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$1.50/APRIL 25 - MAY 1, 2011

In twist, home equity loans rise And borrowers seemingly are more prudent, unlike past frivolity By MICHELLE PARK mpark@crain.com

This is housing-related news some might not expect. Even though property values remain depressed and people’s equity in their homes is lower in many cases than it was a few years back,

numerous financial institutions are seeing big gains in their home equity lending. The dollar volume of Charter One Bank’s home equity loans and lines in Northeast Ohio shot up 229% in 2010 from 2009 levels, which were up 35% from 2008. “It’s grown at a pace unlike we’ve

seen for years,” said Randy Corbin, Charter One senior vice president and retail banking director for Ohio. At KeyBank, home equity lines of credit — which carry variable rates — have dropped in Northeast Ohio, but home equity loans are up dramatically, said Cindy Balser, senior vice president and senior product

manager. New dollars deployed in those home equity loans — which carry fixed rates — climbed 400% in 2010 over 2009, and the upward trend continues this year. Volume was up 190% in this year’s first quarter over the year-ago period. And after a decrease in home equity loans and lines during the 12 months that ended in March 2009, Eaton Family Credit Union recorded

INSIDE Metro goes off campus The county-subsidized health system is continuing an initiative it started last summer to bulk up its outpatient operations at community centers across the city of Cleveland and its suburbs. Read Tim Magaw’s story on Page 8.

See EQUITY Page 19

After buying AmTrust, NYCB adds local staff

CLEANUP th ON WEST 25 — AND STAT!

Since deal in late 2009, bank focuses on stability

Community leaders strategizing on how to revitalize corridor between zoo, market

By MICHELLE PARK mpark@crain.com

By JAY MILLER jmiller@crain.com

It’s been nearly a year and a half since New York Community Bank began operating in Northeast Ohio where AmTrust Bank once did, and the company has added to its staff and business operations here just as executives said it would. Westbury, N.Y.-based NYCB acquired the failed AmTrust Bank in December 2009 in a deal arranged by the Federal Deposit Insurance Corp. It assumed $8.2 billion in deposits and 66 branches in three states and operates here as Ohio Savings Bank. Though not typically what the company does after an acquisition, the thrift has brought certain operations to Northeast Ohio. A call center with nearly 100 employees in suburban Brooklyn has become NYCB’s centralized retail banking call center, and NYCB also is in the process of moving some disaster recovery services to Cleveland, said Joseph R. Ficalora, president and CEO of New York Community Bancorp, NYCB’s holding company. As a result, one of two disaster recovery sites in New York will close. “These are things that we’re doing in Ohio that we weren’t doing before,”

eople are beginning to pay attention to a tattered stretch of one of the West Side’s main streets. A group of employers and community leaders have begun meeting to plot a strategy for improving the look of a threemile stretch of West 25th Street in Cleveland and linking a group of island neighborhoods into a cohesive residential and employment district. The hope is to spark redevelopment of the neighborhood comparable to what is occurring in the nearby Detroit-Shoreway neighborhood and in the Midtown area east of downtown. Spurring this community effort is the growth of two large employers — MetroHealth Medical Center and L.J. Minor Co. — in the middle of the corridor; coming changes in traffic flow; and an expected increase in tourist traffic through the corridor with the opening of the new African Elephant Crossing exhibit at the Cleveland Metroparks Zoo and the development of the Cuyahoga Valley scenic byway. The segment of West 25th that is the topic of discussion runs from Ohio City and the See CLEANUP Page 7 JASON MILLER PHOTOS

Community leaders hope to spark growth along the West 25th Street corridor, similar to that in the Detroit-Shoreway and Midtown areas.

See NYCB Page 20

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CRAIN’S CLEVELAND BUSINESS

COMING NEXT WEEK Heart and soul We honor this year’s health care heroes in the following categories: advancements in health care, allied health, health care advocate, nurse, physician, volunteer and corporate wellness.

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APRIL 25 - MAY 1, 2011

A WORLD OF DIFFERENCE China is clearly a major player in the global economy, but it has a long way to go before it reaches parity with much of the world in labor costs. As measured in U.S. dollars, Chinese hourly labor compensation costs in manufacturing were 4% of those in the United States in 2008, the latest year for which the U.S. Bureau of Labor Statistics could assemble global data. China’s costs “were roughly on par with those of some developing countries like the Philippines, but lagged behind those of other countries like Mexico and Brazil,” according to the BLS. The average hourly compensation cost in China in 2008 was $1.36. Here’s how compensation costs stack up globally, with the U.S. indexed to 100:

Country/region

REGULAR FEATURES Best of the Blogs ..........22 Classified .....................21 Editorial .......................10 Letter ..........................11 Going Places................14

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Index of hourly compensation costs

Europe

134

United States

100

Japan

East Asia

Mexico

Philippines

China

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CRAIN’S CLEVELAND BUSINESS

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INSIGHT

Fuel cell growth lags, and state support wanes Advocates say they must better educate policymakers on industry’s vast potential By CHUCK SODER csoder@crain.com

JANET CENTURY

University Heights mayor Susan Infeld took over the job last year and is exploring economic development ideas. “We need to look at ourselves a little differently now,” she says.

LIVE, WORK AND PAY University Heights aims to draw more workers — and their income taxes — to the traditionally residential community By JAY MILLER jmiller@crain.com

t happens sometimes in neighborhoods. One day painters turn up to put a fresh face on one house, and soon more tradespeople are showing up, re-landscaping the house next door and putting in a new driveway across the street. Something similar is happening in the Heights area in the eastern suburbs. University Heights is joining its neighbors Cleveland Heights and Shaker Heights and is changing its approach to the kind of economic development it wants to encourage.

Long satisfied to be a place where people live, University Heights, like its two neighbors, wants to be a place where people work — and pay the city income taxes. The suburb is creating an economic development committee comprised of residents and development professionals, and it’s considering hiring a part-time economic development coordinator to find ways to bring office workers to a community that has little traditional office space. “Communities like University Heights, Shaker Heights and Cleveland Heights are traditional bedroom communities,” See PAY Page 4

UNIVERSITY HEIGHTS PROFILE Traditionally a bedroom community, the city is looking for ways to drive economic development and lure more workers. A look at the specifics: Population: 13,500 Largest employer: John Carroll University, with about 540 employees (the school estimates its workers pay about 10% of the city’s income taxes)

Potential areas for development: ■ Half-vacant University Square shopping center, which includes a Target and Macy’s. Mayor Susan Infeld sees the space as a possible home for offices and incubators, along the line of what Shaker Heights has done. ■ Corner of Cedar and Taylor

roads, which is largely retail and has empty buildings that could be redeveloped, Mayor Infeld said. Quotable: “We’re challenged. ... We don’t have areas that are necessarily attractive or amenable to business.” — Frank Consolo, University Heights councilman

Convincing Rolls-Royce Fuel Cell Systems to keep expanding its U.S. headquarters in North Canton could be hard if state and federal support for the fuel Fleiner cell industry shrinks too much, according to Mark Fleiner, CEO of the company. Mr. Fleiner and several others who spoke last Tuesday, April 19, at the Ohio Fuel Cell Symposium in North Canton noted that the federal government has been cutting financial

support for fuel cell research and that state support for the industry is in question. Several speakers argued that the industry needs to work harder to convince policymakers that, while the fuel cell industry hasn’t grown as fast as projected, the technology still has great potential to create both clean energy and manufacturing jobs. (Using hydrogen and other molecules as fuels, fuel cells create chemical reactions that generate electricity.) See SUPPORT Page 18

THE WEEK IN QUOTES “Really, for anyone to have enough equity in their home to be doing this, it’s not something we would have thought to be the case.” — Mike Losneck, CEO, Eaton Family Credit Union. Page One

“The value of college sports ... is at an alltime high, and if you’re able to expand your media footprint, ultimately it increases your ability to sell (television) rights and advertising.” — Lee Berke, a New York-based television consultant. Page 6

“It had always been our practice to look for conferences wherever they might be, but we reined that in. … We’re not back to where we were, but we’re on our way.”

“Given the frustration level of flying with the airlines, if executives have the extra money, they may be more inclined to charter.” — Michael Hoyle, president of Business Aircraft Group Inc. Page 17

— Jim Aronoff, partner-incharge, Thompson Hine. Page 15

Atlanta labor law firm latest national force to enter Northeast Ohio By TIMOTHY MAGAW tmagaw@crain.com

Cleveland’s Millisor + Nobil finds right fit after years of merger resistance

The recent acquisition of Millisor + Nobil by Atlanta’s Fisher & Phillips LLP has Steven Nobil feeling a little bit of déjà vu. After all, he’s back where his whole career started — just in a different city. After graduating from Ohio State University’s law school in the early 1970s, Mr. Nobil joined Fisher & Phillips’ practice in Atlanta. But soon thereafter, he got the itch to come back to Ohio, and he joined with Ken Millisor to start an independent,

Cleveland-based employment and labor law firm. “If you’re not prepared to make changes in your life, then you’re going to end up pretty static,” Mr. Nobil said. Mr. Nobil said he and his partners for years had Nobil resisted the pressure to be absorbed by large national firms, though he had difficulty explaining why, other than a merger “either

fits or it doesn’t.” When Fisher & Phillips first broached the idea of an acquisition, Mr. Nobil said the firm wasn’t interested. But after some prodding by a mutual associate, representatives from both firms decided to meet, and now Millisor + Nobil dons the Fisher & Phillips moniker. “It turns out we were able to

make the case that we were different,” said Roger Quillen, managing partner at Fisher & Phillips. “We share values. There just seemed to be a real fit from the beginning even though they told me upon arrival that, ‘we’re happy to talk to you, but don’t expect anything to come of this.’” Fisher & Phillips did not disclose the terms of the deal, but Mr. Quillen said he expects the acquisition to add about $8 million in rev-

enue this year. Last year, Fisher & Phillips brought in $107.5 million.

The dust settles Mr. Quillen said the acquisition rides on the tail end of a trend that peaked a few years ago, when three of the major labor law firms stampeded into the Cleveland market. In 2007, for example, Atlantabased Ogletree, Deakins, Nash, Smoak & Stewart P.C and Littler Mendelson P.C. of San Francisco established locations in the city. Littler came to town through its merger See LAW Page 18

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Pay: City eyes developed sites continued from PAGE 3

said University Heights Mayor Susan Infeld. “But we need to look at ourselves a little bit differently now and look at being able to offer more for our residents than just lovely homes and a little bit of retail. “We’re growing up,” she added, and acknowledged that the need to find new sources of tax revenue is pushing this new approach to development.

Gut check Mayor Infeld is new to the job, taking over last year from Beryl Rothschild, who had been the city’s mayor for 32 years. Last month, Mayor Infeld held a retreat with University Heights’ seven city council

members to develop new ways to prepare the city for a financially leaner future. In addition to boosting the city’s economic development profile, the political leaders agreed University Heights needs to start collaborating more with its neighbors and regionally. “Economic development is the guts of government these days,” Councilman Phillip Ertel said. “If we are going to take one idea from our retreat, I’ll be pleased if it’s hiring someone to do economic development.” University Heights is a small community, with only 13,500 residents, most of whom work outside the city. Its largest employer is John Carroll University, which has about

540 people on its payroll. The university estimates its workers pay 10% of the city’s income tax. The city has little vacant land and doesn’t expect to expand the amount of property zoned for commercial development, Mayor Infeld said. Instead, she’s looking for creative ways to turn existing buildings into commercial space. “It would be nice to focus on areas already developed for commercial activity and make sure it’s full and preserve the residential character of the city by keeping homes separate from commercial,” she said. Rezoning has been a hot-button issue in University Heights for some time. Resident pressure has forced the city since 2007 to put off rezoning for a property on Warrensville Center Road south of the University Square shopping center. The first skirmish was over a plan for a car wash on the site; more recently, residents objected to a McDonald’s restaurant. Mayor Infeld’s first thought is to see if vacant space in the University Square shopping center can be turned into offices and business incubators. University Square is a four-story shopping center built around a parking structure. Target and Macy’s are major tenants in the 287,000-square-foot center, but it has been half empty since a Tops supermarket closed in 2006. Shaker Heights already is doing something similar. It bought a vacant auto dealership and has turned it into incubator space for young businesses. It also is looking at retail and office redevelopment along Warrensville Center Road, an artery it shares with University Heights. Likewise, Cleveland Heights is looking to redevelop existing properties — perhaps closed school buildings — into office or incubator spaces.

