20110523-NEWS--1-NAT-CCI-CL_--
5/20/2011
2:31 PM
Page 1
$1.50/MAY 30 - JUNE 5, 2011
Liquor profit plan: Worth a shot?
NOTICE TO READERS Crain’s Cleveland Business will resume publication on June 6. Visit CrainsCleveland.com daily for the latest business news in Northeast Ohio.
Kasich’s strategy to lease proceeds for JobsOhio entails large debt obligation By JAY MILLER jmiller@crain.com
High risk, high reward. That’s how one public finance professional describes Gov. John Kasich’s strategy to use profits from liquor sales to boost Ohio as a place for new businesses to start and
existing businesses to grow. The reward is jobs, investment and new tax revenues for the state. The risk is that the plan could saddle JobsOhio, the nonprofit the governor is working to create, with $1 billion in debt. That debt will have first call, ahead of any economic development investments,
Kasich
Kvamme
on the state-run liquor operation’s profits, which JobsOhio is buying from the state. The governor’s proposal has
JobsOhio paying the state $1.2 billion to lease Ohio’s liquor profits for 25 years. JobsOhio would issue bonds to pay off the state upfront. The debt service on those bonds is expected to be $40 million annually, or a total of $1 billion. Mark Kvamme, the governor’s director of job creation and economic development guru, said he believes the upside of JobsOhio outweighs what he sees as modest downside risk. See LIQUOR Page 24
Bankruptcy filings ebb in NE Ohio
JUICES ARE FLOWING
Those still ailing seek less costly alternatives
Northeast Ohio companies power up to capitalize on smart grid technologies
By MICHELLE PARK mpark@crain.com
By CHUCK SODER csoder@crain.com
Bankruptcies are down — but don’t get too excited. Yes, when compared to year-ago numbers, bankruptcy filings have dropped in Cleveland and Akron in seven of the past eight months. From January to April, total filings, which include consumer and commercial bankruptcies, are down 10% in Cleveland and 20% in Akron INSIDE: Bankcompared to the ruptcy filings in like period last Cleveland and year. Akron have At face value, dropped over the the trend appears last year. Page 4 to be a welcome signal of economic recovery. But from the vantage point of those who work in bankruptcy circles, recovery isn’t the sole — or even main — reason for the decline. Attorneys and advisers say a key factor in the decrease in bankruptcy filings is because more people and businesses are favoring methods cheaper than bankruptcy to reorganize their finances. “Banks and companies are trying to avoid the costs of bankruptcy, and so they’re working harder to resolve these issues without bankruptcy,” said Larry Goddard, president of The
T
he extra 10-cent charge that FirstEnergy Corp.’s residential customers just started seeing on their bills is only the beginning. The money that the charge generates is a miniscule piece of what utilities are expected to spend over the next decade or so as they transform the nation’s electric grid into a much smarter machine. Several Northeast Ohio companies see big opportunities to capitalize on demand for “smart grid” technologies, which are projected to give utilities more control over how power flows through the grid while also giving consumers more control over how they use it. See POWER Page 8
22
See FILINGS Page 4
0
NEWSPAPER
71486 01032
6
SPECIAL SECTION
INVE$TINGGUIDE2011 Financial losses teach investors a lesson in awareness, involvement ■ Page I-1 PLUS: ESTATE PLANS ■ SUPERSTAR 10 ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 22
20110523-NEWS--2-NAT-CCI-CL_--
2
5/20/2011
2:10 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
CLARIFICATION A May 16, Page 14 story profiling Youngstown Business Incubator CEO Jim Cossler did not end properly. Visit http://tinyurl.com/3epxngl for the full version of the story.
WWW.CRAINSCLEVELAND.COM
THE GO-SLOW APPROACH
UPCOMING EVENTS
March marked a job-market milestone — it was the first time since November 2008 that there were at least 3 million job openings nationwide in consecutive months. On the last business day of March, there were 3.1 million job openings, up from 3 million in February, according to the federal government. The pessimist might note, though, that the improvement is pretty modest and the country still is a long way from reaching the 4.4 million job openings when the recession began in December 2007. Here’s how the job market has fared in the last year:
Leading ladies REGULAR FEATURES Big Issue .....................11 Classified ....................25 Editorial ......................10 Going Places ...............12 Letters ........................10 List: Largest public companies ........I-6, 1-8 Reporters’ Notebook....26 Tax Liens ....................14 The Week ...................26
December 2010
Tickets will be available by June 1 for our annual Women of Note luncheon, scheduled for Wednesday, July 20, at LaCentre Conference and Banquet Facility in Westlake. For more details, visit www. http://www.crainscleveland .com/marketing/women .html.
December 2010
Month March 2011
Job openings
Month
Job openings
3.12 million
August 2010
2.86 million
February
3.03
July
2.85
January
2.74
June
2.69
December 2010
2.92
May
2.79
November
2.97
April
3.04
October
2.91
March
2.70
September
2.76
SOURCE: U.S. BUREAU OF LABOR STATISTICS; WWW.BLS.GOV
November 2010
September 2010
September 2010
a portfolio company of
a portfolio company of
a portfolio company of
Dan T. Moore Company, Inc.
