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VOL. 32, NO. 15
$1.50/APRIL 11 - 17, 2011
Boomers’ retirements raise skilled labor worry
Housing values at decade-ago levels, may stay
Manufacturers fear shortage of workers
One data analyst predicts a ‘long, protracted bottom’; Cleveland down 22% from peak
By DAN SHINGLER dshingler@crain.com
By STAN BULLARD sbullard@crain.com
This is the year the baby boomers start to retire in earnest — 65 years after the World War II generation began producing the baby bubble in 1946 — and it’s a pig in the python that has many manufacturers worried. They aren’t fretting so much about paying for that generation’s retirement. The main concern is that they’ll lose valuable employees and they don’t believe they can find enough suitable replacements from Gens X, Y or Z. “It’s a serious situation, and as you look at the number of positions that are going to be open in five years, it looks even more serious,” said Don Johnson, vice president of Advanced Technology Services in Peoria, Ill., which maintains production equipment for manufacturers nationwide. Advanced Technology and Nielsen Co. recently surveyed more than 100 U.S. manufacturers and found companies are bracing for the cost of losing the skilled labor that baby boomers provide. Seventy-six percent of the respondents with revenues of $1 billion or less said the loss of those workers will cost them at least $1 million to $10 million over the next five years — and 34% of See BOOMERS Page 9
After listing his Westlake home last November for $340,000 and cutting the price twice, Charles Grace in late February sold for $285,000 the four-bedroom English Tudor he bought from a builder for $300,000 in 1991. Almost as tough to swallow as the home’s lack of appreciation after 20 years was the $15,000 in updates he put into the house at his agent’s request to ready it for sale. “The sale was a success, although it was a dismal situation,” said Dr. Grace, an Eaton Corp. retiree who
INSIDE: How home values in Cleveland and some of its suburbs have fared since 2000. Page 25 holds a doctorate in engineering and a law degree. “I had a boss once who said, ‘Get the job done.’ I got the job done.” As Dr. Grace’s experience indicates, and numbers from housing market data providers confirm, home values in Northeast Ohio have returned to what they were a decade ago and beyond. Stan Humphries, chief economist for online real estate data provider Zillow, calls the 2000s the lost See VALUES Page 25
JESSE KRAMER
Charles Grace stands in front of the Westlake house he sold in February — for less than he paid for it in 1991.
INSIDE The zoo goes big
NEWSPAPER
71486 01032
6
15
The Cleveland Metroparks Zoo is preparing to move five elephants — like Shenga here — into their new home, the $25 million African Elephant Crossing. Read Tim Magaw’s story on Page 3.
UH cancer center unites care, eases capacity concern By TIMOTHY MAGAW tmagaw@crain.com
As Linda Mangosh walked the freshly painted halls of University Hospitals’ new $260 million cancer hospital, she said that one day she hopes the sprawling facility could be converted to care for some other kind of disease.
Ideally, with the help of UH’s team of researchers and clinicians, the deadly disease would become a notion of the past. But until then, the new facility — known as the Seidman Cancer Center — will ease the capacity issues facing UH’s adjacent Case Medical Center and consolidate the health system’s cancer care into one building.
“All aspects of care will be under one roof,” said Ms. Mangosh, the cancer center’s vice president of operations. “This makes it much more comfortable for (the patients) and takes away the anxiety.” UH executives said the 120-bed, 375,000-square-foot center wasn’t necessarily built to capture additional market share or to go head-
See UH Page 8
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to-head with the Cleveland Clinic’s cancer program, but rather to address the system’s capacity issues. When the hospital opens in early June, 80 cancer patients will be transferred from Case Medical Center to the new facility. Dr. Nathan Levitan, president of the Seidman Cancer Center, said
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CRAIN’S CLEVELAND BUSINESS
INSIDE
WWW.CRAINSCLEVELAND.COM
COMING NEXT WEEK
Small business
Higher education
The state is looking at stricter laws to govern area Internet sweepstakes cafés, such as Pete’s in Eastlake (right), run by Mark Belich.
Crain’s analyzes the internship scene: Are more companies offering them? Are more of those offers paid, rather than unpaid?
REGULAR FEATURES Best of the Blogs ....................27 Big Issue ................................10 Classified................................26 Editorial..................................10 Going Places ..........................14
List: Bank asset managers ......23 List: Money managers ............22 Personal View ........................11 Reporters’ Notebook ..............27 Tax Liens ................................15
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APRIL 11 - 17, 2011
WHAT GOES UP ... The United States clearly has a long way to go toward getting health care costs under control. The average health care benefit cost for U.S. employers rose 6.9% in 2010 to $9,562, the biggest increase since 2004, according to benefits consulting firm Mercer. Here’s how this country’s per-employee health care benefit increase in 2010 compared with increases in other advanced economies worldwide:
Country United States
Increase in benefit costs 6.9%
United Kingdom
4.9
Ireland
4.9
Portugal
4.1
Netherlands
3.7
Poland
3.3
France
2.7
Italy
2.3
700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editors: Joel Hammond (jmhammond@crain.com) Sports Kathy Carr (kcarr@crain.com) Marketing and food Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Tim Magaw (tmagaw@crain.com) Health care & education Michelle Park (mpark@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing/Events Coordinator: Jessica Snyder (jdsnyder@crain.com) Advertising sales director: Mike Malley (mmalley@crain.com) Account executives: Adam Mandell (amandell@crain.com) Dirk Kruger (dkruger@crain.com) Nicole Mastrangelo (nmastrangelo@crain.com) Dawn Donegan (ddonegan@crain.com) Business development manager & classified advertising: Genny Donley (gdonley@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Lauren M. Rafferty (lrafferty@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Circulation manager: Erin Miller (emiller@crain.com) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com) 1-877-824-9373
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NEOUCOM opens new doors with facility Research building part of university’s plan to incubate a more entrepreneurial culture By CHUCK SODER csoder@crain.com
new approach to innovation. For one, the building will be a physical manifestation of NEOUCOM’s five-year plan to double the amount of research dollars it attracts. Plus, the building will give the school room to create an incubator
The $42 million research building that’s about to go up on the campus of the Northeastern Ohio Universities Colleges of Medicine and Pharmacy says a lot about the school’s
Horton
Schimer
for biomedical businesses that want to tap into expertise and resources at its campus in Rootstown.
Those plans are two big pieces of NEOUCOM’s broader effort to create a more innovative, entrepreneurial culture at the university, according to vice president of research Walter Horton and chief technology transfer officer Maria Schimer. “This is a new direction for the university,” said Ms. Schimer, who also is general counsel for NEOUCOM. The university in May is scheduled to break ground on the
Research and Graduate Education Building, a four-story, 80,000square-foot structure planned for the northwest corner of NEOUCOM’s campus. The school plans to move about 20 faculty researchers into the building 18 months later, Dr. Horton said, adding that it could hold 10 to 15 more researchers. The university, which has less than 1,000 students, aims to turn about half the 14,000-square-footSee RESEARCH Page 11
INSIGHT
Tax reform talks resurface amid state budget quandary Kasich holds firm as critics urge review of special-interest breaks By JAY MILLER jmiller@crain.com
JANET CENTURY
Cleveland Metroparks Zoo director Steve Taylor stands at the entrance to the zoo’s new African Elephant Crossing exhibit. Mr. Taylor and zoo officials hope the new home for five elephants provides a similar boost to when the RainForest opened in 1992. “It’s not rocket science,” he said. “People love wild animals.”
ZOO MAKES SOME NOISE Cleveland Metroparks’ new African Elephant Crossing exhibit marks its largest investment in two decades; strategic plan is next
Although he is asking Ohio’s cities and school districts to cut back because of a shortfall in state tax revenue, Gov. John Kasich continues to reject looking at any of the special-interest tax breaks that could be closed — loopholes that could capture several billion dollars for the state treasury. Critics, who range across the political spectrum, contend the state is failing to capture revenue that instead goes into the pockets of very narrow interests and, often, does so without any test of whether the tax break is doing what it was intended to do.
Ohio does not measure whether its tax breaks succeed at their purpose, and Gov. Kasich isn’t inclined to start now. “One person’s tax expenditure elimination is another person’s tax increase,” said Kasich spokesman Rob Nichols in an email. “While in Congress, Gov. Kasich was well-known for taking on inappropriate corporate welfare and he is committed to doing so again. But right now, most Ohioans don’t believe that they are currently under taxed.” Some states, including Michigan, are taking a closer look. Legislators there are debating that state’s film tax credit after Gov. Rick Snyder proposed ending the break to movie makers. “I will acknowledge it does create some jobs,” Gov. Snyder told the Detroit Free Press. “The question is: At what price? And what’s the opportunity cost in terms of other choices that we need to make?” See TAX Page 24
THE WEEK IN QUOTES By TIMOTHY MAGAW tmagaw@crain.com
C
leveland Metroparks Zoo is putting the final touches on its biggest — and we do mean biggest — investment in nearly 20 years, and officials hope it will stampede the zoo into the future even as they formulate a new strategic plan. The $25 million “African Elephant Crossing” exhibit is slated to open
early next month. It sits on five acres, and at 260,000 square feet quadruples the size of the former indoor and outdoor space for the animals. After all, this ain’t for Dumbo but rather five massive elephants — the largest weighing in at nearly 13,000 pounds. The new complex, built around the shell of a 1950s-era building near the zoo’s entrance, is the organization’s first big capital investment
“If you’re sitting on a property, there is no loss. It does not matter. Here’s the problem: People have to sell. If you have to sell, to move for a job or to retire, you are going to lose money.”
See ZOO Page 23
ZOO ATTENDANCE Year
— Kathy Eilers Lahey, a University of Akron real estate professor. Page One
Attendance
Year
Attendance
2010
1.18M
2000
1.34
2009
1.20
1999
1.19
2008
1.21
1998
1.18
2007
1.23
1997
1.25
2006
1.20
1996
1.10
2005
1.12
1995
1.18
2004
1.27
1994
1.26
2003
1.37
1993
1.44
2002
1.26
1992*
950,288
PHOTO PROVIDED
870,145
Shenga arrived at the Cleveland Metroparks Zoo in March. The 28-year-old female will be part of the new African Elephant Crossing exhibit scheduled to open in May.
2001 * RAINFOREST OPENS
1.27
1991
“There’s not a lot of entertainment in the world. … Coming here is a social event.” — Mark Belich, owner, Pete’s Internet Café in Eastlake. Page 16
“There are not a lot of good people who aren’t working. Either they retired, they never got let go or they moved — so the talent pool is getting smaller, especially in this region.” — Rick Capretta, an account executive at ProTech Staffing Solutions in Mayfield Heights. Page One
“We’re trying to hold off as long as humanly possible, but if things don’t change, I’ll have no choice but to raise prices. … Right now, we’re eating this.” — Izzy Schachner, owner of two Northeast Ohio cafeterias and a food truck. Page 16
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
APRIL 11 - 17, 2011
Forest City CEO: Momentum in selling assets likely to ebb Ratner says portfolio reorientation benefits balance sheet By STAN BULLARD sbullard@crain.com
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Look for Forest City Enterprises Inc. to ease off on its sale of assets from the torrid pace of the past few years. That was the word from Charles Ratner, CEO of the Cleveland-based real estate company, to investors and analysts in an April 1 conference call. Reflecting on the $172 million sale of Forest City’s 49% stake in 15 retail properties in New York, Mr. Ratner said the company is “not actively Ratner considering” portfolio sales of such scale. However, it isn’t done with disposing of assets entirely, as indicated by last week’s revelation that Forest City is talking to Cleveland Cavaliers owner Dan Gilbert about a possible sale of the Ritz-Carlton Hotel in Cleveland to Mr. Gilbert, who is developing with Caesars Entertainment Corp. a casino in the nearby Higbee Building. “We are a consistent seller in good times or bad,” Mr. Ratner said, noting Forest City will continue to look for opportunities to recognize value from within its portfolio. Since embarking in 2009 on a plan to dispose of certain properties and to bring in joint venture partners to share ownership of others, the company has sold $2.9 billion in assets, with a $1.4 billion gain on them under a plan to pay down debt and to increase its liquidity during the credit crunch
and deep recession. Forest City reported this month it had slashed its mortgage and projectoriented note debt 24% over a oneyear period, to $5.8 billion as of Jan. 31 from $7.6 billion 12 months earlier. Many of the assets Forest City shed are jewels. The retail properties in which Forest City sold minority stakes to Madison International Realty of New York represented nearly 20 years of effort to find places for bigbox stores in the difficultto-develop boroughs of the nation’s largest city. Consider, too, some of the deals Forest City closed this past year: It sold a share of its seven-building University Park life sciences complex for $108 million; raised another $25 million from selling the Simi Valley Town Center mall in Simi Valley, Calif., and four other properties in California, Colorado and Queens, N.Y.; plus reaped $17 million from selling shares in three apartment developments in the Washington, D.C., area. The prized assets that were sold were far different from Forest City’s pre-downturn dispositions, which Mr. Ratner often has referred to as “selling from the bottom.” However, because Forest City also has been opening the last few projects it continued to pursue after the recession hit in 2008, its rent revenues have continued to climb despite the asset sales. The real estate concern managed to increase its income from operations to $747 million for the fiscal
year that ended Jan. 31 from $736 million in fiscal 2010. Robert O’Brien, Forest City’s chief financial officer, said greater upside exists for rental growth from the assets it is opening than from those it is selling. He also said the company will remain focused on paying down debt even as it invests in projects such as its Atlantic Yards arena and residential development in Brooklyn, N.Y.
Busy in Atlanta, Baltimore Forest City recently started its second project since the 2008 crisis, the Foundry apartments in Washington, D.C. Its only other project was its long-term Atlantic Yards project. However, the company now is working on long-term plans for apartments as part of masterplanned developments near passenger rail terminals in Atlanta and Baltimore. “We feel major cities need this type of development,” said David LaRue, Forest City’s CEO-designate, who takes over the top job from Mr. Ratner in June. Rich Moore, an analyst at RBC Capital Markets who follows Forest City, reflected on the developer’s need for a balancing act in his most recent report on the company. In an April 7 report, Mr. Moore wrote that he believes the company’s strength is in developing new properties, but it also needs to continue to slash its leverage in case banks require more company equity in mortgages outstanding. He expects Forest City to strengthen its balance sheet with additional sales of stock. ■
Akron General eyes Broadview Hts. foray By TIMOTHY MAGAW tmagaw@crain.com
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Broadview Heights is offering Akron General Health System a chunk of land to build a roughly $30 million, 115,000-square-foot wellness center in exchange for discounted rates for the area’s residents. The city and the health system recently signed a letter of intent to move forward on the proposal, and officials are developing a contract, according to Broadview Heights Mayor Sam Alai. Taxpayers won’t have to foot any of the bill, as Akron General will pay for the construction of the facility. “Once we started, I knew we were going down a good path. I don’t think it took all that long,” said Mayor Alai, who anticipates the building will open in 2013. “The business model needs to be profitable for Akron. They did market research, and there was a hole here.” The wellness center will be Akron
General’s first foray into Cuyahoga County, according to Dr. Tim Stover, president of outpatient services for the health system. After Mayor Alai approached Akron General about building a facility, Dr. Stover said the system’s market research showed that medical services in the area were few and far between. “Those people, if you ask them, they would rather not drive to Cleveland,” Dr. Stover said. “Health care is local, and they don’t have anything local.” Akron General currently has two health and wellness centers, one in Stow and another in Montrose. The system also is building a 98,000square-foot facility in Green, which is expected to be completed this year. The new facility will feature a 24/7 emergency department, three pools, three gymnasiums, fitness equipment and space for physical therapy. It will be built on the Broadview Heights city campus and
physically connected to the city building. Akron General will develop free wellness seminars and programs for Broadview Heights residents. Additionally, both the city and Akron General plan to develop medical office space to lure physicians to the area. Mayor Alai, who noted that health and wellness are a “hallmark” of his administration, said he’s already talking with people in the health care industry who want to bring additional facilities to the city. The public-private partnership model, he said, would also be something he’d like to share with others around the country. With the city providing the land to Akron General, the mayor said that trims about $2 million to $4 million from the cost of the project. “This will be the economic engine for this part of the city,” Mayor Alai said. “People are really looking forward to it.” ■
Volume 32, Number 15 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. 1-877-8249373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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CRAIN’S CLEVELAND BUSINESS
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APRIL 11 - 17, 2011
Investment role up next for respected nonprofit veteran Former Cleveland Foundation CFO Mullen chooses ‘dynamic’ world of asset management By MICHELLE PARK mpark@crain.com
Some of the emails they received contained only one word: “Wow.” After news spread that J.T. Mullen would join Fairport Asset Management Mullen as the wealth management firm’s first chief investment strategist, a number of people who know Mr. Mullen congratulated the Fairport executives who snagged him. More than one person used the
word, “Wow,” said Kenneth Coleman, managing partner of the Cleveland firm. And “several of his former colleagues (said), ‘You’re so lucky,’” added Heather R. Ettinger, also managing partner. In June 2010, Mr. Mullen, 63, retired from his post as senior vice president and chief financial officer for The Cleveland Foundation, the secondlargest community foundation in the country. Not long thereafter,
Mr. Coleman and Ms. Ettinger, who has known Mr. Mullen for some time, floated the Fairport opportunity by him. Mr. Mullen waited. He’d been advised by a mentor and friend to take his time determining his next step. He told Fairport he would take a six-month breather. “We waited about six months and two days,” Ms. Ettinger joked.