Up to a challenge? Mayor Infeld also wants to create a brand identity to better market a largely retail area in the city’s northwest corner, at Cedar and Taylor roads. It has several empty buildings along the border with Cleveland Heights that could be redeveloped. Councilman Frank Consolo thinks University Heights faces a more complicated economic development challenge than its neighbors. “We don’t have areas that are necessarily attractive or amenable to business,” Mr. Consolo said. “We have one strip (along Warrensville Center) that’s been fought over since I’ve been in council, first with a car wash and now with McDonald’s.” But neither project, he said, “is going to set the world on fire for us in terms of money.” Nonetheless, Vince Adamus, an economic development consultant who has served as economic development director in both Brook Park and Beachwood, thinks University Heights is making a smart move. He thinks hiring an economic delopment coordinator would help. “It bears fruit,” he said. “The real estate brokers tell me it’s good to have a person on the ground, a go-to person for the development community.” ■ Volume 32, Number 17 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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APRIL 25 - MAY 1, 2011

LCCC’s $40M bond sale MAC follows its Temple template week’s addition to support rapid growth Last of UMass gives league By TIMOTHY MAGAW tmagaw@crain.com

Lorain County Community College’s enrollment has grown 120% over the last decade, and it plans to sell $40 million in bonds to help finance three construction projects that would accommodate the steady growth and extend its regional footprint. Marcia Ballinger, vice president of strategic and institutional development, said the school serves about 16,000 students annually on a campus built for 6,600 students. “From a demand perspective, we have had exponential growth, which is really indicative of today’s economy and the growing recognition of community colleges,” Ms. Ballinger said. The construction projects are part a strategic plan adopted by the college about five years ago. The plan includes renovating its old library, which now is used as a multipurpose center, at a cost of $17.5 million; a new culinary arts and convergent digital arts building at a cost of $12.5 million; and a new satellite location in North Ridgeville with a $12.5 million price tag.

Only construction on the multipurpose center is under way. Construction at the other two locations is slated to begin in the coming months, with openings planned for the fall of 2012. Over the last decade, Lorain County Community College has opened satellite locations in downtown Lorain (in 2001) and in Wellington (in 2008), and created a joint venture in Brunswick with the University of Akron in 2009. The new North Ridgeville site will be at the intersection of Interstate 480 and Lorain Road. “We’re already bursting at the seams from a facilities perspective,” Ms. Ballinger said. Lorain County Community College estimates the maximum annual debt service obligation on the bond sale would be $2.6 million. Administration officials say student fees are not expected to rise as a result of the sale, as the bonds would be financed through existing operating funds and existing student fees. The college also plans to obtain an updated credit rating from Moody’s Investor Services. ■

another top market By JOEL HAMMOND jmhammond@crain.com

The Mid-American Conference reaped enough benefits when it added Temple University as a football-only member in 2005 that it decided to do it again. Sure, the names were different in last week’s announcement that University of Massachusetts-Amherst would compete as a MAC member in football beginning in 2012, but the goal is identical: Increase the conference’s footprint by moving into major media markets previously underexposed to college football. The MAC accomplished that with the addition of Temple, in Philadelphia, which added to the league’s footprint the No. 4 media market in the United States, according to Nielsen Co. The addition of UMass, the major college of interest in that state, brings into play Boston, the No. 7 market, according to Nielsen, and to a lesser extent, Hartford, Conn., the No. 30 market.

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“We brought value to Temple, and Temple brought value to the conference,” MAC commissioner Jon A. Steinbrecher said. “As you enter into new markets, you broaden your footprint, sponsorship rights and TV opportunity. These are unique opportunities for us.” Population data also illustrate the impact. The league, prior to adding Temple, had 12 schools; the population footprint of those schools — including Cleveland, Cincinnati, Detroit and Chicago, based on their proximity to member institutions — is 21.5 million, according to Navigate Marketing, a Chicago-based sports and entertainment research firm. By adding Philadelphia and Boston, the conference adds 10.6 million in population — a nearly 50% increase. And that helps when it comes to securing media deals. Rick Chryst, of counsel at Cleveland law firm Walter & Haverfield and the MAC commissioner when Temple came on board, said Temple and the Philadelphia market’s presence helped the league when it formed in 2006 a regional football package with ESPN; that was right around the time the Big Ten formed its own network and vacated regional ESPN time slots. That ESPN contract was renewed in 2009 for eight years and has grown wildly: This fall, 15 games will air on ESPN, ESPN2 or ESPN3, with a six-week regional component to supplement the national presence. The regional games appear in 25 markets, including Chicago, Philadelphia, Detroit and Cleveland.

Next in line The MAC is following the blueprint of conferences such as the Big Ten and Pac-12, said AJ Maestas, president of Navigate Marketing. He cited the Big 10’s long-ago addition of Penn State as a gateway to the eastern United States, and the Pac-12’s courtship of Colorado and Utah. The latter additions gave the Pac12, which was rumored last summer to be hard after Texas and other bigname schools, a hefty presence in the Denver and Salt Lake City markets. “You didn’t see the (Pac-12) go after Kansas State” in Manhattan, Kan., population: 52,281, Mr. Maestas said. “The MAC looked at its current

members and added significantly to its presence.” That’s the name of the game, said Lee Berke, a New York-based television consultant who co-wrote the original business plan for the Yankees’ YES Network, often considered the model for team-owned regional sports networks. He said the MAC’s expansion approach makes perfect sense, amid the rat race that conference realignment has become. “The college sports landscape is booming from a media standpoint,” said Mr. Berke, who runs a firm called LHB Media. “The value of college sports, particularly football, is at an all-time high, and if you’re able to expand your media footprint, ultimately it increases your ability to sell (television) rights and advertising.”

Other benefits For the conference’s more traditional members, the moves have increased significantly their exposure in the Northeast, where previously the MAC was little known, said Kent State athletic director Joel Nielsen. That exposure has been helped by Temple’s success under Al Golden, who left the school this winter to become head coach at the University of Miami. Temple in 2009 played in its first bowl game since 1979 as part of the MAC’s enhanced bowl tie-ins. “With the additional exposure on ESPN, we’ve had more mentions of Kent State (and) of the MAC in general,” Mr. Nielsen said. “We know firsthand what that means; it assists the athletic program, and it assists the whole university.” TV exposure also helps with recruiting, as does the chance to play in professional stadiums. Temple rents the Eagles’ Lincoln Financial Field, and UMass has a rent-free deal with the New England Patriots to play games at Gillette Stadium in Foxborough, Mass.; the school and team split revenues from the games. In addition, the MAC required Temple and now UMass — both members of the Atlantic 10 Conference outside of football, and each with high-caliber basketball programs — to play at least four men’s and women’s basketball games against MAC schools each year as part of their admission to the MAC as football members. ■

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Cleanup: Planning arrives just in time for Inner Belt reroute continued from PAGE 1

West Side Market on the north end of the road and the zoo on the south. Cleveland City Councilman Brian Cummins, who inherited much of the southern end of the corridor when City Council redistricted before the 2009 election, said a first meeting this month brought together many of the stakeholders in the area to see if they could develop a coordinated effort to improve the look and feel of the thoroughfare. The corridor has suffered in part because the area lacks strong neighborhood development groups that could help fight the residential and commercial deterioration on West 25th. “Hell, we can’t even get banners on the street,” Mr. Cummins said. Nonprofit development groups such as Ohio City Inc., Tremont West Development Corp. and the Detroit Shoreway Community Development Organization can play key roles in neighborhood development because they bring neighbors together for grassroots efforts to fight blight. They also can act as intermediaries that buy and assemble parcels of land, including vacant properties in the hands of the city or county.

starting to assess how its campus will develop over the next few years, spurred in part by the likelihood that its nearest neighbor — the state-run Cleveland Psychiatric Hospital — will be closing and its land turned over to MetroHealth. Further north, L.J. Minor, a division of Nestlé SA, is beginning a multimillion-dollar expansion of its plant at the Queen Avenue intersection of West 25th. L.J. Minor makes soup bases and other professional culinary products. A Nestlé spokeswoman did not return by deadline three attempts to make contact.

Opportunity corridor A key force behind the first meeting

was Tim Donovan, executive director of the Ohio Canal Corridor, a nonprofit that promotes the recreational corridor between central Ohio and downtown Cleveland, including the Towpath Trail. West 25th is part of a federally designated scenic byway that provides tourists access to the trail. “Let’s face it — West 25th Street, if you tell people it’s a scenic byway, they have a little trouble translating that,” Mr. Donovan said. “This is an opportunity to look at the physical infrastructure and the curbside appeal and make sure we can address this with a strategy that brings new investment to West 25th Street.”

Mr. Donovan said it’s a good time to begin this effort because the rerouting of traffic for the rebuilding of the Inner Belt highway will bring suburban commuters along West 25th for the first time. “It’s going to be an opportunity gained or an opportunity lost,” he said. “Those people that haven’t driven down West 25th are going to be making judgments about Cleveland.” Neighborhood Progress is helping with the effort in part by enlisting the aid of the Detroit Shoreway neighborhood group to provide some leadership to the project. The Detroit Shoreway group has led the much-praised, $33 million-plus redevelopment of its West Side

home turf. Those involved in the West 25th plans say it’s too early to apply a price tag or timeframe to the corridor’s transformation. “We want to be practical and we want to look at low-hanging fruit,” said Ms. Reichtell of Neighborhood Progress. “These would be things that are economical to do that can enhance the attractiveness (of West 25th) and make it more conducive for businesses to move in.” One idea she mentioned that has been a success in improving Penn Avenue is what one Pittsburgh group calls a “green and screen” program that landscapes parking lots and other empty spaces along the avenue. ■

A battered ‘front door’ Bobbie Reichtell, senior vice president for programs for Neighborhood Progress Inc., a foundationsupported nonprofit that provides professional support and at times financial assistance to neighborhood groups, said there’s much work to be done on the street. “It’s pretty unsightly in some places,” Ms. Reichtell said. Her group has its office on West 25th across from the West Side Market. Neighborhood Progress sponsored a field trip last November to Pittsburgh for Mr. Cummins and a few others to tour that city’s revitalized Penn Avenue district, looking for ideas that might be applied to West 25th. Then, this month, she brought together a group of about 30 representatives of various companies and organizations to begin thinking about how to spruce up the corridor. “We view West 25th Street as our front door,” said John Corlett, vice president of government relations and community affairs at MetroHealth Medical Center, who attended that meeting. “So, we’re very supportive of any effort that improves the area.” MetroHealth employs nearly 6,000 people in the middle of the corridor and over the last decade has pushed its physical presence west from Scranton Avenue to West 25th. Mr. Corlett said the hospital is

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APRIL 25 - MAY 1, 2011

Metro hopes community push offsets uncompensated care By TIMOTHY MAGAW tmagaw@crain.com

Officials at MetroHealth say the future of the county-subsidized health system isn’t only at its bustling urban campus off West 25th Street, but also at a handful of community health centers in and around Cleveland. MetroHealth launched an initiative last summer to beef up its outpatient operations and to expand its market reach through the community health centers. At the same time, the health system is recruiting throngs of doctors and has expanded access to its insurance plan, MetroHealth Select. MetroHealth’s strategy of capitalizing on its outpatient assets is meant to drive more patients — and thus, more revenue — to the system. The system never has been a major cash cow in the Cleveland area, as it largely serves a poorer population than, for instance, the Cleveland Clinic or University Hospitals. Broadening its patient base, though, will help MetroHealth offset the heavy amount of debt the system carries as a result of the uncompensated care it provides.

Last year, despite declining county support, MetroHealth provided $109 million in charity care, up from $100 million the previous year. “MetroHealth — like most health care organizations — does depend on a balance of commercially insured patients to help finance the care for others,” said Phyllis Marino, vice president of market development at MetroHealth. MetroHealth’s location near the heart of downtown has disadvantages as the city’s population continues to move to the suburbs, so officials consider outpatient centers a key component of its strategic growth strategy. “Our patients are moving to all parts of Cuyahoga County,” Ms. Marino said. “That includes our insured and uninsured patients. There’s some notion the uninsured patients might live closer to the city, but in reality, they’re all over.”

To the ’burbs So far, MetroHealth’s suburban strategy has reaped benefits. The health system has made changes to the way it operates its outpatient locations in Brooklyn, Strongsville and Cleveland’s Broadway neighborhood, and the number of

patient visits at those facilities climbed 20% in the first quarter of this year compared to the like period last year. The system plans to roll out the changes to 10 other outpatient facilities throughout the county in the coming months in order to boost the number of patients they can see. Some of the changes include freeing up physicians from administrative work, adjusting the number medical assistants or nurses available at each location and tweaking the scheduling models to accommodate more patients. “We want to make sure we started with a care model that was a team approach,” said Dr. Ed Hills, MetroHealth’s chief operating officer. “By doing that, you’re able to use physician extenders, like nurse practitioners, so physicians can free up their time for more faceto-face visits.” By adjusting its operations to see more patients, MetroHealth is laying the groundwork to construct new community health centers, though hospital officials aren’t ready to signal where they may be. “We still have plans to build new locations, but we’re just assessing locations carefully,” said Dr.