MAY 30 - JUNE 5, 2011
$6 Million
has been sold to &
Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing/Events Coordinator: Jessica Snyder (jdsnyder@crain.com)
Series A Convertible Preferred Stock First Lien and Second Lien Senior Credit Facilities
Exclusive Sell-Side Advisor
Exclusive Sell-Side Advisor
Exclusive Sell-Side Advisor
Exclusive Placement Agent & Financial Advisor
Financial Advisor & Sole Bookrunner
August 2010
August 2010
April 2010
March 2010
October 2009
has sold
has divested has acquired
has acquired a majority interest in to
$775 Million Exclusive Sell-Side Advisor
Senior Secured Credit Facilities Joint Bookrunner
$673 Million Exclusive Sell-Side Advisor
Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Lauren M. Rafferty (lrafferty@crain.com)
to
Exclusive Sell-Side Advisor
Advertising sales director: Mike Malley (mmalley@crain.com) Account executives: Adam Mandell (amandell@crain.com) Dirk Kruger (dkruger@crain.com) Nicole Mastrangelo (nmastrangelo@crain.com) Dawn Donegan (ddonegan@crain.com) Business development manager & classified advertising: Genny Donley (gdonley@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com)
®
has acquired a majority interest in
Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editors: Joel Hammond (jmhammond@crain.com) Sports Kathy Carr (kcarr@crain.com) Marketing and food Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Tim Magaw (tmagaw@crain.com) Health care & education Michelle Park (mpark@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams
has been sold to
has been sold to
700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com
Exclusive Buy-Side Advisor
Delivering results We know that successful, long-term business relationships depend upon delivering results for our clients. At KeyBanc Capital Markets,® more than 500 professionals leverage extensive industry knowledge, equity and debt capital markets expertise, and a leading merger and acquisition advisory practice to deliver strategic solutions that help our clients capitalize on opportunities.
Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Circulation manager: Erin Miller (emiller@crain.com) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com) 1-877-824-9373
Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996)
To learn more: Contact Randy Paine, Co-Head 216-689-4119, Doug Preiser, Co-Head 216-689-5944 or Paul Schneir, Managing Director and Group Head of Mergers & Acquisitions and Private Capital Group 216-689-4005. Visit key.com/kbcm KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member NYSE/ FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. Key.com is a federally registered service mark of KeyCorp. ©2011 KeyCorp ADL3121
Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation
20110523-NEWS--3-NAT-CCI-CL_--
5/20/2011
2:10 PM
Page 1
MAY 30 - JUNE 5, 2011
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
3
INSIGHT
Steelmakers on alert to meet natural gas push Nearby extraction process requires tubular steel, and local mills expand to meet demand By DAN SHINGLER dshingler@crain.com
MARC GOLUB
Cindy Barber, the co-owner of the Beachland Ballroom, says despite the Collinwood club’s struggles, she tries to remain upbeat. “We’re doing OK in this economy, and I can’t complain,” she says.
FACE THE MUSIC Cleveland’s live concert scene has lost its vibe, and popular spots are exploring ways to let the bands play on By TIMOTHY MAGAW tmagaw@crain.com
T
he show business isn’t what it was in Cleveland. The city’s once-vibrant live music scene, which helped propel to stardom artists such as Bruce Springsteen and David Bowie, is losing its beat due to a lackluster economy, a population in decline and an abundance — make that overabundance — of competition among concert venues. Cindy Barber has seen the change, and is trying to adjust to it. The co-owner of the Beachland Ballroom said the concert hall, at 15711 Waterloo Road in the Collinwood neighborhood, is carrying “a lot” of debt these days, though she wouldn’t specify the amount. She’s thankful for the venue’s dedicated following,
which has allowed it to get by. “We’re doing OK in this economy, and I can’t complain,” Ms. Barber said. Nonetheless, the Beachland is exploring new business models to ensure its survival. Ms. Barber said she’s working with a professor of finance and students at Case Western Reserve University’s Weatherhead School of Management to evaluate whether some sort of nonprofit model would be appropriate for the venue. “Some of the things we’re thinking about are ways to support younger Cleveland bands through some kind of nonprofit push and to get them some funding to fulfill their own vision,” Ms. Barber said. The Beachland is essentially a nonprofit now, Ms. Barber said, as making money isn’t its goal as See MUSIC Page 7
DEALING WITH DECLINE The Beachland Ballroom, located in Cleveland’s Collinwood neighborhood, and the Agora, on East 50th Street, are institutions in the city’s rock and roll scene. Yet each are struggling with the economy and other factors. Here is how they’re attempting to deal:
■ Agora: Henry LoConti Sr., who founded the venue in 1966, said he’s taken to allowing other promoters to book the hall for concerts, instead of booking shows. That way, if a concert’s attendance is poor, someone else foots the bill for the artist.
■ Beachland: Co-owner Cindy Barber said the venue’s main priority now isn’t making money, but rather promoting the local music scene. In turn, she said she’s met with advisers to determine whether the best route is to make the club a nonprofit officially.
A natural gas explosion is creating more steelmaking work in Northeast Ohio. The explosion — a boom, really — is taking place across eastern Ohio, Pennsylvania and parts of New York, as more wells are sunk to extract the fuel from deep beneath the ground. By drilling thousands of feet, first down and then horizontally through beds of shale, companies are able to set off explosive charges and pump a mixture of sand and chemicals into the beds, thus releasing millions of cubic feet of natural gas in a process known as fracking.
