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Auto suppliers still standing face tough test Some emerged from downturn strong, but others unable to keep up face extinction By DAN SHINGLER dshingler@crain.com
A LITTLE HELP, PLEASE? Area companies warm to ‘open innovation’ — using outside technologies in their products
By CHUCK SODER csoder@crain.com
T
o many of Northeast Ohio’s biggest businesses, open innovation is no longer just a curiosity. Several large companies in the region have gone so far as to appoint someone to be in charge of their efforts related to open innovation — a practice in which companies make a concerted effort to incorporate ideas and technologies created elsewhere into their own products. Though not every big corporation has gone so far as Goodyear Tire & Rubber Co. — which three years ago created an external science and technology program — many are on their way, said Chris Varley, director of the program for the Akron-based tiremaker. “Pretty much every big company — they have someone who is in charge of figuring this out,” Mr. Varley said.
It’s a story with death, destruction and even some zombies, but with an ending that offers hope that at least some of the survivors will live happily ever after. It’s not end-ofthe-world science fiction — rather, it’s the real-life tale of the U.S. auto supply sector, an important part of Northeast Ohio’s economy. If it bleeds, it leads, as they say in the TV business, so let’s start with the deaths — about 9% of auto suppliers here and across the country
INSIDE: A closer look at the Canton area’s dealer purge and how those still in business are faring. Page 3 didn’t survive the recession, said Susan Helper, a professor of economics at Case Western Reserve University who is researching the topic. “That sounds about right to me, too,” said Neil De Koker, president of the Original Equipment Suppliers Association, a Troy, Mich.-based trade group with about 400 North American members that do a large portion of their business in the auto See SUPPLIERS Page 20
INSIDE Northeast Ohio now an easier sell Business attraction group Team NEO reports its job has gotten easier lately, as the region’s profile rises in the eyes of site selectors and others. Read reporter Jay Miller’s story on Page 3.
See HELP Page 6
CSU to introduce more on-campus housing Newest plans call for $50M mixed-use complex, featuring 275-plus apartments By TIMOTHY MAGAW tmagaw@crain.com
PHOTO PROVIDED
20
The second phase of Cleveland State University’s Euclid Commons student housing project is under way.
After nearly two years at the helm of Cleveland State University, president Ronald Berkman jokes that he no longer needs his GPS to find his way home. And if he gets his way, thousands of students won’t need one, either, as they could make it to class on foot. Cleveland State is in the midst of muscling up its on-campus housing offerings, and trustees are expected to sign off within a
month on a deal that would inject more housing options for students and others on the university’s bustling urban campus near PlayhouseSquare. Student housing options steadily have improved since Dr. Berkman joined Cleveland State in 2009. Last August, the 300-room, first phase of the university’s $61 million student housing project — Euclid Commons — opened at Euclid Avenue and East 24th Street. Now under construction, the second phase is scheduled to open in the fall with 300 additional
dorm rooms. “A lot of good things happen when students live on campus,” Dr. Berkman said. “They have solidarity with the university, they do better academically and there’s more campus life.” As for the latest plans, Dr. Berkman said the university will lease 6.8 acres of land to Polaris Real Estate Equities, a developer in Gates Mills, to build a mixeduse housing complex for students and non-students. University officials would See HOUSING Page 4
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SPECIAL SECTION
DIFFERENCE MAKERS Crain’s identifies and profiles 10 Northeast Ohioans who are transforming the region ■ Page 13 ■
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 20
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COMING NEXT WEEK 2011 Investing Guide Have investors changed their strategies as a result of the recession? Plus, our yearly Superstar 10 list, a list of local companies with the largest market capitalizations and a look at other hot topics and issues in the world of investing.
REGULAR FEATURES Best of the Blogs ............22 Big Issue ..........................9 Classified ........................21 Editorial ............................8 Going Places ..................10
Letters ..............................8 List: Financial planners ..20 Milestone ........................22 My View ............................8 Reporters’ Notebook ........22
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MAY 16 - 22, 2011
MOVING IN THE RIGHT DIRECTION Between 1997 and 2011, the number of women-owned firms in the United States rose by 50%, well above the 34% increase for all businesses during that timeframe. That was one of the key findings of a new report from American Express about the state of female entrepreneurship in America. The number of women-owned firms has increased steadily since 1997, and revenues are up a commensurate 53.8% in that period, though employment growth (14%) is modest. Here’s a look at the numbers:
Year
Number of firms
Revenue
2011
8.1 million
$1.26 trillion
2007
7.8
$1.20 trillion
2002
6.5
$941 billion
1997
5.4
$819 billion
SOURCE: AMERICAN EXPRESS OPEN STATE OF WOMEN-OWNED BUSINESSS REPORT, 1997-2011
Faster payroll has its merits.
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CRAIN’S CLEVELAND BUSINESS
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Region gaining favor with site selectors By JAY MILLER jmiller@crain.com
Team NEO says improving economy piques interest of companies abroad
It’s getting a little easier to sell Northeast Ohio, says Team NEO, the business attraction nonprofit. While the outlook isn’t so rosy that Northeast Ohio is on its way to becoming the next Silicon Valley, the group does believe the region’s stature is rising in the eyes of the people who make plant and office
location decisions. Partly, it’s because the economy has been steadily improving and showing signs of change. “Overall, the (regional) economy is doing as well or better than the rest of the nation,” said Jenny Febbo, the group’s vice president for marketing and communications. That’s
THE WEEK IN QUOTES
in contrast to the lagging Rust Belt economy of years past. Over a shorter term, the organization in its Cleveland Plus Quarterly Review reports that unemployment in the region dropped to 9% in March, from 9.2% in December and 11.4% in March 2010. The group’s review also reports that
Northeast Ohio’s unemployment rate at the end of the first quarter dropped 2 percentage points since the year-earlier period to 9.6%, nearly matching the national unemployment rate of 9.5%. But the growing attractiveness of the region also is the result of companies around the world waking up
INSIGHT
Operator pleased with Chancellor U. location
— Bernard Swiecki, senior project manager for the Center for Automotive Research in Ann Arbor, Mich. Page One
— Matt Hlavin, CEO, Thogus Products Co. of Avon Lake. Page One
“I definitely do not approve of having your name on an organization and not working for them. I don’t ever ask anyone to do something I wouldn’t do.” — Jeanette Grasselli Brown, philanthropist and former director of corporate research, BP America. Page 12
“One thing that I care deeply about and believe is that manufacturing is really a critical part of our nation’s future.” — John Colm, founding director, WIRE-Net. Page 13
“You can’t go into battle for the United States without our padding.” — Dan T. Moore, CEO, Dan T. Moore Co. Page 16
See BUSINESS Page 6
I Can Schools to open third public charter, plans more
“This method of hibernation — basically putting a company into suspended animation and waiting for orders — really did prove successful (for some suppliers).”
“If the CEO or the president of the company isn’t pushing to revitalize their business, it’s very difficult to do.”
to Ohio’s status as a relatively lowcost place to do business. Team NEO also is encouraged with the response it is getting to its efforts to take the message of Northeast Ohio to businesses in Europe and beyond. “We’re credible,” said Team NEO CEO Tom Waltermire, referring to economic data that point to a recovery, especially in the manufacturing sector in Northeast Ohio, where
By TIMOTHY MAGAW tmagaw@crain.com
DAN SHINGLER
Brad Black, owner of Downtown Ford in Canton, said business at his dealerships has improved.
CANTON CAR MARKET TURNS THE CORNER Auto-centric area hit rough road, but dealerships that survived the industry fallout now are on a path to growth By DAN SHINGLER dshingler@crain.com
W
elcome to Stark County, a center of seismic activity in the auto industry. The people who sell cars here have been shaken more than most by the dealership consolidations brought on by Detroit’s automakers, which since 2008 have pulled from the Canton-Massillon market nine dealerships — or 24% of the dealerships that had been in existence. That drop ranks the Canton-Massillon market sixth in the nation in terms of the percentage of dealerships lost over a threeyear period that ended last Jan. 1, according to figures compiled by Automotive News, a sister publication of Crain’s Cleveland Business. But the tremors that brought down some longtime names in the local auto business also have left fewer dealers vying for the same number of customers. And survivors are finding that their sales and bottom lines both are on the rise now that the dust has settled. “We were one of the dealers that took a See CANTON Page 19
POWER PLAYERS The following automakers represent the share of retail registrations for the 10 largest players in the Canton-Massillon market between 2007 and 2010.
Automaker
2007
2010
Ford Motor Corp.
20.0%
22.8%
General Motors
26.5
18.3
Hyundai-Kia
5.3
12.2
American Honda
11.1
11.5
Toyota Motor Sales
10.4
9.4
Chrysler Group
13.3
9.0
Nissan N.A.
4.7
5.3
Subaru
0.9
3.3
Mazda
2.3
2.2
VW Group
1.1
2.0
SOURCE: AUTOMOTIVE NEWS DATA CENTER AND R.L. POLK
I Can Schools only has been molding young minds for less than a year, but the organization is moving quickly to open its third public charter school this fall in a space now occupied by a for-profit college. The University of Cleveland Preparatory School, which would serve grades K-8, plans to open in August at the current site of Chancellor University at 1906 E. 40th Street in Cleveland’s Midtown area off Chester Avenue. I Can Schools’ goal over the next two years is to have a total of seven schools in Cleveland, Akron and Youngstown, according to Marshall Emerson III, CEO and co-founder of I Can Schools Mr. Emerson said the new school will serve about 250 students. He said the Midtown site offers the charter school operator a new flagship that will raise its profile. “We’re really excited about that place,” Mr. Emerson said. “We stood outside the building in the morning, and we weren’t really counting cars but looking at the traffic moving up and down Chester. I don’t think we could have asked for a better location.” I Can Schools will lease the building from the Cleveland-Cuyahoga County Port Authority. The five-year lease carries a three-year renewal option, and I Can Schools will pay the Port Authority $15,000 per month for the first year and up to $17,500 per month by the final two years of the lease. Chancellor has been planning to move to a site with more parking along an interstate highway — a popular locale among for-profit colleges such as the University of Phoenix and Strayer University. Chancellor president Robert Daugherty said in an email last week that Chancellor would move to Independence this summer, but he would not comment on the specific location.
‘A model that works’ I Can Schools operates two other schools in Cleveland. Both opened last fall — one in Tremont on the West Side and the other in Slavic Village on the East Side — and boast See CHARTER Page 19
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Housing: New options boost attraction continued from PAGE 1
not discuss the terms of the lease until the deal was finalized. Expected to open in summer 2012, the $50 million complex would feature between 275 to 300 apartments on the north side of the university’s campus on Chester Avenue between East 21st and East 25th streets. If the complex proves to be a success, a second phase would be considered, according to Joe Mosbrook, a university spokesman. The plans have been in the works for more than a year, and shovels are expected to hit the ground this summer starting with the demolition of the old Factory Theatre, which was the university’s performing arts theater.
Guy Totino, owner of Polaris Real Estate, declined to comment on details of the project or its financing until trustees formally approve the lease. However, according to the firm’s web site, Polaris is involved with a similar project near the University of Pittsburgh and has worked on six others — most of which are in Indiana. The prospect of a mixed-housing project that serves students, young professionals and Cleveland State staff is exciting because it could draw businesses not typically associated with universities, said Rockette Richardson, executive director of Campus District Inc., a nonprofit development organization serving the area on the east side of downtown between East 18th and East 30th
The executive summary for our business traveler appreciation day:
You’re the best.
streets. “It just adds an additional dimension of people who will be looking for the services to support their lifestyle in the neighborhood,” Ms. Richardson said. The Campus District is heavily traveled, Ms. Richardson noted, but the latest housing plans could attract a number of year-round residents into the neighborhood, making it a place where people can work, dwell and go for entertainment.
The Akron model Officials at Cleveland State say its housing plans are in lockstep with other urban campuses, particularly the University of Akron, which has bolstered its housing options over the last decade and transformed itself from a concrete-laden commuter campus to one where students want to live and study. Ted Curtis, the University of Akron’s vice president for capital planning and facilities management, said when he joined the university in 1998, fewer than a thousand students lived on campus. Now, that number exceeds 3,000 and continues to grow at the school, which had a fall 2010 enrollment of 29,251. UA also plans to break ground on a 531-bed residence hall today, May 16, which is expected to cost about $35 million and open in August 2012. University officials say aside from boosting the number of students on campus and infusing the campus with more student life, building housing complexes is a way to attract and retain students. The types of housing students demand has changed, officials say, as more students prefer apartment-style living rather than the traditional crowded dormitories that lack privacy. “It’s the type of housing that’s been very attractive and satisfying to our customers, especially their parents,” Mr. Curtis said. “The testimonies to that are the compliments we receive from parents and students thanking us for providing such nice facilities.”