William Lewis, chairman of the system’s market development campaign and chief of clinical cardiology at MetroHealth. Carefully plotting where MetroHealth’s new community health centers are located is an important task, as the market is flush with such sites through the Cleveland Clinic and University Hospitals health systems. Still, Dr. Lewis said MetroHealth has a strong presence in Cleveland’s outlying communities, particularly Strongsville. “We are playing a little bit of catch up,” Dr. Lewis said. “But we think we have all of the pieces in place to have this happen very well.” In some respects, he said, MetroHealth is ahead of the game because of resources such as its insurance plan, community health centers, its data tracking patient outcomes and its electronic medical record system.

We’ll cover you In recent months, MetroHealth has been pushing its insurance plan, MetroHealth Select. Previously, it only was offered to Cuyahoga County employees, but it’s been expanded for employees in other municipalities such as Olmsted Falls, Olmsted Township and Walton Hills. And more insurance enrollees mean more patients, thus the need for access to existing and new community health centers, Dr. Lewis said. “You can’t have one without the other,” he said. “If we have Metro-

Health Select, we need to have access in all parts of Cuyahoga County. This product has tremendous interest among municipalities, companies and other organizations.” MetroHealth officials tout the low cost of the insurance plan compared with its competitors, and they said MetroHealth is in negotiations with a handful of companies that are interested in offering the plan to their employees. A working group advising the new county government reported that since 2008, the plan saved the county between $3,000 and $4,000 per year per employee who switched to the insurance plan. A health system offering its own insurance plan isn’t a model that’s new for Northeast Ohio. Akron’s Summa Health System’s insurance plan — SummaCare — offers coverage to more than 155,000 people throughout the region. Regardless, Dr. Lewis said expanding access to its insurance plan and community health centers situates MetroHealth well for becoming an accountable care organization — a still-evolving aspect of the federal health care reform law that aims to align medical providers and reward them with financial incentives for offering quality care at a controlled cost. “I think we are reassured that we were heading in the correct direction with that,” Dr. Lewis said. “We have all the pieces in place to be a highquality accountable care organization.” ■

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APRIL 25 - MAY 1, 2011

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Building owners see energy efficiency upgrades as worthwhile ‘Green’ improvements enhance properties’ value, selling price when market returns

Wrangling for a credit

By STAN BULLARD sbullard@crain.com

William Beargie, a certified public accountant, has removed the dated mansard roof of his Westlake office building and replaced it with a sloped roof outfitted with solar cells that will help him slash his electric bills. “Cutting my electricity costs to about $5,000 a year from $8,000 is pretty attractive,” Mr. Beargie said. The decision to pursue the project was made easier because Mr. Beargie received a grant from a justexpired state program for the installation, plus a federal energy deduction, and he wants to sell energy credits for the project. All told, the incentives will pay about 80% of the cost of Mr. Beargie’s energy updates. State and federal grant programs may be in flux, but commercial building owners increasingly are taking steps to make their properties more energy efficient. Ironically, the woes of the commercial real estate business — which is dealing with lower margins due to falling rents and rising vacancies — are fueling some of the action. Although bank financing for general building improvements remains scarce, building owners are digging deep to fund efficiency efforts to cut utility costs because they make properties more profitable and may lead to higher selling prices when the investment market returns. There are broader interests at stake here than just private pocketbooks. Commercial buildings last year consumed about 20% of all energy in the U.S. economy, according to the Obama administration, so widespread improvements to such buildings can have a big impact on the country’s energy sufficiency. Property owners are waging this fight on a building-by-building basis. Kenny Coven, a CB Richard Ellis managing director who oversees about 9 million square feet of commercial properties in Northeast Ohio, said an increasing number of the buildings his firm is responsible for managing have owners who want to reduce expenses in these lean times. “With proper steps, a building of 600,000 square feet can trim its electric bills by 15% to 26%,” Mr. Coven said. “That’s a lot of money.” Typically, an energy audit costing around $7,000 recommends steps such as adding variable speed motors to heating and cooling systems, or replacing older magnetic bulbs and ballasts in lighting systems with newer fluorescent lights.

So much for the night shift Consider just one building, the 28story Eaton Center at 1111 Superior Ave. In a program it began three yeas ago, the building’s owner, Sovereign Group LLC of New York, slashed power costs 26% with steps such as replacing two, 600-ton chillers with a 500-ton chiller and a 700-ton chiller that allow the system to vary how hard it works. It also updated

PHOTO PROVIDED

CPA William Beargie is outfitting his Westlake office with a roof featuring solar cells, aimed at cutting his electricity costs. lighting systems and added sensors that allow lights in hallways to go off at night. This year, heating and cooling system fans that run constantly at full force will receive controls so they can be slowed or sped up as conditions warrant. Eaton Center officials would not disclose total cost savings, but indicated the steps trim electrical bills by $10,000 to $25,000 monthly from prior levels. Thomas West, a principal at the Cresco real estate brokerage in Independence, said the drive for energy efficiency even is transforming tenant and building owner negotiations. “In times past, tenants wanted to cap their (energy) costs in lease negotiations,” Mr. West said. “Now they want landlords to control their utility costs.” Tenants in some cases are asked to embrace changes in practices that may not require capital investments, but will save energy. A primary example is an increasing number of buildings going to daytime cleaning crews if tenants approve them. “Traditionally, cleaning crews go through a building floor by floor, turning lights on as they go,” Mr. Coven said. “In the daytime, they don’t need to turn on the lights to see to clean. They’re already on.” Sensors that douse hallway lights at night until someone walks by also are growing common, he said.

Planting changes in the plant Office building owners aren’t the only ones on an energy-efficiency kick. Akro-Mils, a unit of Akronbased Myers Industries Inc., recently completed what general manager Jeff Gervais described as major energysaving initiatives at its main plant in Wadsworth. The installations included new fluorescent lighting systems that replaced halide lighting from the 1990s and other lighting systems dating from the plant’s construction 38 years ago. The company put in switches in its warehouse so lights come on only when workers enter that area. Injection molding machines from the 1980s were replaced with more efficient current equipment. The maker of plastic storage bins and metal storage, organization and material handling products would not disclose how much it spent on the improvements. However, it expects a $40,000 annual savings in lighting costs as it reduces electricity

costs 50%. “We’re excited knowing that the outcome will have a positive impact on the environment as well as increasing the level of efficiency with which our products are created,” Mr. Gervais said.

An aggressive energy program also is in the works at the Tower City Center complex, which last month began reviewing legal agreements to accept grants for more than $500,000 that its owner, Forest City Enterprises Inc., was awarded last December under the 2009 federal stimulus bill. The federal grants will go toward upgrading interior lights and adding exterior LED lights similar to those on Forest City’s Terminal Tower building. Plans also call for a steam turbine-powered electric generator to convert waste heat to electricity for the retail-office complex. Brian Capelli, who manages Tower City, wouldn’t estimate how much the improvements will save Forest City, but he acknowledged the center’s 20-year-old lighting system is outdated. Incentives from utilities are one element in some of the updates, but a common element in many of the recent efforts to reduce energy consumption by as much as 20% is the ability to use a federal tax deduction of as much as $1.60 a square foot.

Last February, the Obama administration proposed a “Better Building Initiative” that offered to replace the energy tax deduction with a yet-to-be-determined energy credit that would be easier for companies to secure. Mr. Capelli, a national board member of the Building Owners and Managers Association trade group, said few companies receive as much of a deduction as they desire because technical requirements are difficult to reach. President Barack Obama proposed the package before federal budget battles with the Republican-led U.S. House of Representatives dominated the national agenda. Prospects for parts of the initiative have become uncertain, but insiders believe some parts of the initiative will be enacted, particularly those replacing the federal deduction for commercial energy-efficiency investments with a credit. “There is built-in support for making existing programs work better, especially the energy tax deduction, perhaps through tax reform,” said Bryan Howard, lobbyist for the U.S. Green Building Council. “At this point, it’s more alive than dead.” ■

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APRIL 25 - MAY 1, 2011

PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

Stimu-less

he heads of municipal governments and local school districts have made a big stink about the budget cuts they’ll need to make because of the reduced level of state support they would receive under Gov. John Kasich’s proposed two-year budget. They should save us the histrionics, because they knew — or should have known — as far back as two years ago that this day was coming, and they deserve a share of the blame for failing to prepare in the intervening time for fewer dollars from the state. Even if deposed Democratic Gov. Ted Strickland was still in office, it’s likely Ohio’s next biennial budget still would be scrimping on support for local governments and schools. Why? Because of the absence this time around of nearly $1.8 billion in federal stimulus money that two years ago allowed then-Gov. Strickland to make ends meet — barely — in the current, two-year general fund budget. The Obama administration hoped back in 2009 the stimulus money would prop up state governments long enough to get them through the worst of the recession, when their tax revenues were falling, and wouldn’t be needed by the time those dollars ran out in two years. But as a jobless rate that hangs around 9% attests, the economy still hasn’t picked up enough to rejuvenate the income tax take of the state and many municipalities. And a depressed housing market where home values remain weighted down by tons of foreclosures continues to crimp the property tax receipts of many school districts. Given the imminent loss of stimulus money, we can’t back the current push by Gov. Kasich and Republican lawmakers to repeal Ohio’s estate tax. As we’ve stated previously, we agree in principle with ending the tax. However, now is not the time, because the communities where deceased individuals resided receive 80% of the $300 million-plus a year in estate tax receipts, and many of them desperately need all the tax dollars they can get. (The Personal View by Martin R. Kolb that begins on this page makes a great case for retaining the tax.) Yet even if the estate tax remains intact, it still would do nothing to replace the crutch of stimulus money that will disappear June 30, when the state’s budget year ends. And that’s the bigger problem. Back in February 2009, state Rep. Bill Batchelder of Medina warned that the use of stimulus dollars to cover the state’s operating expenses “is dangerous to taxpayers, as it creates a structural imbalance that will only put off and exacerbate our budget problems into the future.” Well, the future is here, and as Rep. Batchelder correctly predicted, the consequences of filling budget holes with temporary money will be severe, both for Ohio and for many of its towns and school districts. The surprise with which mayors and school superintendents are reacting to the cuts they’re about to see in their share of state general fund money is hard to understand. They could have used the last two years to evaluate their operations and to draw up contingency plans for the inevitable reduction in state support that was bound to occur once the stimulus money vanished. It appears many did not — and that’s not Gov. Kasich’s fault.

FROM THE PUBLISHER

The intersection of journalism history

both our editor and city editor had his column is about apartheid, a resigned. Dave Rood — a respected figure free press and an obituary notice, in his town of Escanaba and editor of the and they all involve yours truly. sister Panax newspaper there — refused It’s rare to read an obituary of to resign and forced the company, led by a national figure and recall a seminal John P. McGoff, to fire him. moment with that person. But that’s Some of the Mining Journal reporters what happened to me this week when I — me included — had written an op-ed learned of the death of William Rusher, a piece in support of our editors, nationally known conservative and Panax refused to print it, figure and longtime publisher BRIAN thus ending the employment of of National Review magazine. TUCKER three of us. Citizens’ commitMr. Rusher, along with other tees were formed in Escanaba American journalism giants, was and Marquette to boycott the a member of the now-defunct papers. The New York Times National News Council when I and Chicago Tribune were traveled to New York City as a reporting about this protest young and suddenly unemployed over newspaper ethics. CBS reporter who had been asked to produced an hour-long special testify in a hearing about the report on the dangers of chain owner of my former company. ownership of newspapers, and our revolt I was in my mid-20s, and was caught was at the center of the show. up in an ethical dispute in the newsroom And there I was, sitting in a conference of The Mining Journal, a daily paper in room in Manhattan with Mr. Rusher and Michigan’s Upper Peninsula (in Marother members of the News Council, quette) owned by Panax Newspapers. which included at the time CBS News Infuriated by Panax’s insistence that we president Richard Salant, Joan Ganz publish biased, untrue articles about Cooney (creator of the Children’s TeleviPresident Jimmy Carter and his wife,

sion Workshop) and a member of the Pulitzer family. I recall that Mr. Rusher was opposed to the censure of Panax for trying to force the publication of the stories, but the council did just that, and the results were published in the Columbia Journalism Review. I also recall that I didn’t agree with him but admired the tenacity of his position. The National News Council — which was formed as a sort of national ombudsman for considering complaints about the press — died in the early 1980s, when many of the large news organizations refused to fund its operations. It’s a shame, because now most major newspapers have an editor dedicated to dealing with similar complaints about news coverage. As for Mr. McGoff, he finally sold his newspapers, and later died. A few years after the U.P. revolt, a retired South African supreme court judge headed up a commission that determined that Mr. McGoff had been financed in part by the white ruling government of that country to influence public opinion in the U.S. in support of apartheid. ■

PERSONAL VIEW

Cities will pay price if estate tax repealed By MARTIN R. KOLB

am a recently retired business executive and Republican who supported John Kasich for governor. I applaud the governor’s efforts to shift the spending paradigm in Ohio, but disagree with House Bill 3 and Senate Bill 90, which would repeal Ohio’s estate tax and shift the burden to hundreds of municipalities. Eliminating this critical source of vital income for community safety, infrastructure and other local services is a poor business decision with no direct offsets or clear sources of new revenue. I dislike taxes as much as anyone, but before eliminating a source of revenue that brings real dollars to our communities and state, the Legislature needs to