To do so, they need pipe, and lots of it. To supply it, mills are expanding in Canton, Lorain and Youngstown in a steelmaking phenomenon that is totally tubular. “I think it’s fair to say that, prior to the development of shale gas in North America, particularly the Marcellus Shale, (the U.S. Steel plant in Lorain) was in a disadvantaged location,” said Doug Matthews, vice president of tubular operations for Pittsburgh-based U.S. Steel. “Now all of a sudden, the Lorain plant is right on the doorstep of the Marcellus” shale beds beneath Pennsylvania, eastern Ohio and parts of New York — and which See GAS Page 6
THE WEEK IN QUOTES “Banks have not been willing to lend in a Chapter 11 setting since 2008, unless the borrower was just too big to fail.” — Jean R. Robertson, partner and chair of the business restructuring and insolvency practice at Calfee, Halter & Griswold LLP in Cleveland. Page One
“Most of my clients are ... gun-shy. They are a lot more cautious, a lot more wary of anything to do with stock-market types of investments.” — Dennis R. Marvin, president, Marvin Wealth Management, Westlake. Page I-1
“It’ll be about sitting down, smiling, having some noodles, then getting back to work.” — Jonathon Sawyer on his new restaurant, Noodlecat, opening in July in downtown Cleveland. Page 9
“Just because we’re both retiring in 2030, doesn’t mean I have the same risk tolerance that you do.” — Michael McKeown, associate vice president, Aurum Wealth Management Group, Mayfield Village. Page I-2
Lawsuit delays auto dealer Moreno’s planned move to East Side By STAN BULLARD sbullard@crain.com
Luxury car dealer Bernie Moreno is on a drive to enter the auto market in Cleveland’s eastern suburbs from his base on the West Side as he pursues a goal to build a regional chain of auto dealerships. However, doing so depends on when he and Frank Porter Jr., owner of Central Hummer East LLC, remove a road block by settling a recently filed lawsuit over Mr. Moreno’s agreement to purchase
the dealership at 25975 Central Parkway in Beachwood. Mr. Moreno, president of M4 Motors Inc. and managing partner of M4 Realty Inc., and Mr. Porter, best known as the owner of Central Cadillac in Cleve- Moreno land, said in separate interviews that they hope to resolve the dispute and settle the lawsuit soon — perhaps within days — and complete the sale. According to the suit filed May 3
in the Cuyahoga County Court of Common Pleas and assigned to Judge John O’Donnell, Mr. Moreno has lined up a General Motors Corp. Buick and GMC dealership to install at Mr. Porter’s property. The property, originally developed by Mr. Porter as a Hummer dealership until GM dropped that brand in 2009, occupies a highly visible site on the west side of Interstate 271 just north of Chagrin Boulevard.
Mr. Porter has sought to sell the dealership since GM dropped the Hummer line. In the suit, Mr. Moreno said he planned to buy the dealership by last December but had trouble finding a lender because of deed restrictions on the property. Mr. Moreno subsequently found a lender he would not identify. Both businessmen agreed April 8 to consummate the transaction under their prior terms, according to Mr. Moreno’s complaint. However, Mr. Porter told Mr. Moreno on
April 28 that the transaction was off, the lawsuit states. The complaint did not indicate why Mr. Porter said the transaction was off. Messrs. Moreno and Porter declined to discuss what deed restrictions scuttled Mr. Moreno’s original loan for the 27,000-squarefoot dealership on five acres. However, Cuyahoga County records show the city of Beachwood in 2008 amended deed restrictions that originally limited the site to a Hummer dealership to allow a Buick See MORENO Page 6
20110523-NEWS--4-NAT-CCI-CL_--
4
5/20/2011
2:10 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 30 - JUNE 5, 2011
Filings: Bankruptcies may increase continued from PAGE 1
The Sky Quest Travel Experience: Relaxing travel with no waiting in lines, no carrier delays ◆ A flight that departs on YOUR schedule ◆ A private aircraft with a crew you know and trust ◆ Substantial savings over jet card programs ◆ One-way flights available with NO repositioning fee ◆
AIR CHARTER SERVICE AIRCRAFT MANAGEMENT
SAFETY
◆
SERVICE
◆
CONVENIENCE
Northern Ohio’s Premier Air Charter Company 216-362-9904
www.FlySkyQuest.com
Charter@FlySkyQuest.com
Mission Launch! Introducing the launch of our Blackberry App!
Simply download the App by searching “MH Attorneys” in the Blackberry App World.
Attorneys on a Mission
®
Your mission is our mission. We never lose sight of it.
A business advisory and advocacy law firm
®
600 Superior Avenue, East, Suite 2100, Cleveland, OH 44114 216.348.5400 Carl J. Grassi Shawn M. Riley President
Cleveland Managing Member
Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach
www.mcdonaldhopkins.com
Parkland Group Inc., a Cleveland consulting firm that assists in turning around underperforming and troubled businesses. “As the cost of bankruptcy has increased over time, (the use of alternatives) has become more prevalent,” Mr. Goddard said. In a typical middle-market Chapter 11 case — the type that allows a business to reorganize — it isn’t unusual for administrative costs to exceed $400,000 or $500,000, according to those who work in the field. In an ironic twist, companies often can’t file for bankruptcy because they can’t secure sufficient financing to endure the reorganization process, according to Jean R. Robertson, partner and chair of the business restructuring and insolvency practice at Calfee, Halter & Griswold LLP in Cleveland. So-called debtor-in-possession, or DIP, financing typically is used to fund a company’s operations as it proceeds through a bankruptcy, and like other forms of financing, it’s hard to obtain today, Ms. Robertson said. “Banks have not been willing to lend in a Chapter 11 setting since 2008, unless the borrower was just too big to fail,” Ms. Robertson said. She goes as far as to say that the recovery “has not trickled down here to Northeast Ohio from my experience in any meaningful way.”