Embracing his inner geek A soft-spoken Cleveland native, Mr. Mullen had worked for The Cleveland Foundation for 23 years. During his tenure, the foundation’s endowment grew to $1.8 billion from $400 million. He spent his short-lived retire-
ment taking trips, visiting family and finally making an appearance at Cleveland Indians’ spring training in Arizona — something his schedule hadn’t allowed previously. During that time, he was presented with a number of opportunities. “I really took the opportunity to think about what I really, really enjoy doing,” Mr. Mullen said. “I really enjoy the world of investments,” he added, because it’s “very, very dynamic.” Mr. Mullen started with Fairport last Monday, April 4. The firm employs nearly two dozen people and serves high net-worth clients. It counts more than 500 household clients and north of $750 million in assets under discretionary man-
BACK IN TIME J.T. Mullen, who recently joined Fairport Asset Management after a long tenure with The Cleveland Foundation, was named a Crain’s CFO of the Year in 2007. Highlights from his nomination form for that award: ■ “He is highly regarded nationally, a leader among leaders in the foundation field, known for his expertise, innovation and character.” ■ “His financial skills have had a positive impact on Greater Cleveland and its citizens by multiplying foundation dollars available to invest in worthy causes.”
agement. As chief investment strategist — a new role Fairport executives developed with Mr. Mullen in mind — Mr. Mullen is responsible for charting the firm’s longer-term strategy for investing clients’ money. Although some might consider him “geeky,” Mr. Mullen said, he’s eager to get down to research. He also will chair the firm’s investment committee. Asset allocation drives more than 90% of performance for investment portfolios, so when people focus only on individual stocks, it’s like scrutinizing the shrub beneath a tree in the forest, Ms. Ettinger said. “We need somebody looking at the forest and saying, ‘What’s different?’” she said.
Cleveland’s E.F. Hutton Fairport actually has been an approved investment manager for The Cleveland Foundation, so Mr. Mullen and Fairport executives worked together previously, only on opposite sides of the table. Plus, Ms. Ettinger and Mr. Mullen volunteer together on an investment committee for the nonprofit Sisters of Charity Foundation. Given his influence, Mr. Mullen could be a louder voice around the table, Ms. Ettinger said. But he’s not. “He does not dominate conversation, but when he speaks, everyone listens,” she said. Fairport executives are proud the firm attracted talent of Mr. Mullen’s caliber. It’s a testament, they say, to the company’s stature in the industry, and it should be beneficial to their other personnel, who stand to learn from him. One of the “wow” e-mails company executives received was sent about a week ago by Lawrence H. Hatch, president of The Private Trust Co. N.A. in Cleveland, for which Fairport is a preferred investment manager. Mr. Hatch actually wrote two words: “Wow … congratulations!” “The Cleveland Foundation is one of the wonderful successes of our city, and (Mr. Mullen) deserves a lot of credit for that over the years,” Mr. Hatch said via an email to Crain’s. “I believe (he) will make Fairport an even stronger firm … even better for our clients who use them.” Mr. Mullen said he will gauge his success based on how well Fairport is meeting its clients’ long- and short-term expectations. He lives in Westlake with his wife, Mary. Things most people might not know about him: The initials stand for John Thomas. And back in the mid-1960s, Mr. Mullen played the electric bass for three or four different bands. One time, he wore a wig because the band’s contract required it. ■
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BRIGHT SPOTS It’s not all bad out there. Here’s a selection of recent items from Bright Spots, a weekly feature on Crains Cleveland.com that highlights positive developments in the Northeast Ohio business community. ■ Prospect Mold of Cuyahoga Falls, which makes molds, dies, tooling and tight-tolerance machining for the automotive and aerospace industries, received the 2010 Global Supplier of the Year award from Northrop Grumman Corp. and was awarded a $17 million contract to provide the company with custom machining for a long-term defense project. The Global Supplier of the Year Award is the highest award Grumman’s Tooling Division presents each year to one of its more than 50 approved suppliers in North America. A Northrop Grumman executive, Michael Wyhowanec, recently came to Prospect Mold’s headquarters to present the award to all 106 of the company’s employees. Prospect Mold chairman Bruce Wright said the company, which had sales of $24 million in 2010, has been a Northrop Grumman supplier for about seven years. The new contract with Northrop Grumman is for five years and is for work related to the F35 joint strike fighter, Mr. Wright said. As a result of this contract and
other new work, Mr. Wright said, Prospect Mold plans to add about 20 jobs this year and to invest about $3 million in new equipment. Prospect Mold was founded in 1945 by Mr. Wright’s father, William Wright. It also serves customers in the building products, home products, marine and heavy trucking businesses.
being streamed to the device from a server. To secure the protected health information, Mobile MIM provides “at rest” encryption through the use of a passcode and 128-bit encryption from within the app. All transfers use SSL encryption. Mobile MIM is intended for use by medical professionals, not patients. The company plans to release a second app intended for patients, VueMe.
CRAIN’S CLEVELAND BUSINESS ProSpec, GemSeal and Amerimix brands. The marketing firm is developing a national public relations program for Bonsal American that will include outreach to consumer and trade press and promotional activities for Sakrete’s 75th anniversary. Hitchcock Fleming also is developing a strategic media plan. At the 2011 World of Concrete Show in Las Vegas, Hitchcock Fleming produced press kits for Sakrete, ProSpec and Amerimix, conducted press outreach and helped launch the anniversary program. The Sakrete brand is the largest of the four brands. Sakrete products are available at home centers, independent retailers and building material suppliers across North America.
■ MIM Software of Cleveland, a provider of medical imaging software, said its Mobile MIM product has been approved on the Canadian App Store and has been issued a medical device license by Health Canada for remote diagnostic viewing of CT, PET, MRI and SPECT images on the iPhone, ■ Mercy Economic iPod Touch and iPad. Development InternaThe Mobile MIM App tional Corp. (Medic) of is free to download and Akron is teaming with includes sample images Akron-based Signet Enterto demonstrate its funcPHOTO PROVIDED prises to introduce an tionality. Physicians and enterprise development other medical profes- MIM Software’s Mobile MIM program that will start in sionals can download ■ Hitchcock Fleming & AssociSo-Ava, a rural town of Benin on images to the device using MIMAfrica’s west coast. cloud, an Internet-based service ates Inc. of Akron said it was selected The approach “will involve two that allows secure upload and by Bonsal American —a maker of tiers of enterprise development download of encrypted medical packaged building materials and pavement maintenance products loans for fledgling entrepreneurs in data. developing nations,” Medic and The Mobile MIM App is designed for both commercial and residenSignet said in a joint statement. as a so-called “thick client,” which tial construction — to provide “The average loans range from $50 means the data is downloaded to marketing and communications to $300. Proven accounts have the device for viewing instead of work for the company’s Sakrete,
7
shown the values of community, entrepreneurship and trust are regularly instilled as each micro business launches to start or expand their business, working together and regularly meeting with their micro business counterparts.” Medic and Signet said first-tier loan funds “involve training and equipping micro business entrepreneurs with capital, skills, ethics training, and equipment, effectively leading to sustainable incomes and management of their finances.” A second-tier loan fund “involves identifying successful micro entrepreneurs who have a sound business plan, with the passion, character and capacity to expand their vision to the next level,” according to a statement. “They will hire employees and agree to conduct their business and employee relationship practices in ways that conform to principles of honesty, integrity, education and giving back to their communities.” Medic president Larry Lallo said So-Ava “is a place where most of the people literally live in houses on stilts in the water. We are excited about our first joint venture to help micro business persons help themselves through investment of compassionate business leaders here in America.” Signet has business interests in real estate development, manufacturing, investment banking, public relations and public affairs consulting in North America, Europe and China, specifically in the areas of health care, higher education and institutional development.
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Honda boss predicts long UH: Facilities can help recruitment delay for U.S auto plants continued from PAGE 1
By MARK RECHTIN Automotive News
Honda Motor Co.’s North American plants could be operating at sharply reduced output for the next three months as the auto industry struggles to rebuild supply lines following the earthquake in Japan, the automaker’s top U.S. sales executive warned. American Honda Motor Co. executive vice president John Mendel last week said he foresees parts shortages having an impact on the automaker’s North American plants for “60 to 90 days ... that’s my working number for now.” In a best-case scenario, Mr. Mendel added, the production cutbacks could be as short as 30 days. Last week, Honda reduced production at five of its six North American plants by as much as half because of a shortage of parts from suppliers damaged in the March 11 earthquake in Japan. About 90% of the vehicles Honda sells in the United States are assembled in North America, and 600 of its 710 main suppliers are based here.
But Mr. Mendel said that something as inconsequential as a missing speedometer needle can stop an assembly line. “We can’t drive up to these suppliers to ask what’s going on because there’s debris on the roads three meters deep,” he said during an interview at the press launch of the 2012 Honda Civic. “In some places, they are still recovering bodies. And even if you have a warehouse full of finished microchips, the roads are ruined, and you are in the radiation zone. What are you going to do?” Honda imports the CR-Z and Insight hybrids and the Fit subcompact from Japan. Mr. Mendel noted that it would be “erroneous to think we can’t make it up.” Honda’s new plant in Indiana, for example, has been ramping up to build 100,000 units a year, but it has a capacity of 300,000 units. Mr. Mendel said he doubted Honda “will be any more or less impacted” than any other automaker. “If the industry runs down on inventory in late May or June, we’ll be in there, too,” Mr. Mendel said. ■
University Hospitals’ cancer patient volume has grown exponentially — a factor he attributes to the region’s aging population and its industrial past. Over the last 10 years, the system has seen a fourfold increase in the total number of cancer patient visits and now sees about 8,000 annually. Also, between 2005 and 2010, Case Medical Center’s cancer-related hospital discharges increased to 6,500 a year from about 5,200. “This was an opportunity to deal with our capacity constraints and, at the same time, build one of the only freestanding hospitals dedicated to cancer patients and their families. It was an exciting opportunity,” Dr. Levitan said.
A place to heal A freestanding cancer hospital certainly has its advantages, according to Bill Ryan, president and CEO of the Center for Health Affairs, an advocacy group representing area hospitals. For one, it serves as a tool to recruit cancer clinicians because the freestanding hospital deals with a sole disease, so the competition for space and staff is less of an issue than it might be at an all-encom-
PHOTO PROVIDED
University Hospitals’ new Seidman Cancer Center passing medical center. “The people who are going to work at Seidman are all focused on oncology and cancer care,” Mr. Ryan said. “It creates a level of focus within the staff, which I think is welcomed by the community and patients.” Levitan The Seidman Cancer Center is one of the hallmarks of UH’s $1.2 billion Vision 2010 construction and renovation project. Like the system’s recently completed Ahuja Medical Center in Beachwood, the Seidman Cancer Center is strewn with hundreds of pieces of artwork, the latest equipment and private rooms. Perhaps the most striking feature is its cascading glass façade that offers patients lush views of the city’s skyline and will eventually overlook large areas of green space now under construction off Euclid Avenue. “We’re certainly thrilled that the building makes such a wonderful addition to the appearance of this part of the city,” Dr. Levitan said. Because capacity issues were one of the driving forces behind the new facility, one floor of the Seidman Cancer Center could accommodate an additional 30 beds. “It’s expected over the next several years (the region’s) cancer rates, which are already higher than the
national average, will continue to rise,” Dr. Levitan said.
Just down the road The Cleveland Clinic’s Taussig Cancer Institute — also nationally recognized as a cancer-fighting juggernaut — has upgraded several of its facilities in recent years. In 2009, the Clinic opened a 44-bed, 25,000-squarefoot floor for bone marrow transplant and leukemia patients. Dr. Brian Bolwell, the institute’s interim chair, said the Clinic was aware of University Hospitals’ endeavors but noted that it was important to remain focused on its own progress rather than that of its competitors. “We certainly welcome what other organizations are doing for the benefit of cancer patients, but our job is to keep doing what we’re doing, which is to be a premiere cancer center in the United States and worldwide,” he said. In December, Dr. Derek Raghavan — then head of the Clinic’s cancer program — announced he was leaving the health system to help start a new cancer hospital in Charlotte, N.C. Dr. Bolwell said a search for Dr. Raghavan’s replacement is under way but that it could take several months before a decision is made. ■
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Boomers: Recruitment, training will cost manufacturers plenty continued from PAGE 1
respondents said it would cost them $50 million or more. Among big manufacturers with revenues of more than $1 billion, 32% said the loss of baby boomers from their work forces will cost their companies $100 million or more over the next five years. Those losses will come in the form of missed production, overtime, a loss of quality and customer satisfaction — and, most of all, increased expenses for training and recruitment, the survey found.
Mr. Siracusa was referring to a group of Lake County manufacturers formed by Roger Sustar, owner of Fredon Corp., a Mentor manufacturing company that works closely with the college and local high schools on educational programs. Working with educators is one way manufacturers are trying to attract and train new workers in Northeast Ohio. More of them are seeking relationships not only with colleges and technical schools, but also with high schools as they try to develop future employees.
Local preparations
Buying time
In and around Cleveland, manufacturers are gearing up for the challenges ahead, in part by investing in training and supporting local educational efforts. “Recently, I have been introducing job shop owners to the on-the-job training grants offered through (the city of Cleveland and Cuyahoga County’s) Employment Connection. Several companies are scheduling out as far as three years to make the inevitable transition,” said Mary Kaye Denning, co-founder of the Manufacturing Mart in downtown Cleveland, which assists manufacturers with product development, training and other issues. “They know they must train the replacements, and some have plans in the works to have the new hire come on at least six months ahead of the retirement to learn the ropes,” Ms. Denning said. Companies say they’ll need to spend more on training because young people who are willing to work in manufacturing generally don’t have the skills necessary to do so. And they’ll need to spend more on recruiting, just to generate interest in the training. “The retirement of baby boomers is definitely a concern,” said Tony Siracusa, chief operating officer for US Endoscopy in Mentor, a medical device manufacturer. “We have not seen the direct impact of it yet, but we are definitely seeing a lack of interest in entrylevel technical positions from the current generation,” Mr. Siracusa said. “This is why we believe in the (Alliance for Working Together) at Lakeland (Community College), hoping that we could have a trained local work force ready to replace some of the folks that will soon be retiring.”
For now, manufacturers have been given a slight reprieve, said Judith Crocker, director of manufacturing
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education affairs at Magnet, a Cleveland manufacturing advocacy and support group. Dr. Crocker for years has warned manufacturers of the coming retirement boom and has preached the gospel of more vocational education for students not bound for college in order to help meet the labor shortfall. The wave of retirements still is coming, Dr. Crocker said, but was forestalled as many baby boomers pushed their retirement plans back when the recession hit and their retirement accounts shrank. They eventually will retire, and many already are finding their investments have recovered somewhat from their lows in 2008 and 2009.
“It’s not yet been the tsunami that some have anticipated, but it’s definitely looming on the horizon,” Dr. Crocker said. Those on the front line say that’s exactly what they’re seeing as well. “We see a trend where both salary and hourly folks prefer to either continue working past the age of 65, or they opt for a reduced work schedule — for example, two to three days per week for a few years, to supplement any retirement income,” said Andrew Logan, CEO of Logan Clutch in Westlake, which makes clutches for machine tools, tugboats and other specialty uses. Mr. Logan said he’s using that extra time to have his older, semiretired workers train the next gen-
eration of full-time employees. Training will be key if manufacturers want to have the employees they need, said Advanced Technology Services’ Mr. Johnson. And it only will become more important going forward, say others. In the meantime, the number of available skilled workers probably will shrink further, said Rick Capretta, an account executive at ProTech Staffing Solutions in Mayfield Heights who works with many area manufacturers. “There are not a lot of good people who aren’t working,” Mr. Capretta said. “Either they retired, they never got let go or they moved — so the talent pool is getting smaller, especially in this region.” ■
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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
Win, or lose?