Mr. Kolb is a resident of Shaker Heights. consider the implications of its actions on essential services. It needs to define alternate sources of income to cover the loss. I live in Shaker Heights, where I recently chaired the Shaker Heights Financial Task Force. We reviewed the financial issues facing our community comprehensively. The impact of an estate tax loss would be widespread, hurting many Ohio communities. Cities and townships have become more efficient. They continue to do so. But estate tax repeal would devastate the quality of many communities and force requests for more local taxes throughout Ohio. Shaker Heights has averaged approximately $3 million from the estate tax in

recent years. To put this into concrete terms, the loss of the estate tax revenue would translate into the equivalent reduction of more than 30 police officers with wages and benefits. That is 45%, or nearly half, of our uniform officers, every one of whom is needed to keep our community safe and secure. The Ohio estate tax has been an integral component of the state tax structure for financing government since 1893, when the Ohio Inheritance Tax first was adopted. After 118 years of serving the needs of Ohio’s governments and its citizens, it should not lightly be set aside without a thoughtful process that involves careful consideration of alternatives to replace it. From a business and economic See VIEW Page 11

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CRAIN’S CLEVELAND BUSINESS

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Lawmakers, bring out the big guns ■ I always love Brian Tucker’s columns, but the column, “Focus on the economy, nothing more,” in the April 18 issue was right on the mark — and I couldn’t agree more with the view it expressed. My husband, Glenn Brown, and I were in Washington, D.C., last week on a Cleveland Council on World Affairs trip. We were reading The Washington Post plus watching

their local TV stations, and they also showed the same problems there. The partisanship and focus on non-essential budget issues is very discouraging. I truly believe our citizens understand that the debt issues in Ohio and in the United States must be addressed, and we expect our elected officials to make tough decisions. They won’t get our future support if

they don’t. Ohio’s lawmakers should focus on the budget and economic issues, rather than deal with a bill to broaden Ohio’s concealed weapons law to allow guns in bars, restaurants and open-air stadiums, where alcohol is sold. That scares me to death! Jeanette Grasselli Brown Chagrin Falls

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View: Dual revenue hits would cripple communities continued from PAGE 10

perspective, I believe the proposed repeal will severely damage Ohio’s economy, communities and residents, while doing nothing to increase business. Repeal of the estate tax will eliminate approximately $70 million of state revenue and $280 million of local community revenue, worsening an already serious state deficit crisis. At a time of imbalance between revenue and expenses in the state, it is not a prudent business decision to reduce revenue sources. This is further compounded by the proposed reduction in the Local Government Fund. Managing and absorbing two tax-based revenue reductions of this magnitude would be most crippling to our communities and our residents. To replace these dollars, local communities would be forced to seek major tax increases on millions of Ohioans. If the estate tax dollars are eliminated, it will mean even more program and service reductions. And elimination of the estate tax would send millions from the state’s economy to heirs who could be

living in New York or California. Repeal proponents argue the tax drives business owners out of the state. This is an abstract and unproven argument with no compelling data-based research or evidence. The Plain Dealer’s Politifact recently gave its worst rating for veracity to statements made by a major repeal proponent. In my nearly 40 years of running large components of successful businesses, I would never approve such an action with these negative consequences on quality services, and based entirely on a lack of data to support such an action. With services as vital as community safety on the line in so many Ohio cities and townships, and huge cuts in local government aid pending, repeal would be wrongheaded. Gov. Kasich strikes me as probusiness; so does the legislature. They most certainly understand the consequences of repeal. I hope the governor is looking at HB 3 and SB 90 in context, through practical and not ideological eyes. These are the wrong bills at the wrong time. Hopefully, they will not move forward. ■

WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: editor@crainscleveland.com

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CRAIN’S CLEVELAND BUSINESS

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APRIL 25 - MAY 1, 2011

Polymer molder Mar-Bal turns up dials of operation Investments in Chagrin Falls, global operations signal market share growth By BILL BREGAR Plastics News

Polymer molder and compounder Mar-Bal Inc. is investing locally and globally — with plans for a factory in Mexico and a sales office in China, and a new finishing operation at its Chagrin Falls headquarters that creates a metalized finish on plastic parts. Family-owned Mar-Bal takes a long-term view of its business. For example, after outsourcing the metalizing process, Mar-Bal invested $1.5 million to build a dedicated room in Chagrin Falls for physical vapor deposition — the process by which it creates the metalized parts. The metalizing and decorating operation, which the company markets as Thermital, began production in February and handles control knobs for ovens and ranges, along with other appliance parts. By offering attractive stainless steel, chrome and brass finishes along with repeatable textures that look and feel like metal, Thermital has obvious appeal for appliance makers, said Steven Balogh, Mar-Bal vice president. Stainless steel ranges and refrigerators first became popular for high-end kitchens, and appliance designers took notice. For

Mar-Bal, it was a market opportunity. “We saw the appliance manufacturers trying to get more of your consumer products to look like stainless. They had to find ways to do that, because it’s just too expensive. So, that’s where we saw an opening for this,” Mr. Balogh said.

Big-name customers Metallic looks of steel, chrome and brass are moving beyond the kitchen to washers and dryers and other household appliances. And the home appliance sector is a big one for Mar-Bal, which specializes in thermoset molding — the process used to make plastic parts, such as oven handles and knobs and electrical insulators, that must withstand lots of heat. Mar-Bal already molds parts for appliances with the nameplates of Whirlpool, Amana, Maytag and Electrolux, among others. Now, Mar-Bal officials say, Thermital will help grab new plastic molding business outside of appliances. Kevin Casey, whom Mar-Bal hired last December as its vice president of sales and marketing to beef up its efforts to win new business, said the potential markets include lighting, under-hood automotive and even ice machines.

Roots extend to Hungary

Steven Balogh

Scott Balogh

Mar-Bal has forged strong links with Whirlpool, a customer for more than 20 years, by becoming involved in Whirlpool’s Six Sigma Operational Excellence program. Eight years ago, Mr. Balogh participated in an intensive, four-week OpEx course, staying at Whirpool’s training and conference center in Michigan. Since then, three other people from Mar-Bal have gone through OpEx. One — Li Bradshaw, a materials chemist at the company’s research and development center in Chagrin Falls — has become a Master Black Belt in Six Sigma. She was certified at a ceremony at Whirlpool’s headquarters in Benton Harbor, Mich., last Dec. 17. Now, Ms. Bradshaw is leading OpEx training at Mar-Bal. “The Whirlpool people are actually coming out and co-teaching with us,” said Mar-Bal president and CEO Scott Balogh, who is Steven Balogh’s brother. Ken Kleinhample, Whirlpool’s vice president of global quality, said the two companies have a valued partnership. “OpEx is the woven fabric of our company’s DNA and now of MarBal’s as well,” Mr. Kleinhample said.

Mar-Bal was founded in 1970 by Jim Balogh, the father of Scott and Steven. However, the elder Mr. Balogh’s own personal story goes back to his native Hungary. Jim Balogh was just 17 years old in 1956 when he joined thousands of other young Hungarians in Budapest fighting against the Sovietsponsored government in the Hungarian Revolution. He was wounded and jailed, but eventually managed to leave for Yugoslavia. There, he signed up for the U.S. Army. He was discharged in 1962 and settled in Cleveland. The tooling engineer got a job at Glastic Corp., a Cleveland composites company. While working at Glastic, Jim Balogh started Mar-Bal in a small building in Cleveland’s Flats industrial area, with a single used machine. Scott and Steven did odd jobs there as children. Fast forward to today. Mar-Bal expects to generate $47 million in sales this year, from plants in Chagrin Falls; Cuba, Mo.; and Dublin, Va. The company employs 335 people. Companywide, Mar-Bal runs 73 presses — 41 injection molding machines and 32 compression molders. The company makes bulk molding compounds in Chagrin Falls. Decades after its humble beginnings, Mar-Bal is making global moves.

Answering China’s call The Balogh brothers went to China

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in 2004 on a trade mission coordinated by the Society of the Plastics Industry Inc. Those contacts led to Mar-Bal buying raw materials from China, followed by molds. The company already was sourcing molds from Taiwan. In 2007, Mar-Bal signed a threeyear licensing agreement with a Chinese thermoset molder of parts for the electrical sector. Last year, Mar-Bal renewed that agreement. “It’s really been a good relationship — a good way to start to know and understand the way of doing business in China, from the raw material sources to the whole market over there. It’s been a good learning experience,” Steven Balogh said. This year, Mar-Bal is opening a sales office in Shanghai. “That will allow us to sell and distribute our current insulator line more effectively, as opposed to direct from the U.S.,” Steven Balogh said. The next step is a Mar-Bal manufacturing plant in China in the next year or two. Mar-Bal also will open a plant in Mexico’s Bajio region, in the central part of the country, to better serve appliance and electrical customers that have production there. Mar-Bal officials said they hope to begin production in early 2012. The company already has hired key employees and is training them. ■ Bill Bregar is senior reporter with Plastics News, a sister publication of Crain’s Cleveland Business.

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

S&P credit shot serves as wakeup call Negative outlook pushes debt further into spotlight

think this will be the most visible shove they will need, but time will tell.”

By JEFF BENJAMIN Investment News

■ SINGLE-MANAGER HEDGE FUNDS GROW IN NUMBER: New single-manager hedge funds launched in 2010 totaled 1,184, up 51% from 783 funds that opened in 2009, according to a PerTrac analysis of fund information from 10 hedge fund databases. There were 352 new hedge funds of funds launched in 2010, up 15.8% compared to 304 fund debuts the prior year, according to a report released last week by the software and reporting systems company. PerTrac’s analysis of established hedge funds found 9,572 in operation as of Dec. 31, 73% of which managed less than $100 million. Of the 3,196 hedge funds of funds analyzed, 70% managed less than $100 million and 108 funds managed more than $1 billion. Single-manager hedge funds managed $1.6 trillion and funds of funds managed $518 billion, both as of Dec. 31, according to PerTrac’s report. “One clear area of growth has been in the number of single-manager hedge funds,” said Lisa Corvese, managing director, global business strategy, in a news release. — Pensions & Investments

Investment strategists agree that the Standard & Poor’s credit rating service fired a shot across the bow of Congress and the Obama administration with its announcement Monday of a negative outlook for the AAA debt rating of the United States. “The national mood right now is one where people are expecting Washington to start dealing with the debt, and this (credit rating announcement) is an opportunity for the president and Congress to take some action,” said Robert Tipp, chief investment strategist of fixed income at Prudential Financial Inc. The S&P report indicated there’s a 33% chance it would downgrade U.S. debt in the next two years. Steve Van Oder, fixed income strategist at Calvert Asset Management Co., said he believes “it was a good thing that the ratings agency brought the issue to more of a public market.” As Mr. Tipp noted, the ratings announcement is less of an immi-

nent threat of change in the nation’s credit quality as it is a serious wakeup call for lawmakers. The United States has never lost its AAA credit rating, but the government is running a $1.5 trillion deficit and carrying a $9 trillion debt, which adds up to a 60% debt-to-gross domestic product ratio. “This is a consequential statement, given the extent to which the AAA rating contains borrowing costs for all of American society, but it also impacts the rest of the world which uses the dollar as a reserve currency and the most liquid bond markets in the world,” said Mohamed El-Erian, chief executive and cochief investment officer at Pacific Investment Management Co. “All this can be avoided if the U.S. were to converge on a common vision of medium-term fiscal adjustment and start implementing such a reform package,” Mr. El-Erian said. Mr. Tipp saw the ratings announcement as something that lawmakers could leverage as a reason for fiscal restraint. “Now they can use this as an outside force to justify making some difficult changes,” he said. “I would like to

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CRAIN’S CLEVELAND BUSINESS

APRIL 25 - MAY 1, 2011

INSIDE

17 USE OF CHARTERS CAN SAVE EXECS VALUABLE TIME.

BUSINESS TRAVEL

Heavy cut to budgets never hit hard locally National forecast improves, area companies increase secondary spending By JOEL HAMMOND jmhammond@crain.com

o to your favorite search engine, type in “business travel 2011,” and you’ll find any number of national studies and surveys predicting continued growth for this year. The Global Business Travel Association announced this

month that business travel had hit its highest levels since the recession. Business travel spending this year is expected to be stronger than originally estimated, increasing by 6.9% for the year, up from the 5% previously forecast. Meanwhile, Travel Leaders Group, a national travel agency franchisor, said 76% of agents focused purely on business travel

predicted they’d match or exceed 2010 bookings, and American Express Global Business Travel pointed to rising demand for flights as the cause of a 6% hike in airfares. Yet a gauge of Northeast Ohio companies seemingly shows that, for the most part, travel trends here never took much of a hit. And those companies that scaled back

THE GOOD AND BAD OF BEING ON THE ROAD

did so not to their core business, but rather to other, secondary areas, such as business development and conferences, for instance. On that front, the Cleveland office of law firm Thompson Hine in 2009 became “more strategic” when traveling for nonclient activities, such as continuing education and other development opportunities, said Jim Aronoff, the office’s partner-in-charge. “It had always been our practice to look for conferences wherever

they might be, but we reined that in significantly when we saw economic fallout,” Mr. Aronoff said. “Now, we’re sending associates to conferences all over the country again. We’re not back to where we were, but we’re on our way.” Westlake-based Hyland Software at the beginning of last year introduced a new initiative for managers and salespeople, in which those employees were to visit customers in person throughout See CUT Page 16

Bernardine van Kessel Germany The Team NEO executive has four trips to Germany planned in the coming months.

