in most of the nation. Even as the regional construction market picks up, primarily due to projects in downtown Cleveland such as the new Medical Mart, convention center and casino, they plan to stay the course by working out of town as a way to continue growing and

THEINTERVIEW JACK JURON Vice president Albrecht Inc., Akron By AMY ANN STOESSEL astoessel@crain.com

O

riginally formed as a development arm of The F.W. Albrecht Grocery Co., the Akron-based real estate development company Albrecht Inc. has over the past 20 or so years changed its focus and moved away from a

reliance on the grocery company’s well-known Acme stores. Jack Juron, Albrecht vice president, said about 70% to 80% of the company’s work today is linked to other sources, with retail and industrial real estate serving as its core businesses. The company has roughly 4 million square feet of real estate under its ownership and management. The company is in the midst of continued work on its Hudson

ease the swings of the building cycle. As Adelbert “Chip” Marous, CEO of Willoughby-based Marous Brothers Construction sees it: “Every city goes through its spurts. Cleveland is starting a spurt now. But with these tough times we’ve had, we’ve been out of town quite a lot the last few years.” For example, Marous is running the $22 million rehabilitation of the Gibson Plaza apartment building and two other lowincome apartment rehabilitation projects totaling $11 million in Washington, D.C. It has done some work for the Department of Veterans Services hospital and just finished a big drywall, interior finishes job at Consol Energy Center in Pittsburgh. Marous also is building a $24 million

Drive Business Campus, a project announced in 2005 after Albrecht acquired the former Goodyear mold plant and 106-acre property in Stow. “It’s a remarkable location,” said Mr. Juron, remarking in particular on the economic assistance from local government officials as well at the site’s designation as a Foreign Trade Zone. In addition, the company is working to develop a shopping center south of Medina’s Square, and it is actively looking for sites for Acme’s expansion. Mr. Juron recently answered questions from Crain’s Cleveland

See HELP Page 16

Business regarding the work of his company and the real estate market overall. Q: Generally speaking, what do you see as the outlook for retail and industrial real estate in Northeast Ohio? A: Our tenants’ day-to-day experiences are the best barometer of any economic forecast. They are seeing retail consumers as well as their commercial customers being ever wiser with their purchasing decisions. As a result, consumers are weighing their decisions carefully and are only now beginning to act. Essentially, we are hearing from

our tenants they believe the worst is over, but better times depend not only on better sales, but also on improved efficiency of operations. Q: Since 2005, your firm has been working to develop the Hudson Drive Business Campus in Stow. What, if any, effect did the recession have on those efforts, and where does the project stand now? A: Through mid-2008, we were working overtime to build, demise and finish space for new tenants, especially in our Campus Drive flex project (two, 25,000-squarefoot buildings) within the campus See INTERVIEW Page 16

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Interview continued from PAGE 15

in Stow. The leasing of these buildings has been very well received in the market, and we have some 11,000 square feet remaining to offer prospective flex tenants. In October 2008, we felt the full effect of the economic slowdown and after constructing foundations for two new buildings we called a time-out, and have all the structural steel components on hand and ready to again start the project as we continue with attempts to pre-lease up to 17,000 square feet per building. In this instance, we are definitely shovel-ready and can have tenants in a brand-new building in half the time it would take otherwise. Q: When selecting a site for development, what are some of your firm’s top considerations? A: Our close ties with the Acme Fresh Market grocery chain provides us with a natural anchor tenant for retail development. To this end, we are constantly evaluating new sites for grocery-anchored retail projects. On our industrial side, while we always have an interest in acquisitions that fit our needs, with the purchase and ongoing development of our 106-acre business campus in Stow, we have an excellent site that will accommodate a wide variety of tenants and site configurations, either for parcel sales or build-tosuits. With industrial site selection, we are finding the use of professional site selectors by many companies to be widespread, and those agents have long lists of requirements, not the least of which is tax abatement as a must.

Recently, many cities are much more proactive and honest about job creation, understanding they must provide at least as much of an incentive package as their competing municipalities. Therefore, along with location, superior highway access, university technology ties and a skilled job pool, we as developers need aggressive government support and assistance in attracting new business and job growth. Q: Your company does work to renovate older shopping centers. What are some of the challenges associated with upgrading such sites? A: Given many of our retail and grocery-anchored sites have long been in our portfolio we have a great deal of experience with multiple space renovations and/or expansions. When a tenant space is expanded, demised or remodeled, we need to meet current standards related to ADA accessibility, fire safety codes and upgrades to parking lot configurations. Given we operate within approximately 16 cities and five counties we need to stay very much aware of local building requirements and zoning standards. Keeping tenant sales up during renovations has been a challenge, but remarkably oftentimes sales increase during renovations! Q: How did the industrial real estate market in NE Ohio hold up during the economic downturn as compared to the retail market? A: Oftentimes the best answer to a real estate question is, ‘It depends,’ and such is true with Northeast Ohio industrial. The area’s industrial inventory is rife with older buildings with limited clear heights, poor column spacing, old docks, prior generation lighting and aging

office space. Buildings that have good bones can be brought up to modern standards, but a large number of specialized designs or functionally obsolete structures have no promising future. Our warehouse facilities on Gilchrist Road were built in the mid-’60s, but still have a very good design and geographic accessibility. Over the past five years, we’ve made extensive investments in not only interior and exterior improvements to compete in our market, but also have enhanced our facilities with investments in ESFR (early suppression fast response) sprinklers, dock doors throughout and energyefficient lighting, all in an attempt to offer functional, low-cost warehouse space to a wide array of users. Retail has also withstood the downturn, but perhaps not as well as industrial. Northeast Ohio has had more overbuilding of speculative shop space, and retailers are the first to be hit by lower consumer spending. Certainly, the weaker retailers are being weeded out. Q: Are there other trends you are seeing in terms of industrial and retail real estate in this market? A: One recurring theme or trend seems to be the success and growth of third-party logistics companies (3PLs). Much of our recent expansion activity has been space leased to 3PL companies. These tenants occupy large blocks of space and resell the space and their logistics services to manufacturers who choose not to be in the warehouse and distribution business (where they are not experts). This allows manufacturers the ability to grow (or downsize) their core business while shifting the “space risk” on to the 3PL providers.

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Help: Travel stretches resources continued from PAGE 15

student-housing complex near the University at Buffalo. Mr. Marous estimates 30% of the family-owned general contracting, carpentry, drywall and construction firm’s billings are outside Northeast Ohio from about 15% five years ago. Last year, half the firm’s billings were outside Northeast Ohio, but the number dropped this year as more jobs emerge locally. Donley’s Inc., the Valley Viewbased general contractor and concrete contractor, estimates half its billings this year are from outside Northeast Ohio, compared to 25% just five years ago. Project and Constructions Services Inc. of Cleveland, which does work under the name PCS, has been working in Charleston and Wheeling, W. Va., since 2004.