Down memory lane
2011
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Meg Nicholson, Cleveland State’s director of residence life, worked at the University of Akron prior to joining Cleveland State in 2004, and said she’s experiencing a bit of déjà vu. “(The University of Akron) went from this cement-and-concrete campus to building all these new buildings,” she said. “When I left there, it was booming. I feel like that’s what we’re doing here. It’s pretty neat to experience that again.” In 2006, Ms. Nicholson said, about 750 students lived on Cleveland State’s campus, and next fall that number is expected to climb to 1,200. Ms. Nicholson said the most telling sign of Cleveland State’s housing options success is the number of students returning to on-campus dwellings. Next fall, 125 more upperclassmen are returning to live on campus than the year before. ■
Volume 32, Number 20 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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Business: Group extends its reach
MAY 16 - 22, 2011
Help: Culture change difficult continued from PAGE 1
continued from PAGE 3
employment is up 3% from the end of 2010. Expanding companies want to move into markets that are growing. Team NEO management briefed Crain’s editorial staffers last week on the organization’s latest quarterly economic review and spoke as well about the changes that have helped bring about the rebound. “The fundamentals of the region are better than people thought five or 10 years ago; we’ve finally reached bottom,” Mr. Waltermire said, embracing the notion that Cleveland appears to have shed the last of its dying industry and is following the same path of recovery as Pittsburgh. There, the sweeping away of the steel industry in the 1980s has allowed new-economy businesses and the young workers attracted to those businesses to be the face of the Pittsburgh economy. Mr. Waltermire used Akron as an example of the transformation he’s seeing. There, total employment has grown over the last decade, the only metropolitan area in Ohio to see such growth, he said. “Akron hasn’t been the rubber capital for 10 years,” he said. “The
diversification, while painful, is paying off.” The report notes that in February, a German manufacturer, The Rochling Group, said it plans to bring a $15 million injection molding plant to the old Rubber City, and will hire 123 skilled workers. Site selectors tend to start their screening process at the state level, and two site selection consultants told Crain’s that Ohio and its metropolitan areas are attracting more attention. “Ohio is on the radar screen,” said John Boyd, who runs The John Boyd Co., a site consulting firm in Princeton, N.J., that specializes in analyzing the cost of doing business in U.S. cities. “Ohio is quite competitive right now.” Brent Pollina, president of Pollina Corporate Real Estate Inc., in Park Ridge, Ill., sees Ohio’s star rising as well. Over the last seven years, his firm has ranked states on their friendliness toward business, and he said Ohio, though not yet approaching the list’s top 10, is moving up. It’s 25th in the 2010 report, up from 41st in 2008. The new commercial activities tax structure helped the state move up, Mr. Pollina said, but strong
union presence in the state is keeping Ohio from rising higher. Low costs have attracted a number of call centers in recent years to Akron and Lorain County. “This is a place where call centers can be successful,” said Steve Morey, president and CEO of the Team Lorain County business development group. Mr. Morey gives Team NEO credit for helping his efforts both in bringing leads to follow up on and also for providing the research that can help sell a location to a site selector. “We are getting better at working together,” he said. Team NEO also is beginning to see the fruits of its year-old international outreach, started a year ago. Mr. Waltermire said Northeast Ohio now is showing its face at European trade shows. For instance, he said Team NEO’s stronger presence in April at Hannover Messe 2011, the leading European industrial show, produced six leads this year, including one that Mr. Waltermire described cautiously as “an opportunity.” Last year, Team NEO had only one lead from the show. ■
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Midsize companies are starting to get involved, too, said Andy Zynga, CEO of NineSigma Inc. in Beachwood, which helps companies with technical problems find partners that can solve them. Mr. Zynga said one reason NineSigma raised $2.5 million in debt financing from BlueCrest Capital Finance L.P. of Chicago last month is to add staff to meet rising demand for its services from companies of all sizes. The company plans to add about 12 people to its Beachwood office over the next 12 months, he said, declining to say how many the company employs today. The end of the recession is contributing to that boost in business, as is the growing acceptance of open innovation practices, Mr. Zynga said. “It’s sped up lately, definitely,” he said, noting the firm also is expanding because it is adding new services and is operating in more countries.
Making things happen Both Baldwin-Wallace College and the state of Ohio want more companies in the state to get into the habit of tapping expertise and resources that exist in academia or in other companies, be they customers, suppliers or seemingly unrelated businesses. Baldwin-Wallace has hosted several monthly seminars on the topic, but in April it went a step further: Executives from Cincinnati-based Procter & Gamble Co. — which is widely considered a world leader in open innovation — led a half-day session where six local companies from various industries worked together to figure out how they might help each other innovate. They’re scheduled to meet again in the fall to talk about what they’ve achieved. Likewise, the Ohio Department of Development organized two panels on the topic that took place during the April 28 meeting of the Ohio Third Frontier Commission and Advisory Board. The department is exploring the idea of promoting open innovation through its Third Frontier program, an economic development initiative designed to stimulate the state’s economy through investments in technology. No decisions have been made, but a few officials at the meeting — including Mark Peterson, director
of global business development for Procter & Gamble — said the Third Frontier program might be able to create events or in some other way help companies build relationships that could help them innovate. “That’s an area where I think the Third Frontier could, with a little bit of money, make things happen,” Mr. Peterson said.
Innovation for less The Third Frontier already helped drive PolyOne Corp. to pursue open innovation, according to Thomas Hughes, who is program director for open innovation at the producer of specialty polymers based in Avon Lake. PolyOne over the past few years has been listed as a partner on multiple technology development grants awarded by the Third Frontier, which requires grant recipients to work with other universities and companies within the state. That work inspired PolyOne to see how else it might be able to innovate through partnerships, Mr. Hughes said. For example, PolyOne last Thursday, May 12, held the grand opening of its Avon Lake “innovation center,” where PolyOne customers can develop products alongside company researchers. Mr. Hughes called the Third Frontier program “a good catalyst” for open innovation in Ohio. “You’re seeing that germinating here in the state,” he said. Likewise, Thogus Products Co. of Avon Lake has spent a lot of time helping its customers develop new products, said CEO Matt Hlavin. The plastic injection molding company’s “open innovation culture” has helped it drive growth in 2010 and so far in 2011, Mr. Hlavin said. That’s partly because companies didn’t invest much in research and development during the recession and now are looking for less expensive ways to boost innovation, such as by working with companies such as Thogus, Mr. Hlavin said. It can be hard for a company that has been developing all its own products for years to change its culture, officials from several companies said. Doing so requires leadership from top executives, according to Mr. Hlavin. “If the CEO or the president of the company isn’t pushing to revitalize their business, it’s very difficult to do,” he said. ■
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CRAIN’S CLEVELAND BUSINESS
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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
Quit playing
J
ohn Kasich is playing a political game we don’t like in dealing with the state’s budget. The governor chops away at expenses, but loudly proclaims his refusal to consider any form of tax increase, even though it’s inexcusable not to raise the rate on the state’s commercial activity tax. His rigid, one-sided approach to the task of eliminating an $8 billion budget deficit isn’t necessary, nor is it good for Ohio. A recent email from the Kasich Taylor for Ohio campaign committee shows how Gov. Kasich intends to present the budget issue to those he hopes will throw campaign money his way. The subject line of the email reads, “Raising Taxes is Not The Answer.” The message inside builds on that point. “Why am I not surprised?,” the governor writes. “Ohio Democrats are joining President Obama by calling for higher taxes to balance our budgets. “Is that their answer for everything? “They want to kick the can down the road and continue to avoid making difficult decisions the way that families and small businesses across Ohio do every day. “Raising taxes in Ohio is not an option. “As we finally begin to see signs of job creation in Ohio, tax hikes will only serve to kill job creation and send job creators fleeing from our state.” We’re all for turning the screws on expenses, and agree that politicians are good at putting off until tomorrow tough, often unpopular decisions that should have been made yesterday. We also believe tax hikes should not be the primary tool for whittling down the state’s big budget deficit. However, we can’t buy lopping expenses as the sole solution to the budget problem. Serious consequences await cities and schools because of the governor’s ploy of closing the budget gap in part by cutting their state allocations — an act that simply pushes the pain down to the local level. We maintain Gov. Kasich can afford to take some of the pressure off these local entities, yet not compromise Ohio’s competitive position, with a small increase in the commercial activity tax (CAT) rate. Two days before the Kasich Taylor email went out, the Ernst & Young accounting firm issued its annual study of the tax climate for business in all 50 states. The report ranks Ohio third in the nation for the friendliest business tax environment. Ohio’s high rank is due to changes the state adopted in 2005 that phased out tangible personal property taxes on business and the corporate franchise tax and replaced them with the CAT, which is a tax on the gross receipts of a business. The previous tax structure put a heavy burden on manufacturers and other businesses with large amounts of tangible assets, such as plants and equipment. The idea of the CAT was to impose a small tax across a large base of companies so that no business sector carried a big tax load. The problem with the CAT is that the tax rate is set too low — at 0.26% of gross receipts — and hasn’t produced enough revenue to offset the phase-out of the other taxes. The governor could ask the Legislature to raise the rate modestly, but he hasn’t. He should; Ohio’s tax friendliness won’t fall off a cliff if he does.
MY VIEW
Touring the city? Clear your schedule
I
And yet we’d seen so little, and therein did my best impersonation of a lies the beauty of Greater Cleveland, so Cleveland tour guide last month, often missed by us natives and so often and despite my considerable acting heralded by visitors: If you’re complaining chops, Lolly the Trolley shouldn’t about anything other than the area’s fear for its job. horrifically terrible weather, you’re doing I offer a list of Cleveland attractions things all wrong. most often on hosts’ to-see lists that I You’ve no doubt read this before: We didn’t show my guest: the Rock and Roll think too little of ourselves and Hall of Fame and Museum, our region. PlayhouseSquare, Great Lakes JOEL Why? Because Forbes says we Science Center, East Fourth HAMMOND should? Because LeBron James Street, Progressive Field, Quicken made the decision we all secretly Loans Arena, Cuyahoga Valley knew he eventually would? National Park and Cleveland Because, God forbid, Mark State’s revitalized urban campus. Shapiro traded Cliff Lee and CC We didn’t gamble at a casino, Sabathia; or because Derek which soon will be an option. Anderson threw an interception; Why, then, am I seemingly or Romeo Crennel flipped a celebrating such abject failure? coin? Because despite those misses, I’ve played sports all my life and have I was wiped out by Sunday afternoon written about sports at newspapers the when I dropped off my aforementioned last 11. I love sports. But I also love other visitor at Hopkins: Between three of Unithings, such as the television show versity Circle’s best offerings and Little “Seinfeld,” for example. There’s a great Italy, the West Side Market and Crocker “Seinfeld” where Jerry buys his lovably Park, a trip along Lake Road through the clueless father, Morty, a “Wizard” pocket western suburbs, and a few other stops, organizer; Morty is only interested in the we’d seen enough for our short visit.
tip calculator. “It does other things,” Jerry implores. While acknowledging that Cleveland, like any other city, has its faults and we must continue to work on those faults, can’t we focus on Northeast Ohio’s other things? We play key roles in a revitalized and retooled domestic auto industry. In a burgeoning wind energy industry. In health care and biomedicine. In our corner of the wildly growing restaurant business. West Siders who start their commutes before 7 a.m. drive 70 miles per hour on Interstate 90. Rent’s cheap. Business incentives are plentiful; just ask American Greetings and Diebold. And by golly, we might even play a key role in Major League Baseball’s playoffs this year — Jose Mesa, Trader Frank Lane and Sabathia be darned. Surely you’re familiar with the old adage that posits you can’t love anyone else until you love yourself. It applies the other way, too: No one else is going to love Cleveland until we love it, too. Let’s get on that. ■
LETTERS
Consider youth interests when developing ■ In his March 28 letter to the editor, Leon Atterberry took issue with the suggestion that “there isn’t much to do in Cleveland.” He then provided a long list of cultural attractions. Interestingly, many of the institutions on his list are in decline. Why? Because they do not appeal to the 20- to 30-yearolds that Northeast Ohio needs to attract to thrive. Regardless of what older residents think, the younger generation is perfectly comfortable finding these types of resources online, which can be accessed anywhere. For recreation, they generally seek challenging outdoor activities, of which Northeast Ohio has few. When my college-age children, who were raised exclusively in Northeast Ohio, return home on break, they are bored
and claim there is nothing to do. Compared to what they experience in other parts of the country, I have to agree. Their high school peers concur. The nearest recreation is generally several hours away in Pennsylvania or West Virginia. A lake that is cold or frozen most of the year, and has filthy beaches all of the year, is not much of an asset. Until Northeast Ohio can develop opportunities to attract this demographic, we will continue to earn the boring label and not attract those who would have the vibrant outlooks needed to renew the area. DeVon Griffin Granger Township
Reimbursing tuition beneficial ■ “Tuition reimbursement levels drop
locally,” a story published in the March 14 issue of Crain’s Cleveland Business, references a survey that found the number of Cleveland-area companies offering tuition reimbursement programs to employees is dwindling. The global recession certainly drove many of those corporate decisions. But as profitability returns to corporate coffers, it’s important to understand the real financial impact tuition reimbursement means for a company. The thinking that the tuition reimbursement benefit is too high a long-term cost is simply shortterm thinking. The myth, of course, is that tuition reimbursement programs are at best an expensive “fringe” benefit. Companies fear that once an employee is given his or See LETTERS Page 9
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Why not? People drink and they use tax money from alcohol to fund different things. Why not do it with marijuana?
No. Marijuana is illegal — it’s a drug. (Then, as he talked about it more ...) If I’m sick and I’m terminally ill and it makes me feel better, what do you have to lose? I guess the more I think about it, it’s like sure, why not?
I think that medical marijuana serves a good purpose when it’s used properly. I think the danger is ... I think it might solicit encouragement to use it illegally.