G
ov. John Kasich and his Republican colleagues in the General Assembly have won the legislative battle over Senate Bill 5. However, we have an uneasy feeling that they overplayed their hand and come this fall could lose the war over limiting the collective bargaining rights of public employees in Ohio. Public employee unions already are marshaling the troops as they prepare to collect petition signatures so they can put on the November ballot a referendum on SB 5. This strategy should surprise no one. Unions in Ohio and nationwide see the Buckeye State as a battleground in preventing the erosion of collective bargaining rights for public employees. As a result, organized labor and its legislative surrogate, the Ohio Democratic Party, likely will pour millions of dollars into a campaign to convince Ohio voters that SB 5 is an attack on the middle class and should be repealed. It will be interesting to see whether chamber of commerce groups, other business interests and the Ohio Republican Party can pool their resources in a similar way in order to defend the bill as a necessary step toward reining in the excessive cost of government. We also wonder whether business will speak with one voice in favor of SB 5. Evidence already exists of cracks in the unified front of business. Two weeks ago, Michael Broderick, CEO of the much-heralded Turning Technologies in Youngstown, announced that he was resigning from the board of the Youngstown/Warren Chamber of Commerce and his company was withdrawing its membership from the chamber because of the group’s support for SB 5. In his resignation letter, Mr. Broderick took issue with what he called the “flawed” voting process for endorsing the bill, which he says was backed by the chamber even though a majority of board members either abstained from voting or didn’t vote at all. But he also attacked SB 5 itself. “I am a strong supporter of teachers and safety forces workers as some of the greatest heroes in our society,” Mr. Broderick wrote. “To single these heroes out and remove rights that are available to the rest of society I feel is simply unconscionable and not in line with my personal beliefs.” Now, understand that Mr. Broderick’s company makes a chunk of its money selling wireless, interactive audience response systems to K-through-12 schools and colleges — both large employers of the people affected by SB 5. So, he might not want to alienate the folks who use Turning Technologies’ products. But, also keep in mind that other companies — especially unionized ones — may not want to be identified as being on the side that has chosen to pick a fight with labor. We’ll never know whether public employees wouldn’t have reacted as fiercely to a collective bargaining bill that wasn’t as far-reaching and antiunion as SB 5. However, if unions succeed in defeating SB 5 in a referendum, Gov. Kasich and the bill’s backers will have themselves to blame for taking a good concept too far — and they’ll have failed the people of Ohio in the process.
FROM THE PUBLISHER
Service is plenty better in Barbados
T
despite a 6:30 a.m. departure from his is a story about Barbados, my Cleveland — can’t connect you to the family, Cavaliers owner Dan morning flight from Miami to the island. Gilbert and air travel. And they No problem, we thought. We’d take a really are connected — kinda — cab to South Beach, where we had a honestly. wonderful al fresco breakfast, walked the The saga started out when a friend beach, shopped and hopped back into a graciously offered our family the use of cab in plenty of time to make our 7 p.m. his home in Barbados for our spring departure. vacation, and my kids (and their Except that a fuel depot fire parents) started counting down BRIAN the day before at the Miami airthe days after Christmas. Our TUCKER port was making refueling a bit normal yearly spring trip is to of a challenge, and we waited Orlando, and I don’t think my for six hours at the gate, finally wife could have tolerated a 14th boarding, though more than a (15th?) consecutive year in bit worried that at 2:30 a.m. we theme park-land. wouldn’t meet our planned airNot that there’s anything port transportation in Barbados. wrong with Orlando. It’s just But we stumbled into the that once your kids outgrow the warm air of the island with our glow of the Magic Kingdom and bags and saw our driver, Winston, ready the biggest attraction left is our teenage to whisk us away. He couldn’t have been son’s assault on the world record for more gracious, and customer-focused consecutive rides on “The Mummy” at (thus my reference to Dan Gilbert — Universal Studios, it’s time for a change. more on that in a minute). So off we went to Barbados, a jewel of We had a wonderful time in Barbados, the Caribbean. The good news was we were combining just a perfect mix of sightseeing heading to 85 degrees and sunshine. The and relaxing. A wonderful week later, bad news is that American Airlines —
mindful of the airport demands for international travel, we arranged for a cab to pick us up at 3:30 a.m. and Kerr was there early, eager to do whatever his bleary-eyed travelers needed. It was that way everywhere on Barbados, where the people were friendly, interesting and wholly customer-oriented. Then we got back to Cleveland — after another long Miami layover — and I saw my new suitcase come off the carousel with one wheel totally smashed off and another ripped. I walked into the baggage office, only to get this response: “Sorry, but we don’t cover that.” Probably, in the fine print of the ticket, there is language that allows an airline’s baggage handlers to slam your bags around and wreck them. I just wished the airline employee had cared a bit more. I kept thinking of how many times I’ve heard Dan Gilbert talk about empowering employees to do the right thing, and how I feel that way on every trip to The Q. Somehow, I think a Quicken Loans or Cavaliers employee might have handled my airport problem differently. ■
THE BIG ISSUE Has the high price of gas caused you to change your driving habits at all? Why or why not?
BRIAN MASTERSON
MAGGIE KOTKOWSKI
JERRY MASEK
MICHELLE ZEGLEN
Cleveland
Bay Village
Cleveland
Lakewood
I was in the position to buy a new vehicle (a Honda hybrid), so I was able to adjust.
Yes, I think some people don’t want to pay that much for gas to go to the gas station or the grocery store.
I already take transit every day. … But when I do drive, I drive less aggressively.
For me, not personally. I used to take the bus every day, but bus prices are still higher. … Convenience still outweighs my spending habits for better or worse.
➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.
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PERSONAL VIEW
Hard lessons apply to our challenges By MEGAN O’BRYAN
T
risha Meili, author of the best-selling memoir, “I Am the Central Park Jogger, A Story of Hope and Possibility,� offered insight and inspiration as the keynote speaker at Cleveland Rape Crisis Center’s sold-out Faces of Change luncheon on April 1. So, how can a survivor’s journey from despair to healing help leaders and professionals solve problems and impact our organizations? Trisha Meili was a successful young professional, working at Wall Street investment firm Solomon Brothers, when her life was brutally interrupted. In 1989, while jogging in Central Park, she was attacked, raped, beaten and left for dead. During her visit to Cleveland last week, Trisha shared how she approached the enormous obstacles she faced following this attack. Her sage message translates to any major challenge, personal and professional. Ms. Meili shared three “lessons� learned on her road from “victim to survivor.� The lessons speak to the
Ms. O’Bryan is president and CEO of the Cleveland Rape Crisis Center. resilience of the human spirit. But these same lessons resonate with successful business and community leaders, and can apply to tackling our region’s problems. Specifically, Ms. Meili credits her recovery to 1) the power of support, 2) the power of what we CAN do instead of what we cannot, and 3) the power of the present moment. After the attack, Ms. Meili benefited from the extraordinary support of her employer, family, medical professionals and even strangers from all over the world. Providing support for those within our organizations who need it, or seeking it out ourselves, can make a huge difference in whether we overcome a challenge. Ms. Meili also thrived by deciding to focus on her progress, instead of on how far she had left to go. Running one wobbly lap around the track or completing a physical therapy exercise were big wins that encouraged her to accomplish more each day. Last, Ms. Meili learned to stay
grounded in the present moment instead of resenting the past or worrying about how her future may unfold. Living these lessons helped Ms. Meili achieve a recovery beyond what doctors thought possible. After weeks in a coma and eight months in rehabilitation re-learning how to talk, walk and function due to her traumatic brain injury, she returned to Solomon Brothers to continue her successful career. Ms. Meili triumphed when she reclaimed her park and completed the New York City marathon, with thousands cheering her on, in 1995. Stories of trauma and abuse can be hard to hear. But much can be learned if we are brave enough to listen. Cleveland Rape Crisis Center is often awed by the wisdom we gain through the voices of courageous survivors who speak out. The Cleveland community listened intently to Ms. Meili, whose story infuses collective hope and possibility as we seek to create a thriving future for our region. â–
Research: Collaborations encouraged continued from PAGE 3
building that currently houses its researchers into what will be called the Public-Private Partnership Zone. The university plans to recruit young biomedical companies to the building; it already houses the research and development office for Pathogen Systems Inc., which does business as Crystal Diagnostics. NEOUCOM also aims to spin out more startups such as Crystal Diagnostics, which is working to commercialize a technology NEOUCOM and Kent State University developed to detect disease-causing microbes. The goal of the Public-Private Partnership Zone would be to get researchers from academia and industry to work together and draw inspiration from each other, thus creating knowledge, products and jobs, said Dr. Horton, who also is dean of NEOUCOM’s new college of graduate studies. “If you get the private sector and university scientists working together, they will find innovation,� he said.
Joining forces NEOUCOM plans to recruit companies with the help of JumpStart Inc. of Cleveland and other economic development groups that work with startups. Dr. Horton said he expects companies will want to work with NEOUCOM’s growing research staff and use its facilities, including its 20,000-square-foot animal testing lab. Crystal Diagnostics, which is in the process of moving its headquarters to Kent from Boulder, Colo., opted to keep its research offices at NEOUCOM because of both the facilities and the faculty, who’ve helped the company find new ways to apply its technology, said Dan Minardi, president and chief technology officer for the startup. Being in the middle of campus has been a “huge� help to the com-
pany, Mr. Minardi said, noting that employees often have unscheduled dialogue with passing faculty members. “We’re truly part of the university,� he said. While NEOUCOM has yet to begin recruiting startups, efforts to recruit researchers already have helped the school attract more than $10 million in research dollars in 2010 and 2009, up from about $5 million in 2008, Dr. Horton said. The increase was the result of a plan the university launched seven years ago. NEOUCOM in 2003 decided it could expand its research capabilities if it picked four areas of study on which to focus. Over four years, it settled on skeletal biology, cardiovascular and metabolic diseases, auditory neurosciences and community health initiatives. “We truly did a major reset in our research,� Dr. Horton said.
commercializing technologies. The change will give faculty new ways to earn credit toward tenure, she said. Since discussions of that change began, NEOUCOM has “had a number of our researchers approach the (tech transfer) office and talk to us in a way they have never talked before,â€? Ms. Schimer said. â–
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The pipeline is filling The increased focus has helped the school recruit high-performing faculty members from larger institutions. That effort continues, as NEOUCOM is in the process of finalizing the recruitment of a skeletal biology expert from a major university in the Philadelphia area who will bring along other researchers, Dr. Horton said. Two other recruits are in the pipeline as well, he said. The university is trying to get more from its existing faculty, too. For one, NEOUCOM recently put in place a plan that will give them access to more laboratory space as they bring in more research dollars, Dr. Horton said. It also is considering implementing bonuses and other incentives for its most productive researchers, he said. Plus, the school last week was scheduled to approve an addition to its bylaws that redefines “scholarship� to include activities such as patenting, participation in clinical trials and other activities related to
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Cleveland State scores bigger payday as Butler succeeds Bulldogs’ consecutive title game appearances give hefty financial lift to Horizon League members By JOEL HAMMOND jmhammond@crain.com
Butler University’s second consecutive run to the championship game of the NCAA men’s basketball tournament will push nearly $70,000 more than last year into Cleveland State University’s coffers and will boost CSU’s take from Butler’s incredible two-year dominance to about $775,000. The NCAA uses a complicated, rolling formula to dole out revenue from each year’s tournament to member schools and conferences. The money is generated from television broadcast rights, which are substantial in light of the 14-year, $10.8 billion deal the NCAA signed last year with CBS and Turner Sports. Last year, the college governing body gave over $180 million to 31 leagues, which then divvy up the money among member schools. The formula takes into account the last six years and awards “units” for each game a conference plays in those six tournaments. Last year’s
units were worth $239,664 apiece, and with an annual 8% increase, this year’s units should come in at $258,837. Thanks to Butler’s runs the last two seasons — five units apiece, as the NCAA awards no additional money for a championship game appearance — and upsets by CSU in 2009 and Wisconsin-Milwaukee in 2006, the Horizon League has 21 units for the six-year period ending with this year’s tournament. That amounts to $5.44 million, a 19.4% increase over last year’s $4.55 million (from 19 units). Then, the league gives Butler 30% off the top — or about $1.63 million — before splitting the rest of the payout among its nine other member schools. The remaining loot, or about $3.8 million, amounts to about $423,000 for CSU and each of the other Horizon League members, higher than last year’s approximate payout of about $354,000. Contrast those amounts with the payouts had Butler lost in the first round each of the last two years. Last year, other league members
Butler’s Shelvin Mack (1) fights through UConn’s Niels Giffey (5) and Jeremy Lamb in Butler’s loss on Monday night. LEXINGTON HERALDLEADER/ZUMAPRESS .COM
would have earned $279,608 (15 units); after this year’s tournament, the payout would have been $261,713 (13 units, without four from 2010 and four from this year). Brian McCann, CSU’s assistant athletic director for communications, said the league takes a major
portion of the money left over after Butler’s share in what amounts to league dues. But that’s not such a bad thing: Instead of paying those considerable fees out of CSU’s athletic operating fund, the school saves that money for other purposes.“We were rooting for Butler,” Mr. McCann said. “Any time our teams advance, it’s good for our league. (Potential recruits) look at us better; they say, ‘We’re capable of getting to the championship game from CSU, we’re capable of winning from the Horizon League.’” The Horizon League tied with the West Coast Conference for the 11thbiggest payout last year, according to NCAA figures. The 16-member Big East had 109 units over those six years — and a total payout of $26.1 million — by far outpacing the second-highest league, the Big 12. (Last year’s NCAA figures can be viewed at http://tinyurl.com/3kkvrfe.) The Cleveland-based Mid-American Conference, meanwhile, will be paid for seven units — about $1.81 million — after this year’s tournament; the last time the MAC had two teams make the tournament was 1999, and in five of the six years in this current rolling cycle, its sole representative has lost in the first round. MAC spokesman Ken Mather said the conference currently shares all the revenue equally, though it’s entertaining an incentive-based model. ■
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The NCAA distributes revenues from its annual men’s basketball tournament based on conferences’ performances over a rolling, six-year period. The Horizon League, which includes Cleveland State, is benefiting from Butler’s dominance; the Bulldogs have played in the last two national championship games. Here is a look at the HL’s last six years: 2006 (2): No. 11 WisconsinMilwaukee beat No. 6 Oklahoma, lost to No. 3 Florida 2007 (4): No. 5 Butler beat No. 12 Old Dominion, No. 4 Maryland, lost to No. 1 Florida; No. 14 Wright State lost to No. 3 Pitt 2008 (2): No. 7 Butler beat No. 10 South Alabama, lost to No. 2 Tennessee 2009 (3): No. 9 Butler loses to No. 8 LSU; No. 13 Cleveland State beat No. 4 Wake Forest, lost to No. 12 Arizona 2010 (5): No. 5 Butler beat No. 12 UTEP, No. 12 Murray State, No. 1 Syracuse, No. 2 Kansas State, No. 5 Michigan State, lost to No. 1 Duke 2011 (5): No. 8 Butler beat No. 9 Old Dominion, No. 1 Pitt, No. 4 Wisconsin, No. 2 Florida, No. 11 VCU, lost to No. 3 Connecticut
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
13
National Interstate growth reflects stable Ohio insurance industry Richfield company among those projecting increase in staff size By MICHELLE PARK mpark@crain.com
National Interstate Insurance Co. hadn’t done this amount of hiring in a single quarter for years. The Richfield-based company since Jan. 1 has hired 26 people, including 20 in Northeast Ohio, bringing its local staff to 326 and its total staff to 503. The company also has 36 positions open, 31 of which are in Northeast Ohio, said Pamela McDermid, assistant vice president for human resources. A subsidiary of publicly traded National Interstate Corp., National Interstate Insurance sells specialty property and casualty transportation
insurance to trucking companies, charter and school bus operators and limousine services. An acquisition last summer and increased sales are driving the recent hiring, Ms. McDermid said. One segment alone — alternative risk transfer, where customers the company insures share in underwriting risks and potential rewards — saw 57% growth in gross premiums written in the fourth quarter of 2010 over the fourth quarter of 2009. National Interstate remained fairly consistent in its hiring throughout the economic downturn, Ms. McDermid said, noting it hasn’t had hiring freezes or layoffs, except for a restructuring after its acquisition last July of Vanliner Insurance
Co. in Fenton, Mo. Employment levels have declined the last few years in the insurance business. However, the decreases at insurance companies in Ohio, which total about 245, were less than in some states, said Mary Bonelli, senior vice president for public information for the Ohio Insurance Institute, a trade association. “Even though there’s been a slight reduction, it’s a relatively stable industry for the state of Ohio,” Ms. Bonelli said. The average insurance company nationwide is projecting to increase its staff in 2011, albeit quite minimally, said Jeff Rieder, president of Ward Group, a Cincinnati consulting and research firm specializing in
the insurance industry. He cited the firm’s biannual labor outlook survey conducted in January for his forecast. Much of the current and coming recruitment appears to be in the areas of information technology, underwriting and claims, Mr. Rieder said. Claims was the area hardest hit during staff reductions, and companies are finding they “probably cut a little too close to the bone,” Mr. Rieder said. For National Interstate, hiring began picking up in late 2010, Ms. McDermid said. The majority of the positions National Interstate is adding are within accounting and claims, two of the company’s larger support
functions, which are handling increased demand due to the Vanliner acquisition. Several of the positions hired recently are supervisory in nature, according to Ms. McDermid. National Interstate’s other offices are in Hawaii, Missouri, Pennsylvania and the U.S. Virgin Islands. The company’s growth story is one Ms. McDermid said she is proud to tell amid frequent talk of people and jobs leaving the area. “There’s been so much focus on what’s not happening in Northeast Ohio,” Ms. McDermid said. “We’re a publicly traded company that’s right here at home. I think we’ve shown … that we support Northeast Ohio, and we support the community.” ■
ON THE WEB
Story from www.CrainsCleveland.com.