Looking for work Even Great Lakes Construction Co., a Hinckley-based heavy construction contractor that is a stalwart for big road, highway and bridge jobs in the region has just entered other markets, with projects in Columbus, Cincinnati and near Pittsburgh. “We’re spreading our wings geography-wise because of the lack of work in the area,” said George J. Palko, CEO of Great Lakes. “These are areas where we have not traditionally sought work, but there is not enough to sustain the company here.” Out-of-town work allows a firm to shift resources from one region to another as it lands work, said Mac Donley, CEO of the namesake contractor. Human resources and accounting services in headquarters may support the jobs, while superintendents in field locations can be moved to the next job, he said. A simple truth shapes the quest for out-of-town work: other markets have multiple contractors hungry for too-little work just like here. “Every market is competitive,” said Bob Strickland, the owner of PCS. “You only get in if you pay your

dues by being there awhile.”

Roads less traveled Each company followed a different route to its out-of-town job sites. In Donley’s case, Mr. Donley said the company decided its background fit the university and municipal markets of the eastern seaboard. So it established a Richmond, Va., office in 2003, and to more rapidly move into North Carolina, acquired a Wilmington, N.C., company in 2009, Mr. Donley said. The strategy Marous follows is simple: follow existing clients to other markets for a particular assignment and start prospecting for more as it builds its name and contacts. “We went into Pittsburgh with a $50 million job from (Cleveland developer) John Ferchill,” Mr. Marous said of the renovation of the Heinz factory in Pittsburgh to apartments. “A job that size helps you make friends real fast.” Marous is pursuing the Buffalo job for American Campus Communities Inc. of Austin, Texas, a developer it met through building the new student housing complex for it at Cleveland State University. In PCS’s case, it was working on public school projects near the Ohio River and many of its designers and subcontractors also worked across the border in West Virginia, so it pursued opportunities there. For Ozanne Construction Inc. of Cleveland out-of-town work is in its culture, said Dominic Ozanne, its second-generation CEO, who estimates 20% of his company’s work is outside Northeast Ohio. “My father jumped on jets for jobs in Atlanta 30 years ago,” he said. “My son today is working on jobs in New Orleans. In some (project) niches, they don’t care where you are from, just that you can do the job. The question is whether the job fits your schedule. For me, it’s a lifestyle choice: how much do you or your staff want to be on planes?” ■

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Changes to ADA may impact businesses By TIMOTHY MAGAW tmagaw@crain.com

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ttention business owners: If you’re planning to break ground for a new facility or looking to spruce up your existing digs, it might be wise to brush up on a slate of new federal regulations. The U.S. Department of Justice recently revised the regulations enforcing the Americans with Disabilities Act of 1990, and the new rules could have far-reaching implications for local businesses. After all, a failure to comply could lead to a knock at your door from Uncle Sam and leave you vulnerable to potential lawsuits. Northeast Ohio experts say the design changes aren’t necessarily going to break a bank account, and, in some cases, it’s going to make architects’ jobs a little easier as the regulations are more clearly written. But if you’re doing construction or renovations without professional assistance, familiarizing yourself with the new codes is paramount. “Make sure your maintenance team is familiar with ADA requirements — from the parking lot, into the building to the restrooms. That’s really something a nonprofessional in the construction business should be sensitive to,” said

Peter Comodeca, an attorney who specializes in construction contract law at the Cleveland law firm of Calfee, Halter and Griswold. He said it would be a “fail-safe” to simply adhere to the new standards. Most of the heavy lifting will be done by developers and architects who knew the new regulations were coming down the pike, said Arne Goldman, director of business development and a registered architect at Marous Brothers, a construction and development firm in Willoughby. “I think as codes change, we’re responsible to be compliant,” Mr. Goldman said. “It’s not any extra burden. It requires, in some cases, greater expertise or supervision of work.” The new regulations went into effect last week, but in order to give businesses plenty of time to familiarize themselves with the new standards, compliance for many of the provisions isn’t required until March 2012. However, if a facility was built or altered in the last 20 years and in compliance with the standards approved in 1991, further modifications aren’t required. The revisions apply to new construction and scheduled alterations after March 15 of next year, while projects taking place before would be grandfathered in. Some of the

changes are minor, such as lowering wall switches by six inches or offering more van-accessible parking spaces. “It’s when you start moving walls that you have to start looking at the new standards,” said Peggy Lipscomb, a project code specialist at the Cleveland architecture firm Bostwick Design Partnership. “They’re actually easier to follow than the old standards, which is great for us.” Though compliance isn’t necessary for another year, rushing through any renovations or construction projects simply to avoid adhering to the new guidelines might not be the best idea. Even the smallest tweaks — such as painting stripes on a parking lot — might fall under the revised rules, Mr. Comodeca said. For instance, the 1991 standards require only one van parking space per every eight other spaces while the 2010 rules require one for every six. The revised rules also contain new requirements for certain facilities not addressed in the original

law, including recreation facilities such as swimming pools, play areas, exercise clubs, golf facilities and bowling alleys. After March 2012, according to the regulations, building owners must make these locations accessible to those with disabilities if it can be done easily and inexpensively. Large businesses flush with cash are expected to remove “more barriers than businesses with fewer resources,” according to a Justice Department memo for small business owners. Mr. Comodeca noted that a commercial outdoor swimming pool, for one, might be required to upgrade its facilities by March 2012 to make them more accessible. The government, however, could offer some leeway for a swimming pool at a retirement community, which might have resources restricted by Medicaid or Social Security dollars and not have the discretionary cash on hand to make those changes. The revised rules aren’t all about bricks and mortar. Some of the

provisions already are in effect, and they aren’t necessarily going to cost business or building owners more money; rather, they will force a change in mind-set. Sports arenas, for example, are required provide information about the features of accessible seating. Also, new rules clearly define service animals as dogs — and, in some cases, miniature horses — that perform a specific task related to a disability. Business owners aren’t permitted to ask for proof of certification for the use of a service animal and can only ask what tasks it’s been trained to perform. Legal experts say it will be interesting to see how the regulations pan out over the next few years, but the cost implications shouldn’t be anything monumental and, ultimately, each situation will evolve differently. “Overall, there’s nothing here that I think would be overly earthshaking,” according to Richard Miller, a senior attorney at Vorys, Sater, Seymour and Pease’s Columbus office. “Most of this stuff and these requirements have been evolving over time in connection with basic government requirements that have been there for quite some time.” ■

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Fate of all-electric home discount still under consideration PUCO has no timeline for a decision on whether to nix, continue FirstEnergy rates By CHUCK SODER csoder@crain.com