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Patient data specialist raises $11.5M Clinic spinoff plans to hire product developers By CHUCK SODER csoder@crain.com
Cleveland Clinic spinoff Explorys Inc. has raised $11.5 million that should help the data technology firm double the size of its staff by the end of 2011, said Charlie Lougheed, president and chief technology officer of the Cleveland company. The investment was led by Austin Ventures of Austin, Texas, and Foundation Medical Partners of Rowayton, Conn. They were joined by two existing investors: SantĂŠ Ventures of Austin, Texas, and the Cleveland Clinic. Explorys was founded in 2009 to commercialize a Cleveland Clinic technology designed to help the hospital system analyze patient data. Since then, a few other major hospital systems â&#x20AC;&#x201D; University
Hospitals, the MetroHealth System, Summa Health System and MedStar Health of Columbia, Md. â&#x20AC;&#x201D; have begun using Explorysâ&#x20AC;&#x2122; software to tap into its database of patient information. They also contribute data on their own patients, who remain anonymous. The system today contains data on 10 million patients, Mr. Lougheed said. The company has begun selling the system to life sciences companies, which could use the system to analyze the size of markets for various medical products or to monitor outcomes of patients who use those products. Hospitals can use the Explorys system to study their operations and for medical research. They do not pay to use the companyâ&#x20AC;&#x2122;s core product, Population Explorer, though they can pay for more
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advanced features. â&#x20AC;&#x153;We have an opportunity to really empower researchers,â&#x20AC;? Mr. Lougheed said. Explorys, which is based at the Global Cardiovascular Innovation Center on Cedar Avenue, across from the Clinic, employed fewer than 10 people a year ago. Now it has 25 employees, a number that should rise to 50 by the end of the year, Mr. Lougheed said, noting that many new hires will be focused on product development. The company doesnâ&#x20AC;&#x2122;t plan to stop at 50 people, Mr. Lougheed said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re going to double that next year,â&#x20AC;? he said. Explorys in mid-2010 raised $2.55 million from SantĂŠ Ventures, with additional financing from the Clinic. The company in November 2009 raised $1 million from 23Bell LLC of Cleveland, an investment group that includes Mr. Lougheed and Explorys CEO Stephen McHale, as well as other investors. â&#x2013;
LETTERS continued from PAGE 8
her diploma in one hand, heâ&#x20AC;&#x2122;ll turn in his resignation with the other, taking his advanced education with him. But data show the exact opposite. Tuition reimbursement continues to be an important means to foster employee recruitment, retention and even employee loyalty. Nationally, tuition reimbursement is hardly a rare benefit. According to a 2010 study from the HR consulting firm BLR, 85% of employers offer some type of tuition assistance, a significant increase from the 52% of employers who offered the benefit in 2007. The reason itâ&#x20AC;&#x2122;s so commonplace is not its cost, but its tremendous financial ROI. Consider the data from a 2005 study by Spherion, a staffing and employment services firm, which found that 62% of the respondents to its â&#x20AC;&#x153;Emerging Workforceâ&#x20AC;? study who had received training or mentoring said they were very likely to stay with their current employer, while 61% said they were likely to remain in their jobs for the next five years. This is roughly twice as long as the two- to three-year average stays
for a typical employee, according to the study. For employees, thereâ&#x20AC;&#x2122;s no question that tuition reimbursement programs are a critical lifeline to increasing education and skills, and raising individual standards of living. But for our countryâ&#x20AC;&#x2122;s global competitiveness, lifelong learning is a national priority. Thatâ&#x20AC;&#x2122;s one reason the Obama administration wants the United States to have the highest proportion of college graduates in the world by 2020. That means an additional 8 million students would need to earn college degrees over the next decade. According to Deloitte & Touche USA, by 2012 the United States will have a 6 million-person gap between the number of students graduating from universities and the number of workers needed to replace retirees. Baby boomers have reached retirement age, and there arenâ&#x20AC;&#x2122;t enough educated younger workers to replace them. Letâ&#x20AC;&#x2122;s face it: The profile of the American work force is in a state of transition. Employees are no longer simply â&#x20AC;&#x153;9-to-5 workers.â&#x20AC;? In 2011, they are â&#x20AC;&#x153;working learnersâ&#x20AC;? â&#x20AC;&#x201D; non-
traditional students representing more than 70% of all higher education students. They are actively pursuing higher education while juggling fullor part-time jobs, raising families and/or caring for elderly or ill family members. They are a diverse population stemming from many racial, ethnic and socio-economic backgrounds. They are ordinary people, just like you and me, who desire to learn more, do more and be more. What does this all mean for business owners and corporations? Tuition reimbursement is a great value. It creates a stronger work force with the advanced educational skills needed to boost competitiveness and productivity. It also creates a more loyal, motivated work force. Itâ&#x20AC;&#x2122;s time to reframe our thinking. Tuition reimbursement programs are more than just a tax write-off or a periodic benefit to offer only during the â&#x20AC;&#x153;good times.â&#x20AC;? They demonstrate a commitment by businesses to growing and strengthening their work forces, one learner at a time. Gina Cuffari Vice President Ohio Campuses University of Phoenix
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Aircraft equipment maker soars Aero-Instrumentsâ&#x20AC;&#x2122; business takes off with acquisition, airline deal By DAN SHINGLER dshingler@crain.com
Cleveland-based Aero-Instruments is flying high with the acquisition of a new product line and authorization of its instruments for use in new Chinese airliners. Now itâ&#x20AC;&#x2122;s looking for a new place to land near Cleveland. â&#x20AC;&#x153;Our employees are very important to us, so weâ&#x20AC;&#x2122;re not going to go very far,â&#x20AC;? said company president Dan Pappano. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;d like a nice, tidy 40,000-square-foot facility â&#x20AC;&#x201D; and if it were near the airport, that would be great.â&#x20AC;? Thatâ&#x20AC;&#x2122;s not far from the companyâ&#x20AC;&#x2122;s existing location, on Emery Avenue â&#x20AC;&#x201D; but expanding there would be difficult and the company will instead
seek a new facility altogether, Mr. Pappano said. The company has had a gust of tailwinds lately, including its May 3 acquisition of several product lines from a competitor, SpaceAge Controls of Palmdale, Calif. Aero-Instrumentsâ&#x20AC;&#x2122; chief products are Pitot sensors, which determine the speed of an aircraft, but with the acquisition it gains products such as temperature gauges and test instrumentation. Separately, on March 23, AeroInstruments announced that its existing Pitot sensors had been selected for use on C919 commercial aircraft that Honeywell Aerospace will build for China. Over 20 years, Honeywell plans to build about 2,400 of the aircraft â&#x20AC;&#x201D; the rough equivalent of a Boeing 737, Mr. Pappano said. Aero-Instruments still will make in Cleveland all its products, including the ones it just picked up, Mr. Pappano said. It will need to expand beyond its current 55 employees, but has not yet determined how many
hires it will make, he said. Aero-Instrumentsâ&#x20AC;&#x2122; business has been growing by at least 20% a year since 2006, when it began making instruments for large commercial aircraft, Mr. Pappano said. The private company does not disclose its sales, but Mr. Pappano said Dun and Bradstreet estimates that put its revenues at between $10 million and $15 million a year were accurate. The real growth may be yet to come. Not only is Aero-Instruments awaiting approval of its sensors for Airbus airliners in Europe, but the U.S. aerospace market also is growing. Local manufacturers involved in the sector say it has been a stable source of business, and itâ&#x20AC;&#x2122;s been targeted for growth by economic development officials. â&#x20AC;&#x153;The expansion plans of AeroInstruments are exactly the kind of activity we hope to encourage and to see more of in the sector,â&#x20AC;? said Dan Berry, CEO of the Cleveland-based manufacturers group Magnet. â&#x2013;
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CASE WESTERN RESERVE UNIVERSITY SCHOOL OF MEDICINE: Carol L. Moss to vice president, medical development and vice dean for external affairs; Amy R. Sheon to executive director, Urban Health Initiative. CLEVELAND STATE UNIVERSITY: George Voinovich to consultant and adviser, Maxine Goodman Levin College of Urban Affairs.
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DIFFERENCE MAKERS 10 impact players who are transforming Northeast Ohio
DOROTHY BAUNACH President emeritus, NorTech; former interim economic development director, Cuyahoga County By MICHELLE PARK mpark@crain.com
D
orothy Baunach lasted a year and a day teaching science. One day into her second teaching job at a Dayton middle school, she received an offer she wouldn’t refuse: Earn her master’s degree by way of a paid assistantship at the University of Dayton. In 1973, a couple years after she left the classroom, the native Clevelander graduated and immersed herself in medical research before again changing gears. She figured she’d need a Ph.D. or an M.D. if she “was going to do anything of value” in the
field of science, and she had other priorities — having a family, for one. Her next move planted the roots of a career for which she’s now well known. Ms. Baunach joined a group that later became Enterprise Development Inc., an early, technologybased incubator in Cleveland. It was then, back in 1983, first on a TV tray and later on a desk borrowed from the aunt of a company founder, that she began her economic development career. And there she stayed. Ms. Baunach for nearly three decades has worked at the forefront of economic development in Northeast Ohio. “She’s helped to place technology and innovation squarely on every-
JASON MILLER
body’s radar screen,” said Joe Roman, who once was her boss and now is president and CEO of the Greater Cleveland Partnership business advocacy group. “Both of those have potential to grow.”
Instantly sold In the beginning, when she would hear people use the word “incubator,” Ms. Baunach thought of little chickens and petri dishes, not startup companies. In the 1980s, the use of “incubator” in
relation to young companies was still new, she said. Working for Enterprise Development’s predecessor, the Center for Venture Development, Ms. Baunach fell in love with the business of growing business. The first time she shepherded a company through its startup phase, convincing people to invest in the business and writing successful grant applications, Ms. Baunach was sold. “I wanted to do that over and over and over again because there was
nobody else doing that,” she said. Her résumé is a lengthy compilation of development-minded organizations she has helped create, nurture and spin off — “a progression of projects and organizations to build this ecosystem (of entrepreneurship) for the region,” Ms. Baunach calls it. Most recently, she created and led the regional technology-based economic development organization, NorTech. During her time there, she kept creating, with NorTech spinning off both OneCommunity, a regional broadband Internet service provider and innovator, and JumpStart Inc., a “reincarnation” of Enterprise Development Inc. that has become a nationally recognized venture development organization. She also helped design the statewide economic development program, Ohio Third Frontier. “By helping the region get a focus on development opportunities for the future, she has contributed immeasurably to the quality of life and to the success of Northeast Ohio,” said Dr. Roy A. Church, president of Lorain County Community College, who worked with Ms. Baunach at NorTech for about a decade See BAUNACH Page 15
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DIFFERENCE MAKERS
CRAIN’S CLEVELAND BUSINESS
MAY 16 - 22, 2011
ROBERT BRIGGS President, GAR Foundation; partner, Buckingham, Doolittle & Burroughs LLP
JASON MILLER
By KATHY AMES CARR kcarr@crain.com
L
icense plates often are customized around one’s passion — an alma mater, a sports team or, in Robert Briggs’ case, Northeast Ohio. Mr. Briggs’ Hartville barn roof displays a 10-foot-by-5-foot metal replica of his “NEO 1st” license plate, a gift that leadership of the Fund for Our Economic Future presented him in 2008, when he retired as the economic development organization’s founding chairman. Those displays of support reflect Mr. Briggs’ tireless devotion to regionalism and community
outreach, and his advocacy has been a driving force in improving the region’s economic competitiveness, colleagues say. “He’s such a credible player in terms of his role in the Akron community,” said Brad Whitehead, president of the Fund for Our Economic Future. “To have such a visible leader from outside Cuyahoga County working closely with Cuyahoga was really a difference maker in advancing regional economic development.” Indeed, Mr. Briggs was one of the early promoters of regionalism, seeding an idea in 2002 with five area foundations about working together to bolster business
growth, talent development, racial and economic inclusion, and government collaboration. In 2004, a consortium of philanthropic organizations and individuals formed the Fund for Our Economic Future around that mission. Since its founding, the Fund has raised more than $70 million, and most of its grantmaking benefits Northeast Ohio economic development organizations that help accelerate, attract and grow local companies. “There is no end to the amount of collaboration that can take place in the region and make us a much better global competitor,” Mr. Briggs said.
New directions The call to help originated in sixth grade, when Mr. Briggs began volunteering as a patrol boy who stood at intersections directing traffic. “It was the way I was reared — to give back,” Mr. Briggs said. “It’s part of my DNA. And from the time I was 7, I worked, delivering newspapers and mowing lawns.” His work experiences continued as a student at Wooster High School, where he participated in groups
such as the debate team, math club and student government. Those interests led him to Duke University in North Carolina, where in 1963 he earned a bachelor’s degree in history, followed by a law degree in 1966 from Ohio State University. After serving for three years as a staff judge advocate for the U.S. Air Force, Mr. Briggs returned to Wooster and in 1970 joined the law firm of Herndon & Bartlo, which merged with Buckingham, Doolittle & Burroughs LLP in Akron in 1971. Mr. Briggs ascended through Buckingham Doolittle’s ranks, specializing in corporate, business and foundation legal matters. The law firm’s former CEO and chairman emeritus still is a partner there. It was during his tenure at the GAR Foundation in Akron, which was managed until 2006 by Buckingham Doolittle, that Mr. Briggs became disenchanted with Northeast Ohio’s reputation. “We were experiencing a major recession that began in 2000, and I was totally frustrated by the negativity in the region,” he said. “No one was doing anything about the loss of jobs and brain power.”
The tenant companies of the
JEANETTE GRASSELLI BROWN
would like to thank Jim Cossler for making a difference.
Philanthropist; former director of corporate research, BP America
Youngstown Business Incubator
Applied Systems and Technology Transfer (AST2) Country Music Radio Eris Medical Technologies GreenEnergyTV.com LE Marketing NEO HealthConnect Perkins Communications, LLC Revere Data Technagroup Turning Technologies, LLC via680 Vista AST Visual Impact Imaging Zethus Software
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For daily on-line updates, sign up @ CrainsCleveland.com/Daily
By JENNIFER KEIRN clbfreelancer@crain.com
T
he woman spinning and shimmying across the dance floor in a leg-revealing green-sequined dress had the whole audience at GroundWorks DanceTheater’s 2010 benefit clapping along to Whitney Houston’s “I Wanna Dance with Somebody.” It wasn’t one of GroundWorks’ own pros, but rather 81-year-old Jeanette Grasselli Brown, a prominent local philanthropist and volunteer, proving that she’ll do just about anything for the causes she loves. “When you see how well she dances, and the pair of legs on her … well, I want to be Jenny Brown when I grow up,” laughed Dr. Linda Abraham-Silver, president of the Great Lakes Science Center, where Dr. Brown was a founding board member nearly 20 years ago. Dr. Brown’s contributions to local nonprofits and corporations usually don’t require such acrobatics, but they are no less dynamic and memorably effective. “Her style is very unconventional,” said Scot Rourke, president of OneCommunity, where she recently completed a five-year board stint. “She’s a big thinker. No one works harder, and no one is more charming.” Dr. Brown, known to friends and colleagues simply as “Jenny,” spent a 38-year career with Standard Oil Co. of Ohio and later BP America, where she earned international prominence in the field of infrared and Raman spectroscopy. She
A ‘relentless’ optimist Mr. Briggs and Steve Minter, then president of the Cleveland Foundation, spoke in earnest about collaborating with other organizations such as the Akron Community and George Gund foundations to promote regionalism through economic development. “From the summer of 2002 to the time we kicked off the Fund in 2004, (the foundations) worked like hell putting this together,” Mr. Briggs said. “The thing took off like a rocket.” More than 80 philanthropic organizations and individuals now are affiliated with the nonprofit. The Fund’s Mr. Whitehead said Mr. Briggs’ positive outlook has helped bind the concept of regionalism. “The beauty of Rob is his relentless optimism,” Mr. Whitehead said. Christine Mayer, vice chairwoman of the Fund and chief operating officer and legal counsel of the GAR Foundation, expressed similar sentiments. She said Mr. Briggs is not deterred even when things don’t go as planned. “It’s his persistent optimism,” she said. “Sometimes when you’re working toward a long-term goal and have to go through 16 decision points, some of us go through six or so and then say, ‘I don’t know about this.’ “Rob adheres to what he believes in. He’s unstoppable,” Ms. Mayer said. Denise San Antonio Zeman, president and CEO of the Saint
authored nine books in her field, received one patent and was a leader in professional organizations such as the Society for Applied Spectroscopy. “I loved my work. I enjoyed everything about science,” Dr. Brown said. “I always wanted to achieve.”