Survey shows IT optimism This year might be better than last year for local information technology companies, if the Northeast Ohio Software Association’s latest survey is any indication. Only 26% of the IT officials who responded to NEOSA’s fourthquarter survey stated that their companies aren’t hiring — the lowest figure reported since the organization started conducting the survey in 2005, said NEOSA president Brad Nellis. The organization received survey responses in January and February. That percentage stood at 54% when NEOSA conducted its survey for the fourth quarter of 2009. It dropped to 29% in the first quarter of 2010 before rising to 37% in the second quarter and then 40% in the third quarter. Other statistics indicated that area IT companies had a solid fourth quarter. For instance, 65% described fourth-quarter performance as “good” or “very good,” an improvement over three of the previous four quarters. Plus, 30% described their performance as “very good,” a figure that ranged from 15% to 24% over the last four quarters. The percentage of respondents who said they expect their companies to perform better in 2011 increased slightly compared to previous quarters, as did the percentage that said they plan to add staff in 2011. However, Mr. Nellis noted that statistics from the first quarter of 2010 looked better in many cases. And though the latest numbers are encouraging, he said he’s waiting to see survey results for the first quarter of 2011 before making any strong statements about where the sector is headed. In addition, 54% of respondents reported having “some difficulty” or a “hard time” finding “top tech talent,” which was up from previous quarters. — Chuck Soder
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
APRIL 11 - 17, 2011
GOING PLACES
Mission Grand Slam!
JOB CHANGES ARCHITECTURE VOCON: Tony Bandy-Zalatoris to project architect; Theresa A. Vitale to project designer.
CONSTRUCTION PCS: Rob Strickland to project superintendent and Joe Barklow to project manager, Euclid City Schools project.
FINANCE FIRSTMERIT BANK: Eric Peter Hollinger to senior vice president and commercial lender. LAKE NATIONAL BANK: Andrew L. Meinhold to president, CEO; Richard T. Flenner Jr. to vice chairman.
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OHIO COMMERCE BANK: Christopher J. Smerglia to executive vice president, chief lending officer.
FINANCIAL SERVICE BARNES WENDLING VALUATION SERVICES INC.: Craig T. Hickey to senior analyst; Adnan Qureshi to analyst. GRANT THORNTON: Brian Leonard to senior manager, transaction advisory services. LIBERTY MUTUAL: Richard Garcia Jr. to senior branch manager; Michael V. Stauss to senior sales representative. UBS ROCKY RIVER: Bradley H. Bartel to financial adviser, The Hartman Wealth Management Team. RETIREMENT SOLUTIONS: Astra Delvigs to administrative assistant.
GOVERNMENT THE CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY:
Christy E. Rodriguez to marketing and communications manager; Matthew Welsh to operations and facilities manager.
HEALTH CARE
Strickland
Barklow
Meinhold
Flenner
Hickey
Qureshi
Bartel
Laye
Nemec
Cullers
Rathke
Griffin
Newell
McCartney Wantz
CLEVELAND HEARTLAB LLC: Glenn A. Gershon to vice president, clinical laboratory operations and research and development. EMH HEALTHCARE: Dr. W. Craig Eldridge to family practice physician; Dr. J. Kristine Brown to general surgeon. THE METROHEALTH SYSTEM: Dr. Peter Laye, Division of Radiation Oncology; Dr. Carolyn Nemec to director of women’s health.
INSURANCE THE HOFFMAN GROUP: Gerty Delfs to commercial lines account manager.
LEGAL BROUSE MCDOWELL: Joseph Dattilo to partner in charge, Cleveland. MCDONALD HOPKINS LLC: Matthew R. Cox to of counsel. SONKIN & KOBERNA CO. LPA: Lori M. Ambriola to partner; Jill R. Cohn and Kathleen M. McManus to associates. SQUIRE, SANDERS & DEMPSEY: Michael A. Cullers and Sarah K. Rathke to partners. THE SWANSINGER LAW FIRM: John Swansinger to partner; Drue Marie Skaryd to associate. THORMAN & HARDIN-LEVINE LPA: Mark Griffin to shareholder.
MARKETING HOME TEAM MARKETING: Randy Newell to account executive.
NONPROFIT CLEVELAND METROPARKS ZOO: Rob McCartney to manager of horticulture. THE CONSERVANCY FOR CUYAHOGA VALLEY NATIONAL PARK: Ralph J. Davila to director of public relations and marketing. GEAUGA COUNTY HISTORICAL SOCIETY: Elizabeth Wantz to curator, Century Village Museum.
RETAIL MAURICES: Stacy Griffith to store manager.
SERVICE SAFEGUARD PROPERTIES: Michael Greenbaum to vice president, REO; Apryl Seide to general counsel; Jennifer Anspach to director of finance and accounting; Russ Klein to director of quality control.
BOARDS CLEVELAND SOCIAL VENTURE PARTNERS: Marcia Levine to president; Dr. Heather Vallier to vice president; Tim Ryan to secretary; Kevin Shaw to treasurer.
AWARDS OHIO STATE BAR ASSOCIATION: Joseph Kennedy (University of Akron) and Ray Weber (Renner Kenner) received the 2011 Ohio Patent Legacy Award from the Ohio Academy of Science and Intellectual Property Law Section. ST. PAUL AFRICAN METHODIST EPISCOPAL CHURCH OF AKRON: Angela Neal-Barnett (Kent State University) received the 2011 Harold K. Stubbs Humanitarian Award.
Send information for Going Places to dhillyer@crain.com.
STUFF Expecting growth, Bridgestone sets up in Morocco Bridgestone Corp. has established a sales company in Casablanca, Morocco, to serve what it sees as a “key region in which rapid economic expansion can be anticipated.” The new company, Bridgestone Tire Sales Morocco Sarlau, started operations April 1 with four employees. It reports to Bridgestone through the firm’s Bridgestone Middle East & Africa FZE business unit in Dubai. Bridgestone cited Morocco’s growing export business in minerals and agricultural products — the
result of recent free trade agreements with the European Union and the United States — for its optimism. In addition, Bridgestone said, Morocco is building its infrastructure along the Mediterranean Sea coast in hopes of becoming a hub for the distribution of goods in and out of North Africa. The office will be Bridgestone’s ninth in the region. The others are in Algeria, Egypt, Iran, Jordan, Lebanon and two locations in Saudi Arabia. Bridgestone did not disclose its sales expectations for the business. — Tire Business
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TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.
LIENS FILED Scoop Shops of University Heights Inc. 20650 N. Park Blvd., University Heights ID: 34-1942935 Date filed: Feb. 4, 2011 Type: Employer’s withholding, unemployment, corporate income Amount: $9,821 Vocational Services Team 1440 Rockside Road, Cleveland ID: 26-3597180 Date filed: Feb. 4, 2011 Type: Employer’s withholding Amount: $9,602 328 WW LLC 31360 Solon Road, Suite 34, Solon ID: 20-0493427 Date filed: Feb. 1, 2011 Type: Quarterly federal excise tax Amount: $8,779 Dimension Auto & Truck Inc. 2343 Superior Ave. E., Cleveland ID: 34-1713782 Date filed: Feb. 23, 2011 Type: Employer’s withholding, unemployment
Amount: $8,703 A M Custom Interiors Inc. 31525 Aurora Road, Suite 2, Solon ID: 34-1959672 Date filed: Feb. 4, 2011 Type: Employer’s withholding, civil penalty assessment Amount: $8,447 Deloach Orthodontics Inc. 5 Severance Circle, Suite 805, Cleveland Heights ID: 31-1565627 Date filed: Feb. 23, 2011 Type: Employer’s withholding, unemployment Amount: $7,853 Northeast Contracting LLC 25446 Bryden Road, Beachwood ID: 20-4369728 Date filed: Feb. 1, 2011 Type: Employer’s withholding Amount: $7,522 William E. Crowe M.D. Inc. 6681 Ridge Road, Suite 204, Parma ID: 30-0019966 Date filed: Feb. 4, 2011 Type: Employer’s withholding Amount: $7,343 Law Office of Amy S. Glesius LLC 1360 W. Ninth St., Suite 310, Cleveland ID: 20-3175570 Date filed: Feb. 4, 2011 Type: Employer’s withholding, failure to file complete return Amount: $6,919 High Tech Fusion Inc. 7603 First Place, Unit B6, Oakwood Village
ID: 34-1576545 Date filed: Feb, 4, 2011 Type: Employer’s withholding, corporate income Amount: $6,914 York Video Inc. 5731 Turney Road, Garfield Heights ID: 34-1732941 Date filed: Feb, 23, 2011 Type: Corporate income Amount: $6,620 Westlake Bistro Group Inc. 23800 Detroit Road, Westlake ID: 26-1444384 Date filed: Feb. 1, 2011 Type: Employer’s withholding Amount: $6,608 Lloyd L. Wilson LLC 25446 Bryden Road, Beachwood ID: 20-4369728 Date filed: Feb. 1, 2011 Type: Unemployment Amount: $6,516 C & C Investors Inc. 4411 Clark Ave., Cleveland ID: 34-1655137 Date filed: Feb. 10, 2011 Type: Employer’s withholding Amount: $6,373 Ohio Mills Corp. Ohio Mill Supply 1719 E. 39th St., Cleveland ID: 34-1834555 Date filed: Feb. 8, 2011 Type: Employer’s withholding Amount: $6,261 La Photo Inc. Beverly David Photography 13500 Pearl Road, Suite 109, Strongsville ID: 34-1911195 Date filed: Feb. 1, 2011 Type: Employer’s withholding
A center for cancer care. A home for hope. Welcome to our community, University Hospitals Seidman Cancer Center. Be the first to tour the region’s only freestanding cancer hospital on Sunday, April 17. Arrive for our Survivorship Celebration from 1-2 p.m., and stay for the Community Open House from 2-5 p.m. Enjoy refreshments, live entertainment, free health screenings and an afternoon of celebrating more hope. Located at the corner of Euclid Avenue and UH Drive on the University Hospitals Case Medical Center campus. Offsite parking and shuttle service available.
Our mission is you. O P E N I N G J U N E 2 0 11
C U R I N G C A N C E R E V E R Y D A Y.
1- 866 - UH4 - CARE
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
1- 866 - 8 4 4 - 2 2 7 3 UHSeidman.org
Amount: $5,842
Amount: $17,211
Triad Logistics Trucking Inc. P.O. Box 308, Berea ID: 20-8393993 Date filed: Feb. 8, 2011 Type: Employer’s withholding Amount: $5,544
B & C Tavern Inc. One Berea Commons, Berea ID: 34-1514084 Date filed: Aug. 6, 2008 Date released: Feb. 8, 2011 Type: Employer’s withholding Amount: $126,645
Team Energetics Ltd. 750 Alpha Drive, Suite A, Highland Heights ID: 34-1944817 Date filed: Feb. 23, 2011 Type: Employer’s withholding Amount: $5,496 Celebrity Tan Ltd. 26995 Pondside Point, Olmsted Falls ID: 26-0074226 Date filed: Feb. 16, 2011 Type: Unemployment Amount: $5,290 Skyline It Inc. 1090 E. 171th St., Cleveland ID: 20-5142492 Date filed: Feb. 23, 2011 Type: Employer’s withholding, unemployment Amount: $5,269
15
Barry H. Brooks M.D. and Associates 20050 Harvard Ave., Suite 107, Warrensville Heights ID: 31-1555066 Date filed: Jan. 22, 2008 Date released: Feb. 4, 2011 Type: Corporate income Amount: $93,948 DiFrancos Ltd. 6111 Oaktree Blvd., Suite 150, Independence ID: 34-1926066 Date filed: April 5, 2005 Date released: Feb. 23, 2011 Type: Employer’s withholding Amount: $14,742
LIENS RELEASED
Fischer-Markus Master Hair & Nail Design 7819 Broadview Road, Suite 2, Seven Hills ID: 34-1648378 Date filed: May 2, 2002 Date released: Feb. 10, 2011 Type: Employer’s withholding, unemployment Amount: $14,625
Arco Comfort Air LLC 22053 Aurora Road, Bedford Heights ID: 14-1867200 Date filed: Oct. 19, 2010 Date released: Feb. 8, 2011 Type: Employer’s withholding, unemployment
GC&E Inc. 25440 Miles Road, Bedford Heights ID: 31-1491227 Date filed: Aug. 24, 2010 Date released: Feb. 23, 2011 Type: Employer’s withholding Amount: $22,434
You Two Inc. 3475 Fairmount Blvd., Cleveland Heights ID: 34-1645049 Date filed: Feb. 23, 2011 Type: Employer’s withholding Amount: $5,088
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16 CRAIN’S CLEVELAND BUSINESS
INSIDE
18 EVENT PLANNER IN A NEW POSITION.
APRIL 11 - 17, 2011
SMALL BUSINESS Proprietors may have to raise prices on products Commodities costs gnaw at bottom lines By KATHY AMES CARR kcarr@crain.com
R MARC GOLUB
Mark Belich, owner of Pete’s Internet Café in Eastlake, said he supports more strict regulations on sweepstakes cafés.
STAKES ARE HIGH Some Internet sweepstakes cafés could go bust if state enacts stricter laws governing the operations By JAY MILLER jmiller@crain.com
M
ark Belich is betting Internet sweepstakes cafés will continue to thrive in Ohio. Mr. Belich is the owner of Pete’s Internet Café in Eastlake, which opened Oct. 15. He’s confident that any state or local laws that may be enacted won’t wash out his investment in computer terminals and software, which his comments during a recent interview suggested was well north of $50,000. However, there’s a chance he won’t win that bet. Ohio Attorney General Michael DeWine is pushing
legislation, not yet introduced, that could threaten Internet sweepstakes in Ohio. “They are really a threat to Ohio families,” Mr. DeWine said at a March 17 press conference accompanied by two state representatives, Nan Baker of Westlake and Marlene Anielski of Walton Hills, who are preparing an Internet sweepstakes bill for introduction. “They are a ripoff.” Internet cafés have been sprouting up over the last year in a number of states, including Ohio. Because money is exchanged and games appear to be played, courts and legislatures have been battlegrounds See STAKES Page 21
‘NOT A LOT OF ENTERTAINMENT IN THIS WORLD’ On a recent afternoon only a handful of people — four to eight over about an hour — were sitting scattered among the 60 computers in the dimly lit room that is Pete’s Internet Café on Lakeland Boulevard in Eastlake. It’s in a one-story building and is connected by a hallway with another of Mark Belich’s businesses, Pete’s Bar & Grill. (By the way, there is no Pete, Mr. Belich said; he and his dad just liked the name.) One flat-screen television was
showing a baseball game, another announced that the big sweepstakes prize was moving above $2,700. Off in a corner on a bar were complimentary coffee, soft drinks and snacks. “There’s not a lot of entertainment in the world,” Mr. Belich said. “Coming here is a social event.” He said Friday and Saturday nights are his busiest times. Mr. Belich wouldn’t say whether the sweepstakes business was making money, but he said a key for him has been the boost the café has given to
his bar and restaurant business. Mr. Belich said he bought into the business through Phone-Sweeps LLC, a Nevada-registered company with an address in a residential neighborhood in Toronto. He wasn’t sure what he was getting into when a Phone-Sweeps agent began to pitch the business to him last year. But eventually, it sounded good enough that when the agent went to close the deal by saying, “Write me a check for a $50,000 deposit,” Mr. — Jay Miller Belich agreed.
aising the prices on products may become the order of the day for more small businesses as they grapple with protecting their profit margins against the escalating costs of food and fuel. John Colozza, for one, has to increase the price of some confectionary treats by 10% and 20% this year alone to offset the ballooning expense of butter, sugar, cream cheese and flour. “It’s ridiculous,” said Mr. Colozza, founder of Parma-based Colozza’s Bakery. “Every time I order flour, it’s more. Cream cheese was $45 INSIDE: A closer (for seven 30look at the rising pound cubes); costs of some the next delivery commodities. was $53 and now Page 20 it’s $58. “We need to pass along some of those costs. There’s only so much we can eat,” Mr. Colozza said. Other small business owners say they share the bakery owner’s concern about how the spike in costs of commodities such as oil, wheat and corn will impact their bottom lines. Even though some proprietors are holding their prices steady, they only can absorb so much of the pricing pressure before they will have to pass along additional costs to their customers. “We’re trying to hold off as long as humanly possible, but if things don’t change, I’ll have no choice but to raise prices,” said Izzy Schachner, who owns two cafeterias and a food truck. “Right now, we’re eating this.” Keith Ashmus, immediate past chair of the National Small Business Association, said some small businesses such as grocery and retail stores — those most vulnerable to rising fuel and food costs — are in the early stages of implementing price increases. “I don’t know how they can’t, when some businesses such as grocery stores operate on low profit margins anyway,” Mr. Ashmus said.