N

ow it’s up to the Public Utilities Commission of Ohio to decide whether to let FirstEnergy Corp. phase out a decades-old discount it provides to thousands of people who heat their homes with electricity. On one side of the argument over the discount are the Ohio Consumers’ Counsel and Citizens for Keeping the All-Electric Promise, who say people who live in all-electric homes should continue receiving a portion of the discount. Those groups say that FirstEnergy told customers that the discount was permanent, and that, without it, property values will fall. On the other side of the issue are FirstEnergy and the staff of the PUCO. Their proposals differ, but

they agree that the commission should let the utility phase out the Residential Generation Credit. The utility argues that it never said the original discount would be permanent, and that there’s no evidence that removing it will hurt home values. The credit gives people who own all-electric homes in the Cleveland area a discount of about 4 cents per kilowatt hour, or 33% off of the standard rate in the region, which today is about 12 cents per kilowatt hour. FirstEnergy eliminated a similar credit in 2009. The following winter, those who heat with electricity began reporting sharp increases in their electric bills, and FirstEnergy created the Residential Generation Credit to provide temporary relief. Matt Butler, spokesman for the PUCO, said there is no timeline for a decision. He added that he could

not say which way the commission is leaning.

Wish lists Though the credit is set to expire on May 31, none of the four parties that have given recommendations to the PUCO favor an immediate end to the entire discount. ■ FirstEnergy, for instance, favors phasing out the credit over three years for the estimated 159,000 customers in Ohio who heat their homes with electricity. The proposal, however, would cap any increase in a customer’s bill at 12%, so the phase-out period would be longer for some customers, said Ellen Raines, spokeswoman for the utility. ■ The PUCO staff recommended phasing out the credit over five years, decreasing the size of the discount by 25% each year. ■ In a joint proposal, the Ohio Consumers’ Counsel and Citizens for Keeping the All-Electric Promise recommended that customers continue receiving some form of the credit, as well as two other discounts that FirstEnergy has no

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“You don’t need to be a Realtor to know (higher electric bills and lower property values will) affect the market.” – Sue Steigerwald spokeswoman, Citizens for Keeping the All-Electric Promise immediate plans to cancel. The groups want the Residential Generation Credit to vary each year so that, with all three discounts, people who heat with electricity would pay 35% less than the standard rate. Under the plan, customers’ bills still would increase because, when all three credits are included, all-electric homeowners served by FirstEnergy’s three Ohio subsidiaries today receive at least $.054 off of the current standard rate of 12 cents per kilowatt hour, which amounts to a 45% discount. Cleveland-area customers receive even bigger discounts. Sue Steigerwald, spokeswoman for Citizens for Keeping the All-Electric Promise, argues that FirstEnergy’s all-electric customers should continue receiving the Residential Generation Credit because some employees of the utility promised customers that the original discount was going to be permanent. During hearings on the issue, three former FirstEnergy employees testified they did promise ongoing discounts. “People were being told that this discount was forever,” she said. The utility itself, however, never made that promise, Ms. Raines said. When asked whether the company should be held responsible for statements made by employees, she simply said that the utility had no authority to guarantee rates, given that its rates are regulated by the PUCO.

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Ms. Steigerwald, who owns an all-electric home in Kirtland, said she believes some area residents saw their electric bills double shortly after FirstEnergy ended the original credit. She said she doubted anecdotal stories from residents who said the elimination of the credit caused their bills to triple. Larry Frawley, a real estate agent with Keller Williams Realty’s Westlake office, says the prospect that all-electric customers might have to pay more for electricity already is making it harder for them to sell their homes. During hearings before the PUCO, he cited data showing that all-electric homes in Strongsville sold for an average of $77.20 per square foot in 2010, while other

homes sold for an average of $88.36 per square foot — a difference of $11.16. That difference was just $7.45 in 2008, he said, citing numbers from the Northern Ohio Multiple Listing Service. He believes only one factor could explain the change: In 2010, people found out that owners of all-electric homes might lose their discounts. FirstEnergy paid for a separate study that showed no major difference in the sales prices of all-electric homes and homes heated by other methods, such as natural gas. Ms. Raines criticized Mr. Frawley’s data because it includes all types of homes. FirstEnergy’s study, however, compared allelectric homes to similar homes heated by other methods, she said. Even if Mr. Frawley’s numbers are wrong, common sense suggests property values will go down if electric bills go up, according to Ms. Steigerwald. “You don’t need to be a Realtor to know that’s going to affect the market,” she said.

Powering the change Ultimately, changes in the way the state regulates electric utilities make it necessary to eliminate the discount, Ms. Raines said. The utility first started offering the rates as a way to get customers to use more electricity during the winter, when power plants typically run below capacity. However, because of a 1999 state law that largely deregulated the power generation side of the utility industry, FirstEnergy now sells power to Ohio customers through a separate subsidiary, FirstEnergy Solutions Corp. Hence, the FirstEnergy subsidiaries that distribute power in Ohio — the Cleveland Electric Illuminating Co., Ohio Edison and Toledo Edison — do not run the plants, negating the key reason they introduced the discount. Another law, passed in 2008, requires utilities to promote energy conservation. Discounts promote consumption, Ms. Raines said. She also noted that FirstEnergy’s other residential customers are paying for the discount. “At some point we have to right that situation,” she said. ■

HEALTH CARE HEROES Crain’s Cleveland Business on May 2 will publish its Health Care Heroes section, and we’re seeking nominations to help identify honorees among the dedicated professionals who work in Northeast Ohio’s world-class medical and wellness communities. The nomination period runs through March 25. Crain’s will honor people and institutions in the following categories: Advancements in Health Care, Allied Health, Health

Care Advocate, Nurse, Physician and Volunteer. New this year to the section is a category called Wellness that will honor the region’s Healthiest Employer. To nominate your hero, go to www.CrainsCleveland.com/ HealthCareHeroes. The 2011 Health Care Heroes luncheon is scheduled for the week of May 16. Tickets will be available beginning April 1.