A post-retirement career After retiring in 1989, the ambition that fueled Dr. Brown’s career didn’t subside. “I love golf and bridge and being on a beach, but that could never be all for me,” she said. “Being involved in the world and in things that are meaningful to me is so rewarding. It just makes me happy.” At the suggestion of her husband, Glenn Brown, also a former Standard Oil and BP executive, she began gradually to devote her boundless energy to causes closest to her heart — primarily science, education and the arts. “I’ve known her almost 60 years, and I’ve never seen anyone more efficient than she is,” said Dr. Glenn Brown, himself a committed civic leader. “She’s still working full time on about five different organizations.” In just over 20 years, Jenny Brown has held leadership roles in no fewer than 20 nonprofits and corporations, ranging from the Great Lakes Science Center and Cleveland charter school E Prep to the Cleveland Clinic and Ohio Board of Regents, where she served 13 years, including a year as chairwoman. “Her guidance and counsel helped shape my time on the Board of Regents,” said James Tuschman, a
Toledo attorney and current regents chair. “In terms of higher education, she was probably one of the most eloquent voices advocating investing in research in Ohio. That was one of her crowning achievements.” Dr. Brown’s awards and honors are just as plentiful: the American Chemical Society’s Garvan-Olin Medal for distinguished service by women chemists, the Tribute to Public Service Award from Cleveland State University’s Levin College of Urban Affairs in 2006, and induction into the Ohio Science and Technology Hall of Fame and the Ohio Women’s Hall of Fame. “There are very few women who have the kind of legacy Jenny has,” said the science center’s Dr. Abraham-Silver. “There are plenty of us women who wouldn’t be in the positions we’re in today if there weren’t people like Jenny Brown blazing the path for us to follow.”
The woman behind the bio Dr. Brown’s curriculum vitae
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Giving back Meanwhile, Mr. Briggs’ philanthropic affiliations are numerous. In 1991 he joined the GAR Foundation, of which he has been president since 2006. He became a trustee of the John S. and James L. Knight Foundation in 2002 and was elected chairman in 2010. He is a board member and former co-chair of OneCommunity, and a board member and chairman of Invent Now Inc. — The National Inventors Hall of Fame Foundation. Mr. Briggs also serves on the board of FirstMerit Corp. Among the honors Mr. Briggs has received for his work include an honorary doctorate from BaldwinWallace College, the Distinguished Service Award from the Akron Community Foundation, the Honorary Alumni Award from the University of Akron, and the H. Peter Burg Regional Vision Award. Mr. Briggs is a 2010 recipient of the Harold K. Stubbs Humanitarian Award. “Whatever I’ve accomplished has been with enormous amounts of support and collaboration,” he said. Mr. Briggs lives on a mini farm, where he raises Belted Galloway beef cattle and sells fresh eggs. He has three children and five grandchildren. ■
JASON MILLER
implies an imposing figure, worldly and intimidating. But the reality of her demeanor belies her arm-length bio. She’s petite, well-dressed and friendly, with an easy smile and a twinkle in her eye. Plain-spoken and confident, it’s easy to see why she’s so effective. “I definitely do not approve of having your name on an organization and not working for them,” Dr. Brown said. “I don’t ever ask anyone to do something I wouldn’t do.” After a 60-plus-year professional and philanthropic career, Dr. Brown and her husband are easing away from their load of civic involvements. “Before it was always an automatic, ‘Sure, I’ll do that,’” she said. “I’m probably not going to take on anything new that involves a huge amount of responsibility or time.” But she still has some work to do in curing her automatic-yes reflex. “I just said ‘yes’ again (to a committee chair position) this week,” she said with a laugh, “even after I promised Glenn I wouldn’t.” ■
JOHN COLM Founding director, WIRE-Net By CHRISSY KADLECK clbfreelancer@crain.com
Looking forward
C
onsidered by many to be one of the best executive directors in the city, John Colm has the constitution of a long-distance runner. He’s skilled at navigating a course, ready to take the lead for the right opportunity and does the hard work, day in and day out. As the founding director of WIRE-Net, a well-oiled economic development organization with a mission to strengthen manufacturing to create healthy communities and fuel economic growth, Mr. Colm has been in an industrial rat race for nearly 25 years. At 56, he has been the driving force behind an impressive list of initiatives that has championed Northeast Ohio’s 7,600 manufacturers and drawn national and global recognition and work to the region. “One thing that I care deeply about and believe is that manufacturing is really a critical part of our nation’s future,” said Mr. Colm, who once worked as a press operator at a metal fabricating plant just out of college. “It’s a tremendous asset that unfortunately still doesn’t command the headlines in the way that I believe it ought to.” Since its first full year of operation in 1989 — when it began life as the Westside Industrial Retention & Expansion Network, a group focused on aiding manufacturers on Cleveland’s West Side — WIRE-Net has grown from a budget of $92,890 ($166,469 in today’s dollars) and a staff of three to a projected $2.9 million in 2011 expenses and a staff of 23. “There are lots of projects and programs we’ve had success with over the years, but they were all enabled and powered by our tremendous membership of manufacturing companies,” Mr. Colm said. He said his organization now has more than 300 members that employ more than 44,000 people. “We are their voice and advocate for their issues, and we provide services their leaders want and need, including the need to learn through networking,” Mr. Colm said. “Our members enable great projects, including the new Max Hayes (high school), our new markets and wind initiatives, our physical development and work force training programs.”
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Harlan, founder of Entrepreneurs for Sustainability, who worked at WIRE-Net from 1995 to 2001 before starting her own nonprofit, “is that he not only understands the blocking and tackling that needs to be done on a daily basis to help his constituents — the manufacturers in Northeast Ohio — but he is always looking at what are the future trends and how do we bring those opportunities to the manufacturers in this region.”
JANET CENTURY
Luke’s Foundation, said Mr. Briggs also has the ability to communicate with individuals because of his affable, approachable demeanor. “His personality engenders trust,” she said.
CRAIN’S CLEVELAND BUSINESS
Cleveland schools. “He has championed a really in-depth collaborative process to envision a new academic program for the school and has been directly involved in that day-to-day work of bringing partners to the table that has proven tremendously powerful. He sees it as creating the pipeline that his industry needs.” Lakewood Mayor Michael Summers, an original board member of WIRE-Net, said Mr. Colm also always understood the industrial sector’s role and “its need for tender-loving care.” He credits Mr. Colm’s understanding of the industrial sector and its complex landscape for saving and keeping many jobs and manufacturers in the region.
“There are hundreds of hundreds, if not thousands, of jobs that are still in the industrial West Side of Cleveland that are the result of the work of WIRE-Net led by John Colm,” Mr. Summers said. “He understood that early on and has worked with scores of companies to help them plan ahead to anticipate their facility requirements so they could stay here.” Those who work with him and for him are impressed by his ability to handle the extremely challenging work of running a nonprofit while cultivating a vision and having leftover energy to be on the lookout for the next big thing. “One of the things that I really appreciate about John,” said Holly
Enter the creation in 2007 of the Global Wind Supply Network, which now has more than 1,600 manufacturers serving the North American wind industry. With a hope of replicating the same success, WIRE-Net now is collaborating with regional manufacturing assistance group Magnet to create the New Markets initiative to target other emerging industries such as aerospace, medical devices and equipment, and solar and advanced energy. Cleveland City Councilman Jay Westbrook, who was instrumental in WIRE-Net’s founding and has been active and supportive since, called Mr. Colm “an innovative collaborator with everybody from Ph.D.s to worldclass manufacturers to new trainees running a tool and die machine.” He credits Mr. Colm with making the organization a highly valued and widely recognized asset. “There’s a kind of community notion that manufacturing is just furnaces, oily floors (and) pounding machines,” Mr. Westbrook said. “Through WIRE-Net, we’ve seen very modern tools and technology, computerized design, highly collaborative training programs and something as exotic as appreciative inquiry techniques from the Weatherhead School of Management that are directly brought into the small- and mediumsized manufacturing facilities of Cleveland and Greater Cleveland.” ■
Blocking and tackling That’s humble talk considering that in the last year Mr. Colm led a dynamic group of educators, business leaders, foundations and community partners in joining forces with the Cleveland Metropolitan School District. The goal is to create a plan to better prepare students through the new Max Hayes Career Tech High School — scheduled to open in 2014 — for 21st-century jobs in the manufacturing, construction, transportation and information technology sectors. “John is really one of those innovators who is leading the way to a new way of businesses and schools working together,” said Eric Gordon, chief academic officer with the
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JIM COSSLER
DIFFERENCE MAKERS
MAY 16 - 22, 2011
“People are coming back, and we’re hiring them with our portfolio companies.” – Jim Cossler (below), CEO, Youngstown Business Incubator
CEO, Youngstown Business Incubator By TIMOTHY MAGAW tmagaw@crain.com
J
im Cossler doesn’t spend his Sunday mornings delivering impassioned sermons to Northeast Ohio’s faithful, but he does spend an awful lot of his time spreading the word — the word about Youngstown, that is. As CEO and self-anointed “chief evangelist” of the Youngstown Business Incubator, Mr. Cossler has transformed what once was viewed as a glorified downtown renewal project into a bustling hub of software innovation that has brought millions of dollars and hundreds of new jobs into the region. Mr. Cossler knew Youngstown couldn’t compete with Cleveland for medical device and bioscience companies or with Pittsburgh for robotics technology. Youngstown doesn’t have a major research university or a medical powerhouse such as the Cleveland Clinic that spins off new companies ever year. Still, that’s what makes the city prime real estate for software development. Location isn’t what makes a software company successful, Mr. Cossler said, but rather the brainpower a company has in place. “There isn’t a software company anywhere on the globe that will tell you its front door is rushed every morning by users looking for the help desk,” Mr. Cossler said. “If a customer says it’s irrelevant where the software is coming from, why can’t it come from Youngstown?” When sharing Youngstown’s story, Mr. Cossler doesn’t focus on the now-abandoned steel mills that once propelled the region’s economy, but rather on the opportunities that
exist in the Mahoning Valley for burgeoning software companies. “People are actually excited to come back now,” he said. “People are coming back, and we’re hiring them with our portfolio companies.” The eight companies housed at the incubator’s downtown campus brought in more than $60 million last year in global software sales, and Mr. Cossler said incubator companies have a “real shot” at bringing in $100 million in sales this year. “That’s $60 million in new dollars that came into Ohio and Youngstown,” he said. “They created jobs, bought houses, bought cars, paid for restaurant tabs.”
Cooperation is key Starting each spring, Mr. Cossler organizes cookouts outside the incubator, but he offers one caveat for those participating: He doesn’t want to see you talking to anyone from your own company. “The day you’re unwilling to help others, we’ll kick you off or graduate you from the incubator,” Mr. Cossler said. “You just tell me what you want — I’ve got somebody seasoned in the field and willing to sit down with you.” That sharing of knowledge and resources is what has made the incubator successful, said Mike Broderick, CEO and co-founder of Turning Technologies, one of the incubator’s portfolio companies that has boomed over the last few years and brings in about $40 million in annual revenue. “He’s enthusiastic, and he’s a real visionary for what he hopes to see here,” Mr. Broderick said of Mr. Cossler. “You know, he’s a little rough around the edges, but
By CHUCK SODER csoder@crain.com
I JANET CENTURY
he’s a smart guy who’ll tell you clearly and without any sugarcoating how he sees it.” For a person with a degree in philosophical literature, Mr. Cossler seems to have taken to the business world quite well. Those who know him say he has an eye for identifying the companies that will succeed. “To navigate those waters in what is undoubtedly a cutthroat and very competitive field and never lose sight of his commitment to this city and this area, I think is something he brings that is invaluable,” Youngstown Mayor Jay Williams said. U.S. Rep. Tim Ryan, who has an office in the incubator, said Mr. Cossler was just what Youngstown needed — an honest leader who asks people to check their egos at the door. “The success is there, and it works,” Rep. Ryan said. “Youngstown is the comeback city. You can say what you want about other communities, but no one has been dealt the negative hand that Youngstown has been dealt over the last 30 years.”
More than a job Formerly senior vice president for corporate services with the Youngstown/Warren Regional Chamber, Mr. Cossler says something about startup companies always has intrigued him. Helping materialize the next great idea while simultaneously working for the betterment of the region, he said, has made his job with the incubator worthwhile. “I love passionate people. You cannot be successful in a startup
without being passionate,” he said. “I like people who are willing to say, ‘I’m going to pursue this dream.’” Mr. Cossler’s latest “evangelizing” has focused on a company called via680, which is located on the fourth floor of the incubator. Without prompting, Mr. Cossler took to a nearby whiteboard to illustrate the company’s blossoming online communication platform much like a coach would plot an offensive formation for his football team. That intensity has translated into every aspect of his job. Those who work with Mr. Cossler say he doesn’t play favorites and is willing to help anyone with a good idea. It’s not about possessing the right business pedigree, but rather the idea that could help transform Youngstown. Mr. Cossler, for one, took John Slanina under his wing while the latter was in graduate school and was working on an economic development report about the city. After leaving Georgia Tech and finishing up his graduate work at the Delft Institute of Technology in the Netherlands, Mr. Slanina said Mr. Cossler welcomed him back to the city with open arms. Now a senior analyst with Revere Data, a financial information service provider that has an office in the incubator, Mr. Slanina said Mr. Cossler isn’t afraid to get a little dirty while doing his job. Each morning, Mr. Cossler gets there early and sweeps outside the incubator’s complex and picks up every cigarette butt. “Jim’s not only willing to work with potential clients and people and staff, but also willing to put in the elbow grease to make the place
n the eyes of OneCommunity president Scot Rourke, Lev Gonick is great because he dares to be — and because he encourages others to do the same. Since arriving 10 years ago at Case Western Reserve University, Dr. Gonick has transformed how the college uses information technology. He also has pushed to make sure Northeast Ohio as a whole is plugged into a fast Internet connection, which he says is key to ensuring the region remains competitive with the rest of the world. In the process, Dr. Gonick — who is chief information officer and vice president of IT services at CWRU — has gained a reputation as a thought leader in the fields of IT and education.