Emily Lauer California Ms. Lauer, from Fahlgren Mortine, travels roughly 40,000 miles in the air a year and lists “any California destination” among her favorites.

Crain’s talked with four frequent business travelers about their favorite trips and the benefits — and downfalls — of being on the road or in the air so often. Read their stories on Page 16.

Kevin Gregory Chris Messina

New Orleans The benefits consultant says New Orleans is like “going back in time.”

Tokyo Rad-Con’s Mr. Messina thought his plane was pulling from the gate when it started rocking on a recent trip this month; instead, it was another earthquake hitting 100 miles north of Tokyo.

If monitored properly, family members easily can join the fun By KATHY AMES CARR kcarr@crain.com

im Nash and his executive peers from all over the world have seen each other’s families grow up. Because their corporate travels take them each year to locales such as Los Angeles, Denver, Ireland or Italy, Mr. Nash and his colleagues usually extend those business trips into family vacations. “I belong to an association of CEOs, and we get together two to three times a year,” said Mr. Nash, managing partner of Warrensville Heights-based Marcus Thomas.

“We’ve seen each others’ families grow up together. My kids are 20 (years old) and 18 (years old), and they’ve been traveling since they were 10.” Mr. Nash and other Northeast Ohio employees say extending professional travels into family vacations is the way to go if the location and timing are opportune. Companies that permit employees to bring along spouses, significant others or children say certain procedures are in place to make sure personal expenses do not collide with the corporate ledger. “If employees are participating in personal events, they are to

reimburse the company,” Mr. Nash said. “Employees submit expense reports to their supervisors,” which all are audited for accuracy, he said. Steve Brubaker, chief of staff for Akron-based InfoCision Management Corp., said internal travel coordinators handle business excursion planning for the provider of call center solutions’ 4,200 employees. All personal travel expenses are paid separately, even though families still can book their trips through the company’s travel agent. John Sturm, executive director of sales and marketing at North

Olmsted-based Professional Travel, said the process for handling corporate and personal travel is similar. “It’s not that difficult,” Mr. Sturm said. “We have to maintain separate accounting for the personal and corporate side. Once they get (to their destination), depending on the expense system they use, it’s fairly easy to track. “We haven’t had one company come back and eliminate the procedure because it’s been abused,” he said.

Carry on Still, it’s not like Mr. Sturm and

other agency colleagues are inundated with requests for booking business travel with guests. “The percent of business travelers who bring families is a small fraction of our business,” said Mr. Sturm, whose company books about $200 million in total travel each year. Lisa Sward, president and certified travel counselor of Clevelandbased Kaufman Travel Agency, said she never has handled requests from corporate travelers who want bring along their families. “I guess they see no advantage to having family along,” Ms. Sward See FAMILY Page 17

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16 CRAIN’S CLEVELAND BUSINESS

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APRIL 25 - MAY 1, 2011

BUSINESS TRAVEL WORKING ON THE ROAD: GETTING FROM HERE TO THERE Kevin Gregory Principal, Symmetric Solutions Cleveland

hen Kevin Gregory once asked his fatherin-law what helps make for a successful marriage, he got this answer: business travel. Mr. Gregory — now married 19 years — is testing out that theory these days, traveling the country as a benefits consultant and principal for Symmetric Solutions. He splits his time on the road between new business development and client retention. It’s work that takes him everywhere from Sioux Falls, S.D., to Albuquerque, N.M.; Tampa; Nashville; Atlanta and Boston — to name a few of his destinations. “It helps you appreciate your spouse,” he said of the frequent travel. Mr. Gregory said he prefers to drive to his destinations whenever possible — there’s more control, even if it is snowing. Of course, there’s still no place like home for the father of two teen girls. “At the end of the day, this is the best place to raise a family,” he said. “I couldn’t imagine ever not living in Cleveland.” ■ Favorite places traveled to for business: Some of my favorite places are New Orleans and Chicago. The combination of fun clients, great food after work really influence these locations. ■ On average, how many miles do you travel for business a year? If you include air, rail and car, it is over 70,000. Some years, it is more. ■ How do you spend your time in transit? When I drive it is on the telephone or preparing for my meetings. I enjoy driving because I can get some time to think strategically. I enjoy reading and doing Sudoku puzzles. ■ How many trips a year? If you count day trips of more than 200 miles, it is around 40.

Christopher J. Messina Vice president of sales and projects, Rad-Con Inc. Cleveland

ftershocks and radiation aren’t enough to scare away Rad-Con’s Chris Messina. Mr. Messina recently traveled through earthquake-tsunaminuclear meltdown-ravaged Japan on his way to Taiwan and China for business. (Plane tickets through Tokyo were significantly cheaper than those that avoided the area altogether.) “It was a ghost town type of thing,” he said of the Tokyo airport. “It was creepy.” In 2010 alone, Mr. Messina traveled to all corners of the world for Rad-Con, a Cleveland-based manufacturer of industrial furnaces

Emily Lauer Vice president, Fahlgren Mortine Cleveland

one of Emily Lauer’s clients are based in Cleveland — so it’s no surprise the public relations specialist spends a lot of time on the road to get her job done. The single 35-year-old said that right now, she’s making a conscious decision to make her job a priority. “My dust bunnies don’t mind when I leave,” she laughed. “I have a ton of flexibility in that regard.” Ms. Lauer’s travel schedule first started to increase in 2005-2006, and it has consistently grown over the past couple of years. She said the tremendous teamwork back at the home office makes it possible to keep things running smoothly. While in transit, Ms. Lauer divides her time between work and personal reading. “Airplanes are the only places I read books,” she said. Of course, there’s also the matter of staying healthy while on the road. “The business environ-

and a heavy world-famous sites exporter: He visited like The Great Wall of China, Taiwan, China, Pyramids of India (several Giza, etc. times), Vietnam, ■ On average, India, Europe, how many miles Austria, Hungary do you travel for and Germany. business a year? And all were 100,000-plus. trips that he views ■ Longest as necessary. stretch of time “I cannot sell away from home? capital equipment A month. through the Inter■ How many Mr. Messina in Egypt net,” said Mr. trips a year? About Messina, who deals eight international trips per year. in equipment that’s often worth ■ Worst travel story? Trains in millions of dollars. “There’s an India are definitely the worst, each a intangible trust factor.” story unto itself — especially night ■ Favorite places traveled to for business: In general, Europe is more comfortable. But, it is always interesting to have the chance to see

ment lends itself to long, caloric-filled dinners,” said Ms. Lauer, who had a personal trainer develop a hotel exercise program. Today, Ms. Lauer doesn’t blink when it comes to hopping on a plane, which means the summer and holiday travel rush at the airport have taken on new meanings. “I call it rookie season,” she said. ■ Favorite places traveled to for business: Any California destination, New York City and Boise, Idaho. ■ On average, how many miles do you travel for business a year? About 40,000 in the air. ■ How many trips a year? 12-15, not counting day trips or overnights to our headquarters office in Columbus. ■ What are the personal benefits of business travel? Being able to see and experience other parts of the U.S.; test-driving rental cars; trying and comparing cuisine from different regions visited like Texas BBQ versus North Carolina BBQ; building a bank of frequent-flyer miles and hotel reward points to use on personal trips (so far I’ve used miles for about eight international trips); mastering the airport security routine; the people-watching.

Cut: Face-to-face contact important continued from PAGE 15

the year. In doing so, public relations specialist Kaitlin Maurer said, the company prioritized its travel and was more conservative when it came to travel for marketing purposes, such as reducing the number of Hyland employees attending a trade show. Additionally, the company encouraged visiting more than one client on each trip. North Olmsted-based Professional Travel Inc. executive vice president Rob Turk said the agency handles a diverse group of clients, and confirmed that all areas of his customers’ travel itineraries are picking back up. “There’s been an across-theboard resumption of normal activity,” Mr. Turk said. “A lot of it has to do with businesses’ overall strength; people are realizing that they have

to revert back to those activities to grow, to globalize their organizations.”

It’s just business A popular refrain among the employers contacted for this story was that travel — and the relationships built from in-person communication — is a part of being in business. That was at the root of Hyland’s new customer visit program. Thompson Hine’s Mr. Aronoff said the firm recently closed a deal in which its client had offices in 17 countries, and lawyers were in each of the 17 at one point or another. “There’s no substitute for getting together,” he said. The same goes for Home Team Marketing, a Cleveland company that connects corporate advertisers with high schools across the

country. It has grown from one office — in the Caxton Building in the Gateway neighborhood — to eight, including in Chicago, Denver, Los Angeles, New York City and Atlanta in the last two years. Additionally, it works with 18 state associations across the country. Travel, then, is mostly unavoidable. “We have to do what we have to do,” said Jackie Keim, Home Team’s director of marketing and public relations. “We keep growing, and we have to continue to travel.” Warrensville Heights ad and branding agency Marcus Thomas also had a good 2010, and it sees corporate travel as a necessary means. Lori Hedrick, the company’s vice president of human resources, said last year was a “breakthrough” for the company, known for its dog-friendly workplace. “Our clients’ business has been

trains; getting fleeced in Egypt for a camel ride; and high-stakes international negotiation; and illegal cab drivers in Asia have led to a couple of unsettling stories. However, being stuck in

Bernardine van Kessel Director, international business attraction, Team NEO Cleveland

support system at home is essential to Bernardine van Kessel. That’s because the director of international business attraction for Team NEO also is a mother to four young children — 10-year-old twins, a 4-year-old and a 2½-yearold. “I think it’s gone well because everything at home is organized well,” said Ms. van Kessel, who within the past year returned to full-time work and travel. “You cannot do it all.” In addition to working as a team with her husband, Ms. van Kessel said she has a “super-good nanny” and assistance with household chores and meal preparation. “Don’t be afraid to spend money on some good care,” she said. Ultimately, she said the transition has made the weekends more fun and valuable, because the focus now can be completely on family.

robust,” Ms. Hedrick said, “and we have responded accordingly.”

Still a way to watch pennies While traveling may be unavoidable and a part of business these days, watching costs on those flights and hotel rooms is a way to minimize some of the expense. Alan Kopit, the partner-incharge of law firm Hahn Loeser + Parks’ Cleveland office, said it is traveling smarter, not less often. Instead of buying insurance on rental cars, associates use the firm’s insurance; they also buy nonrefundable plane tickets and choose lodging more carefully. “We’re not encouraging people to stay at the Ritz-Carlton; the Marriott will do just fine,” Mr. Kopit said. “These visits are good for business and good for our clients.” Mr. Kopit said much of the firm’s growth has been outside of Northeast Ohio, and he used Milwaukee-based Johnson Controls as an example. Johnson found

Europe due to last year’s Icelandic volcano tops the worst-travel-story list. ■ What are the personal benefits of business travel? See the world! Meet new people in their own cultures. Experience the various customs. Get a broader perspective on international relations. This perspective and interest in the world has filtered down to my teenagers, which I also think is a benefit. Oh yeah, beaucoup frequent-flyer miles. ■ What are the personal downfalls of business travel? Of course, being away from home makes it difficult to stay connected with family and friends (although this is getting easier with the ever-increasing connectivity). Long flights are a drag. This email is being written from Tokyo, so health also comes to mind … beating up the body with time changes and maybe a little radiation.

As for her travels, Ms. van Kessel has had the opportunity to travel to extraordinary locations, but it doesn’t necessarily mean that she’s had the chance to do a lot of sightseeing. For example, she drove by Tiananmen Square and was at the Great Wall of China for less than 20 minutes. “You have to always realize why you are there,” she said. “I have a long list of things I’ve seen briefly.” ■ How do you spend your time in transit? Reading, responding to email. ■ Longest stretch of time away from home? In the last year, 10 days. ■ How many trips a year? Nine ■ Worst travel story? Just this past February 2011, I landed in a Toronto hospital with a medical emergency. The trip prior to that I was caught in a two-day snowstorm in Lyon, France, and missed most of my appointments. I had a bad case of food poisoning in Mexico City. ■ What are the personal benefits of business travel? It widens one’s perspective. ■ What are the personal downfalls of business travel? Missing time with immediate family.