Digesting reality The year-over-year rise in commodities is staggering, small business owners and economists say, driven in part by political unrest overseas, global crop shortages due to extreme weather conditions and See PRICES Page 20
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Pay the balance in full within 10 days of the statement closing date and get a 1.5% discount on virtually all purchases made that month. The discount will appear as a credit on the following billing statement. Pay 10% of the balance from new activity on your billing statement, plus the entire amount of any previously deferred payment or amounts past due by the “Please Pay By”date on that statement, and you can extend payment on the rest until the closing date of your next billing cycle, without penalty. Visit open.com/plum for details. ©2011 American Express Bank, FSB. All rights reserved.
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18 CRAIN’S CLEVELAND BUSINESS
C A S H
WWW.CRAINSCLEVELAND.COM
APRIL 11 - 17, 2011
SMALL BUSINESS apital improvement ccelerate growth timulate sales ire additional staff Durga Chigurupati in September opened Patra, an upscale stationery and floral shop at Eton Chagrin Boulevard in Woodmere. The storefront is an extension of her event-planning business.
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Ms. Chigurupati is an event planner turned event planner and store owner — a rarity in the field, insiders say. In September, she added to her repertoire Patra, an upscale stationery and floral shop at Eton Chagrin Boulevard in Woodmere. “Patra” is Sanskrit for leaf or paper. There, she sells items she handpicks from various independent vendors, including wrapping paper that some people have framed as decoration, greeting cards in a variety of languages and napkins that stand upright. Most members of the Event Planners Association work from homes or small offices to keep down expenses, said Kim S. Sullivan, senior vice president and chief marketing officer of the Lake Forest, Calif., organization. Ms. Sullivan tends not to see event planners opening storefronts. Hank Frisch, co-founder of the Event Planners Expo in Northeast Ohio, which is slated for April 28 this year, agreed that Ms. Chigurupati’s business move is “quite unique.” “I’ve gotten to know a lot of the local event planners,” said Mr. Frisch, also owner of Team Promotions in Beachwood. “I know of no one that has a retail store.” One reason for that, he said, is the two business models court different audiences. While retail stores target the general public, event planners generally look to specific client types, he said. Ms. Chigurupati said she’s been flattered by comparisons of her store to those in New York and Chicago. “I wanted something unique — not to have the same (product) people find anywhere,” she said. “There is no company here like mine that really does what I do.”
A perfect union
©2011 Peanuts Worldwide LLC. Peanuts.com
Ms. Chigurupati began her event planning business, Adhya Productions, in summer 2007, initially coordinating corporate events and expanding by request to do weddings, bar mitzvahs and the like. In early 2010, Eton staff approached her about opening a store. Coincidentally, Ms. Chigurupati had a plan for one but only had taken preliminary steps. Going retail, she figured, would al-
low her to work with clients on a larger scale, rather than on an individual basis tied to events. She liked what she saw at Eton: The proposed space wouldn’t be far from wedding-related stores. “I thought, perfect, the customer who comes, especially the brides, I’m right here,” she said. The retail store carries many more overhead costs. Ms. Chigurupati employs at Patra a full-time floral designer and two part-time sales associates, one of whom also works as an assistant event planner. The shop also requires Ms. Chigurupati to be present at certain times, whereas event planning afforded a more flexible schedule. “This is my first retail business, so I’m learning a lot,” Ms. Chigurupati said. “When I travel to conferences, they’re like, ‘Wow, how do you do it?’ It’s not easy. How do I do it? With help. It’s all about team.” Challenges aside, Patra generates an invaluable visibility. There’s the young woman who stepped inside the store, took advantage of the free hour-long consultation that’s offered, and now, is having her wedding planned by Ms. Chigurupati. Additionally, there have been businesspeople who came by the shop and later hired her to redesign office spaces. “I have a permanent place where I can display my ideas,” she said.
Booked solid April is traditionally when event planning picks up, and this will be Ms. Chigurupati’s first busy season since opening the store. She is trying not to schedule more than 10 or 12 events per year but acknowledges it still will be challenging executing events and managing the store. There are positives to wearing both hats when event planning is slow: She has the store to keep her busy and to generate income. As for the interested investors, Ms. Chigurupati told them no. “It’s just been six months,” she explained. “It’s a baby. I think it’s a lot. I don’t want to overwork myself and stretch myself too thin. “Really for me, I want to keep one and be successful,” she added of her single location. “I want to grow, really add more services. I have a great vision for the store. It takes time.” ■
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SMALL BUSINESS
Be vigilant to stave off social media security breaches
D
uring the past couple of months, you’ve probably seen a lot of press on the value of “social media security” and how you need to protect your information online. Your data are out there and your company’s data are out there, but it’s not the end of the world just yet. I’m not here to tell you that you shouldn’t take the sorts of precautions “experts” prescribe or use a social media platform’s privacy settings. I’m here to tell you that they will do little good. However, below are tips that will have an infinitely more profound effect on your company.
about you. You can set up Google Alerts to send an automatic email with current Google search results as it relates to your company. You can also configure a Twitter search to let you know when people mention you. This allows you to figure out what the social media world is saying about you. Knowledge is power. ■ Don’t hide from criticism: If someone criticizes you online, don’t hide from it. This sounds like Customer Service 101, but it’s not. Many companies simply will not re-
BILLMATHEWS
ADVISER spond to legitimate online criticisms. This can cause people to get angry and start saying more negative
things about your company online. It’s tempting to think that you can dismiss online criticism, but remember that digital ink is forever. ■ Don’t panic: It’s so important to keep everything in its proper place. Don’t panic and run out to spend $100K on software — don’t go around paying consulting “experts” to protect you against the “social media threat.” The only thing you have to fear is what you put out there of your own free will. Control that and all will be well. These tips are by no means
meant to be exhaustive, but to provide a framework for you to develop your own social media security strategy. There is quite a bit to be concerned with out there, but remember to not pay attention to the fear mongers and snake-oil salesmen. They can be worse than anything you will find in the social media world. ■ Mr. Mathews is co-founder and lead geek of Hurricane Labs, a Cleveland-based information security firm founded in 2004.
■ Develop a social media strategy: Spell out what types of activities your company will be engaging in online. Build a code of ethics around that strategy. This will help employees understand how they should and shouldn’t participate online. This is particularly effective for sites such as Twitter, where the effect of a slipup is nearly instant. (In a recent controversial tweet involving Chrysler, a tweet that used an expletive in reference to Detroit-area drivers inadvertently was posted on Chrysler’s corporate Twitter account.) Give your employees clear goals for using these tools and watch your online presence grow. ■ Build an education program: I know it sounds expensive, but it doesn’t have to be. You could put together a few fliers that outline what employees should and shouldn’t be publishing. There have been successful attacks against companies and our nation’s military using data from social networks that simply shouldn’t have been there. Had there been sufficient training in what to do, and what not to do, those cases would have turned out quite differently. ■ Don’t fear the unknown — understand it: There are some legitimate security concerns regarding social media — such as phishing emails or just blatant spam — but it’s not all smoke and mirrors. You should get to know them and understand them. Social networks simply make it easier to pull off these sorts of security breaches, but these attacks are not exclusive to them. It is far easier to target people working at a large corporation to get their password when you can easily strike up an online conversation versus sending them an unsolicited email. Again, education is important in thwarting these attempts. ■ Privacy isn’t so private: Be mindful of the information that you’re entering. I know it’s tempting to believe you have some sort of control over who sees that data, but you don’t. Facebook has become downright notorious for its disregard of privacy. So if you don’t want the information up there for all to see, don’t put it there. (Another pointer: This would be great to include in your education program.) ■ Find out what is out there about you: There are a number of ways to find out what is on the web
Choice. Affordability. Wellness. That's the real value of Anthem. With Anthem Blue Cross and Blue Shield, you can offer your employees more than just health coverage. You can offer them a health benefits package that provides real value…for you and for them. range of affordable health, dental, vision, life and disability plans. AWellness care resources and tools your employees can use to live healthier. Potential cost savings through the strength of our network. Real value for your employees and the benefits they need. Value for your company by helping to manage costs and create healthier employees. Find out more about Anthem’s complete solutions for your company today at anthem.com/connects2.
Life and Disability products underwritten by Anthem Life Insurance Company. Anthem Blue Cross and Blue Shield is the trade name of: In Colorado and Nevada: Rocky Mountain Hospital and Medical Service, Inc. In Connecticut: Anthem Health Plans, Inc. In Indiana: Anthem Insurance Companies, Inc. In Kentucky: Anthem Health Plans of Kentucky, Inc. In Maine: Anthem Health Plans of Maine, Inc. In Missouri (excluding 30 counties in the Kansas City area): RightCHOICE® Managed Care, Inc. (RIT), Healthy Alliance® Life Insurance Company (HALIC), and HMO Missouri, Inc. RIT and certain affiliates administer non-HMO benefits underwritten by HALIC and HMO benefits underwritten by HMO Missouri, Inc. RIT and certain affiliates only provide administrative services for self-funded plans and do not underwrite benefits. In New Hampshire: Anthem Health Plans of New Hampshire, Inc. In Ohio: Community Insurance Company. In Virginia: Anthem Health Plans of Virginia, Inc. trades as Anthem Blue Cross and Blue Shield in Virginia, and its service area is all of Virginia except for the City of Fairfax, the Town of Vienna, and the area east of State Route 123. In Wisconsin: Blue Cross Blue Shield of Wisconsin (“BCBSWi”), which underwrites or administers the PPO and indemnity policies; Compcare Health Services Insurance Corporation (“Compcare”), which underwrites or administers the HMO policies; and Compcare and BCBSWi collectively, which underwrite or administer the POS policies. Independent licensees of the Blue Cross and Blue Shield Association. ® ANTHEM is a registered trademark of Anthem Insurance Companies, Inc. The Blue Cross and Blue Shield names and symbols are registered marks of the Blue Cross and Blue Shield Association. OH_CrainsCleve_041111
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Prices: Local companies may benefit continued from PAGE 16
rising demand for those products. Wholesale food prices as of February, for example, were up 7.3% over the past year, according to a March 16 report by MarketWatch, which is part of The Wall Street Journal Digital Network. U.S. wholesale prices rose 3.9% between January and February, yielding the largest one-month spike in 36 years. Mr. Schachner said he can relate; the price of a case of tomatoes, for example, has doubled this year over last year to $40 from $20. So far, he has been able to hold down the costs of menu items at his two cafeterias — David’s Deli at Cleveland’s Eaton Corp. headquarters and the Court House Café at the Carl B. Stokes United States Courthouse building, but that “it’s definitely affecting our bottom line.” Mr. Schachner, who this year launched his StrEat Mobile Bistro, also is troubled by the rising fuel prices but said it seems the food truck business allows for more flexibility in changing prices. The menu changes daily depending on
what locally sourced foods are in season. “Food trucks enable us to adjust prices more easily than the brickand-mortars,” he said. “I’m wondering if the costs of fuel may be offset by the ability to adjust prices.” Alan Glazen, owner of Erie Island Coffee Co., said he will not be raising coffee prices this year, which he said may bring more chain-loyal customers to his local shop. Starbucks, for example, said in March it was raising the prices it charges retailers for packaged coffee by up to 12% to offset the higher costs of beans. Coffee prices jumped 77% in 2010 and have continued to climb this year as global supplies shrink, according to Bloomberg Businessweek. Mr. Glazen considers price hikes a “last step” after minimizing operational costs. “About 70% to 80% of our costs are overhead related,” he said. “Why should we be trigger happy on the 20% (food and coffee costs)?”
Meanwhile, Chris Brown, director of purchasing for Cuyahoga Heights-based Premier Produce, said the company last fall began implementing a fuel surcharge to its customers after fuel costs reach a certain price point. Mr. Brown, too, is vexed by the implications of rising fuel and produce costs. “This year kind of throws all of what you know in the garbage,” he said. Mike Babet, owner of Forevergreen Lawn Care, which has locations in North Ridgeville and Elyria, said he is metering more carefully fuel usage among the company’s 22 trucks. He also is looking into purchasing fuel in bulk through the Ohio Landscape Association rather than having it delivered, which currently has an extra charge of 18 cents per gallon. “We’re looking at all kinds of ways to save money” to protect profit margins, which have been impacted as the company’s fuel costs doubled in 2010 to $70,000 from $35,000 in 2009, Mr. Babet said.
THE PRICE IS RIGHT? ■ If La Niña, or the cooling of the Pacific Ocean persists, farmers may not be able to shore up production of corn, wheat and other crops, triggering more price increases. Wheat jumped 62% in the past year, climbing to a 30-month high in February. Corn more than doubled in the same period.
According to recent news reports, the prices of food and energy are continuing to climb, in part because of extreme weather conditions and political unrest overseas: ■ Corn prices have climbed to the highest since July 2008, and are up 59.4% from last year, because of shrinking U.S. inventories.
■ Meanwhile, gas prices continue to impact small businesses. The price of one gallon of regular unleaded fuel as of April 4 was $3.662, up about 30% from $2.826 a year ago. Diesel during that same period was $3.985, up 34% from $2.977 a year ago.
■ Wheat prices are up 81%. Wheat crops in China, the world’s biggest producer, and the United States are threatened by continuing drought that is plaguing winter-wheat-growing states. Texas, the second-largest winter-wheat-growing state in the U.S., is having its worst drought in 44 years.