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CRAIN’S CLEVELAND BUSINESS 19

WWW.CRAINSCLEVELAND.COM

REAL ESTATE

Even solid operations on shaky ground if location not suitable By CHUCK SODER csoder@crain.com

E

arlier this year, Michael Symon, one of the more prominent chefs in the United States, closed Bar Symon in Avon Lake — the first eatery that Cleveland’s own Iron Chef has closed in Ohio. The location that housed the upscale tavern previously had been home to Swingos Grand Tavern, which also closed after a short stint in Avon Lake’s Towne Center. While many factors, economic and otherwise, contribute to the demise of a restaurant or retail store, site selection is critical, according to members of the local real estate community. Experts agree that retail businesses need a good location to survive — no matter what they sell or how good they are at selling it. That means a visible, accessible place near lots of potential customers. Finding those places isn’t as simple as it sounds, according to Jerry Herman, owner of commercial real estate brokerage and consulting services firm J.J. Herman & Associates Inc. of Beachwood. For instance, the Interstate 480 exit at Tiedeman Road sees plenty of traffic, but not enough to prevent a few nearby restaurants from closing over the past few years. Why? Mr. Herman figures it’s because people in that area just don’t eat out as much as they do in wealthier areas of town, such as in Cleveland’s eastern suburbs. Meanwhile, he and others described the Interstate 271 exit at Chagrin Road as one of the best locations in Northeast Ohio, boasting lots of well-routed traffic, lots of nearby offices and lots of people who make good money. “This is a lot more complicated than people think it is,” he said.

Complicated case in point Some spots are just hard to figure out. Bar Symon was located in Avon Lake at Walker Road and state Route 83. Avon Lake’s population has been growing in recent years, so it might seem like a good idea to put a restaurant in the area. However, Doug Petkovic, a partner with Michael Symon Restaurants, said the location wasn’t a good fit for the concept. The Bar Symon concept needed to be “a little more family friendly” to attract the volume of customers needed to sustain itself. “In Avon Lake, you should do what would be successful in Avon Lake,” he said. Still, Rebecca Tornberg said the location has potential. She and her husband, Nels, recently moved their catering company, Flavor the Town, into the space, where they also are opening a new restaurant, the Woodfired Grille. H.R. “Bucky” Kopf, CEO of Kopf Builders, which owns the Avon Lake property, said the 9,000-square-foot space that housed Bar Symon might have made it difficult to sustain. “The more square footage you

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have, the more overhead you have, the more volume you’ve got to do,” he said. Robert Nieto, president of R.G. Nieto Co., which specializes in the acquisition and management of shopping centers, did not directly comment on the Bar Symon location, but he noted that stores and restaurants close to the road tend to do better. He described location as the “strongest factor” he considers when making purchases. “If you buy with location in mind, then everything else is going to follow,” Mr. Nieto said. Keith Hamulak, senior associate with CB Richard Ellis’ office on Public Square, also noted that geography can play a role in terms of drawing customers from the surrounding area. In lakefront communities such as Avon Lake, population is not dense in all directions. “Unless your customers are perch and walleye, you’re excluding 50% of your potential market,” he said.

‘Perception of bad access’ Stores and restaurants need to be close to the customers they’re targeting, though that distance varies depending on the business, Mr. Hamulak said. For instance, fast-food restaurants typically draw customers within a three-mile radius. Clothing stores usually draw customers from five to seven miles away. Seemingly small factors also can have a big influence on a location’s success. For instance, CB Richard Ellis pushed to get Dunkin Donuts to put its new Lakewood store on the south side of Detroit Road — or what Mr. Hamulak called the “a.m.” side of the street. Being on the south side allows eastbound morning commuters to make an easy righthand turn onto a side street that connects to the store’s parking lot. He also advises retail stores to locate on what he calls the “far corner” of intersections. Traffic is great, unless the line at a stoplight blocks a store’s entrance. Locating on the corner on the other side of lights where traffic builds up helps avoid that problem, he said. “There’s a huge difference between the near corner and the far corner on a major property,” he said. Accessibility is a major concern for retailers, said Bobby Benjamin, associate broker for Goodman Real Estate Services Group LLC of Lyndhurst. He described how a store on state Route 306 in Mentor clearly was visible from the road, but many shoppers didn’t want to make the U-turn required to get there. The store has since closed, Mr. Benjamin said. “It’s the perception of bad access that killed it,” he said. Retailers also have to think about where people are going to be living and shopping years from now, said Peter Rubin, president and CEO of The Coral Co. of University Heights. In Northeast Ohio, population migration to outer-ring suburbs has “had a huge impact” on area retailers, he said. ■

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Kasich: Plan addresses state program inefficiencies continued from PAGE 1

More than once, these budget commentators used the same phrase — “the devil is in the details� — to characterize their reaction to the $55.5 billion, two-year general revenue spending plan. The new governor is more of a big-picture guy, so the presentations he has made since the budget was rolled out last Tuesday, March 15, glossed over the belt-tightening that will affect all levels of government immediately, in favor of the long-term makeover he believes the budget will force on state and local governments. While the budget is slightly higher than the state’s $54.7 billion 20102011 budget, it is filled with reductions that hit nearly every corner of government, including a nearly $1.3 billion cut to schools over the biennium. Among the key proposals are plans to sell five prisons to a private operator and use profits from liquor sales for JobsOhio, the governor’s new economic development organization. The money would allow JobsOhio, technically a nonprofit organization led by the governor, to make direct investments in companies that agree to stay in or move to Ohio.

“The most important thing we’re trying to do is to return Ohio to a time of economic greatness, to a time when people could get a good job; that’s what this is about,� Gov. Kasich told a group of seniors at the Fairhill campus in Cleveland last week. “Budgets are just numbers and policies, and they’re all very important, but the budget sets a stage for our vision of what we want to be like in this state.�

Much to like in 800 pages On many points, Gov. Kasich’s budget tracks recommendations made by the Ohio Chamber of Commerce and eight regional chamber groups in a report released last December. “Redesigning Ohio� called for privatizing some government services and cutting local government funding to force communities to collaborate and consolidate to save costs and public employee pension reform. Linda Woggon, executive vice president of the Ohio chamber, said her group so far is pleased with what it has heard. “We are in a position here in this state where our approach has to be transformational,� she said. “It can’t just be cut a little and hope

the economy rebounds, because the reality is the economy isn’t going to rebound to support this level of government unless we do some things to help it grow.� On some more specific proposals in the budget, such as using liquorsale profits for economic development and privatizing prisons, she was less emphatic. “We don’t have all the details,� she said when asked about the wisdom on diverting some liquor profits to support Gov. Kasich’s economic development plan. “All we know is that is going to provide an ongoing revenue stream for economic development, and that’s really critical.� J. Clarke Price, president and CEO of the Ohio Society of Certified Public Accountants, also was generally supportive. His group’s budget task force has been studying the budget problem for two years. “I’m impressed that the budget is built on a foundation of a vision and defined fiscal principles. (It’s) more than a mathematical balancing exercise,� Mr. Price said. “Yes, it has the potential to be a transformational budget making some fundamental changes.� But Mr. Clark also has concerns

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as he begins to delve further into the nearly 800-page budget. He noted that while the governor has said the budget “corrects a structural imbalance� caused by the use of one-time federal stimulus money to balance the last budget, the Kasich budget does the same thing in its first year by privatizing prisons and liquor sales and sending some of the proceeds from those transactions to the general fund. That might be OK, Mr. Clark said, of the plan to sell as many as five prisons, though he wants to hear more about “what the government has in mind when they say they will sell certain prisons.� He and others noted that the state has an ongoing responsibility for the safety and health of prisoners, which can’t be turned over to a private company.

