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INSIDE New grocer enters region with two stores
Lenders courting business again More banks re-enter the game, create opportunity for borrowers
Fletcher, N.C.based Earth Fare Inc., a natural and organic food chain, will open new stores in Fairlawn and Fairview Park, and established local grocers are leery. Read Stan Bullard’s story on Page 10.
By MICHELLE PARK mpark@crain.com
Lawrence Krakowski’s fleet is 10 trucks greater because the yellow light for lending, at last, turned green. The Medina businessman’s attempts to borrow money to buy equipment for Krakowski Trucking Inc. in 2009 and early 2010 were “just not accom-
plishable,” he recalled, even though the company was almost debt-free. “Nobody wanted to give in no matter what condition the company was in,” said Mr. Krakowski, the company’s CEO. “It’s not that they wouldn’t loan us money. They wouldn’t give us an answer. The loan process was going on and on and on for months at a time. It was neither a yea nor a nay.”
But, after moving his business banking to First Federal of Lakewood last spring for multiple reasons — among them, cheaper fees — Mr. Krakowski applied for and received financing of more than $1 million last November. With it, he’s outfitted his fleet with 10 new, more gas-efficient trucks. “The banks have stepped up,” he
said. “I think that has forced the other banks to step forward also and be a little more direct in lending.” While business loan demand growth is modest by most accounts, competition is intensifying. More banks have shaped up and are increasing their business lending. Meanwhile, fewer businesses are said by lenders to be seeking financing, and a smaller number of them are well-qualified borrowers. See LENDING Page 19
Crowne Plaza bidder would close hotel for two years
CAUGHT IN THE RAIN Golf courses suffer major losses as weather wreaks havoc
Neglect leaves only 100 of 470 rooms operable
By JOEL HAMMOND jmhammond@crain.com
By JAY MILLER jmiller@crain.com
T
ired of the lousy weather this spring? So are golf course operators. Across the area, horror stories abound, with thousands of rounds and dollars lost and almost no chance to make them up, no INSIDE: Data matter how thirsty from the National area golfers are to play Weather Service show just how bad once the weather turns. this spring has “No one’s going to been. Page 17 make it up. It’s over,” said Joe Salemi, architect and owner of the picturesque Boulder Creek in Streetsboro, situated along the Ohio Turnpike. Mr. Salemi said rounds played at Boulder Creek, which he started in 1998 and opened to the public in 2002, were down so far this year around 70% from the like period last year.
If the sale of the Crowne Plaza Hotel Cleveland City Centre goes through as planned, the new owner intends to close the dilapidated building in November to undertake a two-year, $47-million transformation of the property into a four-star hotel. A myriad of mechanical problems caused by years of neglect has left the current operator with only about 100 usable rooms in the 470-room hotel. At present, a single level of scaffolding surrounds the building at East Sixth Street and St. Clair Avenue, protecting passersby from bits of masonry peeling off the exterior. The closing of the 36-year-old property would put 100 employees out of work. On the bright side, Sage Hospitality Inc. of Denver, which is running the hotel, has partnered with Optima Management Co. of Miami in a bid to buy the hotel out of bankruptcy for $10 million. Its goal is to reopen a restored property in time for the ribbon-cutting on the new Cleveland convention center and medical merchandise mart under construction nearby. The tradeshow complex is scheduled to open in the fall of 2013. The hotel is owned by Lehman
See RAIN Page 17
MARC GOLUB PHOTO ILLUSTRATION
19
See HOTEL Page 21
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SMALL BUSINESS Technology and accessibility make it easier than ever to self-publish ■ Page 12 PLUS: ADVISER ■ TAX TIPS ■ GRAND OPENINGS ■ & MORE
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CORRECTION Clifford V. Harding is professor and chairman of pathology at Case Western Reserve University School of Medicine and University Hospitals Case Medical Center. An incorrect title appeared on Page H-1 in the May 2 issue of Crain’s Cleveland Business.
REGULAR FEATURES Classified..................22 Editorial......................8 Going Places ............10 Letters........................9 List: Manufacturing companies ......18, 20 Personal View ............8 Reporters’ Notebook ..23
COMING NEXT WEEK Crain’s profiles 10 Northeast Ohioans — including former NorTech chief Dorothy Baunach and Tom Yablonsky of the Historic Warehouse and Gateway districts, below — who have made significant contributions to the region.
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CAR TALK If you work in manufacturing, it still pays to be in the auto industry, though the compensation gap between people who make cars and those who make everything else is narrowing. From 1996 to 2009, average hourly compensation (wages and benefits, measured in 1996 dollars) for manufacturing workers declined 1.2%, while it rose 7.7% for workers in nonautomotive industries. Even so, auto industry workers today make about 48% more than nonautomotive manufacturing workers. Here’s how the average hourly compensation data break down in selected years since 1996:
Year
Current dollars Auto Non-auto
1996 dollars Auto Non-auto
2009
$36.98
$24.92
$27.07
$18.24
2006
40.15
23.07
31.29
17.98
2003
35.82
21.28
30.27
17.99
2000
33.45
18.68
30.42
16.99
1996
27.40
16.94
27.40
16.94
SOURCE: U.S. BUREAU OF LABOR STATISTICS
your banker should understand you as well as your business
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IT consultant deals with $2.8M IRS lien Cleveland’s Attevo works to repay large tax debt amid post-recession sales rebound By CHUCK SODER csoder@crain.com
Attevo Inc. is working to pay off a $2.8 million federal tax lien filed against the information technology
consulting firm in March, according to Joseph Burmester, partner and chief financial officer for the company in downtown Cleveland. For eight straight quarters, Attevo failed to pay the Internal Revenue
Service all of the tax dollars the company withheld from employee paychecks. The recession hit Attevo hard, driving it to start falling behind on payments in the fourth quarter of 2008, Mr. Burmester said. “We just got behind and it snowballed,” he said. Increasing sales, however, should help Attevo pay off the lien, Mr. Burmester said. Business picked up
in late 2009, and the company posted a “nice profit” in 2010, he said. Plus, sales so far this year are up roughly 25% to 30% over Attevo’s sales at this point last year, said Mr. Burmester, who declined to provide revenue figures for the company. “We really are very optimistic about how things are going right now,” he said. Attevo — founded in 2004 by CEO C. David Snyder, who is best
INSIGHT
known for starting IT consulting firm Realogic Inc. and selling the Cleveland company to Computer Associates International Inc. in 1998 — disagrees with the IRS over the total amount it owes, Mr. Burmester said. The company, however, is working with the IRS to resolve the tax matter, he said. Attevo has made some small payments toward the lien already and has paid taxes that have See ATTEVO Page 21
State loan to energy outfit has broader implications
REALITIES OF EXECUTING GRANDIOSE DOWNTOWN PROJECT PLANS
Program could be cash cow for Third Frontier By CHUCK SODER csoder@crain.com
Flats East Bank developers employed creative strategies to close financing.
The Browns Lakefront District could cost hundreds of millions of dollars to build.
MONEY MATTERS Whether visionary developments materialize depends on ability to secure elusive financing By JAY MILLER jmiller@crain.com
Construction proceeds at the Cleveland Medical Mart and Convention Center.
R
eal estate developers and politicians always will make and promote grand plans. Small plans, after all, rarely capture the imagination of citizens or real estate investors. And so it is in Cleveland, where so far this year grand plans have been announced by the city for substantial commercial development on land surrounding Cleveland Hopkins International and Burke Lakefront airports, and by the Cleveland Browns for significant mixed-use development north of Cleveland Browns Stadium along the lakefront. See PLANS Page 11
This master plan at Burke Lakefront Airport calls for a corporate campus.
THE WEEK IN QUOTES “We have 350 of 470 rooms that are out of service due to water leaks, window leaks, the plumbing doesn’t work, the air conditioning doesn’t work.” — Ken Geist, executive vice president, Sage Hospitality Inc., which runs the Crowne Plaza Hotel Cleveland City Centre. Page One
“We’re hitting all the buttons they like (in Washington) — regionalism, manufacturing, silo-busting and exporting.” — Brad Whitehead, president, Fund for Our Economic Future. Page 7
“There’s a professional quality to self-published books that didn’t used to be there, but there is still one major challenge: getting exposure for the book and selling it.” — Ron Humphrey, co-founder, Windjammer Adventure Publishing. Page 12
“Moms are real busy; they have a lot of things on their plate. For advertisers … you want to look at where they’re focusing their time and attention.” — Todd Nighswonger, publisher of Cleveland Family, Akron Family and Lake/Geauga Family magazines. Page 12
It’s kind of like a grant and it’s kind of like equity. The state of Ohio is in the process of finalizing terms of a loan that could represent a new way to finance the creation and commercialization of new technology through the Ohio Third Frontier economic development program. The $1 million, no-interest loan is like a grant in that the company receiving it — energy services firm GEM Energy Management Inc. of Walbridge, Ohio, in Wood County near Toledo — would need to pay back only $250,000 of the loan if it never ends up selling the heat and power generation system it develops with the money. It’s like equity in that the loan could be a substantial moneymaker for the Third Frontier program, which typically uses grants to finance hightech projects. Under terms of the loan, 4% of revenues from sales of the generator powered by natural gas would be returned to the program. If GEM makes a lot of money off the generator, which will be marketed to customers that need an uninterrupted power supply, the Third Frontier could receive up to $1.75 million, which means the program would make $750,000 off the loan. During a presentation April 28 before the Third Frontier Commission and Advisory Board, members of the Ohio Department of Development who designed the loan encouraged board members to look at it as a model for future loans. Making loans like these would help the Third Frontier sustain itself over the long term, said Third Frontier executive director Norm Chagnon, who is employed by the Ohio Department of Development, which oversees the Third Frontier program. Last November, voters renewed the Third Frontier for another four years by passing a $700 million bond issue that will finance it through the fiscal year that ends June 30, 2015. “We’re not taking that for granted,” Mr. Chagnon said. See LOANS Page 11
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Hospice industry rejuvenates Economic recovery fuels local operators’ expansion plans By TIMOTHY MAGAW tmagaw@crain.com
After some delay, hospice providers in Northeast Ohio have taken shovel to earth to beef up their operations. Many hospices in the region had planned for years to build new inpatient facilities, but the recession stalled those efforts, according to Jim Faulkner, president of Matrix Archi-
tects, an architecture firm in Dayton that focuses solely on hospice design. But as the economy slowly recovers from the pits of the downturn, hospice organizations are proceedings with their plans. “With prices somewhat sliding backwards (for construction), they could now afford to make that leap of faith,” said Mr. Faulkner, who noted that he’s seen an uptick in business not just in Ohio but nationwide. Both Hospice of Medina County and Hospice of the Western Reserve — two of the largest nonprofit hospices in the region — have made big capital investments over the last year. Though most of the services a hospice provides occur on an outpa-
tient basis, officials say the new inpatient facilities will allow them to absorb more patients and boost their market presence. “In early years, we were helping each other out and sharing what information we had,” said Pat StropkoO’Leary, executive director of Hospice of Medina County. “I would say in last 10 years or so, it’s become increasingly competitive.” Hospice of Medina County is building a $9.6 million, 33,000square-foot inpatient center slated to open late this summer at the intersection of state Route 18 and Windfall Road in Medina. Its current inpatient facility is located at an assisted living center in Medina. “This enhances the awareness of who we are and what we do,” said Christine Gorey, the hospice’s director of marketing. “It increases the access for our services, and we will be the only freestanding hospice in Medina County. That is a tremendous benefit.” Likewise, Hospice of the Western Reserve is building a $20 million, 40,000-square-foot inpatient center in Westlake, which will augment its 42-bed facility on East 185th Street along Lake Erie in Cleveland. The Westlake facility will allow the organization to increase its access points in Cuyahoga County, and there’s always a possibility for more sites, according to William Finn, CEO of Hospice of the Western Reserve. “The future locations and size of facilities would be based on the demand patients create,” he said. The hesitance among dying patients or their families to seek hospice services has faded, and more people accept its role in end-of-life care, according to those in the industry. “The stigma related to hospice is changing,” said Norm Mast, executive director of Community Hospice in Tuscarawas, Stark and Carroll County, which is involved in a $6 million renovation project to build a new inpatient facility. “You’re not seeing it as giving up hope or giving up at end of life. Hospice is about living every day the best as you can.” That shift has prompted others to enter the market. Mr. Finn estimated as many as 40 hospice organizations sprouted in Northeast Ohio over the last five years. Northeast Ohio is a particularly fertile ground for hospices as the region has a higher death rate and its citizens are in poorer health than in other areas of the country. Still, the slow acceptance of hospice care has been a long time coming, said Margaret Sanders, associate director of the office of geriatrics and palliative care at Northeastern Ohio Universities Colleges of Medicine and Pharmacy in Rootstown. “There was a negative view because I think a number of people believed once enrolled in hospice care you were giving up on that patient,” she said. “The message has gotten out that comfort and care are a good alternative when just care is no longer an option.” ■
Volume 32, Number 19 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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Banks, businesses square off as ‘swipe’ fee legislation progresses Financial institutions lobby to delay reduction in debit card charges By MICHELLE PARK mpark@crain.com
Try to change who makes what money when debit cards are swiped, and you incite a feisty tug-of-war. Just ask your legislators. Unless members of Congress agree to a delay, change is to occur July 21 that would reduce dramatically the fees banks and credit unions earn each time a debit card they’ve issued is swiped. In response, some local financial institutions are lobbying legislators for the first time in years, urging delay, while various small business and retail groups are prevailing on lawmakers to stay the course. Eaton Family Credit Union, with three Northeast Ohio locations, and the four-branch Cardinal Community Credit Union both recently collected from staffers and members hundreds of signatures on petitions calling for delay. Those signatures were among nearly 32,000 delivered by 55 Ohio credit unions to U.S. Sen. Sherrod Brown’s office, said Mike Losneck, CEO of Eaton Family Credit Union. Cardinal CEO and president Christine Blake can’t remember the last time the credit union took such action. “It is just too complicated,” she said of the pending change. “That’s why we’ve all been pushing to stop it.”