“Lev has been one of the most inspiring leaders to have come into Cleveland in the entire 43 years I’ve been associated with Case.” – Marv Schwartz, chief scientist, Case Connection Zone It was Dr. Gonick who originally proposed the idea behind OneCommunity, a Cleveland-based organization that provides highspeed Internet access to government agencies and nonprofits such as schools and hospitals, as well as other IT services. Dr. Gonick suggested tapping into unused fiber-optic cables that telecommunications companies installed throughout the region during the 1990s, before the telecom bubble burst. He then helped pull together the network of people and organizations — including Mr. Rourke — that worked to launch the nonprofit in 2003. It today serves more than 1,000 organizations. Mr. Rourke met Dr. Gonick about 10 years ago, while exploring the idea of moving to Cleveland from Chicago — a move Mr. Rourke was hesitant to make. He said Dr. Gonick was one of a few people who got him excited about Northeast Ohio’s high-tech potential, which helped inspire him
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LEV GONICK Chairman emeritus, OneCommunity; chief information officer, Case Western Reserve University to move here and stay here. â&#x20AC;&#x153;Heâ&#x20AC;&#x2122;s always thinking big, and we need more people like that around here,â&#x20AC;? Mr. Rourke said.
Dr. Gonick over the years has worked on a few other big-picture projects that, like OneCommunity, revolved around the idea of making the Internet more accessible. Shortly after arriving at CWRU, the now-52-year-old Beachwood resident helped launch a network that provides wireless Internet access on the collegeâ&#x20AC;&#x2122;s campus and in surrounding areas. More recently, he started the Case Connection Zone, a research project that provides ultra-fast Internet connections to about 100 homes on two streets near the university. Researchers are using the pilot project to get a sense of how fiber-optic Internet connections â&#x20AC;&#x201D; which are many times faster than cable and phone line connections â&#x20AC;&#x201D; can improve peopleâ&#x20AC;&#x2122;s lives. Northeast Ohioâ&#x20AC;&#x2122;s economic future is â&#x20AC;&#x153;directly tiedâ&#x20AC;? to its ability to take full advantage of the Internet and other new technologies, Dr. Gonick said. â&#x20AC;&#x153;We need to be leveraging those technologies, because our competitors are,â&#x20AC;? he said. Though never satisfied to simply work within the walls of a university, most of Dr. Gonickâ&#x20AC;&#x2122;s time is spent managing the IT infrastructure at CWRU. Under his leadership, the IT services division has replaced dozens of software programs used by different university departments with a single enterprise resource planning system. Dr. Gonick also has pushed to make IT more prevalent in the universityâ&#x20AC;&#x2122;s classrooms and labs, whereas it previously had been used mostly for administrative purposes.
always big into IT. He grew up in Canada near the University of Manitoba, where his father taught economics. During high school, he met his wife, Barbara, an Ohio native who lured him to Ohio State University. While studying for his bachelorâ&#x20AC;&#x2122;s in political science, he also conducted survey research using the universityâ&#x20AC;&#x2122;s PolyMetrics Lab, which sparked his interest in technology. That interest grew as he began teaching classes on international affairs in the late 1980s. Incorporating black and white images, audio recordings and other multimedia elements into his presentations helped him engage students in discussions, he said. â&#x20AC;&#x153;I would use technology as a hook,â&#x20AC;? said Dr. Gonick, who earned a masterâ&#x20AC;&#x2122;s in world politics from the State University of New York at Binghamton in 1983 and a Ph.D. in international political economy from York University in Toronto in 1992. Dr. Gonick in the 1990s began using early online tools to teach classes from afar. For instance, in 1993, while teaching political science at Wilfrid Laurier University in Waterloo, Ontario, a sabbatical took him to Arizona State University, where he taught an online seminar on international affairs from his garage in Scottsdale. â&#x20AC;&#x153;I was one of the original cyber profs,â&#x20AC;? he said. That work caught the attention of California State Polytechnic University in Pomona, where he spent five years as dean of instructional technology and academic computing. In 2000, he took a position as chief technology officer at California State Universityâ&#x20AC;&#x2122;s Monterey Bay campus. Soon enough, though, his Ohio-born wife started encouraging him to look for a position closer to home.
A work in progress
A thinker, a leader
Making connections
Dr. Gonick, however, was not
Mark Henderson is glad Dr.
Gonick chose CWRU. Mr. Henderson, chief operations officer for the universityâ&#x20AC;&#x2122;s information technology services division, said Dr. Gonick provides his staff with the freedom and support they need to do their jobs. He is â&#x20AC;&#x153;one of the original thinkers in this space,â&#x20AC;? said Mr. Henderson, who served with him on corporate advisory boards for both Cisco Systems and Dell. And he doesnâ&#x20AC;&#x2122;t just come up with big ideas â&#x20AC;&#x201D; he also knows how to execute them, said Marv Schwartz, who is chief scientist for the Case Connection Zone. â&#x20AC;&#x153;Lev has been one of the most inspiring leaders to have come into Cleveland in the entire 43 years Iâ&#x20AC;&#x2122;ve been associated with Case,â&#x20AC;? said Dr. Schwartz, who earned his Ph.D. from the school in 1973 and is an adjunct professor in the schoolâ&#x20AC;&#x2122;s computer science department. Dr. Gonick, who has two adult daughters, Sari and Mya, studied in India and Africa in the mid-1980s and still enjoys traveling. He also collects wine. Looking ahead, as he is known to do, Dr. Gonick said he expects businesses wonâ&#x20AC;&#x2122;t be using personal computers for long, given the rise of smart phones, tablet computers such as the iPad and â&#x20AC;&#x153;cloud computing,â&#x20AC;? which refers to the delivery of computing services, such as data storage and processing, via the web. He also said IT executives need to make their computer networks more environmentally friendly, noting that computers account for 20% of CWRUâ&#x20AC;&#x2122;s electric bill. While â&#x20AC;&#x153;going greenâ&#x20AC;? may be a fad now, soon enough, it will be required, he said. â&#x20AC;&#x153;We have a very short window between fad and regulation to get it right,â&#x20AC;? he said. â&#x2013;
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Baunach continued from PAGE 11
and remains a board member. In speaking to the difference Ms. Baunach has made, Dr. Church cited the role NorTech has played in the economic transformation of Northeast Ohio. â&#x20AC;&#x153;Obviously, that transformation is impacting everyone across the region,â&#x20AC;? he said.
Family trendsetter Ms. Baunach credits her passion for entrepreneurship, in part, to her childhood, when at night her father and brother would discuss the foundry businesses they ran around the kitchen table in their Gaylord Avenue home.
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Yet her passion about the work of building the technology component of Northeast Ohioâ&#x20AC;&#x2122;s economy has been contagious, Mr. Tyrrell said. While â&#x20AC;&#x153;thereâ&#x20AC;&#x2122;s still more work to be done,â&#x20AC;? Ms. Baunach is convinced that if Northeast Ohio sticks to this work for another five, 10 or 20 years, it will have a story to tell similar to that of Research Triangle Park in North Carolina, one of the more prominent high-tech, research-anddevelopment centers in the country.
Going for a spin Ms. Baunach now is president emeritus of NorTech. But at age 62, Ms. Baunach, who married her husband, Bruce, on the campus of Wittenberg University and now has two grown daughters, isnâ&#x20AC;&#x2122;t ready to retire completely. Earlier this year, she worked as
â&#x20AC;&#x153;Sheâ&#x20AC;&#x2122;s helped to place technology and innovation squarely on everybodyâ&#x20AC;&#x2122;s radar screen.â&#x20AC;? â&#x20AC;&#x201C; Joe Roman, president and CEO, Greater Cleveland Partnership Hers was a blue-collar family, and she was the first to go to college. Her father, the late Ray Champion, never appreciated the value of education, Ms. Baunach said, and stopped at eighth grade. He later learned the foundry trade from German immigrants. She learned from him the tenacity to stick things out and ultimately earned three degrees. Ms. Baunach never used ego or loud demeanor to compel people to rally for the cause, said many who know her. â&#x20AC;&#x153;She was not an attention grabber; she was not an attention seeker,â&#x20AC;? said Tom Tyrrell, a serial entrepreneur who worked with Ms. Baunach at NorTech and is now managing director of Collaborx, a business collaboration catalyst in Bath. â&#x20AC;&#x153;It wasnâ&#x20AC;&#x2122;t her way or the highway.â&#x20AC;?
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Cuyahoga Countyâ&#x20AC;&#x2122;s interim economic development director, drafting an economic development plan. Now she has turned her focus to culminating her career with a â&#x20AC;&#x153;capstone projectâ&#x20AC;? â&#x20AC;&#x201D; and she believes she has found it. This May, Ms. Baunach joined two women entrepreneurs as a partner in a company they launched a year ago, Ener-G Solution Partners. Sheâ&#x20AC;&#x2122;ll be providing strategic guidance to the virtual company, which provides renewable energy alternatives, including solar panel systems, to public and private entities. Her goal is to one day have all of the energy alternatives manufactured in Ohio. â&#x20AC;&#x153;I am so excited about it,â&#x20AC;? she said, noting she always said sheâ&#x20AC;&#x2122;d spin off a company one day. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s taken me 28 years to do it, but Iâ&#x20AC;&#x2122;m going to do it.â&#x20AC;? â&#x2013;
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DIFFERENCE MAKERS
DAN T. MOORE
years Mr. Moore’s junior. He’s known Mr. Moore since he was a kid and he even dated Mr. Moore’s daughter, Wendy. He runs a company called Arborwear in Newbury, which sells specialized outdoor clothing for tree climbers and other hard-working or hardcharging types. Mr. Weber says he owes a good deal of his success to Mr. Moore’s tutelage. “Aside from my father, he’s probably my earliest mentor,” Mr. Weber says. Mr. Weber says he learned plenty about business from Mr. Moore — how to take an idea and turn it into a business, how to deal with financing and raising investments, how to run a business once it was up. But Mr. Moore also taught Mr. Weber something more important. “One of the biggest things he did for me was he always, no matter what the situation, found a way to make something work. He gave me the belief that everything is possible,” Mr. Weber said. Mr. Moore did so with a combination of encouragement and example, beginning right after Mr. Weber finished high school. “He knew I knew how to run a chainsaw, so he asked me to come to his house in Cleveland Heights to help him with something. When I got there he was about 80 feet up in a maple tree hanging out over the middle of the street!” Before that day was over, Mr. Moore had convinced Mr. Weber not only to think about going into the tree care business, but also to do it. MARC GOLUB “That day, he helped me build a shopping list in terms of gear to start my own tree care business,” Mr. Weber recalls.
CEO, Dan T. Moore Co. By DAN SHINGLER dshingler@crain.com
T
he popular story about Dan T. Moore and why he’s made a difference in the world has been told before: In 1997, Mr. Moore’s 29-year-old daughter Wendy was killed doing something that both she and her father loved — skiing. She was killed, not wearing a helmet, by a traumatic brain injury. The following year, Mr. Moore founded a company called Team Wendy, a memorial to his daughter dedicated to ensuring that fewer people would suffer her fate. Team Wendy’s mission was to build better helmets, as well as to raise awareness of the need to wear them. Thirteen years later, Team Wendy not only has designed successful recreational helmets — and played a role in their increased adoption — but it now also makes the padding for every helmet issued by the U.S. military. “You can’t go into battle for the United States without our padding,” Mr. Moore proudly states. It’s no small accomplishment. Nor is it without meaning, including to Mr. Moore, who still fights a tear when he discusses the genesis of that company. No doubt, Mr. Moore’s innovative new helmet designs have saved a lot of lives, probably of both soldiers and civilians who will never know his name. But that’s far from the entire story about how Mr. Moore makes a difference. There’s also the standard “community involvement” stuff. Many are aware of Mr. Moore’s support of the Cleveland Metroparks, resulting in his being named a parks commissioner this year. Finding a list of Mr. Moore’s other board positions is also easy enough — they range from the Cleveland Clinic Foundation to the Harvard Business School Club. He’s on 12 boards. They represent a large contribution to the community, but only a small part of Mr. Moore’s story.
Talkative, to a point Those who have known him a
little better, or longer, might talk about his success as a businessman. He formed his first companies in the early 1970s, after becoming fed up with the rigid, inside-the-box thinking he found in corporate America at his first real job at Standard Oil Co. of Ohio, the predecessor of BP. Today, his business card lists 14 companies and he owns them all under his umbrella company, Dan T. Moore Co. He’s rich, but he doesn’t like to talk about it. “Are you on the Forbes list?” asks this reporter, referring to the magazine’s list of richest Americans. “Oh, of course not,” replies Mr. Moore. “Should you be? Do we just not know?” “No, but we don’t need to get into that.” He’ll talk about successes, but in terms of technological accomplishments or personal achievements, never in terms of money, the way many other business people do. He beams when he pulls out a U.S. Army helmet and shows the padding inside that he developed. He’ll light up even brighter when he talks about how it was developed and how it works. He’ll even talk about how much padding he might have sold in approximate terms. (There are about 2 million helmets in use by the U.S. Army today.) Then, it stops again. “You must make, what, $5 apiece on these?” he’s asked. “That’s not important,” he says. “More? At least $3, right?” He only smiles and says, “It’s a good business.” The point being, not that Mr. Moore is rich, but that money is the scorekeeper in the world of business, and when people such as Mr. Moore score, others benefit. His companies create jobs, support untold numbers of lawyers and accountants, pay local taxes and generally support the local economy. They’re still not the full story of
MAY 16 - 22, 2011
“One of the biggest things he did for me was he always, no matter what the situation, found a way to make something work. He gave me the belief that everything is possible.” – Bill Weber, founder, Arborwear Mr. Moore, though.