Fun with numbers A reluctance to discuss the details of a massive document released less than a week ago isn’t surprising. But some of the caution comes from the way this budget has been rolled out. While Mr. Kasich has said the budget was straightforward, without smoke and mirrors, his presentations have cherry-picked the positive news. At the 2½-hour town hall meeting last Tuesday that unveiled the spending plan, budget chief Tim Keen said, for instance, that basic state aid for schools is up $170 million over two years. Yet the budget document shows for 2012 an 11.5% decline in all funds flowing through the education department, a broader measure of money flowing to the schools, and an additional 4.9% decrease in funding in 2013. Andrew Benson, executive director of Ohio Education Matters, a Cincinnati nonprofit that advocates for improving the education of Ohio students, generally supports the governor’s desire to make schools more responsive to parents and students, but he’s concerned about the immediate impact of the cuts. “These proposed cuts would be difficult for schools and districts to handle in the short-term, especially next school year,â€? Mr. Benson said.

“But the budget plan offers tools that can result in savings for school districts without hurting student achievement if they are willing to make changes in how they deliver educational services.� Joe Roman, president of the Greater Cleveland Partnership, was pleased with the plan for JobsOhio, the governor’s revamped economic development program. Through a complicated transfer, Mr. Kasich is proposing to use liquor-sale profits to provide money for the state to attract and grow businesses by investing in them directly. “One of our biggest concerns about JobsOhio came out great — a committed, long-term source of revenue for JobsOhio from the liquor lease is critical,� Mr. Roman wrote in an e-mail. “There will be some short-term pain, but the only real long-term solution for Ohio is growth, so a dedicated funding stream was critical to the success of JobsOhio and they came through on that.�

Are Ohioans ready for change? Jonathan Murray, managing director of Early Stage Partners, a Cleveland venture capital firm, wondered whether government can be comfortable with the boom-bust cycles of early stage investing, and he hopes the state investment plan is carefully worked out. “Are government entities or government people equipped to understand and manage those risks?â€? he asked. Similarly, Gene Krebs, a former member of the Ohio House of Representatives and now senior director of government affairs and policy at Greater Ohio, a Columbus-based nonprofit that advocates for smart growth, said he has high hopes that the governor’s cut in funds to local government will lead those governments to consider greater collaboration and even consolidation. But he’s not sure, since, he has found, some of the most important information gets buried. “When you get a state budget, read it from the back going forward,â€? Mr. Krebs said. “Because the good stuff ... is in the back.â€? â–

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Ohio’s jobless rate falls to 9.2% in Feb.

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The state’s job ON THE WEB Stories from Unemployment market last month www.CrainsCleveland.com. in Ohio remains continued its slow higher than the naimprovement, with unemployment tional average. The U.S. unemployfalling to 9.2% in February from ment rate for February was 8.9%, 9.3% in January, according to down from 9% in January. data released March 18 by the ■STAY THE COURSE: Ohio is Ohio Department of Job and Family Services (ODJFS). receiving $19.5 million in grants Ohio’s nonfarm wage and salary from the federal government to employment increased 13,600 over help turn around the state’s lowestthe month, to 5,081,900 in February performing schools. from a revised figure of 5,068,300 The state’s school districts will in January. Largest job gains were apply to the state this spring to get reported in leisure and hospitality a slice of cash. In order to be eligible (+5,700), educational and health for the funding, the districts must services (+3,300) and trade, transindicate they will implement one of portation and utilities (+2,300). four restructuring models. The The number of Ohio workers models include revamping the unemployed in Ohio was 542,000, entire structure at low-performing down from 551,000 in January. schools by replacing the principal, The number of unemployed has deevaluating existing school staff creased by 82,000 in the past 12 members and re-hiring no more months from 624,000. than half the teachers. Last month’s 9.2% unemployThe funds are part of $546 milment rate in Ohio compares with a lion available to states through the 10.6% statewide rate in February School Improvement Grant program 2010. in fiscal year 2010.

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21

SHOPPING CENTERS RANKED BY TOTAL RETAIL AREA

Shopping center Address Rank Phone/Web site

Total retail area (square feet)

Total number of stores Anchor tenants

Year opened

Owner

Leasing agent Phone number

1

Westfield SouthPark I-71 & Route 82, Strongsville 44136 (440) 238-9000/www.westfield.com/southpark

1,626,198

168

Dillard's, Sears, JCPenney, Macy's, Kohl's, Dick's Sporting Goods, Cinemark Theatres

1996

Westfield Corp.

Teri Robson (440) 734-6304

2

Eastwood Mall 5555 Youngstown-Warren Road, Niles 44446 (330) 652-6980/www.cafarocompany.com

1,459,168

NA

JCPenney, Macy's, Dillard's, Target, Sears, Old Navy, food court

1969

The Cafaro Co.

Mark Marini (330) 747-2661

3

Westfield Great Northern 4954 Great Northern Mall, North Olmsted 44070 (440) 734-6300/www.westfield.com/greatnorthern

1,228,969

NA

Dillard's, JCPenney, Macy's, Sears, Dick's Sporting Goods

1976

Westfield Corp.

Marjorie Shaw (440) 734-6304

4

Great Lakes Mall 7850 Mentor Ave., Mentor 44060 (440) 255-6900/www.shopgreatlakesmall.com

1,202,374

125

Dillard's, JCPenney, Macy's, Sears

1961

Simon Property Group Inc.

Pervis Bearden (317) 263-7608

5

Midway Mall 3343 Midway Mall, Elyria 44035 (440) 324-6610/www.midwaymallshopping.com

1,104,817

NA

Best Buy, JCPenney, Macy's, Sears, Staples

1967

Centro Properties Group

Gary McEnteer (440) 324-6763

6

Parmatown Mall 7899 W. Ridgewood Drive, Parma 44129 (440) 885-2090/www.parmatown.com

992,000

135

Macy's, JCPenney, Walmart, Dick's Sporting Goods

1960

Parmatown One LLC

David Krone (216) 464-5900 x235

7

Beachwood Place 26300 Cedar Road, Beachwood 44122 (216) 464-9460/www.beachwoodplace.com

975,000

120

Dillard's, Saks Fifth Avenue, Nordstrom

1978

General Growth Properties

Rob Clarke

8

Richmond Town Square 691 Richmond Road, Richmond Heights 44143 (440) 449-3200 /www.simon.com

921,026

NA

JCPenney, Regal Cinemas, Macy's, Sears

1966

Simon Property Group Inc.