On the other end of the tug-of-war rope, businesses that accept debit cards as a form of payment are pulling for the change to proceed. The proposed fee reduction drafted by the Federal Reserve Board would cap the fee merchants pay for debit card transactions at 7 or 12 cents. The higher rate is nearly 73% less than the average 44-cent fee charged per transaction in 2009. At present, the debit card interchange rate — commonly known as the swipe fee — is a percentage of purchases and is set by Visa and MasterCard. For now, both sides in the debit card battle are watching Capitol Hill, where separate bills in the House and Senate are pending in committee. The House bill would delay the price control for a year, the other for two years, and both would require studies of the impact of changing the fees. The Council of Smaller Enterprises in Cleveland would prefer swipe fees be eliminated altogether, but the Federal Reserve’s proposal “does represent significant progress,” according to COSE’s written stance on the matter. “Small businesses should not have to wait any longer for relief in this area,” the document read.
Eating into profits John Altomare, owner of Hudson’s
“(Swipe fee reduction) potentially means some of these banks are going to have more trouble going forward.” – Kevin Jacques, associate professor of finance, BaldwinWallace College Restaurant, with locations in Hudson and Montrose, is in favor of the change. He said he pays more in debit card fees than he does for laundry and linen. “In times like this, anything that helps is better, especially in my business,” Mr. Altomare said, citing rising commodity and transportation costs. Swipe fees are nearly impossible to budget for, said Molly Brogan, vice president of public affairs for the National Small Business Association in Washington, D.C. “These people really are at the mercy of big banks,” said Ms. Brogan, who also called into question how much pain the change actually would cause banks. She noted that many have reported big profits this year. At the top of the petition Eaton Family Credit Union circulated was an explanation that without a delay to debit card reform, the reduction to swipe fees could mean higher fees for certain services, restrictions
on debit card services and elimination of free checking. Mr. Losneck said the credit union receives roughly $5,000 a month in interchange income — about 5% of the institution’s gross income per month. Even now, providing debit card products costs 30% more than what the credit union receives in the way of swipe fees, according to Mr. Losneck. Kevin Jacques, a former economist with the U.S. Department of the Treasury, sees the debate over swipe fees as a litmus test of the ability of bankers and various other groups to influence what the Dodd-Frank Wall Street Reform and Consumer Protection Act ultimately looks like. The act contains the Durbin amendment, which mandates the limit on swipe fees. Fee income has become a “huge source of income and income growth” for banks, said Mr. Jacques, the Boynton D. Murch Chair and associate professor of finance at Baldwin-Wallace College. Following the recent financial downturn, a reduction in swipe fees further would impinge on institutions’ ability to generate revenue, Mr. Jacques said. “That potentially means some of these banks are going to have more trouble going forward,” he said.
Losing proposition The Durbin limit is supposed to exempt financial institutions under $10 billion in assets from the change in fees, but critics argue that
if smaller institutions continue to charge higher swipe fees while larger ones don’t, retailers could discriminate against the smaller ones. Ms. Blake said it’s possible Cardinal Community Credit Union would reissue debit cards down the road without the Cardinal logo if it finds retailers are refusing its cards. She estimates the change in the swipe fee would result in Cardinal realizing a loss of 21 cents on every transaction. “To be fair to all of our members, we may be forced to charge for debit card usage,” she said. “You cannot offer a service at a loss. “It’s not just, ‘Poor us, we don’t get our income,’” Ms. Blake added. “My concern is that I’m not going to be able to offer my low- to moderateincome members a service they’ve come to expect and use.” Larger banks wouldn’t discuss with Crain’s how they might amend their offerings if the fee change proceeds. However, they used recent first-quarter earnings reports to make known the monetary impact they anticipate. Columbus-based Huntington Bank, for one, stated in its first-quarter report that its electronic banking income could be reduced by $45 million in the second half of 2011 if the limit is instituted as proposed. The bank has not hired a lobbyist specifically to address the issue, but continues to “maintain an active governmental affairs dialogue with all constituencies on behalf of our customers,” a spokesman said. ■
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MAY 9 - 15, 2011
Mentor natural gas distributor pumped over market potential By DAN SHINGLER dshingler@crain.com
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If Mentor businessman Greg Osborne and others are right, cars in the not-too-distant future will run on natural gas rather than gasoline — and Mr. Osborne wants to join Texas oil billionaire T. Boone Pickens in running filling stations for those vehicles. “We think compressed natural gas is the way of the future,” Mr. Osborne said. Mr. Osborne and his father Richard, an entrepreneur who made his fortune in industrial gases and real estate, dove into the natural gas business in 2002, when they bought a small company in Orwell called Orwell Natural Gas, which distributes gas to about 2,000 customers. They’ve continued buying up small natural gas distributors, and today, the company, called Gas Natural Inc., operates in Ohio, Maine, Montana, North Carolina, Pennsylvania and Wyoming, with about 70,000 customers. It’s a nice little business, the younger Mr. Osborne says — it earned $5.8 million in 2010 — but he hopes it’s just the start of something bigger. “We’ve got enough natural gas to power the U.S. for 100 years,” Mr. Osborne said of the country, quoting the gospel of Mr. Pickens. “The biggest drawback is that there are not filling stations on every corner — yet.” Mr. Osborne wants to supply and operate some of those stations and is counting on two forces to speed the
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Mentor businessman Greg Osborne (right) wants to team up with Texas billionaire T. Boone Pickens to capitalize on the natural gas market. The duo support a bill in Congress that would bolster subsidies for natural gas vehicles and the infrastructure to make them viable. PHOTO PROVIDED
adoption of the fuel: Congress and Mr. Pickens. The U.S. House of Representatives is considering a bill, backed by Mr. Pickens and sponsored by 180 lawmakers of both parties, that would amp up subsidies for natural gas vehicles and the infrastructure, such as fueling stations, needed to make them viable.
Early birds Mr. Pickens already is going into the natural gas filling station business with his California-based company, Clean Energy Inc. — and Mr. Osborne wants him as a partner. The two are talking, said Mr. Osborne, who happily shows a photo of him and Mr. Pickens at a recent meeting in Washington, D.C., to support the pending legislation. The focus initially would be on fueling stations for fleet operators, such as delivery companies and government agencies, but later, the general public also will need access to the fuel, Mr. Osborne said. It’s too soon to say how the two companies might work together, said Gas Natural operations manager Jeff Heidnik. Their collaboration could entail an investment in Gas Natural by Mr. Pickens’ company, a partnership to invest in and build fueling stations, or even an arrangement whereby Gas Natural provides fuel to stations Mr. Pickens builds in territories Gas Natural serves, he said. Clean Energy is working with similar natural gas delivery companies, said its general manager for the Central U.S., Ken Nicholson. And, like Mr. Osborne, Mr. Nicholson predicts there soon will be more fuel stations, along with more natural-gas-powered cars, across the United States. “In Texas, we already have about 20 public (fueling) stations,” he said. “I can drive (my natural gas vehicle) all over Texas and Louisiana, because the infrastructure is in place. I can’t go to, let’s say, Las Vegas, though, because the
infrastructure is not in place — yet.”
Pumped up Gas Natural’s ambitions are stoked by news of vast natural gas deposits recently discovered in the shale beneath Ohio and Pennsylvania, among other locations. New extraction methods called fracturing make that gas more accessible. A black piece of shale recently made the cover of Time magazine, with the headline: “This Rock Could Power the World.” “He’s absolutely correct,” Cleveland entrepreneur Dan T. Moore said of Mr. Osborne’s belief that gas is the next big thing. Told of Mr. Osborne’s plans, Mr. Moore’s eyes lit up a bit more than usual during a recent interview, as he jotted down information and said he wanted to talk to Mr. Osborne to learn more. Mr. Moore, it turns out, is making a similar bet — he’s working on a fueling system for consumer vehicles that would use natural gas that’s already pumped into people’s homes. At the moment, Mr. Moore is selling conversion kits that enable fleet owners to convert some Dodge trucks over to natural gas — but he, too, says the real boom will come when everyday consumers convert. No one is saying yet how much of their own money they’re willing to invest, or how much they might raise from investors for what Mr. Osborne says will be a capitalintensive process of building a natural gas fueling infrastructure. Gas Natural has shown an ability to raise money recently — last December, it brought in $19 million via a stock offering. But that money will go toward laying new pipe and hooking up new residential and business customers in its existing territories, not for building vehicle fueling stations, Gas Natural’s Mr. Heidnik said. How much money the company needs to get into the natural gas filling station business will depend upon how things go in Washington and with Mr. Pickens, he said. ■
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Program looks to link small manufacturers to ‘big guy’ resources Plan would help companies enter new markets By DAN SHINGLER dshingler@crain.com
Some of the area’s economic development leaders want to give new momentum to some old ideas with an initiative aimed at helping small and midsize manufacturers branch out into new markets — a plan that has won an endorsement from the Brookings Institution in Washington, D.C. Their hope is that others in the nation’s capital will like the plan, too — enough to fund it at a time when federal dollars are handed out about as freely as Opening Day baseball tickets. In Cleveland. In 1996. “We’re hopeful,” said Brad Whitehead, president of the Cleveland-based Fund for Our Economic Future, a regional economic development organization that has promised to provide some money for the initiative. “We’re hitting all the buttons they like (in Whitehead Washington) — regionalism, manufacturing, silobusting and exporting,” Mr. Whitehead said. The initiative is called the Partnership for Regional Innovation Services to Manufacturers, or PRISM, and it’s headed by the Clevelandbased manufacturing advocacy and consulting group, Magnet. PRISM’s mission will be to provide a broad range of services to a few closely aligned companies, which it intends to shepherd to success. “You may need support in terms of product and process innovation. You may need support in terms of market validation for an idea. You may need support for capital and working-capital financing, or you may need help getting people trained,” said Mr. Whitehead, referring to manufacturers who might participate in the program. “We’re entering a relationship where we’re going to be proud to call you our own and we’ll feel some responsibility for your success.” That’s a different model for aiding manufacturers than currently is employed, Mr. Whitehead said. Even though entities such as Magnet offer many forms of consulting services, an approach that surrounds a few “portfolio” companies with comprehensive guidance and assistance is a new tack that backers hope will produce new and expanded manufacturing companies in Northeast Ohio.
The plan was developed in conjunction with Brookings after the public policy think tank selected three regions from 12 competitors, all vying to be project sites for new initiatives, such as PRISM, intended to revitalize their local economies. In addition to Northeast Ohio, Brookings selected the Puget Sound area of Washington and the Twin Cities region of Minnesota for its initial projects. Going forward, Brookings will help pitch the projects to potential sources of federal money and monitor their implementation — possibly so it can replicate them elsewhere. “NEO quickly rose to the top because of its outstanding commitment, historically, to the use of data and the use and development of sophisticated strategies — combined with, what to us, was a strong response to a compelling challenge, that being the de-industrialization,” said Mark Muro, senior fellow and policy director of Brookings’ Metropolitan Policy Program.
A matter of access If PRISM works, it will leverage Northeast Ohio’s knowhow in areas that range from advanced manufacturing to materials science and will put that expertise to use behind small and midsize companies that couldn’t access it on their own, said Magnet’s director of innovation, John Schober. “We really consider the entire economic ecosystem in the region, as we like to call it, to be a part of this,” Mr. Schober said. For example, Mr. Schober said, the area’s universities possess tons of knowledge and expertise that could be put to commercial use if small and midsize companies have access to it. The University of Akron, for example, has one of the world’s most respected polymer science departments. Peter Broer, president of lighting systems maker Lumitex Inc. in Strongsville and himself a Magnet board member, supports the initiative and sees PRISM’s potential benefits to its target audience. Broer “Big companies, like Timken and Diebold, know how to use area universities,” Mr. Broer said. “But to small companies like mine, universities look like a big wall. I need help getting through that wall.” In three or four years, Mr. Broer
Aerospace firm makes California buy Aero-Instruments, ON THE WEB Story from of displacement a maker of air data www.CrainsCleveland.com. sensors to cussensors for the tomers worldwide. aerospace and defense industries, “This acquisition allows Aero-Inhas acquired for an undisclosed price struments to expand our product the air data product line of Spaceofferings to include angle of attack, Age Control of Palmdale, Calif. temperature sensors, air data Aero-Instruments said the acquisibooms, trailing cones and trailing tion will allow the company to enter bombs, while entering the flight test new markets as well as enhance equipment market and strengthening and expand its existing product our position in the growing unmanned lines. Aero-Instruments said after air vehicle market,” Dan Pappano, the deal that SpaceAge Control will president of Aero-Instruments, said continue to develop and sell its line in a statement.
said, he hopes to see one or more PRISM Centers open at area schools — places where the commercialization of technology and the assistance of manufacturers in need of technical help become systematic and routine. But, before that can happen, the program needs to be launched and to get on the road to sustainability.
Some skeptics speak A prospectus shown to potential financial backers in Washington shows how PRISM will begin life with substantial federal support — about $1.2 million in its first year — then wean itself off of federal sources by its fourth year of operation. To get there, PRISM will need to ramp up the money it receives from participating companies in the form of fees — from $50,000 in its first year to $750,000 annually in years four and beyond. But securing fees could prove a hurdle. Many manufactures are leery of government programs and ivory tower solutions to what they see as real-world issues on the ground. One notable manufacturer, who did not want to be identified, dismissed the initiative off hand when federal money was mentioned.