Hahn to be more affordable than firms in New York, Chicago and elsewhere, and now does more business with Hahn. As a result, the law firm not only is flying more often to Wisconsin, but also the 38 states where Johnson does business. Additionally, one way that Home Team Marketing has found savings is in planning ahead as much as possible, thus avoiding costly last-minute trips, Ms. Keim said. That works, said Professional Travel’s Mr. Turk, but other strategies are effective, also. He said companies should study their flight purchases, and like Hahn, buy nonrefundable tickets for those travelers least likely to make changes. If there’s a group whose tickets change more often, spend more on flights that allow changes without the most severe penalties. “In the past, these things weren’t as heavily managed,” Mr. Turk said. “Now, companies are paying more attention to their travel policies and adhering to them more.” ■

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BUSINESS TRAVEL

Commercial flights’ burden drives some executives to charters By JAY MILLER jmiller@crain.com

orporate executives, salespeople and others are returning to travel on chartered or company-owned aircraft, ending a tailspin that started with the collapse of the economy. Always a lightning rod for publiccompany critics, all facets of the business jet world took a beating in 2008 when Detroit automobile executives, whose firms were teetering on bankruptcy, flew in company planes to Washington, D.C., to plead for a government bailout. Indeed, some companies have sold their airplanes, and those that retain them don’t advertise the fact. But some details are known. Progressive Corp., for example, bases aircraft in an unmarked hangar at Cuyahoga County Airport. The company noted in its proxy statement issued in March that CEO Glenn Renwick is entitled to personal use of a company plane as part of his compensation. That personal use cost the insurance company $72,400 in 2010, according to the proxy statement. Typically, high-profile companies argue that such use is a matter of security, which some critics question. But beyond the security argument used for high-profile chief executives, the reasons for the growth in business jet use in 2011 are twofold, according to people in the industry. First, commercial air travel often is a time-consuming chore. And while it may never be as cheap to fly on a private jet as it is to fly commercial, the trade-off between time and money often can be justified. For example, a round-trip business ticket from Cleveland to Fayetteville, Ark., the closest airport to the Bentonville, Ark., headquarters of Walmart, might cost $1,660 and take from between 4½ to 7½ hours each way, according to flights offered

through the Orbitz travel service. That’s $6,600 for four people, not counting the cost of a likely overnight stay. By comparison, a charter flight from Cleveland’s Burke Lakefront Airport to Louise Thaden Airport in Bentonville, a 1½-hour trip, could cost $14,000 and up, depending on the size of the plane.

Taking off slowly Rather than actually owning aircraft, businesses are finding less ostentatious — and less costly — ways to allow their execs to move about the country for business purposes, though questions about corporate flight departments from reporters are routinely met with no-comment statements. The growth is coming from the use of charter services to the pre-paid purchase of bulk flying hours and fractional ownership of jets. The last two options ensure that purchasers will be able to fly to whatever their destination on short notice. Also, as the economy improves and more sales calls end in firm orders, it’s easier to justify the added expense of private flight. “I would say you have a lot of frustration with commercial travel right now,” said Michael Hoyle, president of Business Aircraft Group Inc., which has five aircraft based at Burke Lakefront Airport available for charter. “I don’t know if that’s the driving factor, as much as the economy coming back, but given the frustration level of flying with the airlines, if executives have the extra money, they may be more inclined to charter.” Comparing March 2011 business aircraft traffic with figures from a year earlier, Argus International reports a 4.7% increase in business flight activity. Argus is a Cincinnati firm that specializes in research for the business and commercial aircraft industries. With memories of the recession still fresh, businesses are adopting a more frugal approach to private-jet travel. Though they may not be purchasing aircraft, many businesses are making long-term commitments to private travel. They are looking at

fractional ownership of aircraft and so-called jet cards that may offer tax advantages and may lower the per-hour cost of flying by requiring a commitment of perhaps 25 hours of flying annually. “My utilization numbers (the number of hours a plane is in flight during a 24-hour period) are up about 10% year over year with current customers and how their flying activity has increased,” said Michael J. Silvestro, CEO of Flight Options LLC, the Richmond Heights-based fractional jet operator. “And new business also is up; we’re bringing planes back on line.” He’s so optimistic about the growth of the business that Flight Options is planning to buy 15 new aircraft in 2011, adding to its stable of 102 planes. By comparison, overall business jet sales haven’t rebounded. The General Aviation Manufacturers Association reported in February that worldwide sales of business jets was off 12.3% in 2010 compared with 2009, marking the third straight year of declines.

Flight patterns What kind of private jet travel a business uses depends on its needs. Mr. Silvestro’s customers are businesses, but he allows some individuals — who travel at least 50 hours a year — to buy a 1/16th fractional interest in a small- to medium-sized business jet. It costs between $400,000 for a 1/16th interest in a small Beechjet 400 that typically can carry six passengers and has a range of 2,000 miles, to about $22 million for a one-half interest in a Gulfstream

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said. “I think everyone’s down to business, and that’s the end of that.” Gale Cochran, president of Beachwood-based Flite 2 Travel, said about 20% of their corporate bookings includes accommodations for a spouse or significant other. “But rarely do they include children,” she said. Ms. Cochran surmises that business travelers likely find it difficult to extend business trips into family vacations, particularly when those executives are headed to bustling sites in Europe, Boston or Chicago. But InfoCision’s Mr. Brubaker pointed to the benefits of a healthy work-life balance when families are able to go along on business trips. “I have two daughters, and they’d go on the road with me when we opened new offices in Pennsylvania, Ohio and West Virginia,” Mr. Brubaker said. “And of course, we

made a family vacation out of a business trip to Orlando.” Meanwhile, Todd Nelson, president and owner of Kalahari Resort Convention Center in Sandusky, said he’s noticed a rise over the last couple of years in the number of business travelers bringing along their families. “We’re seeing that more and more,” he said. Mr. Nelson expects that trajectory to continue, with a larger 215,000square-foot conference center in the works, which will bolster Sandusky’s convention center capacity from 2,200 to 5,200 attendees. “During 2008, 2009 and 2010, we experienced double-digit revenue growth” between both the Sandusky and Wisconsin Kalahari facilities, he said. “We’ve proved that over time, when people have a meeting at an indoor water park, attendance goes up.” ■

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Mr. Silvestro said JetPass sales are up 46% between the first quarter of 2010 and the first quarter of 2011. Fractional jet sales are up 467% over the same period, reflecting the sharp decline in sales over the last two years and a rebound. Mr. Hoyle said chartering his aircraft costs between $2,300 and $5,500 an hour depending on the size of the aircraft. The big advantage of chartering, he said, is that “you don’t have to commit to longterm obligations.” ■

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Family: Work-life balance beneficial continued from PAGE 15

550, a large, long-range aircraft, that can carry eight passengers 7,300 miles, according to the Aerlex Law Group of Santa Monica, Calif., which represents fractional jet purchasers. Owners also pay for each hour of use. Flight Options also sells what it calls a JetPass that gives the user 25 hours of flight time. Those cards cost between $100,000 and $212,375, depending on the size of the airplane and between $4,000 and $8,495 per flying hour.

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

APRIL 25 - MAY 1, 2011

LARGEST COMMERCIAL CONTRACTORS RANKED BY 2010 REVENUE

Company Address Rank Phone/Web site

Local revenue 2010 (millions)

New local contracts 2010 (millions)

# of local projects started 2010

New corporate contracts 2010 (millions)

# of corporate projects started 2010

FTE employees as of 4/1/2011 Local Corporate

Year founded Top local executive

Gilbane Building Co. 1621 Euclid Ave., Suite 1830, Cleveland 44115 (216) 535-3000/www.gilbaneco.com

$274.5

$212.7

$2,411.5

116

62 2,297

1873

Thomas M. Laird senior vice president, regional manager

Cleveland Construction Inc. 8620 Tyler Blvd., Mentor 44060 (440) 255-8000/www.clevelandconstruction.com

$216.8

$32.3

$172.1

55 828

1980

Jon D. Small president

Donley's Inc. 5430 Warner Road, Cleveland 44125 (216) 524-6800/www.donleyinc.com

$203.4

$165.4

$215.0

150 420

1892

Malcolm M. Donley president, CEO

The Ruhlin Co. 6931 Ridge Road, Sharon Center 44274 (330) 239-2800/www.ruhlin.com

$166.0

$132.6

$152.0

150 220

1915

James L. Ruhlin president, CEO

Panzica Construction Co. 739 Beta Drive, Mayfield Village 44143 (440) 442-4300/www.panzica.com

$128.6

$65.0

$90.0

100 100

1956

Anthony M. Panzica president, CEO

Turner Construction Co. 1422 Euclid Ave., Suite 1400, Cleveland 44115 (216) 522-1180/www.turnerconstruction.com/cleveland

$100.0

$500.6

$8,000.0

1,400

120 5,051

1902

Mark L. Dent vice president, general manager

Fortney & Weygandt Inc. 31269 Bradley Road, North Olmsted 44070 (440) 716-4000/www.fortneyweygandt.com

$76.2

$17.8

$54.9

127

88 95

1978

Robert L. Fortney president

Continental Building Systems 23230 Chagrin Blvd., Suite 430, Beachwood 44122 (216) 454-0111/www.continental-buildingsystems.com

$51.2

$29.3

$192.4

21 146

1984

Rick Adante project executive

Infinity Construction Co. 18440 Cranwood Pkwy., Warrensville Heights 44128 (216) 663-3777/www.infinityconstruction.com

$28.8

$27.3

31 31

1997

Charles A. Izzo president

Drake Construction Co. 1545 E. 18th St., Cleveland 44114 (216) 664-6500/www.drakeconstructionco.com

$19.4

$12.0

$19.4

39 45

1954

Steve Ciuni president

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

RESEARCHED BY Deborah W. Hillyer

Support: Focus on quick growth hurts Law: Acquisition gives Ga. continued from PAGE 3

“The state of Ohio and the U.S. government should not be flinching right now,” Mr. Fleiner said during the symposium, which attracted about 200 people to Kent State University’s campus at Stark State College of Technology. “I believe strongly that, if they do, we’re going to see (the industry) move off shore,” Mr. Fleiner said. So could that happen to RollsRoyce Fuel Cell Systems? In a conversation with Crain’s Cleveland Business, Mr. Fleiner said the company — a joint venture between Rolls-Royce Group plc of London and a consortium of companies in Singapore — is growing roots in North Canton, but it still would be possible to move the operation, which is developing a stationary fuel cell that would provide electricity to the power grid. Continued government support would help those roots “get a little deeper,” Mr. Fleiner said. The federal government cut the support that fuel cell projects receive from the U.S. Department of Energy by 30%, to $174 million, in fiscal 2010, which ended Sept. 30, from $250 million in both fiscal 2008 and 2009. The White House’s proposed budget for fiscal 2012 would reduce that support to $100 million, a 43% drop from fiscal 2010.

In need of a push On the state level, the Ohio Third Frontier Commission is trying to decide what to do with the state’s fuel cell program, which is part of the Third Frontier, an economic development initiative designed to stimulate Ohio’s economy through investments in technology. The fuel cell program has awarded more than $80 million in grants to fuel cell projects in Ohio, said Pat Valente, executive director of the Ohio Fuel Cell Coalition, which

organized the symposium. One possible outcome of the commission’s review could be that it eliminates the fuel cell program and has fuel cell projects compete for grants through the Third Frontier’s existing advanced energy program, said Norm Chagnon, executive director of the Third Frontier. Mr. Fleiner said he believes fuel cell projects in Ohio could win their fair share if they had to compete with advanced energy projects applying for Third Frontier grants. He’s more concerned about how Gov. John Kasich and his administration want the Third Frontier program to focus more on projects that can spur significant job creation in three to five years. Mr. Valente also voiced concerns about the federal cuts and what he described as “iffy” support at the state level. Though some fuel cell products already are sold into niche markets, the industry still needs government support, he said.

Re-establishing trust Fuel cells already are used to power products such as fork lifts, backup power generators and refrigeration systems. Utilities have connected a small number of fuel cells to the grid for testing purposes; among them are FirstEnergy Corp. of Akron, which last year installed a one-megawatt fuel cell at its coal plant in Eastlake. Fuel cells that run on hydrogen are under development for cars as well, though many more hydrogen fueling stations will need to be built for fuel cell cars to become popular. Companies that are focused mainly on building fuel cells or making products for them will feel the impact if federal and state support for fuel cell research and development is cut significantly, said Bill Whittenberger, president

of Catacel Corp. of Garrettsville, which is northeast of Kent. Catacel, which makes products for managing heat and chemical reactions, will be affected, though Mr. Whittenberger said the company would be in a worse position if it hadn’t diversified into other markets a few years ago. Some companies in the fuel cell industry have been guilty of exaggerating the numbers of jobs they would be able to create in the near term when applying for grants, Mr. Whittenberger said. “There was a couple, maybe three years there, where people were promising the sky,” he said. Now the industry must rebuild its credibility, Mr. Whittenberger said.