Hope fades From John K. Lane’s vantage point, the drop in business bankruptcies is not a positive sign because it’s driven by a loss of hope. “If there was more hope out there in the marketplace, if there were more options available to these companies, they would say, ‘I know bankruptcy’s very expensive, but I’m going to reorganize because I can see the light at the end of the tunnel,’” said Mr. Lane, managing director and CEO of Inglewood Associates LLC, a virtual turnaround and workout firm. But, he noted, “People aren’t seeing that light at the end of the tunnel. “There are a number of companies that are just turning off the lights,” said Mr. Lane, who also is current president of the Ohio Chapter of the Turnaround Management Association. Local Chapter 11 filings this year include one on May 17 by North Coast Drilling Services Inc. in Grafton, one on April 19 by Richard Assaf Dermatology Inc. in Westlake and another on Feb. 15 by Flower Factory Inc. in North Canton. Messages left for those companies and several other debtors named in recent Chapter 11 records were not returned. Businesses in retail, real estate, health care and manufacturing are some of the more common filers of bankruptcy of late, local lawyers said. Reimbursement and insurance challenges are two reasons why a number of health care companies have wound up taking that road, Ms. Robertson said. In general, she said, material and commodity costs are “incredibly difficult for my clients to absorb.” And
FREE FALLING Bankruptcy filings have declined for seven of the past eight months in Cleveland and Akron compared to the like months a year earlier. The following numbers show the percentage changes in bankruptcy filings from the previous year.
Month
Cleveland
Akron
-23%
-27%
March
-12
-17
February
-8
-14
January
14
-19
December 2010
-2
-4
November
-3
-4
October
-2
16
April 2011
September
-4
3
August
2
-7
July
1
5
June
4
1
May
5
2
April
16
7
SOURCE: WWW.USCOURTS.GOV; U.S. BANKRUPTCY COURT, NORTHERN DISTRICT OF OHIO
companies often can’t secure the financing they need because real estate — the collateral pledged to their lenders — is of marginal worth because of depressed property values. Liquidity remains a significant issue, agreed Scott Opincar, partner and business restructuring attorney at McDonald Hopkins LLC in Cleveland. However, private equity and venture capital funds are returning to the market and providing capital, he noted, which will help stave off the liquidations that have grown dramatically because so many companies have had no other viable options.
Receptive to receivers Mr. Opincar said cheaper alternatives to bankruptcy have more than offset the decrease in Chapter 11 cases he has observed. One such avenue is receivership, wherein a judge appoints a receiver to take control of a business and either stabilize operations to pay unpaid debts or, in the event of liquidation, liquidate assets. Generally, the owners of a business do not retain ownership. Ms. Robertson handled five receiverships in 2010 — the same number she probably handled over the past 20 years combined, she said. Mr. Opincar said the 10 receiverships he handled between late 2009 and late 2010 represent “a significant increase” from 2008, when he may have had two or three. In past years, secured creditors often were reluctant to use receiverships as a way to settle debts because of the unpredictability of outcomes, Mr. Opincar said. But an increased number of financially distressed companies has contributed to creditors seeking less expensive methods, and the increased use of receiverships has resulted in more creditors feeling comfortable with them, he said. Another cheaper alternative to bankruptcy that has seen a large increase, insiders said, is the secured party sale — a public or private sale
under state law where a secured lender sells off the collateral pledged to it by a debtor.
Worst is yet to come? Those in the business of bankruptcy offer other explanations for the decrease in cases. Alan C. Hochheiser, managing partner of the bankruptcy practice at Weltman, Weinberg & Reis Co., a Brooklyn Heights firm that represents secured and unsecured creditors, cites an increased number of workouts, including the use of loan modifications. Plus, when credit is less available, as it has been, businesses are less likely to make bigger purchasing decisions that land them in financial distress, Parkland Group’s Mr. Goddard said. That’s one reason why there are, in general, fewer troubled companies than people might expect of this recession, he said. In addition, when sales — particularly those for which companies extend customers credit — are down, cash flow can be greater because less money is tied up in receivables and in inventory, Mr. Goddard said. But, when sales pick up, companies’ cash positions will tighten, he maintains. “If the economy improves, I think it will trigger more bankruptcies rather than less,” Mr. Goddard said. “When sales go up, it’s tougher from a cash flow point of view. All of a sudden, you’ve got more money tied up in receivables and inventory. Your sales are going up, but you have less cash.” Mr. Hochheiser’s forecast is similarly gloomy. He said if foreclosures increase as he expects, more consumers come the third quarter of this year may file for bankruptcy in an effort to stay in their homes. Chapter 13 allows for people with regular income to keep property and pay debts over time. “I think you’re going to see bankruptcies over the next three or four years at elevated levels,” Mr. Hochheiser said. “I don’t see it coming down.” ■
Volume 32, Number 22 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-8249373. REPRINT INFORMATION: 800-290-5460 Ext. 136
20110523-NEWS--5-NAT-CCI-CL_--
5/19/2011
9:55 AM
Page 1
20110523-NEWS--6-NAT-CCI-CL_--
6
5/20/2011
3:04 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 30 - JUNE 5, 2011
Gas: Youngstown also now feeling effects of boom continued from PAGE 3
geologists say should yield at least 50 trillion cubic feet of natural gas. That’s enough to supply the entire United States for two years, based on the nation’s current consumption — and is based on conservative estimates that 10% of the gas can be extracted with current methods. The potential for significant investment in fracking is the biggest reason the company is spending $95 million to upgrade and expand the output of the Lorain plant — a process that began late last year and will be completed in the third quarter of this year, Mr. Matthews said. The upgrade will mean about 100 new jobs on top of the 500 already
at the plant, he said. With that investment, Mr. Matthews said U.S. Steel will install new quenching and tempering lines at the plant capable of heat-treating up to 250,000 tons of tubular steel products annually and enabling the company to ship directly to drilling companies and other customers. It will bring the plant’s total capacity for such products to more than 1 million tons per year from 780,000 tons, the company reports.