“I don’t believe government can create anything except another bureaucracy,” he said. Mike Gordon, owner of Tendon Manufacturing in Solon, a metal fabrication shop, also expressed skepticism. “Right off the bat, if something takes 17 pages to explain, I’m leery,” Mr. Gordon said of the prospectus. “I believe that we already have programs in place to commercialize new technology ideas. I see this, on the surface, as being redundant with other programs in place.” Magnet understands the criticism, but disagrees.
Interested recruits “Yeah, this stuff exists — but it’s not easy for people to access,” said Magnet spokesman Greg Krizman. “The whole point of this program is to make these resources more accessible for manufacturers … especially for the smaller manufacturers.” Folks such as Mr. Gordon might present PRISM with its greatest challenge — he is exactly the type of small, local manufacturer the program is designed to work with, its backers say. But there are supporters as well. “I do think they’re on the right
track with such a program, said Steve Craig, president of Unicontrol Inc. in Parma, which makes instrumentation and controls used in commercial heating and ventilation systems. “I just went through it with (Magnet officials) last Friday,” Mr. Craig said on May 4, “and I was quite interested in it.” Mr. Craig said he’ll likely sign up for Prism in the hope that the program will connect him with help in developing new products, securing government grant money and accessing sources of private capital. For years, Mr. Craig said he’s been doing that legwork himself — “the hard way” — because companies such as his, with 68 employees, aren’t large enough to dedicate staff to finding outside resources. PRISM does not need to attract all local manufactures, just a few who will want to work with it closely — and Mr. Schober said other manufacturers also have expressed interest. “We think we have the capacity to support three or four companies right now, so what we’ve done already is give the PRISM pitch to a handful of companies and we’ve had one or two come back and say, ‘We want to work more with you on this,’” Mr. Schober said. ■
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Brighter skies
I
t has been a dreary spring along the shores of Lake Erie, at least as far as the weather goes. So, how about if we turn to a subject that should chase away a few of those gray clouds and brighten your day? We’re talking about the jobs picture in Northeast Ohio. Bet you didn’t see that coming. Usually when the country is recovering from a recession, job growth in this region trails the rest of the United States. Not this time. Courtesy of current Crain’s managing editor Scott Suttell and former ME Chris Thompson, we’ve come across employment numbers that tell an encouraging job-creation story for Northeast Ohio. Last week, Mr. Thompson — now director of funder and regional engagement for the Fund for Our Economic Future — emailed a tidbit with the subject line, “Man Bites Dog, Rust Belt moves East/South.” We opened it and found a chart that showed the change in manufacturing employment in about 25 states from March 2010 to March 2011. “Check out this chart,” Mr. Thompson wrote. “When was the last time four Midwest states led in manufacturing job growth?” Sure enough, the chart showed Michigan, Wisconsin, Ohio and Indiana — in that order — recorded the biggest number of job gains in the manufacturing sector over that 12-month period. “More broadly, the three top 100 metros that call NEO home (Youngstown, Akron, Cleveland) all were in the top 35 or so in terms of overall job growth and percentage job growth in March 2011 vs. March 2010,” Mr. Thompson continued. “Again, when was the last time that happened? Usually we are fourthquartile performers.” A couple days later, in his Editor’s Choice blog on CrainsCleveland.com, Mr. Suttell shared similar tidings of joy based on a report from SimplyHired .com, a job search engine company. In its April job trends report highlighting national and local market outlooks, SimplyHired said Cincinnati had the highest month-over-month increase in job openings (13.6%) from March to April, followed by San Diego (12.9%) and Dallas/ Fort Worth (12.3%). “The Cleveland/Akron, Salt Lake City and Harrisburg, Pa., markets, were next, all with 11.5% increases in job openings,” Mr. Suttell wrote. Now, keep in mind that the rebound in jobs is miniscule compared to the job losses that took place during the Great Recession. So, any gains are coming from a far smaller employment base. Nevertheless, the improvement in the job market that is taking place in Northeast Ohio is keeping pace with what is happening nationwide — and that’s something that wasn’t the case after the previous four recessions. We attribute a big part of Northeast Ohio’s changing jobs picture to diversification — both of the product offerings and customer bases of individual companies, and of the Northeast Ohio economy in general. People and companies in our region have worked hard to adapt to a changing world, and we believe we’re seeing the fruits of their labors.
FROM THE PUBLISHER
Kasich legacy could hinge on schools
H
hinges on how we prepare our children. ere’s a great example of the old Gov. Kasich could leave a legacy “good news/bad news” headunlike no other Ohio governor in modern line from last week: “School history if he cleaned up the absolute issues get mixed response.” It mess that is this state’s tax system, and had to do with an Associated Press story he could begin with this horrible system wrapping up voters’ reactions to 146 of financing our schools on the backs of school levies that were on the ballot property owners. across the Buckeye State. **** A grand total of 86 were HERE ARE TWO OTHER approved, which is only a 59% BRIAN headlines, each on the same approval rate. That means more TUCKER day last week, a couple days after school systems will be cutting the killing of the world’s most staffs, dropping Advanced Placenotorious terrorist, Osama bin ment courses and instituting Laden, by a team of U.S. Navy more “pay-to-play” charges for SEAL special operations forces: extracurricular activities. “Details of shooting change” The good news is that some and “bin Laden was not armed, levies were approved (most of White House now admits.” them renewals), and that Parma Both stories, which were from passed a levy after seven straight the Associated Press and The Washington defeats. Post, basically said the same thing, Those defeated levies, coupled with namely that early reports that bin Laden the estimated $3 billion in cuts imposed might have been armed or was using a by the Kasich administration’s proposed woman as a human shield were erroneous. budget, means unprecedented additional We should expect that details might pressure on Ohio’s schools, and the change in the aftermath of any military problem is that everyone with half a exercise, especially one fraught with brain knows that our state’s future
great danger. But what bothers me is that one headline writer injected ever-so-subtle editorial comment — “White House now admits” — and the other was entirely fact-based rather than opinionated. It shows the influence newspapers can wield, and how subtle it can be. Neither headline was factually inaccurate — it’s just that one had more opportunity to influence before a reader could even start the story. **** AND, SPEAKING OF newspapers, the fighting has ramped up as Congress continues to review potential new trade agreements with Panama, Korea and Colombia. Last week, The Plain Dealer prominently displayed a story quoting a study that showed how many Ohio jobs have been lost due to the North American Free Trade Agreement, never mentioning the thousands of jobs also created at Ohio companies that export. The next day, the National Association of Manufacturers issued a statement praising the Obama administration’s signals that it will support the agreements. Stay tuned — this could get nasty. ■
PERSONAL VIEW
Many downtown projects need connection By ANTHONY COYNE
C
levelanders desperately want a win. But while we eagerly await the day one of our sports teams wins “the big one,” we should realize the big one is happening right now. And it’s something around which we must all rally. What is the big one? It’s $1.5 billion in combined physical development under way or planned in downtown Cleveland — from the new casino to the Flats East Bank Project to Public Square to the Medical Mart and Convention Center to the Mall. It’s the “big ideas” in the Group Plan’s new report on how to unite and maximize the individual benefits of these projects. It’s simply Cleveland’s best chance for a 21st-century downtown
Mr. Coyne is chairman of the Group Plan Commission. resurgence, roughly a century after its first renaissance. In the early 20th-century version, the two key players were progressive Mayor Tom Johnson and visionary architect Daniel Burnham. Mayor Johnson created the Group Plan as an effort to envision, plan, build and activate a beautiful central gathering space (The Mall) for the public amid an array of classical buildings. Johnson chose Burnham, who helped spur downtown revivals in Washington, D.C., and Chicago, to quarterback the design process. Cleveland’s 20thcentury civic renaissance was the result. Fast forward to today: Mayor Jackson has resurrected the Group Plan to rede-
fine the same space his predecessor energized a century ago. Bringing people and projects together through a new Mall could help spur another great renaissance. Our region has grown disconnected from the core city despite the city’s central leadership role in future growth. The Mall space, along with its sister Public Square, is a metaphor for this disconnectedness. If both are not rebuilt, reconnected and reactivated, we’re left with giant voids rather than unifying centers designed to spur additional development and investment amid several dynamic capital projects set to revive downtown. Just imagine a future where a new neighborhood in the Flats bustles with residential activity, a new casino brims See VIEW Page 9
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HELPING GREAT IDEAS TAKE ROOT
THE BIG ISSUE Do you feel safer now that Osama bin Laden is dead?
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“I’m going to say it didn’t really matter. I never really felt like I lived in a place that was threatened.”
“I feel safer knowing about the intel they might have uncovered at his hideout. … As opposed to saying I feel safer now, I’m hopeful that there will be sort of more heads to that dragon to get cut, too.”
“I do, but I don’t because I know there’s probably a risk that something could happen. But I would still argue it’s a positive step forward.”
“There’s a risk of retaliation, but we’re probably better off in the long run.”
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➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.
Disciplined carriers pose no threat ■ I agree with William Moench in his May 2 Letter to the Editor that I enjoy and look forward to Brian Tucker’s columns. But, like Mr. Moench, I also have reservations about the negative view expressed by Mr. Tucker in his April 18 column toward the expansion of Ohio’s concealed carry weapons law so that permit holders can carry weapons into bars, restaurants and open-air stadiums. I am a National Rifle Association instructor as well as a private citizen who believes in the Second Amendment. A prime example of the need for this change in the revised code is a meeting I had downtown a few months back on a Saturday morning. Myself, a representative with an architectural firm and a developer met at a site. When our meeting concluded at the abandoned building, the
LETTERS developer wanted to walk down to The Wyndham Hotel for a coffee and continue our conversation. I had to excuse myself and walk five blocks back to my car and disarm due to the Wyndham having a liquor license. How was I a threat to anyone in that restaurant by being armed and drinking coffee? Concealed carry weapon holders are disciplined individuals who uphold the law, regardless of how Mr. Tucker sees us. Michael Rickenbacher Richfield
Licensed carriers can help ■ A sign or a law won’t stop that
unbalanced person Brian Tucker mentioned in his April 18 column on expanding Ohio’s concealed carry weapons law from carrying a gun anywhere. I pray there’s a “licensed to carry” citizen ready and willing to stop this person before he decides he wants to kill my wife, my daughter or my grandchildren. I hope that licensed person is there if your family, Mr. Tucker, ever finds itself in this beyond-helpless nightmare. Seung-Hui Cho knew exactly where he was when he calmly strolled through Virginia Tech killing 33 innocent people. He was in a “no carry zone.” They never had a chance. Jeff Longo North Royalton
View: Public can help shape future continued from PAGE 8
with visitors choosing our location over Michigan, Pennsylvania and West Virginia, a new Medical Mart bursts with commerce in a unique space dedicated to the health care industry, and a rebuilt Convention Center buzzes with events and people from around the globe. Downtown’s future is big, and if it all comes together, people will spill out of these busy places onto connected and enlivened public spaces such as the Mall and Public Square. To help achieve this dramatic vision, Mayor Jackson asked civic, foundation, corporate and sports leaders to serve on the new Group Plan Commission. Working with successful Seattle architects LMN and Gustafson Guthrie Nichol, four committees populated by additional community leaders, Downtown Cleveland Alliance and ParkWorks, the commission set out to meet a February 2011 deadline for its recommendations. The Group Plan Commission has now proposed exciting changes to vastly improve downtown’s public spaces. The commission’s recom-
mendations include: ■ Removing Ontario Street as an artery through Public Square. Casino and East Fourth Street patrons would then enjoy a truly signature public space perhaps reminiscent of one where John D. Rockefeller casually strolled and surveyed the city more than a century ago. ■ Reconstructing the Mall so Medical Mart and Convention Center visitors and everyday Clevelanders enjoy a magnificent public space to walk, jog or bike; play Frisbee, kickball or volleyball; or picnic with family while listening to concerts, watching movies or enjoying festivals. ■ Building an iconic pedestrian bridge at the new Mall’s northern end to allow people to easily walk from the heart of downtown to Browns Stadium, Great Lakes Science Center, Rock Hall and back. ■ Transforming East Third Street, between Rockwell and Superior avenues, into an enlivened green space and winter skating rink that will serve as the new gateway to the Mall from the downtown core.
These are just some of the recommendations. Read the rest in the full report on YourChanging Cleveland.com, where people have already provided their feedback during the process. We still need to hear more from the community. The plan needs to live and be part of an ongoing conversation on downtown’s future. So some Group Plan committees will continue to meet, update the plan and begin raising the necessary funds from public and private partners to execute it. The public is encouraged to comment on these recommendations by visiting our public input station, which has been at the I-X Center and will be at City Hall, Cleveland State and Cleveland Public Library. The big win Clevelanders want so badly is happening through these downtown capital projects. And the Group Plan’s big ideas will connect them all, helping to launch our 21stcentury downtown renaissance. We just need all of our loyal Cleveland fans to get in the game and help us make it happen.
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Organic grocer to open 2 local stores
Mission Miami!