David W. Huesser (440) 449-3201

9

Chapel Hill Mall(1) 2000 Brittain Road, Suite 830, Akron 44310 (330) 633-7100/www.chapelhillmall.com

863,406

100

JCPenney, Macy's, Sears

1966

CBL & Associates Properties Inc.

Chuck Bechara (412) 243-4800

10

Ashtabula Towne Square(1) 3315 N. Ridge Road E, Ashtabula 44004 (440) 998-2020/www.ashtabulatownesquare.com

814,026

40

Sears, JCPenney, Kmart

1992

Cabot Ashtabula Lease Co. LLC

NA

11

The Strip I-77 & Portage Road, North Canton 44720 (216) 464-2860/www.starkenterprises.com

800,000

31

Lowe's, Walmart, Giant Eagle, Best Buy, Borders, Bed Bath & Beyond

1996

Stark Commons Ltd.

Carla Lally (216) 464-2860

12

Southgate USA Shopping Center 20950 Libby Road, Maple Heights 44137 (216) 663-3850/www.southgateusa.com

788,130

78

Home Depot, Giant Eagle, Southgate Bowling Lanes, Cuyahoga County Department of Human Services

1955

SG USA Ltd.

Tim Soeder (330) 374-6350

13

Summit Mall 3265 W. Market St., Akron 44333 (330) 867-6997/www.simon.com

766,324

NA

Dillard's Men and Home, Dillard's Women, Macy's

1965

Simon Property Group Inc.

John Vavrus David Huesser (330) 867-6997

14

Sandusky Mall 4314 Milan Road, Sandusky 44870 (419) 626-8575/www.cafarocompany.com

759,164

NA

JCPenney, Macy's, Sears, Elder-Beerman, T.J.Maxx, Best Buy, Old Navy, Dick's Sporting Goods, Target, Cinemark

1976

The Cafaro Co.

Mark Marini (330) 747-2661

15

Crossings at Golden Link Aurora Road & state Route 8, Macedonia 44056 (216) 464-5900/www.thekronegroup.com

725,000

20

Target, Lowe's, Giant Eagle, Great Escape

2004

RLP Group

NA

16

Southland Shopping Center(1) Pearl Road & W. 130th St., Middleburg Heights 44130 (513) 521-4350/www.centroprop.com

714,714

36

Giant Eagle, Burlington Coat Factory, Marc's, BJ's Wholesale Club, Joann Fabrics

1950

Centro GA Southland LLC

Ron McGehee (513) 341-1317

17

Steelyard Commons 3447 Steelyard Drive, Cleveland 44109 (216) 381-2900/www.first-interstate.com

695,482

36

Walmart Supercenter, Home Depot, Target, Best Buy

2007

First Interstate Properties Ltd.

Randy Goodman (216) 381-8200

18

Cobblestone Square(1) 5500 Abbe Road, Sheffield Village 44035 (440) 892-6800/www.carnegiecorp.com

680,000

15

Sam's Club, Regal Cinema 20, Gander Mountain, Litehouse Pools

2001

Carnegie Management and Development Corp.

Joseph W. Khouri (440) 892-6800

19

The Cascades of Brimfield 3975 Cascades Blvd., Kent 44240 (216) 896-5609/www.kowitpassov.com

650,000

NA

Walmart Supercenter, Lowe's, Kohl's, Marshall's, Applebee's, Dollar Tree, Home Savings & Loan

2006

3D Cascades LLC

NA

19

University Square Warrensville Ctr. Rd. & Cedar Ave., University Hts. 44118 (216) 297-9510/www.inlandgroup.com

650,000

12

Target, Macy's, Jo-Ann Superstore, Pier I, T.J.Maxx & More

2003

Inland US Management

Brian Dorr (216) 297-9510

21

Severance Town Center 3640 Mayfield Road, Cleveland Heights 44118 (216) 381-5762/www.pinetreecommercial.com

633,000

32

Walmart, Home Depot, Dave's Markets, Regal Cinemas

1963

Pine Tree Commercial Realty LLC

Kyle Hartung (216) 381-8200

22

Avon Commons 35974 Detroit Road, Avon 44011 (216) 381-2900/www.first-interstate.com

631,646

37

Heinen's, The Home Depot, Kohl's, Target, Costco

2000

First Interstate Properties Ltd.

Randy Goodman (216) 381-8200

23

Great Northern Plazas 25859 Great Northern Shopping Center, North Olmsted 44070 (216) 755-5500/www.ddr.com

627,060

40

Home Depot, Marc's, Jo-Ann Fabric and Craft Stores, Best Buy, Bed Bath & Beyond, K & G Menswear, DSW, PetSmart

NA

EDT Retail Trust

Rob McGovern (216) 755-6435

24

Westgate Center Ridge Road & W. 210th St., Fairview Park 44125 (440) 324-6610

600,000

NA

Kohl's, Lowe's, Petco, Target, Books-aMillion, Marshalls, Ulta Beauty

2007

Centro Properties Group

Gary Macteer (440) 423-6610

25

Legacy Village 25001 Cedar Road, Lyndhurst 44124 (216) 382-3871/www.legacy-village.com

595,942

58

Dick's Sporting Goods, Giant Eagle, Crate and Barrel, Nordstrom Rack

2003

Legacy Village Investors LLC

Marcie B. Gilmore (216) 381-2900

26

Belden Park Crossings 5496 Dressler Road, North Canton 44720 (216) 755-5500/www.ddr.com

593,610

28

Target, Kohl's, Dick's Sporting Goods, Value City Furniture, Jo-Ann Fabric and Craft Stores, DSW, HHGregg, PetSmart

1997

EDT Retail Trust

Rob McGovern (216) 755-6435

27

Marketplace at Four Corners Aurora Road & Marketplace Drive, Bainbridge 44202 (561) 629-5520/www.mpgpropertygroup.com

579,488

21

Kohl's, Marshalls, Walmart Supercenter, Babies R Us, Famous Footwear, Michaels, Dick's Sporting Goods, Big Lots

2002

MPG Property Group

Brad Kowit (216) 514-5100

28

Ridge Park Square 4798 Ridge Road, Brooklyn 44144 (216) 464-5255/www.zeislermorgan.com

562,842

44

Lowe's, Marc's, T.J.Maxx, AMC Theatre, Bed Bath & Beyond

1987

Ridge Park Square LLC

Shannon P. Blackwell

29

Macedonia Commons 8210 Macedonia Commons Blvd., Macedonia 44056 (216) 755-5500/www.ddr.com

543,987

36

Walmart, Home Depot, Kohl's, Hobby Lobby, Cinemark 15, PetSmart, Champs Sports

1994

Developers Diversified Realty

Rob McGovern (216) 755-6435

30

Market Square at Montrose Flight Memorial Drive & Rothrock Road, Copley 44231 (216) 363-6415

529,531

14

JCPenney, Home Depot, Levin Furniture, Dick's Sporting Goods, Staples

1988

PERA Montrose Inc. c/o LaSalle Investment Management Inc.