Timken expands, too In Canton, Timken Co. is on pace to hire 200 more workers this year for its own expanding steel works, which also supply tubular products to the gas exploration business.
Like U.S. Steel, Timken is ramping up production and quality to meet increased demand that is coming first and foremost from the natural gas industry. Timken reports it has spent $4.2 million in 2010 and 2011 to upgrade its Gambrinus Steel Plant in Canton — where it makes tubular steel — and will spend about $50 million on the plant in 2012. U.S. Steel, Timken and other companies refer to the products as “tubular steel” because the products involve more engineering work, more sophisticated production processes and are stronger than what often is considered “pipe.” Pipe can be cast, welded or rolled, and it can have seams, while tubes
generally are forged from a single piece of steel. Timken produces more expensive tubes, necessary for the actual drilling of the gas wells, as well as special steels used by component makers that sell drilling and fracking products such as augers and mud motors, the latter of which pump thick sand-filled fluids, said Ray Fryan, Timken’s director of advanced engineering and quality. Dr. Fryan said about 20% of Timken’s overall steel business — it sold $481.5 million of steel in the first quarter, up 78% from the like period a year earlier — is for steel used in oil and gas exploration. Shale gas is its fastest-growing segment, he said.
Dr. Fryan, who has a doctorate in metallurgy from Case Western Reserve University, said he spends much of his time these days following vents in the Utica and Marcellus shale beds, which lie largely on top of one another.
Drills, drills everywhere Those shale beds already are spurring thousands of land leases and drilling operations. Across much of eastern Ohio, including in Stark County where Timken is based, signs of the natural gas boom are everywhere. Billboards tell people how to reach energy companies, which are eager to sign leases that will enable them to drill through private property to the gas beneath. Drive a little farther from Cleveland, and the engine powered by natural gas that is driving steel production also is working overtime. Texasbased V&M Star, another tubular steel producer, is spending $650 million for a new mill in Youngstown that will employ 350 people when it comes on line in 2012. Timken’s Dr. Fryan said there’s business enough for all the companies, especially because they don’t all make the same products. He added that the more he learns about the potential for fracking and the amount of gas that can be recovered, the more he expects the boom to continue. Drillers are overcoming objections about their practices, in part by improving them, Dr. Fryan said, and there’s no end to the nation’s energy needs. There may not be an end to the potential for gas in the region, either, at least anytime soon, Dr. Fryan said. “It’s going to continue to grow,” he said. “The more we drill, the more we’re finding that the Marcellus is bigger than we thought.” ■
Moreno: Move would be latest in dealer’s rapid area expansion continued from PAGE 3
Chevrolet GMC dealership at the site if the dealership did not challenge a market value for the property of $4.5 million for tax purposes. A listing by Ostendorf-Morris Co. on the LoopNet online commercial realty listing service carries a $5.6 million asking price for the property. However, neither car dealer would disclose their agreed purchase price for the dealership, which was not disclosed in court records. Mr. Moreno’s suit asks the court to enforce the sale agreement or provide his companies with at least $10 million in damages. Mr. Moreno is an upstart in the region’s dealership ranks. He moved to Northeast Ohio in 2005 to open a Mercedes-Benz dealership in North Olmsted and since has added Porsche, Saab and Fiskar lines there. Last year, he acquired the Boyland Acura and Infiniti dealerships in Brook Park. Mr. Moreno said in an interview that he wants to enter the east suburban market as part of a plan to “expand in all of Northeast Ohio, not just North Olmsted or the (west) market.” “We see ourselves as a regional company,” he said. ■
20110523-NEWS--7-NAT-CCI-CL_--
5/19/2011
3:53 PM
Page 1
MAY 30 - JUNE 5, 2011
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
7
Music: House of Blues’ arrival has effect continued from PAGE 3
much as promoting the local music scene. She’s still sorting out the benefits of becoming a nonprofit, but she noted it would allow the venue to accept donations and provide financial support to up-andcoming acts, much like a foundation. The Beachland already is lauded for supporting burgeoning performers, Mr. Barber said, but it doesn’t bring in the revenue needed to operate a business. It’s not all doom and gloom in the concert business, especially for the big boys on the block, according to Michael Belkin, senior vice president for the regional office of megapromoter Live Nation. Mr. Belkin said the summer concert season in Northeast Ohio is shaping up nicely, particularly for big-ticket acts. “When you see economic indicators overall, they’re all positive,” he said. Still, people in the concert business say it hasn’t helped that the number of artists who make Cleveland a stop on their tours has slackened as the city’s population has dwindled and its economy has stagnated. Sure, some musicians, such as The Boss, rarely stage nationwide tours without stopping by the lakefront. However, others have slowed their visits to a crawl and are more selective in where they play.