Earth Fare plans for Fairlawn, Fairview Park By STAN BULLARD sbullard@crain.com
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Fairlawn in Summit County may be 36 miles from Fairview Park in Cuyahoga County, but both soon will share another fair besides that in their names. Both are homes for coming stores of Earth Fare Inc., a natural and organic food chain based in Fletcher, N.C. Foodies may rejoice, but local food retailers are greeting the 21store chain’s march north with a slightly warmer welcome than Union soldiers gave southern troops in the Civil War. At his most kind, Mustard Seed Market & Café co-owner Phillip Nabors terms “bittersweet” the impending opening of Earth Fare one-tenth mile from his familyowned natural and organic food store, at 3885 W. Market St. in Fairlawn. “Our plot to change the world (of 30 years ago) is working,” Mr. Nabors said. “We believe people should eat real food. We celebrate
the growth of the category. It is robust. But the pie is getting sliced again. We’ll get hurt a few months.” Mr. Nabors said competition from Earth Fare will supplement competition that Mustard Seed’s Akron and Solon stores already face from organic food chains and others hyping organic lines. Recently, he said, the competing stores began “the high-low game that retailers play” of offering attention-getting loss leaders. He hopes customers subscribing to its organic, locally sourced philosophy will support local ownership with their pocketbooks. Also wary about another grocer’s entry into Northeast Ohio is Jeff Heinen, co-owner of the 17-store Heinen’s supermarket chain, which is based in Warrensville Heights. “It’s more competition in a market that is not growing,” Mr. Heinen said. Earth Fare stores of the 20,000- to 50,000-square-foot range are smaller than most supermarkets. Even so, Mr. Heinen said his company considers as competition everyone
who sells food. “It has slowed the last three years, but there is more and more square footage being opened where there is no population growth and the economy is stagnant,” Mr. Heinen said. “We scratch our heads and ask, ‘Where do these people think all this business is going to come from?’” A total of six calls to Earth Fare were not returned by Crain’s deadline. A visit late last month to Earth Fare’s first Ohio store location found construction workers adding an awning and other final touches to its store at Fairlawn Shops, 3737 Market St. in Fairlawn. An answering machine at the Fairlawn store’s phone number said it opens this Wednesday, May 11. Earth Fare also has received city approvals in Fairview Park for a store at Westgate, 20999 Center Ridge Road. Competition focused on the natural niche gives no solace to Mr. Heinen, as segments in the food business continue to blur. “We used to talk about it as ‘share of stomach’ in food retailing,” he said. “There’s only so much people can eat, the obesity issue aside.” ■
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Plans: Flats illustrates need for creative financing continued from PAGE 3
However, the schematics and artist renderings that accompanied these projects won’t be transformed into brick and mortar until private investors are willing to commit big dollars to them. And those investors, including institutions such as insurance companies and private equity firms, are not opening their wallets quickly, development executives say. Ask Scott Wolstein how bare the real estate financing cupboard is. Mr. Wolstein, after a half-dozen years of trying, finally closed earlier this year on the financing of his family’s long-planned Flats East Bank mixed-use project in downtown Cleveland. It took a larger-than-typical amount of his family’s personal equity to close the deal, even though his Wolstein Group and its partner, Fairmount Properties, had lined up two prime tenants — Ernst & Young and the Tucker Ellis & West law firm — for his office building and had the cooperation of more than 30 lending sources for the planned development along the Cuyahoga River. “The short answer is that today there is simply no financing available for any speculative development in Cleveland or elsewhere in any property sector other than multifamily” residential projects, Mr.
Wolstein said in an email. While Mr. Wolstein’s recent experience may have left him especially dispirited, he’s not alone in his assessment, though no others in the tight-knit development community would speak openly of their concerns. “I think its going to be challenging,” one experienced finance executive said with a chuckle when asked about how the community will finance the plans put on display so far this year. “A serious deal needs paying tenants or to demonstrate (that) it’s filling a hole in the market.” This financial analyst thinks the latest round of announcements gives false hope. “You can start with a good idea,
but then you should keep your mouth shut until you find someone to pay your rent,” he said. Three plans have been offered since February, when the Group Plan Commission appointed by Cleveland Mayor Frank Jackson put a $90 million price tag on a plan to remake Public Square as a more welcoming meeting place and to link it to the Mall, where construction work has begun for the new Cleveland Medical Mart and Convention Center. On April 19, the city of Cleveland offered a master plan for Cleveland Hopkins International Airport and a similar plan for Burke Lakefront Airport. Besides improvements to both airports, the city’s plans call
for a hotel and structures for more air cargo operations at Hopkins and office buildings at Burke. The next day, the Cleveland Browns offered a concept for lakefront development that likely would cost in the hundreds of millions of dollars, given the cost of the smaller Lambeau Field Atrium project in Green Bay, Wis., to which the Browns compared their concept. The Browns Lakefront District would include parking, a fieldhouse, a sports medicine center and a few mixed-use buildings that could have first-floor retail and residences or offices above. These projects were front-page news when unveiled. But how soon elements of them will materialize
remains to be seen. Observers with experience in real estate development in both the public and private sectors wondered about the wisdom — much less the financial viability — of considering office development when downtown is expected to have a large inventory of vacant office space for years. Even Chris Warren, chief of regional development for Cleveland Mayor Frank Jackson, conceded that it will take time to find the public and private money for them. He nonetheless maintains it is important to get them on the table in order to set the stage for future development. “Let’s not kid ourselves,” Mr. Warren said. “In the area of commercial projects, it still isn’t a great (financial) climate. “But,” he added, “should we wait until the credit markets improve? No.” ■
Loans: Success depends on product sales continued from PAGE 3
GEM Energy Management was a good candidate for the loan, according to Mr. Chagnon, because the company has a customer, the University of Toledo, waiting to buy the generator. With loans, he said, “you have to be able to have some sense of what the reality of sales will be in the next four- to six-year period.” Advisory board member John Huston noted that forgiven loans can be considered taxable income — which could create an unpleasant surprise for a company and its investors. That problem, however, should not be enough to derail the idea, said Mr. Huston, a former banker who helped create the Ohio TechAngel Fund in Columbus. “I’m not saying it’s insurmountable,” he said. Advisory board member Lloyd Jacobs, who is president of the University of Toledo, also praised the loan idea. However, for companies requesting loans, the state may need a new set of rules regarding the matching dollars that applicants must raise themselves, especially when those dollars come from a third-party collaborator, he said. Dr. Jacobs noted that the University of Toledo agreed to contribute $1 million in cash and other resources to the GEM Energy Management project back when the company was applying for a grant. “It doesn’t seem right to me if the state makes a loan and I made a grant,” Dr. Jacobs said in a phone conversation with Crain’s. Mr. Chagnon agreed that matching requirements will need to be reviewed. “We’ll really be measuring skin in the game in a different way than we have in the past,” he said. ■
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16 ADVISER: CLOUD-BASED PROGRAM CAN HELP BUSINESS.
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NOVEL IDEAS Self-publishing enters new chapters of growth as technology, industry accessibility make it easier for writers to produce books By EILEEN BEAL ■ clbfreelancer@crain.com
W
hen produce and fitness guru Maury Feren hit his early 90s, he figured he had “enough life experience” for a book. And he knew he had the tale-telling skills to do one. “People tend to like my stories and the way I present things in the classes I teach, so I thought there’d be enough interest in a book and that people would buy it. And,” he adds with a chuckle, “I liked the idea of having a book out.” He pitched a manuscript to several publishers and struck out: No women, no sex, too much produce, not enough Cleveland, they said. That’s when he decided to publish his book himself. On the advice of a friend, he contacted Windjammer Adventure Publishers, a small custom publishing company in Chagrin Falls. In less than a year, “Wheeling & Dealing in My World,” was published. See BOOK Page 15
RUGGERO FATICA
Maury Feren took matters into his own hands by publishing “Wheeling & Dealing in My World,” with Chagrin Falls-based Windjammer Adventure Publishers.
Savvy marketers tap bevy of media outlets to reach Mom Companies capitalize on opportunities to target
valuable demographic By AMY ANN STOESSEL astoessel@crain.com
M
other’s Day may be the one day a year set aside to remember Mom, but some small businesses are starting to recognize moms’ importance year-round. By some estimates, mothers are one of the most powerful consumer
segments, spending $2.4 trillion annually in the United States, according to author Maria Bailey of Fort Lauderdale, Fla.. She has written a number of books on the “mom market,” including “Marketing to Moms: Getting Your Share of the Trillion Dollar Market” and “Trillion Dollar Moms: Marketing to a New Generation of Mothers.” For those selling their services and wares in Northeast Ohio, there is no shortage of ways to reach this oft-coveted — yet sometimes overlooked — demographic. From online communities to events to more traditional media,
some small businesses are trying to take advantage of the audiences captured by niche information outlets targeting the region’s moms. “There’s a real strong understanding of how important it is to reach this market,” said Jacquie Chakirelis, site manager of Cleveland.MomsLikeMe.com, a website that targets 25- to 35-yearold Northeast Ohio mothers with young children. The Cleveland site, a Gannett Co.venture launched in 2008, has grown from 500 registered users to the 17,000 mark, which was reached last week. It consistently ranks No. 1 or No. 2 in terms of
advertising revenue among 80 MomsLikeMe sites nationally, with advertisements sold at premium rates. “Sometimes it surprises me it’s taken them this long to make the realization,” Ms. Chakirelis said of media buyers. “This is the demographic that’s buying the products.”
‘Word of mouth on steroids’ Calling the Internet “word of mouth on steroids,” Ms. Chakirelis said websites have opened a whole new way to engage with the mom segment. “It’s the new backyard-fence opportunity,” she said.
Macaroni Kid is another national media brand, utilizing local “publisher moms” to produce hyperlocal websites and e-newsletters. There are Cleveland West and Cleveland East versions of Macaroni Kid. Kelly Tarkany, publisher of Macaroni Kid Cleveland West, said she pays a monthly fee of about $60 to host the site, and she keeps any profits from advertisements. “It’s been a really good response from the community,” she said. Her site receives, on average, 3,700 unique visitors per month in addition to its more than 1,900 See MOM Page 14
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Taxes on commerce apply in cyber world Firms must understand costs of doing business beyond state borders
I
f companies can operate in the digital era with no real boundaries around where they can do business, then tax authorities, it seems, can become just as unbounded. In fact, Ohio tax authorities have led the way with an evolving standard for how to tax commercial activity, and it’s catching on in other states. The method is under assault in appeals courts, but it stands for now as the chosen method by which state tax authorities are claiming their share of tax on business transactions that have perhaps only a cyber tie to their state’s economy. The trend is for states to adopt “factor presence nexus standards” that make it easier than ever for states to claim that some portion of a company’s commercial activities cross into a given state’s borders, even if only digitally. “Nexus” is a term in tax law to describe some connection between a commercial transaction and a state giving the state authority to impose tax on it. Before the web transformed the
PETERDEMARCO
TAX TIPS way business is conducted, a company had to have some kind of physical presence in a given state for the state to claim nexus over that company’s activities. If the company made or sold products from a stock of goods located in a given state, it was easy to establish nexus. If the only activity was the solicitation of business in the state by sending sales representatives across the border now and then to look for customers, then the state had difficulty imposing the nexus standard. In the digital era, however, it’s easy for a company to sell products into a given state in a much more passive way. Virtually any company or entrepreneur these days can simply operate a website where a customer can place orders and have products shipped to their doorstep or loading dock, in any state, or even in any part of the world, for that matter. The “factor presence nexus stan-
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dard” that states increasingly are ence in Ohio, so it should not be adopting says a company’s busitaxed for clothing and other wares ness activities will become taxable it sold to Ohio customers. The if a company’s property, payroll or Ohio Department of Taxation sales in the state achieve a given ruled against L.L. Bean in August. threshold or portion of their total L.L. Bean has filed notice that it property, payroll or sales. plans to appeal the ruling to the That casts a much wider net on Ohio Board of Tax Appeals, but a company’s commercial activity ultimately it will have to press on compared with a nexus standard to the Ohio Supreme Court or the pinned to a company’s physical U.S. Supreme Court to argue the presence. tax on the basis of its constitutionOhio adopted such a standard ality. Meanwhile, the tax practice in 2005 when it developed and is established and growing. imposed the preEven the sent-day “comMultistate Tax Ohio tax authorities have mercial activity Commission is tax,” a low-rate, led the way with an evolving onboard with broad-based tax standard for how to tax the method. The meant to target a is a body commercial activity, and it’s MTC much larger pool that is working of taxpayers with catching on in other states. to bring some a small additional kind of cohetax amount. siveness to the The idea behind the tax was to collection, remittance and adminspread the taxpaying burden istration of state taxes across state among a larger number of taxpayers, borders, to make it easier for comminimizing the pain for any indipanies to understand and comply vidual or group. with their tax obligations. It recIt also taxes the gross receipts ommended thresholds for states to of the business instead of its net consider as they adopted their income and helps a state avoid the standards. “physical presence” standard. Companies that do business Other states have taken notice across state borders, even if only and begun following suit. Since digitally, need to be aware of just how early 2010, five more states have taxable their transactions really are jumped on the bandwagon and and assure they comply. ■ more are expected to follow. Mr. DeMarco is vice president L.L. Bean is leading the charge and director of the tax services to fight the factor presence group for the regional accounting approach to establishing nexus, and business consulting firm of and it’s challenging the tax in Ohio. Meaden & Moore, headquartered in L.L. Bean argued it had no stores, Cleveland. employees or other physical pres-
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Mom: Internet fosters marketing potential continued from PAGE 12
weekly e-newsletter subscribers. It has promoted businesses ranging from pest control and lawn care companies to restaurants and insurance companies, along with the expected advertisers such as party supply stores, bounce houses, photographers, gymnastics studios and camps. One Macaroni Kid West advertiser, photographer Becky Workman in Avon, said the site is the only place she advertises her business, Becky’s Photography. Ms. Workman not only likes the audience she reaches, but also as a fellow mom, she said she supports the efforts of the newsletter. Publisher Ms. Tarkany said she sells advertisements in the range of $20 to $150 a month, depending on placement and type. “At one point I had a waiting list,” she said.
The eyes have it
Formerly
GRAND OPENINGS
Like her counterpart Ms. Tarkany, Jenny Steadman, the Macaroni Kid Cleveland East publisher, said she sees her mission as more of a hobby and community service, despite the two to three hours a day she devotes to the site. Nonetheless, she also said she has gained business buy-in, sometimes even trading ad space for services such as lawn care. “You’re getting almost 1,000 eyes
… 80% to 90% of them are moms,” Ms. Steadman said. “I tell them that, and with that they are receptive.” Sites such as Macaroni Kid create online communities, where moms can communicate with each other, and where an advertisement or mention creates an almost built-in endorsement for a product — “an implied validation,” said author and mommarketing specialist Ms. Bailey. “Word of mouth in the mom market is the strongest mover,” said Ms. Bailey, adding that websites, social media and blogs have helped confirm that belief. “You could see and quantify word of mouth,” she said.