A mentor out on a limb To get the real story of how Mr. Moore has perhaps made the most difference, you have to go beyond the Mal Mixons and Toby Cosgroves
of the world. People like these sing his praises, but they did not necessarily need him to make a big difference in their lives. To get the real story you have to talk to someone such as Bill Weber. Mr. Weber is 43 — nearly 30
One of hundreds Later, Mr. Weber had an idea to make sandals out of a thermoelastic foam that a person could heat up, form to their foot, and then wear. “But I’ve got no experience,” Mr. Weber told Mr. Moore. “Have you ever worn a pair of sandals?” Mr. Moore asked. “Yes,” Mr. Weber replied. “Then that makes you and Jesus Christ just about the foremost experts,” Mr. Moore shot back. Needless to say, Mr. Weber charged ahead into the shoe business, with some technical help from Mr. Moore. It didn’t work, but it didn’t matter — thanks in part to Mr. Moore, Mr. Weber was already past the point of letting a little thing such as failure get him down. The point, Mr. Weber says, is that Mr. Moore has inspired him, counseled him and generally guided him in the right direction over the years, building in his young protégé the confidence he needed to, if not succeed, at least try. And Mr. Weber is not alone. “There are hundreds of guys like me,” he says, referring to Mr. Moore’s willingness to help less experienced entrepreneurs. That might be the way in which Mr. Moore has made the greatest difference in the world. So far, at least. After all, Mr. Moore is only 71, far from ready to take it easy, he’s still riding mountain bikes and motorcycles. With a helmet, of course, as a tribute as well as a precaution. ■
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DIFFERENCE MAKERS
MAY 16 - 22, 2011
CRAIN’S CLEVELAND BUSINESS
ROBERT C. SMITH President and CEO, Spero-Smith Investment Advisers Inc. By JAY MILLER jmiller@crain.com
BOB SHEARER Chairman, co-founder and CEO, Shearer’s Foods Inc. By JOEL HAMMOND jmhammond@crain.com
B
ob Shearer says any entrepreneur must identify a need, then develop a product or a business that would satisfy that need. His need 37 years ago in the Canton area was simple: better-tasting potato chips. And it’s safe to say Shearer’s Foods Inc. has met the criteria. Since the day in 1974 when he and his brother, Tom, bought the lone truck of a potato chip delivery man, Mr. Shearer has made it his goal to leave a lasting impression on his community and his industry. He offers his experience to students at Lake Erie College, where he sits on the board of trustees. He also serves on the board at Pegasus Farm, a therapeutic riding center dedicated to helping children and adults with disabilities. And his company is an industry leader in sustainability, setting a new infrastructure standard with its Massillon plant, which is the first snack food manufacturing plant to be platinum LEED certified by the U.S. Green Building Council. LEED stands for Leadership in Energy and Environmental Design. “We have a duty as CEOs to reach out,” Mr. Shearer said. “I feel a responsibility to make a difference.” The company employs 1,633 after starting with four in 1974; 885 are located in Stark County. It began business with a 2,500square-foot operation in Brewster, and now calls 200,000 square feet home in the same small town, about 15 miles southwest of Canton. All because of a bad bag of chips. “My parents and grandparents were in the grocery business, and the fellow who delivered chips to the store was retiring,” Mr. Shearer said. Mr. Shearer said he and his brother “bought his truck, and didn’t like those chips. We thought, ‘We can make our own better.’”
That green feeling The company now produces and sells 37 different chips, pretzels, puffs and other products, and since 2007 has added a 300,000-squarefoot distribution center in Navarre; plants in Lubbock, Texas, Bristol, Va., and Hermiston, Ore.; and a pretzel factory in Canonsburg, Pa. The new Millennium plant in
Massillon is the crown jewel, though, and has reduced the company’s energy and water usage by 30% and oven gas usage by 47%. The company estimates those features hiked the cost of building the plant by 8% to 10%. After hearing Jeff Immelt, CEO of General Electric Co., speak three years ago, Mr. Shearer approached Margie Flynn, principal and co-owner of BrownFlynn, a sustainability consulting firm in Highland Heights. Ms. Flynn said Mr. Shearer had a clear understanding that his company, simply by the nature of what it does, affects the environment. And he wanted to minimize those effects. “He said, ‘We cannot continue to do business as we are today,’” Ms. Flynn said. “There was no question in my mind he would go back to the company and take sustainability to the next level. He wants to do what is right for his community and the future of his business.” In Ms. Flynn’s experience, that trickles down to a company’s bottom line. Customers increasingly are focused on brand reputations and want to do business with responsible companies, Ms. Flynn said. In addition, companies that follow sustainable business practices have an impact on the personal lives of their people. “It has a domino effect, and our employees learn about sustainability,” Mr. Shearer beams. “We’ve affected their lives.”
Snack Food Association. Jim McCarthy, the group’s current president and CEO who worked directly with Mr. Shearer, said the association made significant changes at Mr. Shearer’s suggestions, and all have improved the industry group. Those changes included staff adjustments and significant cost savings on office space in high-rent Northern Virginia, each contributing to higher profitability. “He’s a brilliant leader,” Mr. McCarthy said. “There aren’t a whole lot of opportunities in this industry. He did a wonderful job of entering and becoming very successful.” As for the future, Mr. Shearer, 60, and his wife, Melissa — the company’s vice president of communications — have no children in line to take over. Instead, a “great young management team” is in place, he said. “I’ll always be involved somehow,” he said. “Once it gets in your blood, it’s hard to get out.” ■
about,” he said. “I have a strong calling for public service and for helping the general public, and I believe (public) policy can make a difference.” One of the area’s leading personal financial counselors — his firm has more than $265 million under management — Mr. Smith has played key leadership roles in changing the direction of the Cleveland-Cuyahoga County Port Authority, the Council of Smaller Enterprises and the area’s regional chamber of commerce, now the Greater Cleveland Partnership. He also has been a trusted adviser to Cleveland Mayor Frank Jackson since the former councilman decided to make his first run for mayor in 2005. Mr. Smith’s financial counsel has been sought as well. He is chairman of the investment committee of the board of the Ohio Bureau of Workers’ Compensation and a member of the investment committee of the Cleveland Foundation. He’s also chair of the human resources committee of United Way Services of Greater Cleveland, board chairman of his alma mater, Ohio Northern University, chairman See SMITH Page 18
JESSE KRAMER
RUGGERO FATICA
R
obert C. Smith understands money. The president and CEO of Spero-Smith Investment Advisers Inc. in Beachwood has spent more than 30 years advising high net-worth individuals and managing their investments. But he also values civic involvement. So, for about the last 20 years, the 58-year-old Mr. Smith has been working to make a difference in the way nonprofit and civic organizations manage their destinies and their money. “I’m involved in things that I care
Congratulations to our Difference Maker and Executive Director
Thomas Yablonsky!
Lending his expertise Lake Erie College president Michael Victor met Mr. Shearer four years ago when the latter gave a speech to LEC students after receiving Ernst & Young’s Northeast Ohio Entrepreneur of the Year award. Mr. Shearer last May received an honorary doctorate from the school, and he remains active on its board and in its Center for Entrepreneurship. Mr. Victor said Mr. Shearer provides inspiration for students with his direct approach. “He is a gifted entrepreneur; he sees an opportunity and seizes it,” Mr. Victor said. “Students are enamored with him. He’s a magnetic speaker and keeps in touch with them after he speaks to them.” Mr. Shearer also has made his mark on the snack food industry, through his work six years ago as chairman of the Arlington, Va.-based
17
Join Historic Gateway Neighborhood and Historic Warehouse District in making a difference in Downtown Cleveland.
Historic Downtown Cleveland Luncheon Forum Thursday, June 23, 2011 Sammy’s Metropolitan Ballroom
Featured Speaker: Robert F. Gregory
President, Detroit 300 Conservancy: Campus Martius Park $65 per person, Corporate Table Sponsorships Available
216-344-3937 or www.warehousedistrict.org
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CRAIN’S CLEVELAND BUSINESS
DIFFERENCE MAKERS
MAY 16 - 22, 2011
TOM YABLONSKY Executive vice president, Downtown Cleveland Alliance; executive director, Historic Warehouse District and Historic Gateway Neighborhood groups By STAN BULLARD sbullard@crain.com
I
n the early 1970s, Tom Yablonsky worked evenings part time at the main branch of the Cleveland Public Library. The Parma teenager often spent his dinner break at an eatery across the street at The Arcade. It was there that the St. Ignatius High School student fell in love — not with another person, but with the 1890-vintage Arcade and old buildings in general, as well as with Cleveland’s downtown. His romance flared at a time when both were being left in the dust because most business and real estate energy was focused on suburban development. Decades later, Mr. Yablonsky helped engineer the $60 million adaptive reuse of the Arcade as a Hyatt Regency Hotel. Experts say the work reversed the Arcade’s slide toward the wrecking ball. Years after his youthful desire to explore things became fixed on downtown, Mr. Yablonsky has developed a keen knowledge of Cleveland’s history and is an indefatigable advocate for rejuvenating the center city. His approach is to use bricks-and-mortar relics from Cleveland’s former glory as a foundation to rebuild. Mr. Yablonsky’s titles reflect some of the scope of his historic preservation efforts. He likes to say he has three jobs — two paid and one unpaid. He serves as executive vice president for the Downtown Cleveland Alliance, the city center’s business improvement district, where he assists redevelopment projects. He also serves as executive director of the two-person shared staff of the Historic Warehouse District and Historic Gateway Neighborhood local development corporations.
Smith continued from PAGE 17
of ideastream, the nonprofit that runs public broadcasters WCPNFM and WVIZ-TV, and a member of the board of Motorists Mutual Insurance Co. of Columbus. He started his career in civic life in 1993, serving for two years as president of the board of the MakeA-Wish Foundation of Northeast Ohio; thereafter, he served a twoyear term as chairman of COSE. Mr. Smith’s longtime associate, Mimi Lord, chief investment officer and senior vice president of SperoSmith, believes her boss genuinely cares about the region and its success and the welfare of its people. She also believes he brings unique talents to the roles he has chosen to play. “He has a special skill of leading group discussions and helping groups fully air the issues and come to very productive decisions,” she said. “He’s very respectful of everyone and he values peoples’ contributions.”
The unpaid job is as a board member of the Ohio Canal Corridor, a nonprofit group Mr. Yablonsky helped found 25 years ago. The group played a key role in securing federal designation of the route of the former Ohio Canal — from Dover, Ohio, to Cleveland — as a national heritage trail in order to tell the region’s history in the nation’s development. All of Mr. Yablonsky’s formal titles aside, Cleveland architect Jonathan Sandvick said the most accurate title he’s heard for Mr. Yablonsky is “yenta” — Yiddish for matchmaker. “He brings the right mix of people to the marriage to get a project done, whether it’s developers or expertise or funding sources,” said Mr. Sandvick, a past chairman of the Historic Warehouse District group and longtime colleague of Mr. Yablonsky. “He mixes the dynamics of personality and culture,” Mr. Sandvick said. “He wants projects to happen to his very core. He’s helped people who have worked with him make a lot of money. He’s done wonderful things for the city.”
He’s a believer Real estate developer John Ferchill, chairman of the Clevelandbased Ferchill Group development firm, describes Mr. Yablonsky as “very talented.” “He’s one of the best people I’ve met nationally who works to get (real estate projects) done,” Mr. Ferchill said. Mr. Ferchill and others laugh when asked if Mr. Yablonsky might have fared better financially by trying his own hand at development rather than by coddling projects at nonprofits. “He believes in that stuff,” Mr. Ferchill said of redeveloping buildings to save them. “I do it to make
Man about town Mr. Smith has had ample opportunity to use his skills in some of the most important decisions made in the civic community in the last decade. The most high profile of his civic jobs has been at the Port Authority. In 2½ years on the board, Mr. Smith, along with board member Anthony Moore, changed the direction of the agency, forcing the resignation of Port Authority president Adam Wasserman and scrapping a costly — too costly, Mr. Smith believed — $500 million plan to move the docks and redevelop the lakefront north and west of Cleveland Browns Stadium. Shortly before he joined the board, the maritime agency had launched its plan to move the docks, and in Mr. Smith’s first months on the board Mr. Wasserman went about adding staff and hiring planning and development consultants without presenting a financial plan to finance the move. “They created the vision and it was a big vision and it had great
MARC GOLUB
money. He’s in love with the buildings.” Mr. Yablonsky said he lacked the cash to be a developer. The son of an airline ground crewman at Cleveland Hopkins International Airport, his interest in planning led him to earn a master’s degree in public administration at Indiana University-Bloomington. After stints in public administration in Indiana, a job interview question in 1982 about where he wanted to be in 10 years made him realize he wanted to be in Cleveland. He came home to do paid and volunteer planning studies for several groups and eventually found his niche as the Warehouse District’s full-time executive director in 1986. His style is low-key and rumpled. Although he works with property and business owners and others who drive flashy cars, the 55-yearold Mr. Yablonsky talks proudly of a Chrysler van he has coaxed to 223,000 miles. His first new car is a Toyota Corolla he leased in 2010 because the terms were so sweet. He and his wife, Mary, live in a house on West Boulevard in Cleveland, which dates from 1924, where they raised two children — Elise, 25, and Alex, 22. Mr. Yablonsky’s skills are
multifaceted. He can be technical in nature, promoting creative approaches to redevelopment and devising financial incentives geared to historic preservation. His other ability might be overlooked but is equally crucial: motivating people. Mr. Yablonsky also has the ability to attract cadres of volunteers to do everything from serve on Warehouse District and Gateway boards to acting as tour guides at fundraisers. Observers attribute that skill to an infectious love for the community and its history.
appeal as a vision,” Mr. Smith said. “But when you had to start connecting the dots and get from A to Z to make it happen, I became very suspect and I just lost confidence that the management could do it.” It took nearly two years for Mr. Smith and Mr. Moore to win over a majority of the board and scrap the plan. Now he’s chairman of the Port Authority and is charting a course that has the docks staying where they are, while encouraging a modest redevelopment of part of the lakefront. Mayor Jackson appointed Mr. Smith to the Port Authority board in 2007 after working with him on living wage legislation, which passed in 2000. They were on opposite sides on that issue. Mr. Smith, representing COSE and the Greater Cleveland Growth Association, opposed the law, which requires city contractors to pay a higher minimum wage than is set by state and federal law. “Even though we didn’t agree on the legislation, we got to know each other and learned to respect each other,” Mayor Jackson said
recently. “From then on, whenever there was something I had a question about that was related to a business or wanted to know what business thought about something, I would ask him.” When Mr. Smith was chairman of the Growth Association in 2003 and 2004, he helped broker the merger of the business advocacy group with Cleveland Tomorrow, a CEO-led group, and the Greater Cleveland Roundtable, a group pushing for greater minority participation in the regional economy. The task was to create an organization that spent less on managing the organization and more on creating jobs and nurturing businesses.