The Agora adapts Smaller venues have been dinged the most by the challenges the concert business faces. Already gone is The Odeon in Cleveland’s Flats, which closed in 2006. And a shell of its former self is the Cleveland Agora, at 5000 Euclid Ave. on the city’s East Side. Both Ms. Barber and Henry LoConti Sr., the owner who founded the Agora in 1966, said the House of Blues took a swipe at their business when it came into Cleveland in 2004 as it easily was able to outbid them for shows because the latter venue is owned by Live Nation. “It was very aggressive when (the House of Blues) first opened,” Ms. Barber said. “In order for us to stay open and stay alive, we were just using lines of credit to keep us going. There just became a very big competition in town.” Coupled with Live Nation’s domi-
nance in the market, Mr. LoConti said the city’s 8% admissions tax has made Cleveland less competitive in attracting acts and has hurt small venues within the city limits. The 8% is taken from a show’s gross, and after paying the performer and production costs, little cash — if any — is left to support a venue’s bottom line, Mr. LoConti said. Cleveland is the only major city in the state to have such a tax, according to the most recent data from the Ohio Department of Taxation. Troubles continued to mount for the Agora during its soured partnership with Jigsaw Entertainment Group, which was headed by Phil Lara, who owned the Jigsaw Saloon and Concert Club in Parma, and Terry Buckwalter, an anesthesiologist in Pennsylvania. A legal scuffle ensued after the Black Keys, a Grammywinning rock band from Akron, weren’t paid $50,000 for a pair of sold-out shows at the Agora. Mr. LoConti said the venue’s legal woes have been cleared up, but the Agora is “more or less out of the dogfight” for concert acts. He’s largely allowed other promoters to rent the venue for concerts and other events rather than book his own shows. The only event he has booked himself is a wedding in September. The shows booked by other promoters have been modestly attended, Mr. LoConti said. If the attendance is poor, he’s not on the hook for the bill of paying the performer, which offers him somewhat of a cushion as he re-evaluates his business. Mr. LoConti said he’s seen some success with his new model, which has allowed the venue to break even, but it’s far from the Agora’s heyday, when artists such as ZZ Top and Patti Smith filled the house. Mr. LoConti said he could get back into the concert game now, but he’s biding his time as he works to make the venue more competitive, though he wouldn’t specify how.
Supply exceeds demand Venue owners say the live music business in few cities escaped the economic storm of the last few years. However, many of the acts that have been on the road have been drawn to growing markets elsewhere, such as Columbus, where census figures
show the population last decade climbed 10.6%. Contrast that increase with the 17% drop in population last decade in Cleveland — the most dramatic decline of Ohio’s urban centers. “It’s a little bit harder to get a volume of people to shows in Cleveland right now,” the Beachland’s Ms. Barber said. “There’s certain markets where it’s a little more predictable.” The combination of fewer acts and fewer patrons creates an imbalanced supply-demand situation for concert venues in and around Cleveland. “Part of the problem in Cleveland is we have amazingly high-quality entertainment choices here, and we’re all competing for entertainment dollars,” she said. “It seems like we have as many choices as Chicago right now, but we have a third of the actual people that go out and see things.” The perspective is different from Mr. Belkin of Live Nation, who said any difficulty in filling arenas isn’t necessarily a Cleveland problem, but a regional one. At times, slow attendance has forced the promoter to curtain off sections of the venues, such as Quicken Loans Arena or Cleveland State University’s Wolstein
JASON MILLER
Henry LoConti Sr., who founded the Agora in 1966 Center, where it stages shows, but that hasn’t universally been the case. There also have been sellout shows, he noted. “The reality is that the region kind of goes in lockstep,” Mr. Belkin said. “None of the cities are considerably better or worse. Some markets have a new building, and with that comes a honeymoon, but in general, the Midwest travels as a unit.” Mr. Belkin said he’s also “just trying to be a little smarter about what goes where” and is booking acts that he knows can fill a large
venue, such as The Q or Blossom Music Center in Cuyahoga Falls. The acts currently booked for Blossom — mostly large country shows — can draw a significant crowd, he said. Some of the acts booked for the outdoor amphitheater this summer include Kenny Chesney, Tim McGraw, Jimmy Buffett and Rascal Flatts. Also, rock acts such as Rush and Roger Waters of Pink Floyd have performed in recent months. “You have a lot of strong shows,” Mr. Belkin said. “I can see good numbers already.” ■
Archer Awards The 2011
Achievements in Human Resources
Honor the Human Resources professionals who build your business with first-class people, talent, development and culture.