Angelo Catalano (330) 374-6345

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Information from www.costar.com and/or shopping center and management company websites.

RESEARCHED BY Deborah W. Hillyer

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Care: Hospitals satisfied with franchise fee extension continued from PAGE 3

Medicaid, and you can’t do that when you’re in the inner city.� The A.M. McGregor Group, another Cleveland-area provider of services to the aged, is looking to limit its Medicaid exposure in order to weather further rate cuts, said Rob Hilton, president and CEO of the organization. McGregor is looking to boost the number of beds offered for skilled nursing care, which are typically covered by Medicare. Skilled-care is offered to patients recovering from hospital stays and need some sort of followup treatment or therapy. “We can increase our skilled care in response to a cut in Medicaid, but it’s significant every time we add one skilled-care bed because we’re decreasing Medicaid by one

St. Augustine Health Campus, a Cleveland-area nursing home provider, could stomach as much as $2.6 million in reduced reimbursements over the biennium, according to Patrick Gareau, St. Augustine’s president and CEO He said about 80% of St. Augustine’s patients are covered by Medicaid, a program that already doesn’t cover the cost of care, and further reductions to the program could force the nursing home to curtail its operations even further. “These are people that we’re talking about that are going to suffer if we don’t get this turned around somewhat,� Mr. Gareau said. “The only way to contend with this is to reduce your exposure to

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bed and depriving one more lowincome senior care,� Mr. Hilton said. Under Gov. Kasich’s proposal, Mr. Hilton said McGregor is poised to lose about $1 million over the next two years. Also, McGregor has taken over a program — known as Program for All-Inclusive Care of the Elderly (PACE) — that allows low-income seniors to live at home rather than in more-expensive residential care facilities, and it wants to use the program to launch a broader home-care operation. Rate cuts are problematic for nursing homes because of the slew of regulations with which they must comply, said Jeff Myers, chief operating officer of the Village at Marymount, a Catholic nursing home community

in Garfield Heights. “It takes a lot of people and a lot of processes to make sure you’re at 100% efficiency every day. That costs money,� Mr. Myers said.

Hospitals hit, too Hospitals also were walloped in Gov. Kasich’s proposal, though not as drastically as some expected. Many hospital executives in Northeast Ohio didn’t respond to requests for interviews, but Summa Health System CEO Thomas Strauss said he was encouraged by the emphasis on proposing payment structures that reward quality outcomes rather than high patient volumes. Hospitals applauded the governor’s plan to extend temporarily the franchise fee, a mechanism that

REAL ESTATE

allows the state to draw more federal matching dollars to prop up the state’s Medicaid program. Northeast Ohio hospitals — particularly those with high Medicaid volumes — had complained about its impact on their bottom lines. However, many made up some of the losses through elevated Medicaid reimbursements. “The governor faces so many challenges, and we want to work with him to find solutions for the problems facing health care and our economy,â€? Mr. Strauss said. Hospitals weren’t as receptive to the governor’s proposal of slashing their Medicaid payments by $478 million over the next two years. Because of the likely rate cuts on the state and federal level, Mr. Strauss said Summa is exploring ways to cut costs, and that includes evaluating services and staffing levels. “There’s nothing on the table that is sacred,â€? he said. â–

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THEINSIDER

THEWEEK MARCH 14 – 20 The big story: Berkshire Hathaway Inc., the company controlled by Warren Buffett, announced it will buy Wickliffe-based specialty chemicals maker Lubrizol Corp. for $9.7 billion in cash. The March 14 transaction, which has been approved unanimously by the boards of both companies, values Lubrizol at $135 per share. Lubrizol will remain located at its Wickliffe headquarters and will continue to be led by its current management team, Omaha, Neb.-based Berkshire Hathaway said. The companies expect the transaction to be completed during the third quarter of 2011. See related story, Page One. On a roll:

Metals distributor and processor Ryerson Inc. of Chicago said it bought Singer Steel Co., a flat-rolled steel processor based in Streetsboro. Terms of the deal were not disclosed. Singer has been in business for more than 85 years and had revenue in 2010 of about $50 million. Singer is Ryerson’s fourth acquisition in the past 14 months.

An instrumental purchase: Diversified manufacturer Eaton Corp. agreed to acquire Internormen Technology Group, a company in Germany that is a producer of hydraulic filtration and instrumentation technology. Eaton did not say what it paid for Internormen, which has sales and distribution subsidiaries in India, China, Brazil and the United States. Internormen employs 360 and had 2010 sales of more than $55 million. Moving out: GrafTech International Ltd. said Mark R. Widmar, its acting chief financial officer and president of its Engineered Solutions segment, has decided to leave the company “to pursue another career opportunity.” The maker of graphite electrodes and other carbon-based products was not more specific. As previously reported, GrafTech already had begun a search Shular for a new CFO. Craig Shular, who was GrafTech’s CFO prior to becoming CEO, will be acting CFO in the interim.

To their credit: Parker Hannifin Corp. refinanced its syndicated credit facility at $1.5 billion over the next five years. Parker said with a total of 21 lenders around the world, solely led by KeyBank National Association, the credit facility “is a key component of the company’s overall capital structure and supports the issuance of U.S. commercial paper.” Go to commercial: Abakan Inc. said its portfolio company, MesoCoat Inc., along with their partner University of Akron have received a $2 million award from Ohio Third Frontier program to accelerate the commercial demonstration of CermaClad, a high-speed fusion cladding process, and the development of CermaClad nanocomposite ceramic metallic materials. Abakan said a portion of the award will be used to construct a new powder coating and high-speed cladding facility at the University of Akron.