All about relationships Of course, Ms. Bailey does have some advice for small businesses trying to reach on-the-go moms: “It’s all about relationships when it comes to moms.” That means an integrated approach is best — both online and offline — and it not only should include bloggers and websites, but also traditional media and mom groups. Not surprisingly, the typical advertisers reaching out to moms are the ones that would be expected — schools, summer camps, day cares and the like. Valerie Hoffman, vice president of marketing for StrategyOne Inc. in Canton, said only about 20% of
the exhibitors at last month’s KidsGo Expo at the Great Lakes Expo Center in Euclid were of the more nontraditional variety, like those selling basement systems. “I nicknamed it the ‘bridal fair for moms,’” Ms. Hoffman said of the first-time event that attracted about 650 attendees. “They wanted what we had to offer as far as the market went.” Jim Milano of Milano Monuments in Cleveland is one such “nontraditional” advertiser who sees value in the mom market in Northeast Ohio. “What I’ve seen in our business is that adult children are really playing a role in their parents’ life,” he said. Yet while Mr. Milano advertises on the MomLikeMe website, not every business is as easily sold on the demographic. Todd Nighswonger, publisher of Cleveland Family, Akron Family and Lake/Geauga Family magazines, for one, said selling nontraditional advertisers on his target audience can be a little tougher. “Moms are real busy; they have a lot of things on their plate,” said Mr. Nighswonger, whose family publications are distributed in 1,250 locations in eight counties, including at day cares and schools. “For advertisers … you want to look at where they’re focusing their time and attention,” he said. ■
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Book: Publishing will not always bring fame, fortune continued from PAGE 12
Mr. Feren says he learned more than he ever wanted to know about what it takes — copy editing, paper selection, page layout, cover design, and marketing — to self-publish. But, he adds, it was worth it: “Now I’m a published author. There’s prestige in that.”
The boom in self-publishing Until about a decade ago, selfpublishing had a pretty low, and narrow, profile. It was the purview of groups publishing cookbooks to raise money for worthy causes, family genealogists and “eccentrics” with the bucks to pay for production of leather-bound tomes on topics near and dear to their hearts (hence its still-strong association with vanity publishing). With everyone from fantasy-mad teens to mystery writers going the self-published route, experts say there are reasons why self-publishing is growing by leaps and bounds. The digitization of the publishing industry and concurrent creation of simple-to-use book publishing programs means that anyone with a computer can create and email a manuscript to a “publisher.” Some publishers are “virtual,” online sites — such as Amazon.com’s CreateSpace — where, for a small fee or none at all the manuscript gets posted as an online or print-on-demand book. “The problem with this is that unless you pay for additional services, (online publishers) publish what you send them, typos, bad grammar and all,” says Kelly Ferjutz of South Euclid, whose year-old company, The Book Mechanic, coaches people through the selfpublishing process. Other publishers are bricks-andmortar printing companies, such as Windjammer Adventure Publishing or the Ashland-based BookMasters Group, which provide “book building” and pre- and post-printing services — copy editing, page formatting and numbering, cover design, an International Standard Book Number (ISBN) number, marketing and promotion strategies, and warehousing and fulfillment — on a fee-for-service basis.
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“A manuscript is not a book. When authors don’t understand the book-building process, there needs to be a lot of hand-holding,” said Ray Sevin, president of BookMasters Group, Inc. The second reason is that traditional publishing houses are locked into the blockbuster mindset. “If you don’t have a famous, not just recognizable, name, your chances of getting a manuscript read or a book deal with a major publisher are minimal,” Mr. Sevin says. Finally, it has become OK to self-publish.
“There’s a professional quality to self-published books that didn’t used to be there, but there is still one major challenge: getting exposure for the book and selling it,” says Windjammer Adventure Publishing’s co-founder Ron Humphrey, the former head of the printing department at Tri-C West.
It’s not about the money Self-publishing is booming, yet many stress that it’s all but impossible to make self-publishing pay, especially if you publish fiction. “Nonfiction and self-help books
are big, big, big, in both traditional and self-publishing. About the only fiction genre that’s making money is erotica,” Ms. Ferjutz said. If there’s no money in it, why are huge numbers of people — including those in the business world — self-publishing? For some, Mr. Humphrey said, the big draw is career enhancement. “A book enhances your credibility, and when you are giving a talk or presentation, you have a way to sell it, too,” he said. For others, it’s a do-good proposition. “The vast majority of
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self-published books are books where people are sharing their expertise. They don’t patent their ideas, they publish them. If they make a profit, that’s icing on the cake,” Mr. Sevin said. For still others, self-publishing is the way to get noticed by the New York City publishing houses. Citing Lyndhurst police chief Rick Porrello’s “To Kill the Irishman,” self-published in 1998 and recently picked up by Simon & Shuster, Ms. Ferjutz said: “Every now and then someone breaks out, but that’s like winning the lottery.” ■
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Cloud computing can be a breeze, if executed correctly
THEINTERVIEW
I
E
n the world of information technology, cloud computing — a technique that harnesses the power of the Internet to access commonly used software and applications — is quickly becoming the next big thing for small and midsize businesses (SMBs). Cloud computing offers SMBs affordable, pay-as-you-go, scalable, enterprise-class technology, leveling the playing field and creating new opportunities to innovate and reach more customers. SMBs may stand to gain even more than larger competitors from cloud computing, and a recent survey commissioned by Microsoft and conducted by 7th Sense Research demonstrates an increasing awareness of the cloud’s benefits. Twenty percent of IT decision makers at SMBs indicated that they knew at least a fair amount about cloud computing, and 16% of these decision makers have cloud projects planned or under way. For SMBs not yet leveraging the cloud, its many advantages may encourage future plans to reach skyward.
Cloud scenarios There is no one-size-fits-all cloud computing model for small businesses, but rather businesses can use it in numerous ways to their advantage. For example, some SMBs may wish to improve communication and collaboration among employees or even to sustain a remote work force. These businesses can move email, document sharing and collaboration tools online, giving employees access anytime, anywhere to the tools they need most. Shifting these programs to the cloud also enables enterprise-level support and greater integration among productivity tools that employees use regularly. Perhaps your business provides a web service to its customers and
RAYMONDPAGANINI
Next steps
ADVISER could benefit from a more flexible and reliable technology platform. You can switch to a cloud-based operating system and let an experienced cloud service provider manage your infrastructure while you focus on business priorities. You also can easily scale your cloud-based applications up or down, a benefit that can help you save money and run your business more efficiently.
Safe and secure? If you’re wondering whether housing your data on a remote server over which you have no oversight or control is safe, keep this in mind: In the survey on cloud computing, more reliable security was one of the top four reasons SMBs said they would be encouraged to buy into cloud services, and providing increased security surfaced as one of the top five things cloud services have enabled SMBs to do. Choosing a cloud services vendor with a strong track record of providing enterprise-class security solutions to its customers will ensure that your data stay safe and secure. Also, look for a vendor that provides 24/7 support and a high availability guarantee should downtime occur. If you prefer, in the end, to have some sensitive corporate information housed on your premises and not in the cloud, you still can reap the benefits of cloud computing. Many cloud solutions integrate seamlessly with local software and allow companies to choose a set
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For many smaller businesses, especially those that lack dedicated IT staff, the idea of running cloud services inhouse can be daunting. In these instances, working with a local certified IT services provider can help guarantee your business gets the maximum benefits from cloud computing. An IT services provider can offer employee training on new software, as well as 24/7 remote support, relieving your workers from some of the behind-the-scenes responsibilities that come with any technology transition. If you opt for working with an IT services provider in your migration to the cloud, do your homework to ensure that the vendor you select has experience and competencies that match the unique needs of your business. Assess what you want most from your relationship with an outside vendor and do some comparison shopping to determine the provider that will best fit your organization. Embracing the next big thing in business technology isn’t always easy, even if it’s for the good of your business, because it means leaving the familiar for the unknown. Therefore, as you consider the value that cloud computing could bring to your business, learn as much as you can about what a move to the cloud could look like for your business, keeping in mind that the cloud is here to stay and also is here to propel your business forward. ■ Mr. Paganini is president of Cornerstone IT, a Cleveland-area company that provides organizations with IT solutions, including managed services, development, hosting and those specifically tailored to support small businesses.
MARCIA BALLINGER Vice president for strategic and institutional development Lorain County Community College arlier this year, Lorain County Community College announced it would join nine other community colleges in an initiative aimed at pursuing new ways to support entrepreneurs and small business owners across the country. Known as the Virtual Incubation Network, the program is intended to help community colleges explore how they can Ballinger further develop services for entrepreneurs and small business owners through a virtual system. Recently, Marcia Ballinger, Lorain County Community College vice president for strategic and institutional development, answered questions from Crain’s Cleveland Business regarding this initiative and its current status. — Amy Ann Stoessel Q: Briefly describe the goals of the Virtual Incubation Network, and what progress has been made on the project to this point. A: The American Association of Community Colleges in partnership with the Charles Stewart Mott Foundation selected Lorain County Community College as one of 10 community colleges nationally to be part of a Virtual Incubator Network initiative. The initiative is a pilot program to encourage the creation of more startup businesses to help sustain continued economic recovery through the community college system. Through the network, these 10 community colleges will leverage their unique strengths in supporting entrepreneurship and economic development for collaborative learning and to identify programs that can be enhanced through new technologies and replicated throughout community colleges nationally. Lorain County Community
College’s role in the initiative is focused on improving and expanding the highly successful Innovation Fund, which was launched by the Lorain County Community College Foundation in 2007 and now administered in collaboration with nine higher education and economic development partners across Northeast Ohio. (The Innovation Fund is focused on supporting technology-based entrepreneurial endeavors and emerging technology-based businesses, according to its web site.) Q: What is LCCC’s anticipated role in the Virtual Incubation Network? A: As one of 10 community colleges nationally selected to be part of this network, Lorain County Community College will have the opportunity to develop new digital delivery methods and support tools to better serve entrepreneurs in the region. For instance, through this project, Lorain County Community College will be creating more efficient means for delivering and managing programs like the Innovation Fund. These new tools will better serve entrepreneurs in Northeast Ohio and ultimately shared with other community colleges. The products created through LCCC’s role in this network will be used to create Innovation Fund America, which advances the federal agenda to stimulate entrepreneurship nationally. Q: How might Northeast Ohio businesses benefit from this project? A: We are constantly seeking new, improved approaches to best serve entrepreneurs, as they represent the jobs engine for our region’s future. With technology, supporting entrepreneurs is not bound by time or place. Capacity created through this project will allow us to improve entrepreneurs’ access to funding and mentoring. Q: What are the potential benefits of using new technologies to foster business development? Are there any possible downfalls? A: Technology can be a powerful resource for enhancing programs designed to help entrepreneurs grow. It fosters expanded opportunities to connect, engage and deliver meaningful support to grow new businesses and jobs. We see technology as an important tool to help us fulfill our mission. Q: In all, 10 community colleges have been selected to be part of the Virtual Incubation Network. What benefit is there to be gained from working with colleges from across the country? A: Our participation in the network opens the doors to a wide range of tested programs and strategies for nurturing entrepreneurs being implemented across the nation. As a network member, we are able to learn from one another and leverage this experience to bring new programs back to help entrepreneurs in Northeast Ohio.
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Rain: Course maintenance costs eventually may increase continued from PAGE 1
National Weather Service data back up what we all have seen — rain, rain and more rain: Last April, there were only six days with more than a tenth of an inch of rain, and a total of 2.01 inches for the month; this April, 6.89 inches of rain fell, with 21 days of a tenth of an inch of rain or more. Last March, only 1.82 inches of rain and 1.4 inches of snow fell, and on 21 days the high temperature reached 45 degrees or higher. This March? Well, you probably know the story: 3.58 inches of rain and 11.8 inches of snow, with the high temperature reaching 45 or more on 13 days. Cindy Cole, general manager at Bunker Hill Golf Course in Medina, said this year so far has reminded her of 2007, which few around here will forget: 3.52 inches of rain fell that month, but 13.4 inches of snow also fell, most on the famed Easter weekend when the Cleveland Indians and Seattle Mariners were snowed out for baseball. Bunker Hill is down about 2,000 rounds so far this year, translating to about a $44,000 decline, Ms. Cole said.