Extended Deadline! Nominate Now Categories
Thursday, June 9, 2011 11:30 am Registration • 12 Noon Lunch & Program Executive Vice President & General Manager
Cleveland Indians Manager
CHRIS ANTONETTI
MANNY ACTA
Moderated By DAVE CHUDOWSKY
Coming July 21, 2011
HR EXECUTIVE OF THE YEAR
INNOVATION
LIFETIME
CITIZENSHIP
AWARD
ACHIEVEMENT
AWARD
RISING STAR AWARD
AWARD
Presented by:
Cleveland Indians
WKYC, TV 3
A Tribute to
JOE TAIT
Sponsored by:
Legendary “Voice of the Cavs”
For more info: ExecutiveCaterers.com click on Summer Sports Series 2011 or call 440.449.0700
Learn More at: CrainsCleveland.com/Archer
20110523-NEWS--8-NAT-CCI-CL_--
8
5/19/2011
1:52 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 30 - JUNE 5, 2011
Power: Smart grid pilot could lead to equipment upgrade continued from PAGE 1
Companies such as Eaton Corp. of Cleveland are selling and developing automation equipment for substations and other parts of the grid. Others, such as Intwine Energy of Chagrin Falls, are working on products consumers would use to monitor their energy use and to orchestrate household appliances so that they consume electricity in the most efficient way possible. FirstEnergy sees opportunity, too: The Akron-based utility in October 2009 was awarded more than $57 million in federal money for smart grid pilot projects in Ohio, Pennsylvania and New Jersey. FirstEnergy is investing an equal amount of its own money in the pilot projects, including one that is under way in Cleveland’s eastern suburbs. To recover money spent on that project, the utility on Jan. 1 added a new fee onto the bills of its customers in Ohio. Residential customers pay 10 cents per month, and commercial customers pay roughly $1 per month. FirstEnergy is taking a “conservative approach” to implementing smart grid technology by complying with existing regulations but going
“As a country, we really have to start walking the walk, not just talking the talk.” – Doug Dillie, director of smart grid solutions, Eaton Corp. no further, according to a statement FirstEnergy Utilities president Charles Jones made during a May 3 conference call while discussing the company’s first-quarter results with analysts. The pilot projects, however, will give FirstEnergy a chance to gather data on the costs and benefits of such technology, Mr. Jones said during the call. The Ohio pilot project began in January, when FirstEnergy started installing new equipment at substations and on circuits that serve several suburbs, including Mentor, Chardon, Willoughby, Chesterland and Concord. The utility in April began installing the first of 5,000 so-called smart meters that it plans to place in homes throughout that area over the next few months. If the project goes well, FirstEnergy would continue upgrading its grid equipment, and over the next few years it would install another 40,000 smart meters, which deliver meter readings directly to the utility, said FirstEnergy spokesman Mark Durbin.
“It would give us an idea of what they’re using, (and) how they’re using it,” Mr. Durbin said.
Girding for spending Spending on smart grid technologies is expected to rise in the coming years. For instance, a 2010 report by Pike Research, a Boulder, Colo., firm that conducts market research related to clean technologies, suggests worldwide smart grid spending will climb to $35 billion in 2013, more than triple the $10.5 billion spent in 2009. Interest in smart grid technology picked up when the federal government passed the American Recovery and Reinvestment Act of 2009. Within the $787 billion provided by the bill for economic stimulus spending was $4.5 billion for smart grid initiatives, including FirstEnergy’s pilot projects. Other factors driving adoption include incentives from states, growing environmental awareness among consumers and improved computing technology, said Dave Martin, president of Intwine Energy.
The energy management company, which employs five people and works with several contractors, a year ago started shipping its first product: a thermostat that allows consumers to monitor and control their heating and air conditioning via the Internet. Intwine also is about to release early versions of a load controller designed to work with air conditioners, hot water heaters and pool pumps, as well as a “smart outlet” that monitors power used by devices plugged into it and can turn those devices on and off. In addition, Mr. Martin said Intwine has developed two pieces of software that, when combined, would let utilities monitor their customers’ energy use and, in some cases, control it. Utilities that use the software programs could offer consumers discounts or other benefits to get them to agree to let the utility turn off or turn down certain appliances when the grid is under stress, Mr. Martin said. A few utilities have committed to testing some of Intwine’s technology, Mr. Martin said, adding that the company could sell products to utilities, retailers and vacation property managers. Utilities’ attitudes toward smart grid investments have changed from two years ago, when they simply were trying to decide whether they should implement technologies such as Intwine’s, Mr. Martin said. “Now the conversations are, ‘How are we going to do it?’” he said.