SOURCES: BLOOMBERG, WASHINGTON POST AND AAA
‘Local’ advantages
cutting spending. “As growth improves, price hikes will stick as owners try to restore profitability,” the March 8 report said. Despite the anticipated rise in product costs, Mr. Ashmus said some small businesses may even be in a better position than their larger chain counterparts, which also are changing their sticker prices. “The transportation costs are less for locally produced goods,” he said. “Local small businesses have inherent advantages.” ■
Other factors also point to a thawing of price freezes. According to the National Federation of Independent Business, the net percentage of small businesses that said they were raising prices in February was 5%, the first positive reading after 26 consecutive months of price cutting. The price increases may reflect small businesses’ plans to restore inventories from lower to average levels during the recession, when consumers started saving and
GRANDOPENINGS LIFESAVOR CONCIERGE 4325 W. 137th St. Cleveland 44135 www.lifesavorconcierge.com LifeSavor Concierge is a concierge, errand-running and personal-assistant service. The business serves individuals and small businesses, as well as corporations that offer concierge services as part of employee benefits packages. Examples of services offered by LifeSavor include meeting with service technicians or deliveries at one’s home as well as grocery and gift shopping; eBay listings; garage sale preparations; senior check-in; light yard work and housework; in-line waiting (BMV, tickets); data entry; Internet research; business meeting support; event coordination; and house-sitting. LifeSavor provides services on a one-time, as-needed or retainer basis. 216-570-5652 lisa@lifesavorconcierge.com
THE GOLDEN BARKERY LLC P.O. Box 1191 Mentor 44061-1191 www.thegoldenbarkery.com The Golden Barkery is an online bakery with a two-fold mission: to provide human and four-legged customers homemade treats, while at the same time raising awareness and funds for animals at risk and in need. Matt Craggs, owner and founder of The Golden Barkery, pledges to donate 10% of all net proceeds to local and national animal rescue organizations. The Golden Barkery offers six kinds of dog treats; six different celebration “Pup Cakes”; three- and four-pack treat baskets; and “K9 Pawty Packs” for two to 12 dogs. Human treats include eight varieties of cookies with multiple batter combinations; eight types of brownies
and bars; 20 types of cupcakes; and three dessert platters. Mr. Craggs also is the current director of Golden Retrievers In Need (G.R.I.N.). Phone 440-479-6205 Fax 440-954-9407 info@thegoldenbarkery.com
DR. HERBERT A. ORLANSKY: A CARING FAMILY DENTIST 26300 Euclid Ave., Suite 926 Euclid 44132 www.acaringfamilydentist.net Dr. Herbert Orlansky’s family dentistry practice emphasizes periodic and preventive dental care, as well as early oral cancer detection, the treatment of sleep apnea and cosmetic enhancements. The office’s new luminescent technology, VELscope, has a light and lens that is used to identify potential oral cancer areas in the mouth. Dr. Orlansky also offers a Dental Savings Club. The plan includes two cleaning and exam visits per year, X-rays and fluoride. Members also receive a 25% discount off all regular dental treatments. Prices range from $249 for individuals to $499 for families. Dr. Orlansky has more than 30 years of experience, having graduated from the University of Pennsylvania School of Dental Medicine in 1980. He is a member of the Greater Cleveland Dental Society and the American Dental Association. Phone 216-797-1401 Fax 216-797-1405 To submit a new business, send the following information by email to Amy Ann Stoessel at astoessel@ crain.com: business name; address; city and ZIP; web site; brief description of business; business phone number; business fax number; business e-mail address; and date the business opened. Call 216-771-5155 with questions.
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Property owners, tenants may see tax benefits
I
n December of last year, President Barack Obama signed into law the much-anticipated 2010 Tax Relief Act. While most of the press surrounding this legislation focused on its extension many favorable tax provisions, including low dividend and capital gains rates, there has been much less focus on a very liberal expensing policy that could provide significant tax benefits to owners and tenants of real property. Leasehold improvements, which are sometimes referred to as tenant improvements, are the physical changes, including renovations and additions, made to rental space as part of a lease agreement. These changes are made to configure the space for the needs of a particular tenant, and typically include changes to interior structural elements, mechanical systems and permanent lighting fixtures, among others. Although the rules on depreciating leasehold improvements have changed over the years, for many years the 39-year depreciation period on the building structure itself was
CARLGRASSI
TAX TIPS applied to the leasehold improvements. This period was inconsistent with the fact that, in reality, these types of improvements often have a useful economic life of only five to 10 years, the duration of the typical commercial lease term. In 2004, the depreciation period for leasehold improvements was changed to 15 years — a timeframe that is more reflective of the actual useful life of such improvements. This change was not, however, permanent, and had to be re-enacted each year to avoid a reversion to the former 39-year period. At the end of 2009, the 15-year depreciation period reverted to 39
years when Congress was unable to agree on passage of a tax extender bill. Fortunately, the December 2010 tax legislation included an extension of the 15-year depreciation period for leasehold improvements, retroactive for 2010 and through 2011. That was good. It gets better. This same legislation provided a 100% write-off for certain property acquired and placed in service after Sept. 8, 2010, and before Jan. 1, 2012. This deduction generally is available for property that is depreciable over less than 20 years. The allowance of this write-off, coupled with the extension of the 15-year depreciable period for leasehold improvements, allows leasehold improvements to qualify for this deduction. In general, improvements made to the interior of real property that is nonresidential real property can qualify for the deduction as long as the improvement is made pursuant to a lease between unrelated parties. A binding commitment to enter into a lease is considered a lease
Stakes: Cafés not necessarily gold mines continued from PAGE 16
between game providers and café owners and state and local governments. Asked for clarification of the attorney general’s comments, spokeswoman Lisa Hackley issued the following statement: “Under the proposed legislation there cannot be a ‘sweepstakes terminal device’ that is used to reveal winning entries.” While Mr. Belich doesn’t want to see a law that kills cafés, he is all for strict regulation because he believes it would run operators less scrupulous than him out of business.
“They didn’t think of it as gambling; it was entertainment,” he said. And as he watches the big casinos going up, he’d like to have a way for small business people, like bar owners who have been hurt by the no-smoking law, to boost their revenue. But he thinks it should be regulated by the state, even with a high license fee. “One guy told me, ‘I don’t care if I’ve got to pay 10 grand’” for a license, Mr. Polensek said. “Because the fly-by-night operations are not going to be able or willing to come up with that kind of money.”
Different perspectives
What’s the big deal?
Some legislators oppose the cafés and their video games because they believe they are illegal gambling devices. Others believe the games, while they might be legal, are rigged and pay out only a small portion of their proceeds to winners. Conversely, the operators believe they offer customers harmless entertainment. Mr. Belich likened the sweepstakes to those run by McDonald’s in which your drink has a game card on it. You’ve paid your money (for the soft drink at McDonald’s or the telephone card at his Internet café) and whether you win already is predetermined. While it appears Ohio is looking to increase the pressure on the cafés and their games, other states and even some Ohio municipalities are simply looking at licensing and closer regulation. Some communities have tried zoning restrictions. Cleveland City Councilman Michael Polensek has been watching the issue closely, since his East Side ward has two cafés, though one recently was closed by police. He used to oppose gambling of any kind, but he’s softened his position as he’s watched constituents play the lottery and get on buses — even his tight-fisted mother — to travel to out-of-state casinos.
The problem for states and cities is the structure of the games and the computer terminals. While the terminals appear to mimic games of chance like slot machines and video poker, Mr. Belich and operators argue that none of the even minimal skills required for those games are in play on their machines. Rather, the on-screen displays only add entertainment value to what are really prosaic sweepstakes entries. What his Internet café is selling, Mr. Belich said, are phone cards that can be used to pay for longdistance or international calls. But, when you buy the $20 card you also get at least 2,000 bonus points that you can use on the computer terminal to see if you’ve won. Other cafés tie game points to the purchase of Internet time. At Lucky Shores Cyber Café in Willoughby Hills, $20 in computer time earns you 2,000 sweepstakes points. Signs posted near the entrances of both cafés tell players the chances of winning are predetermined. Electronically pulling a video slot machine lever doesn’t affect whether you win or lose. Mr. Belich said you can buy your phone card and immediately ask the cashier whether you’re a
sweepstakes winner, using a reference number that comes up when you log on to the computer or the bar code on your phone card. While the rapid proliferation of cafés would suggest the shops are gold mines, that’s not really the case.
for this purpose. Family members, businesses under common control and most trust arrangements would be considered related parties for purposes of determining whether a particular lease would qualify. The improvements can be made by the lessee, sub-lessee or the lessor. The improvement must be placed in service more than three years after the date the building first was placed in service. The purchaser of a building therefore can take the deduction for leasehold improvements in the first year of ownership, as long as the seller of the building had placed it in service at least three years prior to the sale. While the rules do not list specific types of improvements that qualify, they do provide that the following improvements do not qualify: enlargement of the building; elevator or escalator; any structural component benefiting a common area; and the internal structural framework of the building. Given this list of exclusions, it appears that other common
Lucky Shores in Willoughby Hills, which opened Dec. 1, will be closing soon, said Chris Gresham, general manager. The problem is that his shop picked the wrong software. “If you wanted a soft drink you’d want to go to a store that sold Coke or Pepsi,” he said. His store is selling an off brand. He doesn’t offer a game called Cobra Cash, which café regulars know and like.
improvements, including plumbing, heating, cooling and other air movement systems, would qualify. The property placed in service must be new; purchasing used or reconditioned property will not qualify. There are, of course, some restrictions on the 100% write-off. Owners and tenants of real property used primarily as a restaurant or for retail sales will, for instance, need to take into account limitations on the characterization of certain improvements to those types of property as leasehold improvements that qualify for the write-off. Although the IRS characterizes the write-off of these improvements as “expensing,” the 100% write-off provision should not be confused with other tax rules allowing for an immediate deduction in the year an asset is purchased. These other provisions generally have limitations on the amount of the deduction and on the amount of expenditures made in each year. The rules allowing for the write-off of leasehold improvements discussed above do not have any dollar limits on the amount of the qualifying deduction or on the amount of total expenditures. ■ Mr. Grassi is a member and president of McDonald Hopkins LLC.
Mr. Gresham said Lucky Shores’ owners are looking for new, more popular software to install before they reopen. Beyond that, he’s concerned about the threat of legislation closing down the business a second time, and this time for good. “When it comes down to it, the state or city could decide to change their minds and do (make this illegal),” he said. ■
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MONEY MANAGERS
RANKED BY ASSETS UNDER MANAGEMENT LOCALLY(1) Total assets under local management with discretion (millions)
Company Address Rank Phone/Web site
Dec. 31, 2010
Dec. 31, 2009
% change
Minimum Total number individual of local account accounts (thousands)
Portfolio analysts on staff
Compensation for services
Chief investment officer
Top local executive Title
1
Victory Capital Management Inc. 127 Public Square, Cleveland 44114 (216) 689-4400/www.victoryconnect.com
$35,816.0
$48,009.0
-25.4%
634
$10,000.0
61
Percentage of assets under management
2
Boyd Watterson Asset Management LLC 1801 E. Ninth St., Suite 1400, Cleveland 44114 (216) 771-3450/www.boydwatterson.com
$3,521.4
$3,053.7
15.3%
236
$250.0
2
Fee only, percentage of assets under management
Brian L. Gevry
Brian L. Gevry, CEO, CIO Timothy M. Hyland sr. exec. vice president
3
Ancora Advisors LLC 2000 Auburn Drive, Suite 300, Cleveland 44122 (216) 825-4000/www.ancora.net
$2,567.5
$2,470.9
3.9%
1,274
$20.0
10
Fee only
Denis J. Amato
Frederick D. DiSanto CEO
4
Wasmer, Schroeder & Co. 1111 Superior Ave., Suite 965, Cleveland 44114 (216) 622-0000/www.wasmerschroeder.com
$1,273.4
$1,050.6
21.2%
324
$1,000.0
4
Percentage of assets under management
John S. Majoros III, Thomas Michael J. Schroeder N. Richmond Jr., principals, portfolio managers
5
Oak Associates Ltd. 3875 Embassy Pkwy., Akron 44333 (330) 668-1234/www.oakfunds.com
$880.0
$960.0
-8.3%
50
$3,000.0
3
Percentage of assets under management
D. Oelschlager James D. Oelschlager James president, CIO
6
Goode Investment Management Inc. 50 Public Square, Suite 1700, Cleveland 44113 (216) 771-9000/www.goodeinvestment.com
$499.0
$471.8
5.8%
13
$0.0
2
Percentage of assets under management
Bruce T. Goode
Bruce T. Goode president
7
North Point Portfolio Managers Corp. 5910 Landerbrook Drive, Ste. 160, Mayfield Hts. 44124 (440) 720-1100/http://nppmcorp.com
$445.6
$373.9
19.2%
200
$500.0
3
Percentage of assets under management
Diane M. Stack
Ronald J. Lang president, secretary
8
Winslow Asset Management Inc. 3333 Richmond Road, Suite 180, Beachwood 44122 (216) 360-4700/www.winslowasset.com
$425.0
$360.0
18.1%
107
$1,000.0
4
Percentage of assets under management
Gerald W. Goldberg
9
Spero-Smith Investment Advisers Inc. 3601 Green Road, Suite 102, Beachwood 44122 (216) 464-6266/www.sperosmith.com
$399.2
$326.0
22.4%
262
$500.0
6
Fee only and percentage of assets under management
10
RAV Financial Services LLC 2000 Auburn Drive, Suite 310, Beachwood 44122 (216) 831-4900/www.ravfinancial.com
$320.0
$309.0
3.6%
375
$500.0
3
Fee only
David M. Taucher
11
Carnegie Investment Counsel 25550 Chagrin Boulevard, Suite 101, Beachwood 44122 (216) 367-4114/www.carnegie-capital.com
$314.0
$213.0
47.4%
340
$500.0
5
Fee only
Richard L. Alt
Gary P. Wagner, COO Richard L. Alt, CIO
12
Gratry & Co. 20600 Chagrin Blvd., Suite 320, Shaker Heights 44122 (216) 283-8423/www.gratry.com
$277.0
$209.8
32.0%
563
$0.0
2
Fee only
Jerome R. Gratry Mark A. Anderson Gregory A. Tropf
Jerome R. Gratry president, managing director, CCO
13
First Fiduciary Investment Counsel 6100 Oak Tree Blvd., Cleveland 44131 (216) 643-9100/www.firstfiduciary.com
$255.6
$219.9
16.2%
294
$250.0
NA
Percentage of assets under management
14
HW Financial Advisors 23240 Chagrin Blvd., Cleveland 44122 (216) 378-7296/www.hwfa.com
$253.0
$224.0
12.9%
492
NA
NA
Percentage of assets under management
15
The Mutual Fund Store 36040 Detroit Road, Suite E, Avon 44011 (440) 934-6565/www.mutualfundstore.com
$239.0
$186.0
28.5%
2,708
$50.0
3
Percentage of AUM
16
Private Harbour Investment Management & Counsel 29525 Chagrin Blvd., Pepper Pike 44122 (216) 292-5700/http://privateharbour.com
$225.6
$200.5
12.5%
194
$1,000.0
3
Percentage of assets under management
James A. Blue
17
Van Cleef Asset Management Inc. 3201 Enterprise Parkway, Suite 140, Beachwood 44122 (216) 464-0253/www.vancleefinc.com
$204.0
$180.0
13.3%
NA
NA
5
Percentage of assets under management
Geoffrey C. Hauck Marty Burke Jr. Lino Sergo
Geoffrey C. Hauck
18
Jentner Financial Group 302 N. Cleveland Massillon Road, Akron 44333 (330) 668-1000/www.jentner.com
$186.0
$153.8
20.9%
138
$500.0
1
Percentage of assets under management
Martin A. Weisberg
Bruce A. Jentner president
19
Tower Wealth Management 20600 Chagrin Boulevard, Ste. 803, Shaker Hts. 44122 (216) 295-2400/www.towerwealthmanagement.com
$158.6
$139.2
13.9%
125
$500.0
4
Percentage of assets under management
William G. Batcheller Ensign J. Cowell S. Sterling McMillan William G Batcheller
20
Reed Financial Services Inc. 3690 Orange Place, Suite 240, Beachwood 44122 (216) 464-2090/www.reed-financial.com
$129.0
$110.3
16.9%
250
$250.0
2
Percent of assets
21
Shaker Investments 3690 Orange Place, Suite 400, Cleveland 44122 (216) 292-2950/www.shakerinvest.com
$128.0
$115.0
11.3%
40
$200.0
3
Percentage of assets under management
22
Midwest Investment Management LLC 1301 E. Ninth St., Suite 1110, Cleveland 44114 (216) 830-1110/www.mimllc.com
$124.8
$131.3
-4.9%
374
$500.0
3
Fee only, percentage of assets
23
Broadleaf Partners LLC 9 Aurora St., Suite 5, Hudson 44236 (330) 650-0921/www.broadleafpartners.com
$90.0
$60.5
48.8%
267
$100.0
2
Percentage of assets under management
Doug MacKay
Doug MacKay CEO, CIO
24
Cornerstone Wealth Management 835 Sharon Drive, Suite 280, Westlake 44145 (440) 899-4000/www.cornerstonewealthmgmt.com
$89.0
$79.7
11.7%
198
$0.0
3
Percentage of assets under management
Nick Dionisos
David A. Gomersall president
25
Paradigm Wealth Management LLC 27865 Clemens Road, Suite 1A, Westlake 44145 (440) 892-5900/www.paradigmwealthmgmt.com
$87.5
$76.0
15.1%
50
$500.0
1
Percentage of assets under management
William Keller
Douglas Kuhlman managing partner
26
Bosshard Investment Management Co. LLC 130 Springside Drive, Akron 44333 (330) 666-6886
$55.0
NA
NA
NA
$1,000.0
NA
27
Sigma Investment Counselors 30195 Chagrin Blvd., Suite 210 N, Pepper Pike 44124 (888) 718-1132/www.sigmainvestments.com
$21.1
$17.2
22.8%
22
$500.0
1
Greg River
Mimi Lord
David C. Brown Co-CEO
Gerald W. Goldberg chairman, CIO Kara H. Lewis, president Robert C. Smith president, CEO Robert A. Valente CEO
Mary F. Anderson president Stephen L. Rudolph
Adam Bold
James M. Reed Edward P. Hemmelgarn Norman F. Klopp
Stephen L. Rudolph CIO Brian Fowles managing partner, senior investment advisor Geofrey J. Greenleaf CEO
Ensign J. Cowell managing principal James M. Reed president NA Norman F. Klopp managing partner
Fee only
Michael McClary
Otto Bosshard president
Percentage of assets under management
Denise M. Farkas
Denise M. Farkas chief investment officer
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. Business lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Companies on the Money Managers list are registered investment advisers with the Securities and Exchange Commission and have full discretionary control over where all of their clientsâ&#x20AC;&#x2122; money is invested. This criteria is in keeping with the standard used by our sister publication, Pensions & Investments.