Got the fever While courses may not make up the rounds already lost, pent-up demand should fuel heavy traffic once the weather breaks. Or at least that’s the hope. The Cleveland
Metroparks’ eight courses were down about 22,000 nine-hole rounds in April, spokeswoman Jane Christyson said. But the Metroparks have brought back their popular promotion that offers golfers $20 free for every $100 they spend in greens fees. Plus the parks system this weekend will open its new, 36-hole course, Seneca Golf Course in Broadview Heights. The parks last fall leased the course from the city of Cleveland, and will offer a free nine-hole round at Seneca for every 18 holes played elsewhere in the system, Ms. Christyson said. “The good news is that, generally in Cleveland, March and April only account for about 3% of your rounds,” she said. “It usually doesn’t help you all that much, but hopefully it doesn’t hurt you too much, either.” Hawthorne Valley Country Club general manager Bob Zeman said the Solon club was down from last April, but he declined to offer specifics. He, too, expressed confidence in a turnaround. “I get our bookings sent straight to my phone, and when there’s a nice day, they go way up,” Mr. Zeman said. “People are champing at the bit.” Meanwhile, John Thornton, manager of Turkeyfoot Lake Golf Links in Akron, said the course is down about 900 rounds over last
BRIGHT SPOTS Bright Spots is a periodic feature in Crain’s highlighting positive business developments. Submit information to managing editor Scott Suttell at ssuttell @crain.com. ■ Energy Focus Inc. of Solon, a provider of energy-efficient LED lighting products, said it has been awarded several lighting retrofit contracts totaling $3.4 million. The new projects include retrofits to upgrade the lighting in school districts in the United States and Canada, federal and county government buildings in the southeastern United States, and lighting at a manufacturing plant of a Fortune 500 company. Energy Focus did not identify that company. In the contracts, Energy Focus said it completed audits of the facilities, inventoried their lighting systems, created an approved energy savings design and now is procuring materials and overseeing the lighting installations Joseph Kaveski, CEO of Energy Focus, said in a statement, “These new contracts … are expected to contribute to a much stronger quarterover-quarter result for the team in the second quarter of 2011.” ■ OEConnection LLC of Richfield, which provides online auto parts exchange services, last month served as the sponsor of a computer programming contest held at BaldwinWallace College in Berea. More than 50 students from Northeast Ohio high schools participated in the competition, which required them “to write computer programs to solve a series of increasingly difficult problems,”
OEConnection said. Baldwin-Wallace computer science students managed the competition from beginning to end, including creating the problems and outcomes. The winning team was from University School, in Hunting Valley. “This contest has become a way to bring high school students to a college campus and help them see what computer programming is all about,” said Susan Penko, a BaldwinWallace computer science professor and organizer of the annual competition. “It’s a fun program that rewards talented students and, hopefully, will encourage many of them to pursue computer science or related degrees.” ■ Moen Inc. of North Olmsted was one of the big winners at 2011 Kitchen & Bath Industry Show in Las Vegas. More than 50 products were submitted to the “Best of KBIS” competition, and Moen’s Flushmount body sprays were one recognized with top honors. The Flushmount products received a Silver Award in the “Best of Bath” category. Products were judged based on functionality, quality, flexibility, aesthetics/style and innovation. Moen’s Flushmount body sprays, which were introduced last month at the Kitchen & Bath Industry Show, “feature a modern design that fits cleanly against the wall, seamlessly blending in with tile, slate or other premium shower surround materials,” the company says. An adjustable mounting bracket “helps ensure quick and easy alignment with adjacent body sprays and fits within a standard two-by-four foot wall,” according to Moen. The sprays also can be more easily repaired from in front of the wall, instead of behind, like traditional body sprays, the company says.
RAIN, GO AWAY The sour spring weather has had a negative effect on area golf courses, where rounds played in some cases are down by the thousands. Here’s a look at spring rainfall, snowfall and high temperature averages in March and April.
Year
Rainfall
Snowfall
High temp
2011
10.47 in.
11.8 in.
52.0 degrees
2010
3.83
1.4
59.8
2009
6.41
3.6
56.0
2008
7.72
30.4
52.3
2007
7.23
20.7
52.6
SOURCE: NATIONAL WEATHER SERVICE
FILE PHOTO/MARC GOLUB
Bunker Hill Golf Course in Medina is down about 2,000 rounds so far this year, general manager Cindy Cole said. year to this point, but he remains optimistic. He said Turkeyfoot drains well, and thus golfers can play sooner, including with carts on the course.
Trends, trends There’s also the ever-present
question of the economy and rising fuel prices. Bunker Hill’s Ms. Cole said she expects a benefit from the latter factor, because more golfers will stay closer to home to play. Mr. Salemi, though, sees gas prices and the economy in general as more obstacles; he said Boulder Creek in February took the drastic step of letting go its PGA professional, which saved him a significant amount of money. Ms. Cole also fears the spring weather’s potential impact on Bunker Hill’s equipment and maintenance budgets. All the rain harms the grass, which fails to take
GROWING
root. Plus, she worries about extra upkeep for her mowers, which will be under heavy stress and potentially could rust down the line. Mr. Salemi estimated Boulder Creek in the last two years has laid six or seven miles of drain tile in an effort to combat the weather; updating drains in one fairway can cost $10,000, he said. It all has Mr. Salemi trying to keep a smile on his face. “I don’t ever want to own another golf course,” Mr. Salemi said with a chuckle. “I’ve had opportunities. I don’t want a golf course even if you gave me the keys.” ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 9 - 15, 2011
LARGEST MANUFACTURING COMPANIES RANKED BY FTE LOCAL EMPLOYEES(1)
Company Address Rank Phone/Web site
Full-time Full-time equivalent equivalent local employees employees in Ohio
Parent company Headquarters
Local manufacturing facilities
Products manufactured locally
Top local executive Title
1
General Motors Co. P.O. Box 33170, Detroit 48232-5170 (313) 556-5000/www.gm.com
5,975
10,000
Detroit
Lordstown, Parma
Chevrolet Cruze and parts for GM makes and models
Robert Parcell, plant manager, Lordstown; Al McLaughlin, plant manager, Parma
2
Timken Co. 1835 Dueber Ave., S.W., Canton 44706 (330) 438-3000/www.timken.com
4,700
5,000
Canton
Canton
Steel and bearing rollers
James W. Griffith president, CEO
3
Swagelok Co. 29500 Solon Road, Solon 44139 (440) 248-4600/www.swagelok.com
3,600
3,600
Solon
Solon, Highland Heights, Strongsville
Fluid system components for a broad range Arthur F. Anton of industries president, CEO
4
Ford Motor Co. One American Road, Dearborn 48126 (800) 392-3673/www.ford.com
3,550
4,150
Dearborn, Mich.
Avon Lake, Brook Park, Walton Hills
Vehicle assembly, engine assembly, vehicle parts stamping
5
Sherwin-Williams Co. 101 Prospect Ave., NW, Cleveland 44115 (216) 566-2000/www.sherwin-williams.com
3,035
3,660
Cleveland
Cleveland, Bedford Heights Coatings and related products
Christopher M. Connor chairman, CEO
6
Goodyear Tire & Rubber Co. 1144 E. Market St., Akron 44316 (330) 796-2121/www.goodyear.com
3,000
NA
Akron
Akron
Race tires
Richard J. Kramer chairman, president, CEO
7
The Lincoln Electric Co. 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com
2,450
2,475
Lincoln Electric Holdings Inc. Euclid
Euclid, Mentor
Arc welding products
John M. Stropki, chmn., president, CEO; George D. Blankenship, senior vp, president, Lincoln Electric North America
8
The Babcock & Wilcox Co. 20 S. Van Buren Ave. and 91 Stirling Ave., Barberton 44203 (330) 753-4511/www.babcock.com
2,174
2,514
Charlotte, N.C.
Barberton, Copley, Euclid
Electro-mechanical equipment, heavy pressure vessels, other heavy components, coal pulverizer components
Richard L. Killion, president, COO, Babcock & Wilcox Power Generation Group Inc.
9
Parker Hannifin Corp.(2) 6035 Parkland Blvd., Cleveland 44124 (216) 896-3000/www.parker.com
2,150
3,450
Cleveland
Akron, Avon, Elyria, Fairlawn, Kent, Mentor, Ravenna, Strongsville
Valves, hoses, fittings, actuators, filters, E. Washkewicz pumps for pneumatic/hydraulic applications, Donald chairman, CEO, president components and systems used on aircraft
10
The Lubrizol Corp.(3) 29400 Lakeland Blvd., Wickliffe 44092 (440) 943-4200/www.lubrizol.com
2,041
2,060
Wickliffe
Avon Lake, Painesville
Lubricant and fuel additives, rubber additives, plastics, personal care product ingredients
11
Nestle USA in Solon (includes Nestle Prepared Foods and Baking) 30003 Bainbridge Road, Solon 44139 (440) 349-5757/www.nestleusa.com
1,947
2,408
Nestle USA Glendale, Calif.
Solon
Higgins Stouffer's and Lean Cuisine frozen prepared Frank president, CEO, Nestle Prepared meals Foods and Baking
12
Eaton Corp. 1111 Superior Ave., Cleveland 44114 (216) 523-5000/www.eaton.com
1,833
3,211
Cleveland
Brooklyn, Parma, Aurora, Euclid
Synflex brand thermoplastic hose and tubing, Airflex brand industrial clutches and brakes, fuel pumps for commercial aircraft
NA
James L. Hambrick chairman, president, CEO
Alexander M. Cutler chairman, CEO
MANUFACTURING FOOTPRINT DECISIONS. Register for a free webinar: http://manufacturingwebinar.plantemoran.com
Bob Dobrowsky, Partner • 216.274.6511
13
ArcelorMittal 3060 Eggers Ave., Cleveland 44105 (216) 429-6000/www.arcelormittal.com
1,728
2,516
Chicago
Cleveland, Warren, Shelby
Steel products: hot-rolled, cold-rolled and hot-dipped galvanized sheet and semifinished (slabs)
Eric Hauge vice president and general manager, ArcelorMittal Cleveland
14
Bridgestone Americas Inc. 1200 Firestone Parkway, Akron 44317 (330) 379-7000/www.bridgestoneamericas.com
1,725
2,314
Nashville, Tenn.
Akron, Brook Park, Columbiana, Sandusky
Racing tires
Hank Hara, chief technology officer, vp, Bridgestone Americas Tire Operations
15
Rockwell Automation Inc. 1 Allen-Bradley Drive, Mayfield Heights 44124 (440) 646-5000/www.rockwellautomation.com
1,561
1,988
Milwaukee
Twinsburg, Warrensville Heights
Factory automation products
Steven A. Eisenbrown senior vice president architecture and software
16
Republic Engineered Products Inc. 2633 Eighth St., NE, Canton 44704 (800) 232-7157/www.republicengineered.com
1,504
1,504
Grupo Simec Guadalajara, Mexico
Lorain, Canton, Massillon
Special bar quality steel
Jaime Vigil president, CEO
17
The J.M. Smucker Co.(4) 1 Strawberry Lane, Orrville 44667 330-682-3000/www.smuckers.com
1,400
NA
Orrville
Orrville
Fruit spreads and toppings
Timothy P. Smucker, chairman, coCEO; Richard K. Smucker, executive chairman, co-CEO
18
Invacare Corp. One Invacare Way, Elyria 44035 (440) 329-6000/www.invacare.com
1,341
1,341
Elyria
Elyria
Custom power wheelchairs, custom manual wheelchairs, seating and positioning products
Gerald B. Blouch president, CEO
19
Ben Venue Laboratories Inc. 300 Northfield Road, Bedford 44146 (440) 232-3320/www.benvenue.com
1,303
1,303
Boehringer-Ingelheim Ridgefield, Conn.
Bedford
Sterile injectable pharmaceutical products
Thomas J. Murphy president, CEO
20
Philips Healthcare 595 Miner Road, Highland Heights 44143 (440) 483-3000/www.philips.com/healthcare
1,250
1,250
Royal Philips Electronics Amsterdam, The Netherlands
Highland Heights
CT, computed tomography
James Mazelsky general manager CT and nuclear medicine
21
Alcoa(5) 1600 Harvard Ave., Cleveland 44105 (216) 641-3600/www.alcoa.com
1,245
NA
Alcoa Inc. New York
Cuyahoga Heights, Cleveland, Barberton
Automotive, truck, aerospace wheels, aerospace parts, industrial products
Olivier M. Jarrault, exec. vp-Alcoa; group president, Engineered Products and Solutions
22
Delphi Packard Electrical/Electronic Architecture 5725 Delphi Drive, Troy 48098 (248) 813-2000/www.delphi.com
1,070
1,070
Delphi Automotive Troy, Mich.
Warren, Vienna, Rootstown
Automotive connection systems, wiring, injection molding
James A. Spencer, vp and president, Delphi Packard Electrical/Electronic Architecture; president, Delphi Latin America
23
GE Lighting (unit of GE Appliances & Lighting) 1975 Noble Road, East Cleveland 44112 (216) 266-2222/www.gelighting.com
1,035
2,050
General Electric Co. Fairfield, Conn.
Cleveland, East Cleveland, Euclid, Ravenna
Lighting components and finished products
Maryrose Sylvester president, CEO GE Lighting
24
RG Steel LLC (6) 999 Pine Ave. SE, Warren 44483 (330) 841-8218/www.rg-steel.com
1,000
1,000
Sparrows Point, Md.
Warren
Flat rolled steel products
Thomas J. Cera vice president, general manager
25
Myers Industries Inc. 1293 S. Main St., Akron 44301 (330) 253-5592/www.myersindustries.com
849
1,015
Akron
Middlefield, Wadsworth, Jefferson
Plastic containers and car parts
John C. Orr president, CEO
25
Steris Corp. 5960 Heisley Road, Mentor 44060 (440) 354-2600/www.steris.com
849
913
NA
Mentor
Single-use chemistries, biological and chemical indicators, VHP sterilizers
Walter M. Rosebrough Jr. president, CEO
See LIST Page 20
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MAY 9 - 15, 2011
Lending: Banks now initiating more discussions with clients continued from PAGE 1
“Last year, we may have been one or two (lenders) at the table” vying for a loan, said Lynda Nowak, vice president of commercial lending for First Federal of Lakewood. “In this industry, it’s pretty typical to get multiple bids. We’re starting to see that more, for sure.” For select businesses, the situation means there’s more reason, and ability, to shop around. “The benefit to a business owner is that they’re going to see more flexibility and more attractive pricing,” said Daniel E. Klimas, president and CEO of LNB Bancorp Inc. and Lorain National Bank. Competition really began to pick up as 2010 came to a close and companies could demonstrate a full year of improvement, Mr. Klimas said.