Growth on the way? Ashlawn Energy LLC, which is developing what its web site describes as a “fuel cell flow battery,” is based in Virginia but opened a research center in Painesville partly because of Northeast Ohio’s expertise related to fuel cells, said president Norma Byron. The state’s investments through the Third Frontier’s fuel cell program have helped build that expertise, she said. “It’s nice to have that separate pot of money because it guarantees that the expertise will stay here,” she said. Stark State has made a big bet on fuel cells: The school offers fuel cell-related certifications and it feeds interns to area fuel cell companies, including Rolls-Royce, which is housed in the school’s Fuel Cell Prototyping Center. Stark State president John O’Donnell said he isn’t worried about government support for fuel cells, though. With some work, he said, the industry will convince policymakers that growth is coming. “I think that story is going to carry the day,” he said. ■

firm access to new markets continued from PAGE 3

with the Cleveland law firm of Duvin, Cahn & Hutton, while Ogletree set up its own shop and snagged attorneys from Spieth, Bell, McCurdy & Newell. Also, in late 2006, Jackson Lewis LLP of New York announced it had lured four attorneys from McDonald Hopkins to staff its Cleveland practice. “Most of (the small labor law firms) have disappeared into firms like ours, but there are a few holdouts, like Nobil,” said Mr. Quillen, whose firm now has offices in 25 cities thanks to the acquisition here. “I have in my mind the remaining candidate firms (across the country), but there aren’t many left.” One of those holdouts in the Cleveland area is Ross, Brittain & Schonberg Co. — a labor and employment boutique firm. “We’re the last of the breed in this market,” said Alan Ross, the firm’s president and one of its founders. Mr. Ross said his firm has been approached about possible mergers by some of the larger national firms over the last several years, but he hasn’t felt the need to join their ranks. He said he and his partners are comfortable with the culture they’ve developed and don’t want to risk losing it. “Everybody works well together,” he said. “Our client base meshes well the lawyers we have in the firm. It’s a comfortable environment for us and one we’ve been able to continue to grown in.”

Benefits in a big house Still, joining the big kids on the block has its perks. Millisor + Nobil now will have access to Fisher & Phillips’ breadth of expertise it previously lacked, according to Mr. Quillen.

Millisor + Nobil, for one, had lacked a strong business integration law practice, but now gains access to Fisher & Phillips’ resources. Likewise, Fisher & Phillips lacked a strong workers’ compensation practice and will be able to elevate Millisor + Nobil’s to a national platform. “They truly practice law the same way — try to solve problems before they happen, demand that clients come first and are very responsive to them,” Mr. Nobil said. “We started thinking about it, and it all came together.” The acquisition also offers Fisher & Phillips the change to delve into the industrial markets of Cleveland, Akron, Youngstown and Canton. “It’s a hotbed of the kind of work we want to do,” Mr. Quillen said. “All we do is labor and employment. When you have a heavy manufacturing sector — even when people are out of work — there’s a lot of work to do.” The migration of the larger labor law firms into the Cleveland market was somewhat delayed compared to other major cities, according to James Stone, who left McDonald Hopkins in 2006 to join the Cleveland office of Jackson Lewis LLP. He noted that Cleveland has a very established legal community, which made it difficult for outsiders to break into the market. Finding the right firm with which to merge also can be a challenge, Mr. Stone said, because at the end of the day, the lawyers are a firm’s most important asset. “All of these national firms have their own cultures,” said Mr. Stone, managing partner of Jackson Lewis’ Cleveland office. “They’re looking for people that they feel can fulfill those cultures. They tend to be picky and choosey.” ■

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Equity: Banks see products as means to deeper relationships continued from PAGE 1

a 25% increase in home equity loan dollar volume in the 12 months ended March 2010, and a 3% increase in home equity lines, CEO Mike Losneck said. Loan growth in 2011 has been flat, but lines of credit have continued to grow at nearly 4%, he noted. “It’s kind of surprising because, in a lot of cases, home values have come down significantly over the last couple of years,” Mr. Losneck said. “Really, for anyone to have enough equity in their home to be doing this, it’s not something we would have thought to be the case.” The increases aren’t happening everywhere, KeyBank’s Ms. Balser noted, citing regions such as the Southeast and Southwest where mortgages are “very upside down,” meaning the loan amounts are higher than the values of the houses that secure them. And some lenders’ growth has been more modest, like the 3% growth in home equity lending Huntington Bank reported in this year’s first quarter over the year-ago period. But, Mr. Balser added, “everyone is saying there is a new spring in the step of the consumer.”

Borrowers show restraint Here’s what’s not happening: Most consumers are “not putting the house on the line for the vacation, not being frivolous with equity,” Ms. Balser said. “Lines of credit used to be our ATMs or our checkbooks,” she said of the last decade, when home values appreciated year after year. “If I ran out, next year, I’d just get more. But not now. Clients aren’t going crazy and saying, ‘Hey, I’ve got all this equity, give it all to me.’” Today, home equity borrowing is used increasingly as a financial management tool, not to fund “lifestyle upgrades,” Charter One’s Mr. Corbin observed. “People are really thinking about how they manage their finances,” Mr. Corbin said. “If you can use your equity, from a pricing standpoint, you’re usually paying less (in interest rates than is charged) on most credit cards.” Consolidating debt is a big driver for today’s home equity borrowers,

noted Mr. Losneck of Eaton Family Credit Union, which has three locations in Northeast Ohio, one in Arkansas and one in Illinois. Some continue to finance higher education with home equity lines, too. The concept that people used their home equity for lifestyle upgrades seems somewhat of an urban myth to Bruce McCain, chief investment strategist for Key Private Bank. One of the most significant uses for the product was college tuition payments, he said, noting that the volume of student loans surged when borrowing against one’s home became less feasible. That said, Mr. McCain agreed that people are trying to get their financial houses in order.

Risky business? More consumers and lenders also are matching the use of loan products to collateral — a trend that makes “good common sense,” Mr. Corbin said, because it prevents, for example, the financing of a sevenyear asset, such as a vehicle, with 15-year debt. Key’s Ms. Balser agreed, and noted that many clients are borrowing to make home improvements to ensure what value they do have in their houses doesn’t deteriorate. “Folks have not done a lot of work around their houses the last couple of years,” she said. “They’ve realized even if they thought they wanted to move, they probably can’t move right now. Now they’re just going to add to the house they have and stay put.” The question arises, though: Isn’t lending and/or borrowing more against a home, when home values have so recently collapsed, risky? That depends, Mr. McCain said. Applying more debt against one’s home when values are stagnant or in decline increases the risk of going under water, or owing more on a home than it’s worth, he acknowledged. But it also could be the case that some consumers are reshuffling existing debt and perhaps reducing it. “People are focused at this point on making their budgets stretch for things that have to be purchased,” Mr. McCain said, citing higher gas

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“Lines of credit used to be our ATMs or our checkbooks. ... But not now.” – Cindy Balser, senior vice president and senior product manager, KeyBank prices. “They may feel that the risk of more debt on the home may be worth it. It’s a matter of offsetting the risks.” Plus, interest rates are expected to rise and there’s concern about inflation, and home equity products — unlike credit cards — can be a tool for locking in rates and terms, Mr. McCain said.

Filling a void The recent double- and even triple-digit percentage increases in home equity lending are due in part to the drop in activity in previous years. When levels become low, any increase appears more dramatic — and home equity lending, Mr. McCain noted, is “nowhere as significant as it was.” Mr. Losneck said one reason home equity lending is up at Eaton Family Credit Union is the withdrawal of other lenders from the space. Among those that aren’t engaged in home equity lending at present is Third Federal Savings and Loan, which stopped such

lending last June. It entered into an agreement last September with its regulator, the Office of Thrift Supervision, to limit the concentration of home equity loans in its portfolio. Mr. Corbin agreed that fewer home equity lenders means those that are active in that market get a bigger piece of the pie. In addition, Charter One has ratcheted up its regional mortgage lending group significantly in the past six to 12 months. Where there had been eight mortgage loan officers midyear last year, there now are 26 loan officers, he noted. And the bank intends to add another 10 to 15 by year end. One bank industry insider, who requested anonymity, said she has seen increased advertising for home equity products, which could be another factor in their growth. Mr. Corbin said home equity products remain attractive for lenders because they’re an avenue through which banking relationships tend to deepen — unlike auto loans, for example, which often are

written indirectly, rendering lenders less able to address other needs consumers may have. Mr. Losneck expressed a similar view. “We like the first mortgage and the home equity product because it really gets to the point where the credit union becomes the primary institution for a family,” he said.

Old ways die hard Mr. Corbin said he hopes consumers don’t return to borrowing against their homes to live more grandiosely. “My hope is that people use good common sense to fuel their future and not the changing equity values in properties,” he said. Others, however, doubt this is the last we’ve seen of such behaviors. Though people are using home equity lines increasingly for their intended purpose — home improvement — Bill Valerian, president and CEO of Liberty Bank N.A. in Twinsburg, anticipates consumers will return to their old ways. He wouldn’t venture a guess at when. “People will return to using homes as a piggy bank,” Mr. Valerian predicted. “It will happen as sure as the sun will come up tomorrow.” ■

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NYCB: AmTrust’s mortgage subsidiary proves to be lucrative continued from PAGE 1

Mr. Ficalora noted. “We have good employees in a good environment, and we’re building on that.” AmTrust Bank prior to its failure had laid off hundreds of people, and “the people that remained were really the best of what they had,” Mr. Ficalora said. The past year has been one of continuing stabilization, said Robert P. Gillespie, first senior vice president for New York Community Bancorp, who worked for AmTrust for more than 20 years. For one thing, NYCB over the last year closed on the purchases of 18 former AmTrust buildings, 13 of which are in Ohio. Plus, local hiring

has continued: Since last April, 15 retail positions, including branch managers, have been filled, and the relocation of certain operations also has added roughly 15 jobs. There are about 50 jobs open, most of which are not new jobs, but replacements. It’s still to be determined how many jobs the move of disaster recovery services will involve, Mr. Gillespie said.

Jobs branch out Three major downsizings by AmTrust prior to NYCB’s acquisition resulted in some branch managers leading two or three branches, Mr. Gillespie said. “That’s not the case now,” he

said, noting there are three management staff members at every office, unless the positions haven’t been filled yet. As of last March 31, NYCB employed 1,149 in this region; that’s up 4% from 1,103 in March 2010 and up nearly 6% from 1,085 at the time of the Dec. 4, 2009, acquisition. Overall, the acquisition of AmTrust, which excluded the failed institution’s nonperforming assets, has proven lucrative for NYCB, Mr. Ficalora said. Its Ohio Savings Bank branches and AmTrust branches in Florida and Arizona operate efficiently, he said, citing an analysis of the branches’ costs and

services. Plus, the acquisition of AmTrust’s mortgage subsidiary has added power to NYCB, said Matthew Kelley, a senior analyst who follows NYCB for Sterne, Agee & Leach Inc., a brokerage firm in Portland, Maine. Mr. Kelley said of the $1.27 a share the thrift earned during 2010, 27 cents was generated by the mortgage unit. The subsidiary originates one- to four-family mortgage loans nationwide and packages and sells them to the secondary market. According to Mr. Gillespie, mortgage origination was up 13.5% in the first quarter of 2011 over the same period a year ago.

It’s a keeper For some time, the fate of the mortgage subsidiary, rebranded NYCB Mortgage Co. LLC, was unclear, as it was not a business in which NYCB had been involved and the thrift initially intended to sell it. However, after a few months of due diligence, “we came to appreciate that this business was actually a good business, well run … and was better for us to keep,” Mr. Ficalora said. Mr. Gillespie agreed. “That could have been sold,” he said. “It could have been moved to New York. It’s a big commitment for Cleveland — all those jobs, all those payroll taxes, all those dollars the people can spend in the community.” As of March 31, the mortgage subsidiary staffed 386 of the 1,149 NYCB employs here.