RESEARCHED BY Deborah W. Hillyer
8LI
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CRAIN’S CLEVELAND BUSINESS
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23
BANK ASSET MANAGERS
RANKED BY ASSETS UNDER MANAGEMENT LOCALLY Total assets under local management with discretion (millions)
Company Address Rank Phone/Web site
Dec. 31, 2010
Dec. 31, 2009
% change
Minimum Total number individual of local account accounts (thousands)
Portfolio analysts on staff
Compensation for services
Chief investment officer
Top local executive Title Kenneth A. Dorsett exec. vice president, Wealth Management Services
1
FirstMerit Bank NA 106 S. Main St., Akron 44308 (888) 384-6388/www.firstmerit.com
$2,553.7
$2,483.0
2.8%
2,750
$250.0
16
Percentage of assets under management
Robert M. Leggett
2
Fifth Third Asset Management Inc. 600 Superior Ave. East, Cleveland 44144 (800) 786-8651/www.ftam.com
$2,182.8
$2,217.2
-1.6%
344
$100.0
0
Percentage of assets under management
E. Keith Wirtz
3
Huntington National Bank 917 Euclid Ave., Cleveland 44115 (800) 480-2265/www.huntington.com
$1,420.0
$1,300.0
9.2%
1,200
$300.0
6
Percentage of assets under management
Randy Bateman
Chris Cwiklinski senior vice president, portfolio manager
4
Northern Trust 200 Public Square, Suite 1950, Cleveland 44114 (216) 357-2400/www.northerntrust.com
$936.8
$881.1
6.3%
851
$1,000.0
3
Percentage of assets under management
Mary Lynn Laughlin Douglas Y. Wang
Michael A. Cogan president, CEO, Ohio
5
Lorain National Bank 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com
$145.0
$142.0
2.1%
507
$100.0
NA
Percentage of assets under management
Patrick J. Griffin
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. Business lists and The Book of Lists are available to purchase at www.crainscleveland.com.
Zoo: Organization contemplates long-term plan continued from PAGE 3
since it opened the $32 million RainForest exhibit in late 1992. That attraction led attendance to spike more than 50% to roughly 1.44 million visitors the first full year it was open and, according to zoo director Steve Taylor, helped turn the zoo around. “It’s not rocket science,” Mr. Taylor said. “People love wild animals.” Zoo officials hope the elephant exhibit similarly leads to a surge in patrons, though attendance hasn’t sagged despite the tepid economy over the last few years. Last year, for example, nearly 1.18 million people visited the zoo, and officials anticipate attendance to grow to 1.3 million this year — a number Mr. Taylor characterized as a conservative estimate. Sue Allen, the zoo’s marketing and public relations manager, said the zoo has maintained its attendance numbers by keeping admission fees low and offering seasonal attractions, such as its stingray and animatronic dinosaur exhibits. Those attractions, coupled with big-ticket exhibits such as African Elephant Crossing and the RainForest, are important components of doing
business and keeping patrons coming back, Ms. Allen said. “With a couple amusement parks around, they’ve trained Clevelanders to expect something new every summer,” Ms. Allen said.
In the nick of time Though the sprawling, new elephant complex is nearing completion, some loose ends must be tied up on the financing front. The project’s $25 million price tag is split between the Cleveland Zoological Society — the fundraising arm for the zoo — and the Metroparks’ capital budget, which is financed by a 10-year, renewable tax levy. The zoological society is about $160,000 shy of its $12.5 million fundraising goal, according to Liz Fowler, the group’s executive director. Ms. Fowler said it’s turning to various individuals and foundations to shore up the rest of that cash, which it hopes to raise by the time the exhibit opens May 5. The fundraisers were able to sidestep the paralyzing recession by bringing in about $10 million of the needed capital prior to the elephant exhibit’s 2008 groundbreaking.
So far, about 3,500 donors have contributed to the campaign, which has netted four $1 million gifts. “People are really enthusiastic,” Ms. Fowler said. “When they see the quality of the plans and the commitment to high standards of animal care and educational outreach, people get it and are excited to be part of it.”
Charging ahead Ms. Allen said the zoo plans to launch an aggressive marketing campaign that will include radio, television, print and outdoor advertising, though she noted the final cost of the campaign hadn’t yet been nailed down,
“The marketing team is aware of life after elephants,” Ms. Allen said. “We know that the exhibit has great legs, but the marketing plan does include a lot of attention to marketing following the grand opening.” For institutions such as the zoo, the Cleveland Museum of Art or Rock or Roll Hall of Fame and Museum, changing their offerings is an important element of keeping their spaces fresh. The art museum, for one, rotates pieces in its permanent galleries and brings in several exhibitions throughout the year so that each visitor “has new experiences every time they come,” said Caroline Guscott, a museum spokeswoman.
Peter Klein Mark Koenig managing directors
Daniel E. Klimas president, CEO
RESEARCHED BY Deborah W. Hillyer
Now that the major elephant project is nearing completion, zoo officials are putting together a new strategic plan to guide the organization over the next five or 10 years. The strategic plan will focus on redefining the zoo’s mission, identifying its longterm vision and establishing a master plan for the zoo’s facilities. Mr. Taylor said he expects the plan to be finalized over the next few months for a roll-out to the public this summer. It likely won’t include specific details for additional blockbuster projects, but it would lay out possibilities for renovations. Another key element of the strategic plan will be to identify possible new revenue opportunities, Ms. Allen said. For example, the zoo may explore the idea of charging for parking. ■
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Tax: Groups say axing certain breaks would save money continued from PAGE 3
Critics would like to see some review in Ohio, both as a way to increase revenue to the state and as a matter of fairness to businesses and others who don’t get the breaks. “Imagine if Democrats had put forth a program that cost $7 billion and was designed specifically to increase jobs,” said Mark Cassell, associate professor of political science at Kent State University. “And if during the last five years we didn’t have a net increase in jobs, the Republicans would be up in arms. This would be a program of immense failure. And yet that’s the nature of tax expenditure programs.”
Looking for a credit report The $7 billion Dr. Cassell refers to is the amount of revenue foregone annually because of legislative decisions to exempt some transactions from sales or other taxes, or to give businesses or individuals tax credits for a variety of reasons. The Ohio Department of Taxation issues a tax expenditure report every two years along with the biennial budget. The report issued last month details 128 tax exemptions and credits that lurk in the state tax code. Were those exemptions elim-
inated, they would have added $15.2 billion to the 2012-2013 general revenue fund budget, which spends $55.5 billion. That’s up from $14 billion foregone from the 2010-2011 budget. However, that number includes some tax breaks for individuals that are entrenched in taxpayers’ psyches. It’s simply not in the realm of possibility that all of these exemptions would even be considered for elimination. For example, among the largest contributors to that $15.2 billion revenue-foregone number is the personal income tax exemption of $1,600 each for the filer, a spouse and dependents that has been around since the creation of the state income tax in 1972. Exempting from taxation $1,600 of income for every man, woman and child in the state costs the general revenue fund more than $1.1 billion for the two-year cycle. Dr. Cassell estimates that the business tax credits and exemptions are in the neighborhood of $3 billion to $3.5 billion annually. But many of the credits and exemptions have only the backing of those who benefit from them. Dr. Cassell and others say that the big problem with these tax carve-outs
“We just think each (tax credit) needs a careful review to see where exactly each stands.” – Barbara Benton, vice president of government affairs, Ohio Society of Certified Public Accountants is that they aren’t reviewed regularly. “We recommended that as a potential source of new revenue that the tax credits in place be reviewed to make sure they are accomplishing the goals they were intended to do,” said Barbara Benton, vice president of government affairs for the Ohio Society of Certified Public Accountants. “We just think each (credit) needs a careful review to see where exactly each stands.” The CPA society has, since last June, issued a series of reports that offered ways to solve the state’s budget crunch.
On this, left and right agree The Ohio Chamber of Commerce and eight metropolitan chambers also have recommended that tax policy be reviewed. “Tax expenditures are often valuable tools that help create jobs and increase other revenue for the
Taking Flight—Our Region and the Future of Air Travel Two Events to Learn More Master Plan Public Workshop April 14, 2011, 4:30 – 7:30 p.m. Cleveland Hopkins International Airport
The City Club of Cleveland April 20, 2011 at Noon Speaker: Ricky D. Smith*
From contributing $3.5 billion to the region’s economy to connecting entrepreneurs and businesses to opportunities around the world, the Cleveland Airport System is vital to Northeast Ohio’s future. Ricky Smith, the Director of Airports for the City of Cleveland, will speak on how the airports will continue to be hubs for economic growth—unveiling the master plan for Cleveland Hopkins International Airport, and discussing the future of Burke Lakefront Airport. Go to www.clevelandairport.com for details. * Director of Airports, City of Cleveland
state,” the groups stated in “Redesigning Ohio: Transforming Government into a 21st Century Institution,” a report released in December. “But some have been on the books for years without a review to ensure that they are meeting their intended policy outcomes.” Policy Matters Ohio, a liberal nonprofit think tank, was similarly critical in a report last month on tax expenditures. It said that most of the exemptions remain in effect indefinitely with little or no scrutiny by policy makers. “Though their origins may be murky, many tax expenditures have continued for decades, draining state revenue, providing a special advantage, without an accounting for whether they serve their original purpose or any purpose at all,” the report stated. It cited in particular a credit that brewers and beer importers receive on beverage taxes when they pay part of them during the first half of the month they are due. Even the conservative Buckeye Institute, which opposes anything that increases anyone’s taxes, sees a need for a review of these targeted tax breaks. “To me the focus should be on spending right now and at some point we need to have a broad-based tax reform summit in Ohio to figure out how do we reform our tax code that is a net decrease in taxes,” said Matt Mayer, the organization’s president. “We should have a conversation on tax expenditures.”
Discount fly buys That conversation could get complicated, because the tax breaks often have hard-to-determine value. Take, for instance, the cap on sales tax paid by people who own a fractional interest in a jet aircraft. Although a one-eighth interest in a jet such as a used Beechcraft 400A might cost $800,000 (a reasonable price according to several online price guides), the sales tax on that transaction is capped at $800, a discount of about $61,200 at Cuyahoga County’s 7.75% sales tax rate. That’s less than the taxes a new-car buyer pays for most of the latest models. James Balthaser, a partner in the Columbus office of Thompson Hine LLP, followed the legislation that in 2003 created that sales tax cap. “This was an effort to keep Ohio competitive in this particular industry,” he said. “There are some states that do not impose any sales tax.” Part of the impetus, Mr. Balthaser said, was that Ohio is home to two key players in the fractional jet market — NetJets, which is based in Columbus, and Flight Options, based in Richmond Heights. However, customers interested in private jet ownership are very mobile, and their tax lawyers often advise customers to simply complete the sales in states that don’t heavily tax these transactions. A quick out-of-town trip to save thousands of dollars would make sense for these buyers. The cap provides at least modest revenue to the state. ■
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Values: Other big cities experience same issues continued from PAGE 1
decade in housing in terms of values. And the worst may not be over, even though the severe recession that cratered the housing market has passed. Mr. Humphries said in a research note he expects home values to drop as much as 7% more before stabilizing this fall; thereafter, he said, “we’ll experience a very long, protracted bottom before home value appreciation returns to historically normal rates.” Zillow statistics for the ClevelandElyria-Mentor metropolitan statistical area show the median sale price in January 2011, the most recent period available, was $111,300. That’s the lowest median price since $111,100 in February 1999 and is 22% less than the region’s peak of $143,200 in July 2006. In the Akron MSA, January’s median sale price of $120,000 was the lowest since Feb. 1, 2003, when it was $119,000.The January figure is 24% below the Akron MSA’s peak of $147,000 in August 2007. Statistical purists who follow the housing market prefer the CaseSchiller home price index more than Zillow because the former tracks the same houses through the years. But the news from Case-Schiller isn’t much better.
Misery loves company In the Cleveland-Elyria-Mentor MSA, Case-Schiller reports that in January — the most recent month available — its home index stood at 99.36, down from a January 2000 base of 100. Home values peaked at 123.49 in July 2006 before beginning a four-year decline to the current level. The Cleveland MSA is in some high-profile company, because Atlanta, Detroit and Las Vegas are MSAs where average home prices now are below their January 2000 levels, according to Case-Schiller. Washington, D.C., tops the 20 markets Case-Schiller tracks and is 85% above its January 2000 level. Case-Schiller does not track the Akron MSA. Kathy Eilers Lahey, a University of Akron real estate professor, said regardless of which data one uses, it’s clear Northeast Ohio home values have tumbled. However, Dr. Lahey notes that aggregate statistics share
CRAIN’S CLEVELAND BUSINESS
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a common problem — they do not say everything about the housing market within a particular metropolitan area. Some towns or neighborhoods within a region may see home values gain more than 30% on average, while homes in other areas may lose 10% or 15% of their value. The statistics also track only properties that are sold at any given time. “If you’re sitting on a property, there is no loss. It does not matter,” said Dr. Lahey, whose doctorate is in finance. “Here’s the problem: people have to sell. If you have to sell, to move for a job or to retire, you are going to lose money.” Dr. Lahey said the perception of housing as an investment rather than primarily as shelter took off about 2003, in part because stock prices were in the cellar and people sought solace cocooning in their homes in the wake of the Sept. 11 attacks in 2001. Now the housing market must deal with the aftereffect of the housing bubble, even if home prices in Northeast Ohio did not rocket up during the last decade like in other parts of the country. “We haven’t had a bubble like this in housing for more than 40 years,” Dr. Lahey said. “A bubble drags people along. Now people are gun-shy. They are afraid they may lose their job or lose money on a house.”
Lost generation of buyers? Cliff West, a principal at the Cleveland-based DavisonWest real estate brokerage, said he does not consider housing a dead dog in terms of investments, just a different dog than in the past. “Our thought pattern about housing as an investment may be questionable,” Mr. West said. “With the lack of population growth in Cleveland, we may never see the value of a house bought in the last 10 years get there again” to what values were as they peaked. John Lynch, a principal at Keller Williams Realty-Greater Cleveland West in Westlake who also works as an appraiser, notes that banks are setting the tone for values by only considering nearby home sales over the last three to six months as comparable sales when determining for loan purposes the collateral behind a mortgage.“This is not going to last
UP, DOWN, ALL AROUND Online real estate data provider Zillow tracks nationwide housing values, including the Cleveland-Elyria-Mentor metropolitan statistical area. Below are what it’s found for the city, some suburbs and the metro area as a whole:
Area
Jan. 2011
Jan. 2010
Jan. 2009
Jan. 2005
Jan. 2000
Cleveland
$53,300
$70,700
$75,000
87,200
70,000
Lakewood
110,000
116,700
114,100
141,700
114,900
Maple Heights
63,900
88,200
93,700
100,100
83,700
Westlake
201,200
188,900
191,600
234,100
189,700
Beachwood
224,200
223,500
224,200
286,200
220,700
Broadview Heights
177,800
170,500
177,200
220,700
168,300
Avon
202,500
200,900
191,100
234,400
163,800
Chagrin Falls
227,600
244,800
217,100
257,700
193,500
Cleveland metro
111,300
118,700
120,100
142,500
117,000
SOURCE: ZILLOW
forever, maybe another five years,” Mr. Lynch said. Would-be sellers should not be deterred, according to Mr. Lynch. “Even in today’s market, it’s to people’s advantage to sell a house to get what they want,” he said. “If they bought the house 10 years ago, it may sell for less than they want, but it will cost them less to go into the next house and get closer to their dream house.” Still, home builder Sam Petros is concerned that the impact of years of negative housing news will offset the basic benefits of real estate ownership for younger buyers who fuel the housing market. “I worry about losing a whole generation of home buyers,” Mr. Petros said. In Dr. Grace’s case, he notes he got most of his money out of his former residence after 20 years. And, shedding his former home allowed him to buy a 13th-floor lakefront condo at Winton Place in Lakewood at about the same cost. Not only does he avoid homeowner chores, Dr. Grace said, “I’m happy here. I have a gorgeous view of Lake Erie and the sunrise.” ■
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weatherhead
OUR LETTERS CARRY THE STRENGTH OF NUMBERS
Rates for property, casual insurance move downward U.S. commercial property/casualty rates dropped an average of 4% in March from 5% the previous four months, electronic insurance exchange MarketScout reported. According to Dallas-based MarketScout, several lines of coverage tracked by the firm — including workers’ compensation, property, business interruption, small commercial, general liability and automotive — “adjusted in March” and are “showing a moderation of rate cuts.” “We have finally broken out of the doldrums. Rates are moving,” said Richard Kerr, CEO of MarketScout, in a statement. “It looks
like the soft market from 2005 to 2011 will end with workers’ compensation and catastropheexposed property risks leading the way out.” Workers’ comp rates are increasing in some states and, due to speculation since the March 11 earthquake and tsunami in Sendai, Japan, catastrophe-exposed risks are seeing increases of 2% to 5%, MarketScout said. Insurers of large accounts of up to $1 million in premiums continued with average rate reductions of 5% in March, according to the statement. — Business Insurance
25
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APRIL 11 - 17, 2011
REAL ESTATE
Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com
AUCTIONS
REAL ESTATE AUCTION / MAY 18 EXCELLENT VALUE ADDED RETAIL OPPORTUNITY!