Knock, knock Banks, too, possess more attractive balance sheets and subsequently are willing to take more risk, said Bill Mahnic, associate professor of banking and finance at Case Western Reserve University. “I think a lot of business bankers are back to doing cold calling, knocking on doors,” he said. Brian Mackert has noticed regional banks more aggressively seeking to make loans to clients of his Westlake accounting firm, Mackert Consulting Group. There’s a heightened sense of urgency on banks’ part to produce loan proposals — “an indicator that they mean business in the small business arena,” Mr. Mackert said.
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
writing decisions are made locally.
‘More signatures and blood’ The economic survey conducted biannually by the National Small Business Association seems to reflect what these local businesses are experiencing. It reflects a “slight thawing,” said Molly Brogan, vice president of public affairs for the Washington, D.C., advocacy group. Last July, 41% of businesses surveyed said they couldn’t obtain adequate financing. In December, that figure was 36% — the lowest it’s been since December 2008, she said. Still, while securing bank financing feels more doable, it’s no cakewalk, said Mr. Wilson, who has added two employees to the four he already had at Chad Allan Consulting and who soon plans to beef up his inventory at Slate Rock Safety. “I did not feel like I was in the driver’s seat either time,” he said. “I felt like I had to earn it. I had to prove to them that I was worthy. I think you have to work harder for it these days, provide more documentation, more signatures and blood, personal guarantees.” A bit more willingness to take risk on the banks’ side would be nice, Mr. Wilson said. “Certainly, we (businesses) are asking for money to take a risk,” he said. “You hear the president talk about jobs, jobs, jobs. The governor since taking office is (saying) jobs, jobs, jobs. I’m trying to borrow the money to create jobs. There just didn’t seem to be a major willingness
19
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“This is like we had pneumonia, and it’s going to take us a while to get back to where we were.” – Bill Mahnic, associate professor of banking and finance, Case Western Reserve University Medina business owner Chad Wilson didn’t see a real sense of urgency during the second half of last year, when — after what he called a four-month “fiasco” — a regional bank he wouldn’t identify ultimately offered only half the $150,000 credit line Mr. Wilson sought. He was so dissatisfied that he moved the banking relationship for his web development firm, Chad Allan Consulting, to Western Reserve Bank in Medina, where he obtained a credit commitment. Only after the community bank stepped up, Mr. Wilson said, did the regional bank decide it could or would do the $150,000 credit line. “For me it was too little, too late,” he said. Fast forward to 2011, and that same regional bank Mr. Wilson left committed within a few weeks to tripling an existing line of credit to $100,000, which he requested for Slate Rock Safety, the safety apparel retailer and wholesaler he co-owns. Perhaps the bank didn’t want to lose more of his business. Perhaps it’s because competition is building. Perhaps it has everything to do with banks’ hunger for collateral today. The increased line of credit Mr. Wilson wanted in order to hire people at his consulting firm isn’t secured by inventory the way the line of credit for apparel is, he acknowledged. Mr. Wilson’s experiences, though at times frustrating, have him convinced that opportunity for borrowing today is better than it’s been for the past year or two, particularly at community banks, where under-
from the banks to also participate in the jobs recovery.”
Go with the flow So which businesses are in a position to take advantage of the increasingly competitive business loan market? “What we’re looking for — what I think most banks are looking for — is, No. 1, cash flow,” said Andrew L. Meinhold, president of Lake National Bank in Mentor. A track record of an ability to repay and good collateral position are definite considerations, too, he said. Profitability and profit margins, plus capital structure and capital adequacy, are other factors banks consider, said Jerry Kelsheimer, president and CEO of Fifth Third Bank, Northeastern Ohio. For many small businesses, eligibility for credit is based on personal credit scores, some of which aren’t so pretty because business owners are under water on second mortgages they took out to fund their businesses, said Ms. Brogan of the National Small Business Association. That’s a big consideration that has nothing to do with how well a business is performing, she said. CWRU’s Mr. Mahnic acknowledged that while there have been changes to what banks are willing to accept in terms of leverage and the like, the changes are by no means dramatic. “This is going to be a slow healing,” he said. “This isn’t like a cold. This is like we had pneumonia, and it’s going to take us a while to get back to where we were.” ■
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20110509-NEWS--20-NAT-CCI-CL_--
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 9 - 15, 2011
LARGEST MANUFACTURING COMPANIES RANKED BY FTE LOCAL EMPLOYEES(1)
Company Address Rank Phone/Web site
Full-time Full-time equivalent equivalent local employees employees in Ohio
Parent company Headquarters
Local manufacturing facilities
Products manufactured locally
Top local executive Title
27
RPM International Inc. P.O. Box 777, Medina 44258 (330) 273-5090/www.rpminc.com
825
982
Medina
28
Luk USA LLC 3401 Old Airport Road, Wooster 44691 (330) 264-4383/www.lukusa.com
800
800
Schaeffler Group North America Wooster Fort Mill, S.C.
Torque converters, torque converter clutches
Marc McGrath president
29
Goodrich Landing Gear 8000 Marble Ave., Cleveland 44105 (216) 341-1700/www.goodrich.com
761
1,503
Goodrich Corp. Charlotte, N.C.
Cleveland
Landing gear assemblies, engine controls, electrical power systems, ice detection and protection systems, potable water systems
Mike Brand president
30
PolyOne Corp. 33587 Walker Road, Avon Lake 44012 (440) 930-1000/www.polyone.com
760
800
Avon Lake
Avon Lake, Massillon, Norwalk
Color and additives, engineered materials, Geon compounds
Stephen D. Newlin chairman, president, CEO
31
Newell Rubbermaid 3200 Gilchrist Road, Mogadore 44260 (330) 784-7141/www.newellrubbermaid.com
745
1,100
Atlanta
Mogadore, Fairlawn, Wooster
Rubbermaid food storage products
Joseph Soldano director, Ohio operations
32
Lockheed Martin Akron 1210 Massillon Road, Akron 44315 (330) 796-2038/www.lockheedmartin.com
700
NA
Lockheed Martin Corp. Bethesda, Md.
Akron
Lockheed Martin products
Colleen Arthur director, Akron Site Lead
33
PPG Industries Inc. 3800 W. 143rd St., Cleveland 44111 (216) 671-0050/www.ppg.com
689
689
Pittsburgh
Cleveland, Strongsville
Automotive coatings
Richard Bauer operations director, Americas
34
Kennametal Inc. 180 Penniman Road, Orwell 44076 (440) 437-5131/ www.kennametal.com
634
824
Latrobe, Pa.
Orwell, Solon
Drilling, milling, turning, toolholders, inserts and custom solutions tooling
Carlos Cardoso chairman, president, CEO
35
Automated Packaging Systems Inc. 10175 Philipp Pkwy., Streetsboro 44241 (330) 342-2000/www.autobag.com
550
550
Streetsboro
Streetsboro (3), Garfield Heights, Bedford
Autobag(R) bagging machines, SidePouch(R) Hershey Lerner, chairman packaging systems, AirPouch(R) void fill, Bernie Lerner, CEO infeeds; counters, scales and conveyors Cliff Brehm, president
35
MFG - Molded Fiberglass Co. 2925 MFG Place, Ashtabula 44005 (440) 997-5851/www.moldedfiberglass.com
550
550
Ashtabula
Ashtabula
FRP composites
Richard S. Morrison CEO, president
37
Colfor Manufacturing locations in Minerva and Malvern www.aam.com
522
522
American Axle & Manufacturing Detroit
Malvern, Minerva
Forged and machined products
Tom Fry plant manager Malvern
38
Meggitt Aircraft Braking Systems Corp. 1204 Massillon Road, Akron 44306 (330) 796-4400/www.aircraftbraking.com
512
512
Meggitt United Kingdom
Akron
Aircraft wheels and brakes and related landing gear systems
J.J. Williams senior vice president and general manager, global operations
39
The Wooster Brush Co. 604 Madison Ave., Wooster 44691 (330) 264-4440/www.woosterbrush.com
500
475
Wooster
Wooster
Paint applicators and equipment, brushes, rollers, extension poles, surface prep tools
Bill Fagert president
40
Carlisle Brake and Friction 6180 Cochran Road, Solon 44139 (440) 528-4000/www.carlislebrake.com
497
500
Carlisle Cos. Charlotte, N.C.
Solon, Medina, Akron
Friction, clutch and transmissions products
Chris Koch president
41
Shiloh Industries Inc. 880 Steel Drive, Valley City 44280 (330) 558-2600/www.shiloh.com
494
581
Valley City
Valley City, Wellington
Steel products for the automotive industry
Theodore K. Zampetis president, CEO
42
Norman Noble Inc. 5507 Avion Park Drive, Highland Heights 44143 (216) 761-5387/www.nnoble.com
468
NA
Highland Heights
manufacturer for medical devices Cleveland, Highland Heights Contract and implants
43
Mansfield Plumbing LLC 150 E. First St., Perrysburg 44864 (877) 850-3060/http://mansfieldplumbing.com
463
463
Corona Columbia, South America
Big Prairie, Loudonville, Perrysville
Vitreous china toilets, lavatories and urinals, Jim Morando toilet tank trim president
44
Nordson Corp. 28601 Clemens Road, Westlake 44145 (440) 892-1580/www.nordson.com
453
487
Westlake
Amherst
Powder and liquid coating systems
Michael F. Hilton president, CEO
45
Gerstenslager Co. 1425 E. Bowman St., Wooster 44691 (330) 262-2015/www.gerstenslager.com
444
489
Worthington Industries Columbus
Wooster
Automotive sheet metal stampings and assemblies
Ed Kurzenberger executive vice president
46
Sandridge Food Corp. 133 Commerce Drive, Medina 44256 (330) 725-2348/www.sandridge.com
420
420
Medina
Medina
Refrigerated salads, soups and side dishes
Mark D. Sandridge CEO
47
Ferro Corp. 1000 Lakeside Ave., Cleveland 44114 (216) 641-8580/www.ferro.com
407
565
Cleveland
Cleveland (2 plants), Walton Porcelain enamel frit, specialty glasses, Hills, Orrville polymer additives
James F. Kirsch chairman, president, CEO
48
Omnova Solutions Inc. 175 Ghent Road, Fairlawn 44333 (330) 869-4200/www.omnova.com
350
352
Fairlawn
Mogadore, Akron
Specialty chemicals, including emulsion polymers and coating resins
Kevin M. McMullen chairman, president, CEO
49
Thomas Steel Strip Corp. Delaware Ave. NW, Warren 44485 (330) 841-6222/www.tatasteeleurope.com
330
330
Tata Mubai, India
Warren
Cold rolled steel
William Boyd president, CEO
50
East Manufacturing Corp. 1871 state Route 44, Randolph 44265 (330) 325-9921/www.eastmfg.com
315
315
Randolph
Randolph
Aluminum truck-trailers
David J. Tate president
51
GrafTech International Holdings Inc. 12900 Snow Road, Parma 44130 (216) 676-2000/www.graftech.com
300
NA
Parma
Parma, Lakewood
Natural graphite products
Craig S. Shular chairman, president, CEO
52
Voss Industries 2168 W. 25th St., Cleveland 44113 (216) 771-7655/www.vossind.com
282
282
Cleveland
Cleveland
Sheetmetal fabrications, flanges, couplings and clamps
Daniel W. Sedor Sr. president, CEO
53
Aleris International Inc. 25825 Science Park Drive, Suite 400, Beachwood 44122 (216) 910-3400/www.aleris.com
281
797
Beachwood
Cleveland, Elyria, Uhrichsville, Rock Creek, Macedonia
Aluminum recycling and processing
Steven J. Demetriou chairman, CEO
54
Sifco Industries Inc. 970 E. 64th St., Cleveland 44103 (216) 881-8600/www.sifco.com
271
271
Cleveland
Cleveland, Independence, Alliance
Forgings for the aerospace and energy markets and selective plating products and services
Michael S. Lipscomb president, CEO
Cleveland, Medina, Euclid
Roofing materials, construction sealants and Frank C. Sullivan concrete admixtures chairman, CEO
Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Employee numbers as of March 31, 2011. (2) Additional manufacturing locations in Wadsworth, Wickliffe and Youngstown. (3) Lubrizol Corp. has agreed to be acquired by Berkshire Hathaway Inc. The transaction is expected to close during the third quarter of 2011. (4) The 2011 employee number is from the Wayne Economic Development Council website, www.waynedevelopment.org. (5) Information is from the 2010 Manufacturing Company list. (6) Formerly Severstal Warren Inc.
Scott Noble vice president, CFO
RESEARCHED BY Deborah W. Hillyer
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Hotel: Med mart link would help continued from PAGE 1
Brothers Holdings Inc., which is reorganizing under U.S. Bankruptcy Court supervision. Sage executive vice president Ken Geist told a Cleveland City Council committee meeting last Tuesday, May 3, that the Crowne Plaza lost $2.5 million last year and the Bankruptcy Court wants to avoid any further cash drain. “We have 350 of 470 rooms that are out of service due to water leaks, window leaks, the plumbing doesn’t work, the air conditioning doesn’t work,” Mr. Geist told members of City Council’s community and economic development committee. “So we’re down to 100 rooms that we can actually sell and we’re currently running about 20% occupancy.” He added that only two of six elevators are operating in the hotel.
A bridge to somewhere Mr. Geist told City Council the Sage-Optima partnership has court approval to buy the property and is putting together financing to complete the purchase. Optima already owns the Penton Media Center building, an office property that faces onto East Ninth Street and has a direct connection to the hotel. It also owns One Cleveland Center, across East Ninth Street at St. Clair; the Huntington Building at East Ninth and Euclid Avenue; and the 55 Public Square building. Sage is a hospitality management firm that manages 65 hotels across the country and has ownership interests in 35 of them. The city is pushing legislation
that would grant the new ownership $3 million in tax increment financing on the condition that it raise the remaining financing. A project summary submitted to City Council said the Sage-Optima partnership needs $57 million to finance the purchase and to invest in a renovation of the property. One issue is unresolved that, if settled, might make securing financing easier. Sage/Optima hopes to collaborate with the city to build a walkway that would bridge East Sixth Street from the hotel to Public Auditorium, which will be connected to the new trade show complex. That all-weather link, and a fourstar rating, would give the hotel a leg up to be the home for groups staging conventions across the street. The partnership has hired Marous Brothers Construction of Willoughby to inventory the hotel’s deficiencies and, once the sale is completed, to renovate the structure. Arne Goldman, director of business development for Marous, said the contractor would expect to hire 400 construction workers over the 18 to 24 months of construction.