Idea man Mr. Yablonsky’s vision attracted Tim Donovan, executive director of the Ohio Canal Corridor since 1990, to that cause. Mr. Donovan, a speechwriter for former Cleveland Mayor George Voinovich, was working as a writer and video producer in 1986 when he pitched Mr. Yablonsky on doing video on the Warehouse District. Mr. Yablonsky told Mr. Donovan about his ideas for redeveloping the Warehouse District, then said, “If you like that big idea, here’s another one I’m working on.” After Mr. Yablonsky told Mr. Donovan about the concept of the
Don’t just listen Mr. Smith said among those who have guided him as he began to play a larger role in civic affairs were the late Richard Shatten, who had been executive director of the Cleveland Tomorrow, and Carole Hoover, a former president of the Growth Association. After he confided in Mr. Shatten several observations he had made
canal corridor, Mr. Donovan realized its opportunities and began working on the cause. In 1983, Messrs. Yablonsky and Sandvick often devoted lunchtime to wandering the area northwest of Public Square that had just been listed on the National Register of Historic Places as the Warehouse District. Only six buildings in the neighborhood were fully occupied. They dreamed of what could be done to restore boarded-up former garment factories and hardware warehouses. Since then, 50 buildings have been renovated to lofts and offices and as restaurants and nightspots. The Gateway neighborhood near the ballpark and arena has enjoyed a similar rebirth. Now, Mr. Yablonsky is on to new tasks. He’s working on rejuvenating retailing on Euclid Avenue. He also is supporting development of the Canal Basin in the Flats as a park, noting residents seek amenities that urban pioneers a generation ago did not. He also is excited about the Warehouse District’s recently won role to provide services to aid historic preservation and adaptive reuse of buildings in the downtrodden Flats. “I don’t believe in a big-bang theory of development,” Mr. Yablonsky said. “Success in cities is incremental.” ■
at one civic meeting but hadn’t voiced, Mr. Shatten chastened him. “Bob, you should have shared those observations,” Mr. Shatten told him. “You don’t have the luxury of just going and listening. You have to participate.” From Ms. Hoover, now president of the eLearningPartnerships, an online education and training company, he learned how to take his observations and ideas and build consensus. When he was rising in the ranks of the board of COSE, Ms. Hoover, whose father had been a confidant of the civil rights leader Martin Luther King Jr., passed on to Mr. Smith advice she had learned from her father and Dr. King. “At first, Dr. King was fighting to get a seat at the table,” he recalled of Ms. Hoover’s advice. “Then he got a seat at the table but realized he didn’t have any influence. “Then he realized that if you’re sitting at the table, people don’t care what chair you’re sitting in — they care that you care more about the table than the chair you’re sitting in.” ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Canton: Vehicle inventory moves fast
Charter: More schools planned continued from PAGE 3
continued from PAGE 3
hit with the (automaker) bankruptcies, but it turned out to be a plus for us,” said Doug Waikem, president of Waikem Auto Group in Massillon, which along with nearby Canton makes up much of metro Stark County. Mr. Waikem says sales are up 47% in the first four months of 2011 versus the like period in 2010, and profits are up by 78% as his per-unit cost of sales goes down with each bump in volume. He’s selling about 500 cars a month so far this year from 40 acres of lots with about 1,500 cars on them at any one time, 1,000 of them new. Mr. Waikem, like other dealers in the county, lost some of the nameplates he’d been selling in the wake of the Big 3 restructurings. In his case, gone are a GMC truck franchise, as well as a Chrysler Jeep dealership. He fought the losses at first, taking the original equipment manufacturers to arbitration. That move got him more money, but he still was disappointed to lose the dealerships, he said. Not anymore. “There were too many dealers, and we weren’t making money,” Mr. Waikem recently conceded. Without a reduction in the number of competitors, dealers would have had to fight harder over a shrinking pie. Based on figures from Automotive News, the Canton-Massillon market saw retail vehicle registrations fall to 11,592 in 2010, down 22% from 14,879 in 2007. For dealers that lost out, the closings were a bitter pill. For others who stayed in business, it was good medicine. Mr. Waikem, for one, was not exactly left with nothing. He retained the seven brands he carries today — Ford, Subaru, Hyundai, Kia, Nissan, Honda and Mistubishi. He attributes his current growth to those brands picking up market share, as well as to not competing with as many dealers. High gas prices also are helping, he said, because most of his remaining brands offer more fuel-efficient vehicles than some U.S. automakers. “When you’re stuck with Honda, Ford, Nissan and Subaru, it’s not all bad,” he said. Stark County is varied in both its
geography and demography. However, from the new residential developments on the north end of the county, through Canton and onto the dairy farms and cornfields that make up much of the rest of the county, surviving dealers say business is good and improving.
Mourning Mercury no more Go east down the old Lincoln Highway just a couple miles, to Canton, and Downtown Ford owner Brad Black strikes a note of optimism right in harmony with Mr. Waikem, his chief rival. Sales and profits are up sharply at his dealership, too, he said. Mr. Black gained new dealerships in recent years, buying out nearby Ganley Lincoln Mercury in 2007 and ending up with what was left of the inventory of Lincoln Way Motors, another Lincoln-Mercury dealer, after Ford closed it in 2008. Mr. Black still disagrees with Ford’s 2010 decision to discontinue Mercury, but says his Lincoln sales have exceeded expectations. He attributes his increased Lincoln sales to three things: more success than he would have predicted in terms of converting Mercury owners into Lincoln buyers, fewer dealers to compete with generally, and a mistake by GM that pushed some former Cadillac buyers into his Lincoln dealership. In the latter case, General Motors announced in 2009 that it was going to close its Stark County Cadillac outlet. It ultimately reversed that decision, but not before some Cadillac buyers switched to Lincoln. “You’ve got to wonder what the heck they were thinking,” Mr. Black said. “They said they were canceling all the Cadillac dealers in Stark County and going to send people to Akron. That was great for me, but not so great for Cadillac.”
‘We can’t sell asphalt’ All in all, Mr. Black is happy with the way things have worked out so far. “Ford has done a great job of getting us a quality product and they absolutely hit the nail on the head when they didn’t take any government money,” Mr. Black said. That’s a common reason many dealers believe Ford is gaining market share, especially among the
red-state truck buyers that buy their F-series pickups from Mr. Black or dealers such as John Chapman, general manager of Montrose Ford Lincoln in nearby Alliance. “Believe it or not, we hear that a lot,” Mr. Chapman said, when asked if buyers were citing Ford’s refusal to borrow money from the U.S. government as a selling point. But, like Mr. Black, Mr. Chapman also credits Ford’s improving product quality — and fewer other Ford dealers to contend with — as reasons for a rebound in sales this year. “It’s just not as diluted,” Mr. Chapman said of the market today. “It should eventually make the existing dealers more healthy.” Maybe too healthy. Mr. Black said his biggest worry as of late is not whether he’ll have customers, but whether he’ll have cars. A severe winter kept buyers at bay in January and February, he said — and those are the months upon which Ford is basing his allotment of new cars. “I was offered around 50 cars to replace 90 that I sold recently...,” he said. “We could get much more market share if we had more inventory. If that’s important to (Ford), they’d better pay attention, because we can’t sell asphalt.” ■
enrollments of about 220 students at each school, Mr. Emerson said. He noted that some in the education sector have called the organization “crazy” for employing such a rapid growth strategy. However, Mr. Emerson maintains the school has employed “a model that works,” which is showing in its internal assessments taken by students every six weeks. He said test results show marked improvements in proficiency for all grade levels at both schools. Mr. Emerson said I Can Schools is situated well financially, though impending cuts in state aid to education due to the absence of one-time federal stimulus dollars will force the organization to keep its operations lean. Also, I Can Schools doesn’t receive any property tax revenue unlike the public school districts. This year, the schools received about $7,200 per student from the state as well as federal dollars for the schools’ poorest students, which brought the total amount to about $8,500 per student. Next year, Mr. Emerson said that number is expected to drop to about $7,500 in state and federal aid due to the lack of stimulus dollars. I Can Schools relies on donations
as well, and the group plans to make a push next year to bolster its philanthropic efforts. “Right now, we don’t have an operational gap. We over-enrolled on purpose,” Mr. Emerson said.
E Prep in their bloodline Both Mr. Emerson and Jason Stragand, the group’s other cofounder and chief academic officer, previously were with Entrepreneurship Preparatory School, or E Prep, on East 26th Street in Cleveland. E Prep, which is sponsored by the Cleveland school district, is part of Breakthrough Charter Schools — another local charter management organization. Breakthrough plans to open both a new middle school and a K- 2 school in the fall. The new schools will bring Breakthrough’s portfolio to six schools, and the goal is to open as many as 20 by 2020, according to John Zitzner, president of Friends of Breakthrough Charter Schools, the fundraising and advocacy arm of the organization. “We have to urge people to keep the focus on the creation of quality schools and have less talk about charters and non-charters,” Mr. Zitzner said. “That’s where conversation is starting to shift.” ■
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19
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 16 - 22, 2011
FINANCIAL PLANNERS
RANKED BY ASSETS UNDER MANAGEMENT LOCALLY Total assets under management locally (millions)
Company Address Rank Phone/Web site
Dec. 31, 2010
Dec. 31, 2009
% change
Total number of local accounts
Minimum individual Portfolio account analysts on (thousands) staff Compensation for services
1
BNY Mellon Wealth Management 30195 Chagrin Blvd., Suite 350W, Cleveland 44124 (216) 464-4244/www.bnymellonwealthmanagement.com
$1,800.0
$1,500.0
20.0%
2,150
$2,000.0
NA
2
Skylight Financial Group 1660 W. Second St., Suite 850, Cleveland 44113 (216) 621-5680/www.skylightfinancialgroup.com
$1,390.0
$1,306.8
6.4%
5,000
$0.0
3
Carver Financial Services Inc. 7473 Center St., Mentor 44060 (440) 974-0808/www.carverfinancialservices.com
$643.0
$570.2
12.8%
2,400
4
212 Capital Group 22901 Millcreek Blvd., Suite 360, Highland Hills 44122 (216) 595-0123/www.212capitalgroup.com
$613.0
$540.0
13.5%
5
Raymond James Financial Services Inc. Belden 4158 Munson St. NW, Canton 44718 (330) 493-0777/www.rjbelden.com
$440.0
$370.0
6
BDS Financial Service Corp. 30405 Solon Road, Suite 16, Solon 44139 (440) 248-5625 /www.bdsfsc.com
$327.2
7
Szarka Financial Management 29691 Lorain Road, North Olmsted 44070 (440) 779-1430/www.szarkafinancial.com
8 9
Chief investment officer
Top local executive
Percentage of assets under Leo P. Grohowski management
Ronald Ambrogio regional president
1
Fee and commission
Steven Thompson
Paul Fox president, CEO
$350.0
5
Fee and commission
NA
Randy Carver president
19,486
$10.0
3
Compensation for all services
Joe Kovach Curt Lindsay
Curt Lindsay managing partner
18.9%
800
$100.0
2
Percentage of assets under management, based fees, NA trail
Randy McGill branch manager, owner
$275.0
19.0%
650
$50.0
3
Fee and commission
Ashok Shendure
Ashok Shendure president, CEO
$295.0
$220.0
34.1%
1,100
$0.0
6
Percentage of assets
Les A. Szarka
Les A. Szarka CEO
Demming Financial Services Co. 13 New Hudson Road , Aurora 44202 (330) 562-6086 /www.demmingfinancial.com
$278.6
$248.8
11.9%
400
$0.0
3
Fee based
NA
David Demming president
Storey & Associates 1360 S. Main St., North Canton 44720 (330) 526-8944/www.storeycapital.com
$126.0
$110.0
14.5%
60
$0.0
2
Fee only
Harlan G. Storey
Harlan G Storey president
10
Strategic Wealth Partners 6000 Lombardo Center, Suite 120, Seven Hills 44131 (216) 447-9318/www.swpohio.com
$81.4
$40.1
102.7%
122
$250.0
4
Fee only; percentage of assets under management
Mark Tepper
Mark Tepper president
11
Securus Financial Strategies 33595 Bainbridge Road, Suite 104 , Solon 44139 (440) 349-4980 /www.securusfs.com
$59.0
$45.0
31.1%
250
$50.0
NA
Fee or commission
William Russo
William Russo CEO
12
Bishop Financial Advisors 591 Boston Mills Road, Suite 500, Hudson 44236 (330) 342-4080/http://bishopfinancialadvisors.com
$51.0
$45.0
13.3%
150
$350.0
1
Fee based
NA
Brian Bishop owner, financial adviser
13
McGervey Wealth Management 6263 Frank Ave., NW, North Canton 44720 (330) 966-2100/www.mcgerveywealth.com
$36.0
$27.0
33.3%
90
$500.0
3
Fee only
NA
E. Michael McGervey president
14
True Wealth Design 150 North Miller Road, Suite 350A, Akron 44333 (330) 777-0688/www.truewealthdesign.com
$27.2
$27.2
0.0%
63
$250.0
1
Fee only
Kevin Kroskey
Kevin Kroskey president
15
Westlake Advisors 24960 Center Ridge Road, Suite 3, Westlake 44145 (440) 250-9744/www.westlakeadv.com
$13.2
$9.6
37.5%
15
$0.0
1
Fee only
David Zolt
David Zolt
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.