“Given our experience in Ohio, we would certainly be more inclined to entertain offers.” – Joseph R. Ficalora, president and CEO, New York Community Bancorp

is now

Fisher & Phillips LLP The attorneys and staff of Millisor + Nobil in Cleveland and Columbus, Ohio have joined Fisher & Phillips LLP, a national law firm representing employers in labor and employment matters. With its newest additions, Fisher & Phillips is now a firm with 260 attorneys in 25 cities. All of them are committed to partnering with clients to find practical and efficient solutions to issues arising in the workplace. Each of the firms has earned an outstanding reputation for excellent client service. Of the 260 combined attorneys, 70 are listed in The Best Lawyers in America, Chambers USA: America’s Leading Lawyers for Business or Super Lawyers. Fisher & Phillips recently received a “First-Tier Ranking” for management-side labor and employment law firms from U.S. News & World Report – Best Lawyers. To learn more about Fisher & Phillips LLP, visit us at www.laborlawyers.com. In Cleveland and Columbus, the name has changed but the commitment remains the same. Cleveland Managing Partner: Steven Nobil Fisher & Phillips LLP 9150 South Hills Boulevard • Suite 300 • Cleveland, OH 44147 Phone: (440) 838-8800 • Fax: (440) 838-8805

Fisher & Phillips attorneys at law

LLP

Solutions at Work®

National First–Tier Rankings Employment Law – Management Labor Law – Management

www.laborlawyers.com Atlanta Charlotte Chicago Cleveland Columbia Dallas Denver Fort Lauderdale Houston Irvine Kansas City Las Vegas Los Angeles Louisville New England New Jersey New Orleans Orlando Philadelphia Phoenix Portland San Diego San Francisco Tampa Washington, DC

Asked whether he, too, would say the past year has been one of continued stabilization, the mortgage subsidiary’s president and CEO, Jon Baymiller, replied, “No question about it. “New York Community Bank … is providing excellent support for the businesses that they chose to keep,” said Mr. Baymiller, who was executive vice president of mortgage banking for AmTrust when it failed.

Wide open spaces Less lucrative for NYCB in Northeast Ohio, Mr. Ficalora said, is a lack of tenants for the downtown building at 1801 E. Ninth St. it bought this year. The vacancy rate in the building currently is 38%, though the building still operates at a profit, Mr. Gillespie said. The number of showings to potential tenants is picking up — driven, he believes, by NYCB’s ownership of the building — something potential tenants view favorably. Increasing core deposits remains a priority, Mr. Gillespie said, noting the institution is planning various product promotions. He said April to April, the institution’s market share in Northeast Ohio increased nearly 1%. According to the FDIC’s Summary of Deposits, which is published every October and is based on June data, NYCB’s deposits were $1.74 billion in Cuyahoga County in 2010, rendering it No. 7 in market share. AmTrust’s deposits had been shrinking dramatically and were $2.67 billion in the county in June 2009, $4.23 billion in June 2008 and $4.43 billion in June 2007. NYCB has made one acquisition since the AmTrust deal — of Desert Hills Bank in Arizona in March 2010. Might it grow again by acquisition in Northeast Ohio? “Given our experience in Ohio, we would certainly be more inclined to entertain offers in Ohio,” Mr. Ficalora said. But Mr. Kelley, the securities analyst, said he’d be surprised if NYCB bought other banks in Ohio or Arizona. He expects the thrift to stick to the east, where its core New York market and core customers are, which Mr. Kelley said makes additional transactions in Florida more likely. ■

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APRIL 25 - MAY 1, 2011

Contact: Phone: Fax: E-mail:

CRAIN’S CLEVELAND BUSINESS

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Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com

REAL ESTATE

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card

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OFFERED ABSOLUTE, REGARDLESS OF PRICE! 1441-1535 Mentor Ave., Painesville, OH CURRENT NET OPERATING INCOME AT 75% OCCUPANCY IS $645,000

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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 Caesar’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.

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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

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

APRIL 25 - MAY 1, 2011

THEINSIDER

THEWEEK APRIL 18 – 24 The big story: The state’s new higher education czar is on board with Kent State University’s plan to borrow $210 million to finance a $250 million capital improvement initiative on the university’s main campus. The capital improvement plan was scuttled last fall by former Ohio Board of Regents chancellor Eric Fingerhut, who opposed a new student fee that would be implemented to fund the project; new chancellor Jim Petro Petro, though, already has signaled his support for the initiative. Among the planned improvements would be a redevelopment of the Kent campus’ “science corridor” to expand educational and research opportunities in science, technology, engineering, mathematics and medicine. Kent State expects to break ground on projects next fall.

Flight plan: Calling Cleveland Hopkins International Airport the doorway to the city, Cleveland Mayor Frank Jackson laid out a $1.6 billion master plan for remaking the 86-year-old airfield. The plan would play out over the next two decades and includes a modernization of the main terminal, a new hotel, moving walkways on Concourse C and a new mini-terminal that will give passengers direct access to the remote Concourse D. The city also expects to expand and improve parking and the roadways into and out of the airport; boost the capacity for air cargo handling; and upgrade facilities for aircraft maintenance. Team players: The long-planned redevelopment of the Lake Erie waterfront could receive a boost from the Cleveland Browns. President Mike Holmgren said the team wants to play the role of catalyst in getting lakefront redevelopment going. However, he stopped short of saying the team will play a financial or development role in bringing a mix of shops, offices and public uses to land north of the stadium now used for shipping and storage. Browns special counsel Fred Nance made it clear that the team was offering a “concept,” not a full-blown plan.

The wait is over: The School of Law at Case Western Reserve University has identified its next dean, nearly three years since the last time the university did not attach the tag “interim” to the person holding the job. Lawrence E. Mitchell, a business law scholar at George Washington University, will become the new dean pending approval of the university’s board of trustees. At George Washington, Mr. Mitchell is the Theodore Rinehart Professor of Business Law and founding executive director of the Center for Law, Economics & Finance. Finally the boss: Lee Fisher, the former Ohio lieutenant governor who also served as director of the state’s Department of Development under former Gov. Ted Strickland, was named president and CEO of CEOs for Cities. CEOs for Cities is a Chicago-based group that assembles CEOs and other urban leaders to serve as catalysts for change in American cities. Mr. Fisher assumes his new job today, April 25. This and that: Kichler Lighting in Cleveland acquired for an undisclosed price Teron Lighting Inc., a privately owned maker of commercial lighting products that is headquartered in the southwestern Ohio town of Fairfield. … OverDrive Inc. of Valley View is working with Seattlebased Amazon.com to develop Kindle Library Lending, a new feature that will launch later this year and will allow owners of the e-book reader to borrow books from more than 11,000 U.S. libraries.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

OK, so it isn’t an exact representation … ■ Last week saw the unveiling of two plans for redevelopment in Cleveland and some welcome clarity about the theoretical nature of the ideas that were put on display. First, on Tuesday, Cleveland Mayor Frank Jackson was at Cleveland Hopkins International Airport rolling out a plan for the transformation of Hopkins and Burke Lakefront Airport. Then, the next day, the mayor stood by at Cleveland Browns Stadium as team president Mike Holmgren described a vision for lakefront land north of the stadium. Whenever civic leaders hold press conferences to talk about the fruits of months or years of planning and studying, they generally follow the credo of architect Daniel Burnham, who designed Cleveland’s Mall. “Make no little plans,” he wrote. “They have no magic to stir men’s blood.” So, to stir the blood, the plans that were laid out included dramatic artist renderings of stylish, futuristic structures. Both press conferences even displayed the same rendering for Burke that showed an office building next to a man-made pond — creating the appearance of a lush, blue-green Shangri-La. Never mind that the small pond would be an incongruous addition because it would be 200 yards from a vast and real, if less inviting, Lake Erie. That was too much for Fred Nance, special

WHAT’S NEW

counsel to the Browns, who was taking reporters through the details of the lakefront plan. So he added a lawyerly, and honest, caveat to his presentation. “It may look something like this or nothing like this,” he said.—Jay Miller

Monsters work to play off their playoff appearance ■ As you might expect, the Lake Erie Monsters are serious about the first American Hockey League playoff appearance in the franchise’s four-year existence. So serious, in fact, that they’ve spent “well into the five figures,” according to team spokeswoman Sarah Jamieson, on a rebranding effort just for the playoffs. The Monsters were scheduled to play the Manitoba Moose in Winnipeg last Friday night; they led the opening-round, best-of-seven series 3-1 entering the game. The makeover includes the team’s web site and social media presences, exterior arena signage (pictured) and merchandise, along with newly branded playoff giveaway items, such as a Fathead mobile device cover. Should the Monsters beat Manitoba, they’d be guaranteed at least two more home games in a division final series against either Hamilton or Oklahoma City. In the first two home playoff games, April 16 and 17, the Monsters drew 7,908 and 8,822 fans, respectively. That’s on the heels of a 1.3%

The company’s new iPhone and iPod Touch app is designed to educate consumers about a roofing system introduced in January that’s comprised of a Kynar Aquatec, resin-based topcoat and an elastomeric acrylic basecoat. APV Engineered, which was founded in 1878 and makes engineered products for a variety of industries, says the app offers “layers of easy-to-find information on the APV eCoolRoof product,” including product background; environmental specifics on conservation, sustainability and aesthetics; and case studies. It also functions as a savings calculator, “which allows building owners, architects and industrial designers to calculate their potential energy savings with APV eCoolRoof versus a roof coated with a conventional elastomeric acrylic coating,” the company says. APV Engineered says the roofing system “can provide up to a 63% increase in life cycle energy savings for a structure, as well as up to a 63% reduction in CO2 emissions versus using an elastomeric acrylic product.” For information, visit www.eCoolRoof.com. Send information about new products to managing editor Scott Suttell at ssuttell@ crain.com.

Docs are the stars in latest Akron Children’s ads ■ Akron Children’s Hospital recently unveiled a new promotional campaign that administrators hope will lure not only new patients to the health system, but also new doctors as well. Typically, the hospital’s advertising campaigns had focused on patients, but the latest campaign has turned the camera to tell doctors’ stories, said Beth Smith, Akron Children’s director marketing and public relations. “It’s part of what makes us special,” Ms. Smith said. “What we’re trying to do is show how intensely they care for every child.” Dr. Norm Christopher, chairman of the department of pediatrics, said he’d like to hire about 100 physicians over the next three to five years. He noted an extreme shortage in pediatric subspecialists, and as the hospital extends its regional footprint, luring those physicians to Akron Children’s is paramount. Dr. Christopher said the ad campaign is meant to help recruit those doctors by setting apart the care the hospital provides from that of its competitors. “These are really great people who aren’t a lot different from your neighbors and enjoy and relish what they do in careers,” he said. To view the ads, visit http://tinyurl.com /3mf373l. — Timothy Magaw

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

COMPANY: APV Engineered Coatings, Akron PRODUCT: APV eCoolRoof app

regular-season attendance increase, to an average of 6,568. That total is a new franchise single-season record and was good for sixth in the 30-team league. — Joel Hammond

Dan Gilbert has a FLUD of business opportunities ■ Mortgage lending, pro sports, casino development, real estate — sometimes it seems like Dan Gilbert does just about everything. Here’s one more to add: a startup that provides a new way for people to consume news. Forbes.com noted in a short story that Mr. Gilbert is providing some of the money behind FLUD, which brings customized news to readers in a highly attractive visual format. “It’s a busy space” these days, Gilbert Forbes.com said, with competition from Flipboard, Pulse and Zite. FLUD has about 1 million users and has raised $1 million from a group of investors led by Mr. Gilbert’s Detroit Venture Partners. San Diego-based FLUD has iPhone and iPad apps that offer slick interfaces of articles that are tiled on the screen. Founder Bobby Ghoshal said FLUD is differentiating itself by focusing on “news that really affects you,” and it’s implementing a locationbased service that will recommend stories and feeds based on a user’s location. Mr. Ghoshal built the service last year in his spare time and launched it last August. Through pitching the company on the online angel investing site AngelList, Forbes.com reported, Mr. Ghoshal was introduced to Mr. Gilbert and eventually got a 15-minute meeting with the Cavaliers owner, who was impressed enough with Mr. Ghoshal’s pitch to invest.

Hypnosis brings calm before surgical storm ■ There’s a Cleveland story at the heart of a

New York Times piece about the increasing use of hypnosis to help patients gain control over their illnesses. The lead anecdote came from Kirsten Ritchie, 44, an insurance marketing representative in Cleveland who nearly 20 years ago had four tumors removed from her brain. (Ms. Ritchie told the paper that the operation and its aftermath were “horrific.”) The news that she needed brain surgery again was quite difficult. “Determined to make her second operation a better — or at least less traumatic — experience, Ms. Ritchie … turned to an unusual treatment,” The Times reported. “At the Cleveland Clinic’s Center for Integrative Medicine, she had four hypnosis sessions in the month before her procedure, during which she addressed her fear of surgery. She also practiced self-hypnosis every day.” Eventually, she said, “I got to a place where I felt a sense of trust instead of fear.” In February, doctors removed a plumsize tumor from her brain. Ms. Ritchie told The Times that she woke up from the procedure feeling “alert and awesome.” She also attributes a speedy recovery and calm state to her hypnosis sessions.

This aluminum firm is doing solid business — in Atlanta ■ Here’s one that got away. “Novelis Inc. brought more jobs than expected when it moved its North American headquarters from Cleveland to Atlanta,” according to the Atlanta Business Chronicle. Novelis, an aluminum products company, announced in February 2010 it would expand its Atlanta headquarters while consolidating operations from Cleveland. At the time, Novelis said it would add 135 new jobs over two years. Novelis has instead added 150 new jobs and kept 90.

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CLEVELAND STATE UNIVERSITY INAUGURATES A NEW TRADITION FOR STUDENT SCHOLARSHIP SUPPORT Commencement Weekend

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