Key ingredient: equity Tracey Nichols, Cleveland’s director of economic development, told council members the renovation effort would include modernizing the building’s plumbing and electrical systems and sprucing up guest rooms and public spaces. She submitted an artist’s rendering that shows much of the brown brick exterior replaced with less somber glass. City-approved tax increment financing, or TIF, would earmark
any incremental increase in property taxes that would result from improvements to the building toward the repayment of bonds that would be issued for the benefit of a developer. In this case, the current property taxes on the hotel are $583,765 a year based on a $19 million valuation of the property. After the improvements, the developer estimates the property will be paying $1 million a year in taxes after five years of operation. The partnership intends to put up $27 million in equity and, in addition to the city loan, is seeking a $25 million mortgage and $2 million from the hotel brand with which it links up. Sage’s Mr. Geist said the partnership is talking to Westin Hotels & Resorts and another chain, which he did not identify. He said he expects the financing to be completed and the deal to be closed by the end of June. That large equity contribution is a testament to how tough financing of commercial real estate has become. It’s especially difficult to finance hotels, which aren’t able to show banks a revenue stream from longterm leases with tenants. “That’s why there so few of them happening,” Mr. Geist told Crain’s after the committee hearing. ■
STAN BULLARD
The Crowne Plaza Hotel Cleveland City Centre
Attevo: Customers’ delays played role in money issues continued from PAGE 3
come due since the fourth quarter of 2010, he added. Attevo already has settled another, smaller lien, according to Mr. Burmester. The state of Ohio in February filed a judgment lien against the company, seeking about $47,000 owed in taxes. Attevo made the payment only recently, so it has not yet shown up in public records filed with Cuyahoga County Common Pleas Court, Mr. Burmester said. “That’s now been paid, so we’re making progress,” he said. Attevo today employs about 100
than it used to, Mr. Burmester said. Today, Attevo is in a “strong position,” he said, and it expects to pay the IRS what it owes soon. “We’re pretty optimistic, even though it’s kind of an ugly thing,” he said. Attevo’s tax debt to the IRS recalls past financial disputes involving Mr. Snyder. A former associate of Mr. Snyder who in 2000 loaned $1 million to Digital Atoms Inc., a software company Mr. Snyder helped start, won a judgment lien against him in 2002 for not fully repaying the loan,
“We’re pretty optimistic, even though it’s kind of an ugly thing.” – Joseph Burmester, partner and chief financial officer, Attevo Inc. people, Mr. Burmester said, including about 20 contractors, many of whom work for Attevo full time. The company, which three years ago employed about 110 people, including contractors, reduced its staff by about a dozen people during the downturn, Mr. Burmester said. Not only did the company win less business as a result of the recession, but existing clients often failed to make prompt payments and its line of credit was reduced, he said. Since then, the company has added a few people to its staff, though it relies more on contract employees
which Mr. Snyder personally guaranteed, according to a Crain’s Cleveland Business story from September 2002. At the time, six creditors also were suing Mr. Snyder’s now-defunct beer company, Snyder International Brewing Group LLC, for not paying bills, according to the story. In the 2002 story, Mr. Snyder cited the slow economy as part of the problem. Mr. Snyder did not respond to requests for comments about the tax lien filed against Attevo. He instead let Mr. Burmester speak for the company. ■
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Bill Merriman 216.287.6971 bmerriman@leffelectric.com
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THEINSIDER
THEWEEK MAY 2 - 8 The big story: Olympic Steel Inc. is expanding amid growth in revenues and earnings by opening 300,000 square feet of warehouse, steel-processing and office space in the United States and Mexico. The company said it secured the new locations, by purchase or lease, in April to be closer to customers so that it can serve them better, including with smaller, but faster, deliveries. The largest building is a 177,000-square-foot structure in Gary, Ind., that Olympic Steel bought from U.S. Steel Corp. That operation will house a temper mill and cut-to-length line to process steel by the end of this year.
Station identification: Cleveland’s classical music station, WCLV-FM, 104.9, plans to join ideastream, the umbrella organization that oversees public broadcast stations WCPN-FM, 90.3, and WVIZ-TV, Channel 25. Under an agreement with the WCLV Foundation, ownership of WCLV-FM would be transferred from the foundation to ideastream. Radio Seaway Inc., the licensee of WCLV, would become a subsidiary of ideastream with its own board of directors. The parties are applying for the transfer, with approval by the Federal Communications Commission anticipated in about three months. On board: Directors of University Hospitals named Alfred Rankin Jr., CEO of holding company Nacco Industries Inc., as the health care system’s chairman. Mr. Rankin replaces Monte Ahuja, a major benefactor to UH. Mr. Ahuja will remain on the board and will continue to co-chair a $1 billion fundraising campaign. Rankin Mr. Rankin has served on the UH board for more than 25 years.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Cavs still popular at home, but not so much elsewhere
■ After ranking third last year, the Cleveland Cavaliers dropped out of the top 10 in the NBA’s calculation of most popular team merchandise this season. The league ranks only the top 10, and the Cavaliers didn’t appear. But the Cavs are undeterred, and say that by another measure — “per-cap” sales, a measure of in-arena spending per body through the turnstiles — they rank in the “top tier” of the league and “well above” the league average, according to spokesman Tad Carper. ■ A few shareholders at LNB Bancorp Inc.’s “We think that is a significant indicator,” annual meeting last Tuesday, May 3, didn’t Mr. Carper said. let an allotted question-and-answer session Mr. Carper referred Crain’s to the NBA for go to waste. information on where the Q: What are the bank’s Cavaliers rank in per-cap plans for paying dividends? spending; a league spokesThe answer provided by woman did not return a LNB and Lorain National message seeking confirmaBank president and CEO tion of league per-cap Daniel E. Klimas: The bank numbers. is focused on making sure The drop in team merits capital structure is in chandise sales overall likely place. Mr. Klimas added stems from sales outside that getting the company’s the arena. Without LeBron’s HERSCHMAN ARCHITECTS stock price up would be top draw, Cavs merchanmore valuable to shareholders than a onedise fell out of favor across the country and in time dividend. global markets such as China, where LeBron Q: Looking ahead, what are your plans for is ultra popular. expansion? Mr. Carper said season ticket holders and A: Most of the bank’s focus is on growing other fans offered positive feedback after the commercial business, and that can be done opening of Quicken Loans Arena’s new twowith additional people, including several story team shop, which was redone starting lenders hired recently. It doesn’t necessarily last June after the Cavaliers were eliminated
A bit of give and take at LNB
WHAT’S NEW
complex formerly known as GaREAT has landed a big fish. Spire Institute, the rebranded complex just off Interstate 90 in Ashtabula County, announced that Michael Johnson, the current world record holder in the 400-meter dash, will open his second performance training center there. Mr. Johnson’s other center is near Dallas.
Troubled waters: Cleveland State University’s provost will mediate the contentious quarrel over sewer district fees in Cuyahoga County. County Executive Ed FitzGerald asked Geoffrey Mearns, a former federal prosecutor and dean of the Cleveland-Marshall College of Law at Cleveland State, to mediate the dispute over how storm water runoff will be managed in the region and who will pay for it. A trial had been set for July on a lawsuit brought by local governments against the sewer district plan. This and that: Applied Industrial Technologies Inc. acquired Gulf Coast Bearing & Supply Co. of Corpus Christi, Texas, a distributor of bearing and power transmission equipment. Gulf Coast serves customers in south Texas. … The latest Small Business Employment Index put together by CBiz Payroll Services indicates that hiring by small businesses was up in April. The index, a barometer for hiring trends among companies with 300 or fewer employees, rose 1.35% last month after posting a 0.69% increase in March.
Club for Growth meets its enemy, and it is Sen. Brown
COMPANY: Timken Co., Canton PRODUCT: ADAPT bearings Timken says the high-capacity bearings are designed for the metal industry’s “most demanding continuous caster applications.” The ADAPT bearings feature a design that provides “optimal ease of installation, reliability and performance,” the company says. “For metal-industry manufacturers, this translates into reduced downtime associated with maintenance intervals.” Timken exhibited the new bearing line at last week’s Association for Iron & Steel Technology’s AISTech 2011 event in Indianapolis. Each ADAPT bearing consists of “a cylindrical inner ring, an outer ring with a proprietary outer-race profile and a roller/retainer assembly that features specially profiled rollers with a snap-in retainer,” Timken says. The inner ring has a cylindrical raceway, allowing the shaft to move left or right relative to the outer ring. Timken says the bearings were designed to create “a self-aligning effect with the rollers, which minimizes skewing while maintaining constant bearing clearance.” For information, visit www.Timken.com. Send information about new products to managing editor Scott Suttell at ssuttell@ crain.com.
require brick and mortar, Mr. Klimas replied. Also on Tuesday, LNB recognized Ben Norton, who has retired from the board after 28 years of service. Mr. Norton brought a tenacious conviction of cost control, said board chairman James R. Herrick. Speaking briefly to the group, Mr. Norton recalled taking a $700 loan in 1961 to buy a 1957 Ford. “Nowadays, you’d walk in, and (the banker) would say, ‘Put it on your credit card,’” he remarked, prompting laughter. — Michelle Park
An idea takes root in Solon ■ CardPak Inc. apparently just loves trees. Not only does the company in Solon save trees by using recycled paper for the bulk of the retail packaging it produces, but it’s also planting new ones. Well, not itself, actually. In what might be an even more clever PR move, the company has found a politically correct way to use cheap, child labor to get the job done — students of Roxbury Elementary School in Solon happily did the actual planting April 20. CardPak provided more than 100 saplings to students, who brought empty milk cartons from home to hold the trees prior to planting. By planting the whole carton, students get to recycle that paper, too, while providing protection for the trees’ roots. “We’re thrilled to have the opportunity to teach elementary school kids in our community about renewable resources like paperboard packaging,” said CardPak chief financial officer Jerry Lamm. — Dan Shingler
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com
Lots of nickels: Cedar Shopping Centers Inc. of Fort Washington, N.Y., said it’s selling 17 of its 20 properties in Ohio to Nickleplate Realty Trust LLC of Canton. Cedar Shopping Centers said 14 of the properties it’s selling are anchored by Discount Drug Mart stores, and include shopping centers in Canton, Lodi and Westlake. The real estate investment trust said the total sales price for the 17 properties is about $45 million. Nice win: The Harpersfield Township athletic
in the second round of the playoffs. The store nearly doubled in size, from 3,200 square feet to 5,700 square feet, and among other new technology, features handheld devices from which associates can ring up fans’ purchases. The new dimensions put the Cavs’ shop in select company, as only the Los Angeles Lakers’ Staples Center store can match its size. The team also introduced new color schemes and logos this past offseason. — Joel Hammond
■ The anti-tax Club for Growth considers U.S. Sen. Sherrod Brown a big zero. Sen. Brown, a Democrat from Avon, was one of 30 senators to receive a 0% rating when it comes to supporting what the group considers “pro-growth policies” — that is, purely free-market policies. Twenty-nine of the 30 senators with a 0% rating were Democrats. The other, Vermont’s Bernie Sanders, is an independent.
Maybe now the doctors will be extra nice to you ■ Patient gripes soon will affect how much hospitals get paid by Medicare, and that might not be good news for elite hospitals such as the Cleveland Clinic. Kaiser Health News reported that the Centers for Medicare & Medicaid Services is finalizing details for the new reimbursement method, required by last year’s health care reform law. “Consumer advocates say tying scores from patient-satisfaction surveys to payments will result in better care,” according to Kaiser Health News. “But many hospital officials are wary, arguing the scores don’t necessarily reflect the quality of the care and are influenced by factors beyond their control.” Under CMS’s proposal, Medicare will begin withholding 1% of its payments to hospitals starting in October 2012. That money — $850 million in the first year — “will
go into a pool to be doled out as bonuses to hospitals that score above average on several measures,” according to the story. Patient survey scores would determine 30% of the bonuses. Dr. James Merlino, chief experience officer at the Cleveland Clinic, which scored below average on seven of nine key patient-satisfaction questions, said doctors and nurses have done their own studies and concluded that very sick and depressed patients give skewed views. Very ill patients are less likely to report that nurses check in on them every hour — even when logs prove they did, he said.
With a little luck, Cleveland could supplant Atlantic City ■ Perhaps Ohio casino operators will be able to tap into the Las Vegas fatigue expressed by a Westlake couple in an Associated Press story about gambling destinations. The story noted that a new poll finds Las Vegas remains the first choice of gamblers, with 47 citing it as the casino destination they’d most like to visit. No. 2, though, is not Atlantic City, but New Orleans, at 10%. (Atlantic City was third, with 8%.) When Rosemary and Jerry Slattery of Westlake were planning to celebrate their 11th wedding anniversary, they considered Las Vegas, the AP wrote. “I said, ‘We’ve gone to Las Vegas so many times; let’s go to Atlantic City instead,’” Mrs. Slattery said. Jerry last visited Atlantic City in 1949, and he liked what he saw this time; the couple “enjoyed a rolling chair ride on the Boardwalk, loved gazing out at the ocean, and said the people they encountered were friendly,” according to the AP. Substitute “lake” for ocean and Cleveland could offer that exact experience, with newer casinos, more to do and better restaurants.
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