Campaign mode: Ohio will be the focal part of a broad-based campaign by FreedomWorks, which advocates for small-government causes, to target what the group considers “the rampant abuse of power that organized labor has engaged at the state and federal level to impact elections and the public policymaking process.” The budget for the first phase of the campaign is $5.6 million. The campaign will include “organized grassroots rallies and protest activities to counter union events, in addition to paid TV and online video ads.” It will begin in Ohio, followed by Wisconsin, Tennessee and other states.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Corsa Performance hears the sweet sound of success

protect their property. Mr. Kazen, a former rabbi at Mt. Sinai Medical Center in University Circle, decided to become an entrepreneur after the hospital ■ Corsa Performance Exhaust in Berea has closed in 2000. apparently struck a sweet note with owners In December he launched his latest of Ford’s popular Mustang muscle car — and endeavor, ClaimProof, which provides docpulled off a nifty bit of e-marketing as a result. ument backup services for individuals and The company’s stainless steel exhaust businesses. system, which it says delivers a powerful sound outside of the vehicle without creating That business is just the latest in a line of a drone in the cabin, was ventures Mr. Kazen has voted the top Mustang started to help people accessory for 2011 on the protect what they own. New York Times’ About. Through the same comcom web site. pany, technically called Winning the award got Base K USA Inc., Mr. Corsa’s product featured Kazen years ago created a on About.com, along with key chain return service a short write-up and links called Keyp-It: He sold key to Corsa’s own site. chains that contained a FILE PHOTO/JASON MILLER According to About.com: reference number so that, “Our readers selected Corsa Craig Kohrs, vice president of mar- if a customer lost their keys, Performance Exhausts as keting and sales at Corsa Perfor- whoever found them could their favorite Mustang mance Exhaust return them by dropping Aftermarket Product. Corthe keys in a mailbox. sa’s Mustang GT 5.0L systems are 18 lbs. From that idea came Keepet, a service to lighter than stock and are said to deliver a help return lost pets to their owners. It sold 153-percent increase in flow. Corsa says this collar tags that contained a 24-hour phone results in a performance gain of 7 hp and number for the company. And then Mr. 4 lb.-ft. of torque. Corsa also offers a Sport Kazen started ID Strip, a service that sold Exhaust System for the new V6 Mustang.” identification tags for laptops, cell phones Hmm, is that a rumbling V-8, or a really and other devices that often are lost. effective tweet that we’re hearing? — Dan Though ClaimProof is still small — Mr. Shingler Kazen is its only employee — he believes the concept has a lot of potential. Several companies offer services that allow people to back up their computer documents, but many of them target businesses, while ■ Jacob Kazen is really into helping people ClaimProof focuses more on individuals.

Former rabbi gets religion on document backup

MILESTONES

BEST OF THE BLOGS

COMPANY: US Endoscopy, Mentor THE OCCASION: Its 20th anniversary

Excerpts from recent blog entries on CrainsCleveland.com.

US Endoscopy, which designs and manufactures endoscopic devices, was founded in 1991 by Marlin Younker. During the past two decades, US Endoscopy has grown to 362 employees, has established distributor partnerships in more than 50 coun- Gulam Khan tries and boasts nearly 5,000 customers worldwide. “This is a great opportunity for our organization to look back on how far we have come over the last 20 years, and also to reinforce the core principles that have helped us grow,” says Gulam Khan, US Endoscopy’s current president, co-chairman and CEO. “I am extremely proud of our employees, customers and global network of partners.” For information, visit www.usendoscopy.com.

COMPANY: Moore & Associates Inc., Shaker Heights THE OCCASION: Its 10th anniversary The marketing firm headed by longtime ad agency veteran Tom Moore just celebrated a decade in business. Clients in that time have included Invacare Corp., Cleveland State University, the American Red Cross, Superior Tool, Debonne Vineyards and Donald Ross Golf Enterprises. Prior to founding the firm in early 2001, Mr. Moore was CEO of Wolf Cleveland (now Melamed-Riley) and executive vice president at Liggett-Stashower.

Oil’s price run-up isn’t a problem — yet — for Eaton ■ Eaton Corp. isn’t letting high oil prices get in the way of capital spending plans, according to Bloomberg. Oil is trading at 29-month highs, but the volatility would have to last three to five months before it would have “a significant impact in industrial capital markets,” Eaton CEO Alexander Cutler said at a recent industrial conference in New York. Bloomberg said concern that violence in Libya further would squeeze Middle Eastern supplies has helped push oil up 15% this year. During the conference, Mr. Cutler recalled the oil surge of May 2008 to July 2008, when consumers curbed spending while companies moved ahead with capital expenditures. “We’ve just got to see how this (current price run-up) plays out,” Mr. Cutler said. “I don’t think it’s going to be the immediate impact in the capital goods market that it’s going to be in the consumer markets. But if it goes on for too long, you’re clearly going to have to see some marginal impact.”

Growth the Subway way accommodates odd spaces ■ You might have noticed a recent changing of the guard in the fast food world, with Subway finally beating out McDonald’s as the worldwide leader in restaurants. (It’s 33,749 for Subway and 32,737 for the burger king, if you’re keeping score.) One key ingredient to the sandwich chain’s success? Some offbeat locations,

The company also allows people to fax hard documents directly into ClaimProof’s online “vault.” So why is he so interested in protecting people’s property? For one, he’s been there: About seven years ago, while visiting New York City, he pulled over to the side of the road with a flat tire. While one person changed his tire, someone else made off with his suitcase, which contained treasured items he received at his Bar Mitzvah and a bunch of paperwork related to insurance claims he planned to make. — Chuck Soder

Premier’s market premiere is marked by quick growth ■ Premier Bank & Trust NA, a community bank in North Canton, in less than a year has reached $100 million in wealth division assets under management. The bank, which has roughly $170 million in total assets, received its regulatory approval to open a trust department in April 2010 and began accepting assets last June, said Denise Penz, executive vice president, chief operating officer and wealth officer. Its wealth division offers asset management and trust and estate administration, among other services. “That’s impressive growth for a new entity,” said Charlie Crowley, managing director of Paragon Capital Group LLC, an investment banking firm in Mayfield Heights. The wealth division creates a revenue stream that enables the bank to do more lending, Ms. Penz said. The bank has locations in Stark, Wayne and Belmont counties; it lends in Summit, too. — Michelle Park

including one in Northeast Ohio, according to CNNMoney.com. “Having stores in non-traditional locations certainly helps,” said Les Winograd, a Subway spokesman. “It allows us to get into areas that some of our big competitors would find difficult to do. Subway is flexible and we have minimal equipment, which allows us to be creative in where we go.” The story highlighted six unusual Subway outlets, one of which is the 850-square-foot store — the world’s first Kosher Subway — in the Mandel Jewish Community Center. “The franchisee, Ghazi Fadoul, had already opened 100 Subway sandwich shops in the area but decided to replace cheese with a soy-based substitute and remove ham and bacon from Subway’s menu for his new venture,” CNNMoney.com reported. “The Cleveland Kosher organization supervises food preparation, except for Friday afternoons and all day Saturday, when the “closed” sign comes up, in observance of the Sabbath.”

With surgical precision, Clinic finds a promising startup ■ One of many good things you can say about the Cleveland Clinic is this: The institution knows how to pick a winner. The Wall Street Journal recently published its “Next Big Thing” list of the 50 most-promising venture capital-backed companies. (It’s a very California-heavy list; no Ohio companies are on it.) The top spot on the list went to Castlight Health Inc. of San Francisco, a developer of web-based software that gives employees personalized views of medical benefits and treatment costs. The Clinic is a major investor in Castlight.

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