Suppliers: Consolidation could help combat foreign competition continued from PAGE 1
supply market. Locally, there was no shortage of carnage. S&Z Metalworks, a 125-employee automotive parts maker on Cleveland’s West Side, disappeared in 2009, an early victim of collapsing sales in the industry. It could not find a buyer. Bettcher Manufacturing, a metal stamper serving the automotive market, among other industries, closed its 70-person plant on Brookpark Road in Cleveland, though it is still in business with a Dallas headquarters and a plant in Mexico. “We were in Cleveland since 1894 (115 years), but were forced to close and sell this facility due to the recent severe economic conditions, primarily caused by the automotive industry,” Bettcher sales engineering manager Bill Sweeny told Crain’s by email. Mr. Sweeny said the Cleveland plant’s customers “were unable to pay for goods and services already delivered, and there were essentially no near-term future sales to look forward to.” Kendale Industries in Valley View also succumbed in 2009; its 78,000square-foot plant and 39 stamping presses were put up for auction
that same year. Stampers were hard hit because they tended to have more eggs in the automotive basket than, say, a machine shop that might have diversified more easily into medical devices, aerospace or other industries. “I bet I could name half a dozen that are no longer around,” said Jerry Zeitler, president of Clevelandbased Die-Matic Corp., which stamps small precision parts for Ford, other automakers and their suppliers. Die-Matic has survived, Mr. Zeitler said, because it went into the crisis financially strong, cut costs quickly and was prepared to fill orders when companies such as Ford starting building cars again. Today, Mr. Zeitler said, he’s gaining business that once belonged to some of the companies that fell — a common theme among healthy survivors so far.
Zombies lurk Mr. De Koker of the suppliers association said he has seen about 40 member companies disappear since 2008. But another 60 or so have reorganized under Chapter 11 bankruptcy protection and emerged, for the most part, stronger than
before, Mr. De Koker said. Survivors tend to fall into two camps, Dr. Helper said: The strong, viable companies able to gear back up as growth returns, and those that have become mere shells of companies, without the employees, inventory or capital required to get their businesses back up to speed. “I call them zombies,” she said. “They are the walking dead.” How many zombies are around is tough to know — it’s not exactly something a company brags about, Dr. Helper said. As recently as early this year, Dr. Helper thought as many as half the surviving auto suppliers might be zombies. She has backed off on that number, though, and says there are fewer than she first estimated. It only takes one or two large orders to kill a zombie outright — when they can’t fill these orders, customers abandon them — and much of that culling process probably has taken place by now, she said. However, there still are more suppliers likely to bite the dust, industry insiders say. “It’s not as imminent as it was in 2009, but it’s still going on,” said Bill Adler, president of Stripmatic Products in Cleveland, which makes vehicle suspension and other auto-
motive components. Mr. Adler said he’s still picking up business from competitors that either are gone or are unable to fill orders. In some cases, though, zombies don’t die. Bernard Swiecki, senior project manager for the Center for Automotive Research in Ann Arbor, Mich., said they’ve shown an uncanny ability to come back, especially now that financing again is available to auto suppliers. “This method of hibernation — basically putting a company into suspended animation and waiting for orders — really did prove successful” for some suppliers, Mr. Swiecki said.
Consolidation predicted Dr. Helper still has concerns, though, after surveying more than 200 auto suppliers around the country and interviewing more than 50 owners and executives. Now she’s less worried about shortterm zombies and more concerned about long-term investment laggards that will not keep up with their foreign competition in terms of modernizing their operations. Many U.S. companies have coped so far by working their employees longer hours — preferring to pay overtime than to hire new people or
to invest in new equipment — and that’s a recipe for problems, she said. “Quality levels are falling a bit. People are just tired,” Dr. Helper said. Surviving only will grow harder, she said, as vehicles become more complex and begin using more types of fuel and sources of power. Those changes will require even more precision parts that must be made by increasingly sophisticated equipment run by highly skilled workers. What’s about to happen next, according to Mr. De Koker, might be the financial accelerator the U.S. auto supply sector needs to keep pace with foreign competitors. The sector is about to undergo a huge round of consolidation, mergers and acquisitions, he predicts — which will get rid of more weak players, allow others to combine resources and bring in capital from investors who once again believe there is money to be made in producing car parts. “We’re going to see significant growth and consolidation of the industry; it needs to consolidate more,” Mr. De Kokersaid. “The reason there wasn’t more consolidation in the past few years is private equity walked away ... and people weren’t willing to sell their companies.” ■
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THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
MAY 9 - 15
A time clock for the 21st century
The big story: Ferro Corp. plans to move its
■ A new smart phone application devised by the federal government is something one local attorney believes will rear its head in collective action lawsuits in the next year or so. The U.S. Department of Labor, Wage and Hour Division last week launched a timesheet app that enables workers to clock in when they begin work and to clock out when they finish or take a break. It is the first app the Labor Department has released and is an extension of a campaign the department implemented last spring to encourage people to keep their own records of hours worked, a department spokeswoman said. Wage theft has been an ongoing problem, she said, and the smart phone app is another tool for people to use to determine what they’re owed. Charles F. Billington, a labor and employment attorney with the Cleveland firm of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., said he believes the app likely will crop up as evidence in court actions. “It’s not advantageous to employers at all,” he said. “Now you have to worry about your employees creating an evidence trail” — and one, he argued, that is Labor Department-approved. Mr. Billington said he’s shocked the federal government is this technologically savvy. However, he isn’t surprised that it’s targeting wage and hour issues, as it has been more
headquarters out of downtown Cleveland in favor of a suburban site that was abandoned by a company that headed out of state. The producer of specialty chemicals said it has signed a long-term lease for a two-story, 63,000-square-foot office building at 6060 Parkland Blvd. in Mayfield Heights that will become known as Ferro Global Headquarters. The building, which dates to 1989, was vacated last year by Novelis Corp., Ferro Corp.’s cur- a producer of rolled alurent downtown Cleve- minum that consolidated land headquarters its operations in Atlanta. The building on Parkland, with 62,400 square feet of office space, is much larger than Ferro’s current 40,000-square-foot headquarters at 1000 Lakeside Ave.
Sweeping into new space: Suarez Corporation Industries, a multichannel marketing company that sells products as diverse as portable heaters and fashion jewelry, plans to take part of the former Hoover vacuum cleaner plant in North Canton for a new manufacturing and distribution operation. Suarez said it will consolidate operations from existing facilities in Green and Plain Township near the AkronCanton Airport. It plans to move 180 jobs to North Canton in the process. The company expects to hire another 100 people. On schedule: TOA Technologies Inc., a Cleveland-based producer of scheduling and routing software for mobile work forces, said it has closed on a $17.2 million round of financing. TOA said Sutter Hill Ventures led the financing round, which includes existing investors Intel Capital and Draper Triangle Ventures. New shareholders include Draper Fisher Jurvetson founder Tim Draper, Fort Washington Capital Partners Group and a number of TOA’s original private investors. This fits the bill:
Apple American Group LLC, a restaurant company in Independence that is the largest Applebee’s franchisee in the country, received what it termed “a strategic growth investment” from private equity investors Goldman Sachs Capital Partners and Weston Presidio. Apple American did not disclose the size of the investment in the company. However, Apple American said its management team, led by founder, chairman and CEO Greg Flynn, also participated in the investment and will maintain “a significant ownership position” in the company.
Northern exposure: Cliffs Natural Resources Inc. closed its previously announced, $4.95 billion acquisition of Consolidated Thompson Iron Mines Ltd. The Cleveland-based producer of iron ore and metallurgical coal said it financed the deal with a $1.25 billion term loan, $750 million in bridge financing and available cash on hand. As previously indicated, Cliffs plans to replace the $750 million in bridge financing by accessing the capital markets.
Promises (not) kept?: A Cleveland company that offered to help homeowners avoid foreclosure has been sued by the Ohio Attorney General’s office for failing to live up to its promises of debt relief. The lawsuit is seeking full restitution from the Modification Group and its director, Robert Walker. The complaint filed in Cuyahoga County Common Pleas Court alleges the Modification Group charged homeowners $1,995 or 1% of the mortgage balance with the promise of lowering interests rates and/or eliminating late payment charges. The company’s contract pledged to refund 80% of the upfront cost if it couldn’t.
aggressive about them in recent years. “This could be the tip of the iceberg,” he said. “We could see an explosion of new and interesting applications (by government agencies) that are aimed at creating an evidence trail.” — Michelle Park
to buy diesel fuel at $3.38 a gallon, at least until August, when the contract expires. So RTA saves two ways. First, through its fixed-price contract it saves 61 cents a gallon. Then its heating oil hedging saved it another $1.37 cents a gallon in April. — Jay Miller
How RTA beats the high cost of fuel
Entrepreneurs get motorcycle club in gear
■ $2.01 a gallon for diesel fuel, or about half what you pay at the pump. That’s what Greater Cleveland Regional Transit Authority paid to run its buses in April, said Gale Fisk, executive director of the agency’s budget and management office. And you were patting yourself on the back because you bought the biggest gas can you could find to take full advantage of the $3.69 a gallon your 30-cent discount gets you at Giant Eagle’s GetGo stations. RTA, which buys 4.7 million gallons of diesel a year, has learned how to play the futures market successfully so far. Since January 2010, RTA has been buying heating oil futures, which move in tandem with diesel fuel. It got into that market because it wasn’t able to get a long-term, fixed-price contract for fuel. So when the price of a barrel of crude shoots up and diesel follows, Mr. Fisk buffers RTA’s balance sheet by selling its futures at a profit. In addition, RTA eventually was able to get a fixed-price contract that is allowing it
■ Listening to entrepreneur Dan T. Moore talk about a motorcycle trip that took him to the southern tip of South America, to the Arctic Circle and back to Cleveland got Don Larson thinking: There’s something about motorcycles that entrepreneurs like. That’s why Mr. Moore, Mr. Larson and a few entrepreneurs have started Entrepreneurs MC, which stands for “motorcycle club.” The group will hold its first meeting — or, rather, its first “ride” — on Friday, May 27, at 5 p.m. They’re meeting for food and drink at Whiskey Island, then taking state Route 2 to Mentor. There, they’ll get a tour of Wiseco Pistons, which makes forged pistons and other parts for motorcycles, all-terrain vehicles, snowmobiles, boats and even cars. The latter are not welcome at the group’s meetings, said Mr. Larson, managing partner at business process software developer MCF Technology Solutions. Participants must bring a motorcycle, and they must own a business or aspire to own one. They can register at www.entrepreneursmc.com. Mr. Larson will be on his Yamaha V-Max. Mr. Moore, who owns several companies in Northeast Ohio, plans to bring his new BMW Racer. — Chuck Soder
MILESTONE
BEST OF THE BLOGS
COMPANY: Corporate Charters LLC, Cleveland THE OCCASION: Its 10th anniversary
Excerpts from recent blog entries on CrainsCleveland.com
The company, founded in March 2001 by Debbie Marcellino, is an aircraft charter broker that arranges worldwide charter services for corporations and individuals. Ms. Marcellino said she started the business to assist longtime travel clients with their private aircraft charter needs. She has worked in the travel industry for more than 25 years and has Marcellino been in business aviation since 1989. In its role as an aircraft charter broker, Corporate Charters works with clients to secure the best aircraft for their itinerary at a competitive cost. The company monitors each flight with a flight tracking system to ensure maximum efficiency for clients. Corporate Charters operates from offices at Burke Lakefront Airport. Ms. Marcellino is a member of the National Business Aviation Association and the Ohio Regional Business Aviation Association. The company also is certified by the Women’s Business Enterprise National Council. For information about the company, visit www.CorporateChartersLLC.com. Send information about significant corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.
D.C. College Access Program learns from Cleveland effort ■ A program in Cleveland provided the inspiration for a Washington, D.C., effort to get more of the graduates from that city’s public schools to attend college. The Washington Post said the D.C. College Access Program, which sponsors a citywide network of advisers who help students with college admissions and financial aid, “is a rare example of sustained success in the perennially troubled city school system.” Program officials tell the newspaper that their work in the past decade “has contributed to a doubling of the college attendance rate for the city’s public schools, to 61% of high school graduates, near the national average of 69%. The estimated share of those students who finish college within five years has climbed from 15% to 40%.” The Post reports that D.C. College Access “was patterned after the Cleveland Scholarship Program, which had reaped impressive gains in college attendance by putting college counselors in public high schools.” The Cleveland program, now known as College Now Greater Cleveland, “also delivered small, strategic scholarships to bridge the gap between a student’s financial aid package and the cost of a public university,” The Post said.
Film plants ideas about what makes a healthy diet ■ The Los Angeles Times ran a laudatory short review of a new documentary that focuses largely on the work of Dr. Caldwell B. Esselstyn, a former surgeon at the
Cleveland Clinic, and T. Colin Campbell, a professor emeritus of nutritional biochemistry at Cornell. The film, “Forks Over Knives,” offers a “persuasive presentation of solutions to unhealthy eating habits,” The Times said. The bottom line to their work: “Whole plant foods are beneficial, while animal-based foods are not. Furthermore, whole plant foods prove to be genuinely satisfying, though junk food, which can be so pleasurable to eat, is so lacking in real nourishment that it causes one to crave more of it, which then escalates cholesterol levels and calorie intake.”
Chess, pizza and dry cleaning in Cleveland lead to CEO job ■ Cleveland was an important stop for Victoria Livschitz, CEO of Grid Dynamics in Fremont, Calif., and her husband, Leonard, according to a charming first-person narrative in The New York Times. The Eastern European native said she met her future husband on the first day of an international chess tournament in Bulgaria. They left for the United States in 1991 and wound up in Cleveland, where Leonard delivered pizza and Mrs. Livschitz worked at a dry cleaner while attending Case Western Reserve University. “We wanted to give chess lessons, but we needed to advertise, so we asked a local activist and chess player to sponsor an exhibition in a city park one Sunday,” she said. “I had 26 opponents and played them all at once. I won 20 games, lost three and had three draws. Standing on the sidelines, Leonard announced the opening of our chess academy and signed up students.” The love of chess led to a love of computer programming, she said, and after graduating in 1994, she worked at Ford and Sun Microsystems before starting Grid in 2006.
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Riverside remembers a dear friend
The loss of Stu Schreiber leaves a hole in our hearts and community, but our memories of Stu and his legacy are an inspiration. Stu was a trusted Riverside advisor for nine years, helping shape our company and becoming a close friend to many of us along the way. We are honoring Stu through a scholarship in his name at his alma mater, Denison University. Please visit www.riversidecompany.com/stu/ to learn more. The Riverside Family
19 offices 13 countries 4 continents
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