ESTATE DIRECTS BANK DIRECTS LAND AUCTION! IMMEDIATE SALE! IMMEDIATE SALE! 4 Commercial & 25,000 SF, 2-STORY 46,310 SF INDUSTRIAL Residential Dvlpmt Sites OFFICE BUILDING w/ WAREHOUSE BLDG ON From 3 Acres to 128 PARKING LOT 9.54 ACRES Acres in NE Ohio ALL LAND PARCELS
OWNERSHIP ORDERS IMMEDIATE SALE!
Painesville Commons Shopping Ctr, 142,000 SF Center on 13.23 Acres THE SHOPPES IN BEREA
OFFERED ABSOLUTE, REGARDLESS OF PRICE! 1441-1535 Mentor Ave., Painesville, OH CURRENT NET OPERATING INCOME AT 75% OCCUPANCY IS $645,000
8023 Crile Road, Concord EXCELLENT SELLER Township, (just North of FINANCING AVAILABLE!
2940 Noble Road, Cleveland Hts, OH 44121 130-148 Front St., Berea, OH 44017
OFFERED w/ A PUBLISHED RESERVE OF: $395,000 w/ SELLER FINANCING BIDDING TO FOR QUALIFIED COMMENCE AT: BUYERS! $245,000 Located adjacent to Lake OFFERED W/ A PUBLISHED RESERVE OF: $2,495,000
County Fairgrounds on the newly widened, heavily traveled Mentor Ave (Rt. 20) and minutes from I-90, SR-44, & SR 2. Credit tenants include: H&R Block, Sherwin Williams, Best-Cuts, Little Caeser’s, AutoZone, Rent-a-Center, & Save-a-Lot. Very strong location for retail with it’s fantastic demographics and many new developments in the area.
ON-SITE INSPECTIONS: Tuesdays, April 19 & 26, May 3 & May 10 from 1:00 PM to 3:00 PM
Retail Stores & Apartments. Entire block bordered by School St. & W. Grand St. (200’Frontage) in the heart of Berea’s Business District. 3 Commercial storefronts & house w/ 4 rental units. Approximately 10,600 SF of Commercial & 2,400 SF of Residential. Excellent Investment Opportunity. Current NOI @ 100% occupancy is $57,547.
ON-SITE INSPECTIONS: Thurs., April 28, May 5 & May 12th from 1:00 PM to 3:00 PM
OFFERED w/ A PUBLISHED RESERVE OF: $250,000 (Only $10.00 per Sq. Ft.!) Currently 75% Occupied with a NOI of $63,682. Projected NOI @ 100% Occupancy $78,461. Originally built in 1974 with an addition in 1988. Many Capital improvements including, new A/C units & updated electrical & plumbing. Excellent opportunity for investor or user/investor to add value and increase income. Located within walking distance of public transportation, major lifestyle centers, retail, restaurants, & entertainment venues in the terrific suburb of Cleveland Heights. ON-SITE INSPECTIONS: Wednesdays, April 27, May 4 & May 11 from 1:00 PM to 3:00 PM
Chardon) OH 44077.
OFFERED w/ A PUBLISHED RESERVE OF: $455,000 (Only $10.00/ Sq. Ft.!)
1.Rt. 611 & Harris, Sheffield Village, OH (Lorain Co.) 18 Acres Zoned Residential. Suggested Opening Bid: $25,000 2. I-90 & SR 45, Saybrook Township, OH (Ashtabula Co.) 36 Acres Zoned Commercial. Suggested Opening Bid: $30,000 3. Lake Breeze Rd. (N of Rt. 611), Sheffield Village, OH (Lorain Co.) 128 Acres Zoned Residential, Opportunity for re-zoning to Industrial. Suggested Opening Bid: $75,000 4. Rt. 18 & Abbeyville Rd., Medina City, OH (Medina Co.) 3 Acre Corner Zoned Comm. Suggested Opening Bid: $7,000
Well located off SR 44 and 1/4 mile South of I-90, this property was built in 1971 with a 12,000 SF addition in 1994.12’- 20’ clear ceilings, 6 docks, 1 drive-in door, overhead gas unit heaters, 277/480V/3P with power and distribution throughout. Seller would consider 10,000 SF leaseback. Terrific opportunity for user, investor, or user/ investor. Property lends itself well for multi-tenant Off-site Due Diligence occupancy. Seminar at Chartwell ON-SITE INSPECTIONS: Group Headquarters: 1301 Thursdays, April 28, May E. 9th St., Cleveland, OH 5 & May 12 from 1:00 PM 44114. Friday, May 6 At to 3:00 PM 1:00 PM
For Brochure & Terms of Sale call: Michael Berland or Mark Abood: 216-360-0009
www.chartwellauctions.com | Chartwell Auctions/Chartwell Group, LLC
Gordon Greene, OH RE BROKER / AUCTIONEER
Streetsboro Auction
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4.5 acres – 303’ X 700’ 9131 S.R. 43 Zoned Commercial
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FOR LEASE or SALE Retail Space Cleveland Heights 14,000 sq ft - Cedar Lee END CAP UNIT AVAILABLE-2400 sq ft RETAIL/OFFICE /RESTAURANT Good User Opportunity
216-410-5400
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20110411-NEWS--27-NAT-CCI-CL_--
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APRIL 11 - 17, 2011
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
27
THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
APRIL 4 - 10
State pilot program means business youth will be served
The big story: Cleveland Cavaliers owner and casino developer Dan Gilbert is in talks with Forest City Enterprises Inc. about acquiring the Ritz-Carlton Hotel at Tower City Center. Kelsey Williams, RitzCarlton public relations coordinator in Cleveland, said hotel executives have indicated talks are under way but no deal has been reached. The 205-room Ritz-Carlton has a management contract for the property with Forest City, which owns the hotel/office tower as part of Tower City. The hotel is within a few hundred feet of the Horseshoe Casino Cleveland operations planned by Mr. Gilbert’s Rock Gaming and Caesars Entertainment Corp.
■ The state of Ohio has a new pilot program designed to help 20 groups of young entrepreneurs start 20 new companies. The Ohio Third Frontier Commission last week put $425,000 into the Ohio’s New Entrepreneur Fund. The fund will award $20,000 grants to small teams trying to launch new businesses. This summer, Ohio State University’s Fisher College of Business will choose 10 teams to participate. Those teams will spend 11 weeks in Columbus, where they will receive space at the Fisher College’s 10X business accelerator, which also will connect them with entrepreneurial mentors and other resources. Another 10 teams would be chosen for a winter session. If the commission likes the results, it could extend the program and even start similar versions of it in other regions, said Norm Chagnon, executive director of the Ohio Third Frontier program, which aims to boost economic development through investments in technology. “This is very much a pilot,” he said. The program is open to anyone who has been enrolled as an undergraduate or graduate student at a college within the past three years. The college need not be in Ohio, nor are team members required to be current residents, but any business formed through the program would have to be set up in Ohio. The program — the brainchild of Mark Kvamme, director of job creation for the state, and Michael Camp, executive director
So it begins: The Cleveland school board approved a measure to close seven schools and to lay off hundreds of employees, but the belt tightening likely won’t stop there as the district attempts to wipe out a projected $74 million budget deficit over the next two school years. The board voted to lay off 702 Cleveland Teachers Union employees, which includes 643 teachers. It will consider additional layoffs at a meeting later this month.
Citizens of the world: A new organization called Global Cleveland raised more than $1 million from founding sponsors to better integrate the city into the world economy. Global Cleveland said its goal is to “connect people to opportunities” and to “attract and retain workers for the more than 20,000 currently open jobs in the Cleveland region.” It will establish the Global Cleveland Welcome Hub in a ground-level space in the former BP Tower. That building later this year will become the Huntington Bank Building as Huntington moves its northern Ohio headquarters to the building. Huntington National Bank has made a $500,000 gift to Global Cleveland, the effort’s largest contribution.
Down to business: Cleveland will have a new minority business center as a result of a financial commitment from the Minority Business Development Agency of the U.S. Department of Commerce. The agency announced $7.8 million in grants for 27 MBDA Business Centers nationwide, including two new centers in Cleveland and Denver. The Cleveland grant, for $225,000, was awarded to the Economic Growth Foundation, which is part of the Greater Cleveland Partnership. The grants are for five years if centers continuously meet program criteria, which would put the total value of the Cleveland grant at more than $1.1 million. Prison food could get better:
Caterer Harlan Diamond could face six months in jail for his role in the Cuyahoga County corruption scandal. The CEO of Executive Caterers in Mayfield Heights pleaded guilty in federal district court in Akron to mail fraud and to helping former County Commissioner Jimmy Dimora defraud Mr. Dimora’s campaign committee. The court could reduce Mr. Diamond’s jail time if he cooperates with federal investigators and if he testifies in court. Mr. Diamond will not be sentenced until after Mr. Dimora’s trial, which is scheduled to begin Sept. 12. He also agreed to pay a fine of $7,108.80.
On board:
Ray Leach, CEO of venture development organization JumpStart Inc., was named to the board of the National Venture Capital Association. The association, with more than 400 members, advocates for policies that encourage innovation and reward long-term investment.
WHAT’S NEW
of Fisher College’s Center for Entrepreneurship — is intended to help attract young people to the state or keep them here, Mr. Chagnon said. “This is really about giving new reasons … for young people to want to stay in the state,” he said. — Chuck Soder
Private sector receptive to Raskind’s big changes ■ The Cleveland-area business community balked at financially backing the Cleveland schools’ lofty academic transformation plan until its members felt the district had mended its budget woes, but the interim schools CEO Peter Raskind (left) appears to have taken strides to their liking. “I think Peter is doing exactly what he needs to do to put the district in a position to succeed,” said Joe Roman, president and CEO of the Greater Cleveland Partnership, the city’s chamber of commerce. The Cleveland school board last week approved Mr. Raskind’s proposal to cut $74 million from the district’s budget over the next two years. The board voted to lay off 702 Cleveland Teachers Union employees, which includes 643 teachers. The board will consider additional layoffs at a meeting later this month when Mr. Raskind will recommend laying off central office employees and cutting salaries and benefits. The Cleveland schools are counting on as
Only fools rush in when it comes to health care reform
Keithley, which makes advanced electrical test instruments and systems, has introduced an addition to the company’s Series 2600A System SourceMeter family that’s designed specifically for characterizing high-power electronics. The product works for a variety of R&D, reliability and production test uses, such as testing high-brightness LEDs, power semiconductors, batteries, components, modules and subassemblies, Keithley says. (To view an online product tour on the Model 2651A, visit tinyurl.com/3doqtt6.) Like other members of the Series 2600A family, the Model 2651A “offers a highly flexible, four-quadrant voltage and current source/load coupled with precision voltage and current meters,” Keithley says. “It combines the functionality of multiple instruments in a single full-rack enclosure.” The Model 2651A “provides a choice of digitizing or integrating measurement modes for precise characterization of both transient and steady-state behavior,” according to the company. For information, visit www.Keithley.com.
Sweet music to artists in need of some bread ■ This is likely to hit the right note with artists, particularly those starving for cash flow. NoteWorthy Federal Credit Union in Cleveland plans to expand significantly its artist loan program after it received last month a $25,000 investment from the George Gund Foundation. The credit union’s creative arts project loans, which are limited to $50,000 or less for no longer than 48 months, debuted in 2010 and are intended to be a cheaper alternative to credit cards, said Henry Peyrebrune, NoteWorthy president. The loans can be used to buy equipment, produce documentary films and facilitate cash flow for small nonprofit arts organizations. “As the economy recovers, it is important to remember the possibilities for job creation in the arts,” Mr. Peyrebrune said. As part of its program-related investment portfolio, the Gund Foundation deposited the $25,000 with NoteWorthy. — Michelle Park
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
COMPANY: Keithley Instruments Inc., Solon PRODUCT: Model 2651A High Power System SourceMeter
much as $12 million in funding from the private sector to support its transformation plan, a hallmark initiative of former schools CEO Eugene Sanders, who retired last December. Area businesses helped fund a study to evaluate what could be done to prop up the district’s finances, Mr. Roman said, and some of those ideas made it into the proposal, such as pay and benefit reductions. “People invest when they have confidence in what they’re investing in,” Mr. Raskind said in an interview prior to the school board’s vote. — Timothy Magaw
■ The health care reform law passed last year “is setting off a gold rush for highpriced lawyers and consultants,” according to The Washington Post, which quoted a Cleveland consultant in the story. “Much of the activity — and the prospect of glitteringly high fees — is swirling around a widely discussed provision that encourages doctors, hospitals and insurers to team up in treating patients,” the newspaper reported. “Initially, these ‘accountable care organizations,’ as envisioned in the law, will treat only Medicare patients, and will get bonuses for providing better care at lower cost. But if they work, ACOs will likely spread to private patients as well.” The Department of Health and Human Services last month released a 429-page proposed ACO rule, and a final version is due by year’s end. The first ACOs are scheduled to launch in January 2012. Joan Mason of the Cleveland-based Gateway Group told the newspaper that many hospitals and doctors lack the necessary computer capabilities and other infrastructure to form ACOs soon. In December, a hospital asked her to create an ACO in six months. “I said, ‘No, I can’t do it because you can’t go from zero to ACO.’” Ms. Mason told The Post that she’s planning a speech titled “ACOs: Why Fools Rush In.”
Even on the baseball diamond, tech keeps a watchful eye ■ Bloomberg Businessweek talked with a
Cleveland Indians executive in a piece about how technology is changing the way baseball is played — and how it’s understood by people running the teams. The story noted that a motion-capture system called Fieldf/x, which uses four cameras perched high above the field to track players and the ball and log their movements, stands to create “a digital catalog of virtually every movement at every Major League Baseball game in every park.” That means, according to the magazine, that “you could find out whether Ichiro Suzuki truly gets the best jump on fly balls hit into the right-field gap, or if Derek Jeter really deserved that Gold Glove last year.” Sportvision, the company that makes Fieldf/x, also has a deal with Major League Baseball Advanced Media (BAM) to incorporate its Pitchf/x technology into baseball’s online game-tracking service called Gameday, the magazine reported. BAM provides the raw data for free to all 30 Major League Baseball teams, which use it to evaluate pitchers and hitters. “That was a tremendous amount of data,” said Mike Chernoff, the 29-year-old assistant general manager of the Indians. Digesting it, he told Bloomberg Businessweek, was a major undertaking. “We continue to find useful pieces,” Mr. Chernoff said.
They cover the earth, so of course it’s a big U.S. brand ■ Sherwin-Williams Co. of Cleveland landed at No. 28 on a list from Daytonbased Interbrand Design Forum of the 50 most valuable U.S. retail brands. Walmart ranked No. 1, followed by Target, Home Depot, Best Buy and CVS. Hard to believe anyone who has shopped in a CVS was consulted for this list.
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4/6/2011
10:25 AM
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