Eaton’s new grid guy Eaton Corp. also has started paying more attention to the market for smart grid technology, said Doug Dillie, director of smart grid solutions for Eaton. It was only a year ago that Eaton created Mr. Dillie’s position, which involves looking for opportunities in the smart grid sector and helping various departments market smart grid products. Eaton already sells some smart grid products, such as a network protector designed to spot grid problems and to reroute power to prevent big outages. Mr. Dillie said Eaton also is in a good position to develop products that take advantage of real-time
with the e Cox Businesss Inte ernet Pro oductiv vity Pacckage It’s time for more speed, better customer service & 24/7 technical support for
only
$24
99
/mo*
Includes these added-value features! • Download/upload speeds of 6 Mbps/2 Mbps • 1 Free Static IP • 10 GB of Cox Business Online Backup • Cox Business Security Suite for 10 PCs • 10 email addresses • Free access to My Account • Free Professional Install • 30-day money back guarantee
* Offer expires 6/30/2011 and is available to new subscribers of Cox Business Internet in Cox, wired, serviceable locations in Connecticut and Ohio. Minimum 2 year term required. Productivity Package including Cox Business Internet with download/upload speeds of 6 Mbps/2 Mbps, 1 Free Static IP, 10 GB of Cox Business Online Backup, Cox Business Security Suite for 10 PC’s, 10 company name email addresses, Free access to My Account, Free WiFi access at locations listed on www.coxfreewifi.com, Free 24 x 7 technical support, Free standard professional installation and a 30 day money back guarantee. In year 2, your monthly service rate will increase to $44.99 per month. Cox cannot guarantee uninterrupted or error-free service or the speed of your service. Rates and bandwidth options vary and are subject to change. Discounts are not valid in combination with or in addition to other promotions, and cannot be applied to any other Cox account. Services not available in all areas. Other restrictions apply. © 2011 CoxCom, Inc., d/b/a Cox Communications New England or Cleveland. All rights reserved. CTCLE
pricing — a concept where utilities would charge customers more to use electricity during peak hours, when strain is put on the grid. Mr. Dillie said few technical limits exist to developing both the technology that would allow utilities to send customers real-time prices and the equipment and appliances programmed to turn off or on based on those prices. However, Mr. Dillie said he believes it will be a long time before that technology becomes prevalent if the federal government doesn’t pass a law giving utilities an incentive to use it. “As a country, we really have to start walking the walk, not just talking the talk,” he said. Other area companies are working in the smart grid space as well.
The evolution goes on Rockwell Automation, which is based in Milwaukee but has operations in Mayfield Heights, Twinsburg and Warrensville Heights, already sells products designed to help factories monitor how they use electricity, water and other resources. Some factories already receive realtime information about electricity prices, so Rockwell — with the help of software developers in Mayfield Heights — eventually plans to create software that would allow factory machines to use that information to make decisions on their own, said Dave Mayewski, sales development leader for the company. “There’s a lot of room to reap further benefits,” Mr. Mayewski said. Acense LLC of Twinsburg is working on a sensor designed to detect acetylene gas in power transformers. The gas is given off by power arcs that occur during malfunctions, such as when insulation in the transformer breaks down. The company was formed in 2009 by Jack Harley, CEO of FirstPower Group LLC, a Twinsburg company that specializes in maintaining circuit breakers and compressors used by utilities. Mr. Harley sees smart grid technologies as another part of the overall evolution that the grid has been going through since it was created. After all, he’s been working on Acense’s technology for nine years. “I think this evolution is going to continue,” he said. ■
BUSINESS LEADERS INVITED TO FIND A CURE FOR CANCER
Presents…..
Corporate Recruitment Breakfast CLEVELAND Ritz-Carlton June 8, 2011 – 7:30 a.m.
Presenting Speaker: Ed FitzGerald Cuyahoga County’s First County Executive
AKRON University of Akron’s Martin University Center June 9, 2011 – 7:30 a.m.
Presenting Speakers: Harry Curley & Frank Hill, PRC Medical
Call 1-866-791-2688 or visit www.cox.com/business
Business®
Admission is free but space is limited.
Contact Sara Thorne-Briechle at 216.910.1226 by June 3.
20110523-NEWS--9-NAT-CCI-CL_--
5/19/2011
3:07 PM
Page 1
MAY 30 - JUNE 5, 2011
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
9
Esteemed chef prepares to launch second ‘green’ eatery Jonathon Sawyer set to open Noodlecat near flagship E. 4th St. tavern By KATHY AMES CARR kcarr@crain.com
Jonathon Sawyer has catapulted The Greenhouse Tavern during its two years in existence to the top of an increasingly competitive group of marquee Cleveland restaurants that garner national praise. That same momentum is moving forward the 31-year-old chef’s business expansion plans. This July, at 240 Euclid Ave., he plans to open Noodlecat, a Japanese noodle shop just around the corner from its sister on East Fourth Street. “It’ll be about sitting down, smiling, having some noodles, then getting back to work,” said Mr. Sawyer, one of Food & Wine magazine’s best new chefs of 2010. The two restaurants combined will employ more than 100 workers. Mr. Sawyer expects The Greenhouse Tavern’s sales this year to top last year’s $3 million mark. He hopes to do $1 million in sales at Noodlecat. Mr. Sawyer is transplanting at Noodlecat many of The Greenhouse Tavern’s environmentally conscious philosophies and its commitment to infusing locally sourced foods into its menu. And if all goes well, Noodlecat will be the second certified-green restaurant in Ohio, the first of which is The Greenhouse Tavern. Green restaurants are certified by the Green Restaurant Association based on water efficiency, waste reduction, use of sustainable furnishings and building materials, sustainable food offerings, energy use, and chemical and pollution reduction. There are 330 certified-green restaurants in the United States, said Jennifer Fleck, spokeswoman for the Boston-based association. Recycled materials and reclaimed furniture enrich Noodlecat’s 2,000square-foot space. The reused materials include science lab tables harvested from John Carroll University that will be used as dining room tables to reclaimed bleachers from a Lakewood park that will serve as chair rails and benches. Because Noodlecat’s space, owned by East Fourth Street developer MRN Ltd., needs little buildout, Mr. Sawyer said the project will cost only $160,000. The Greenhouse Tavern’s project cost was $1.2 million, though the 200-seat establishment has more than double the capacity of the 83seat Noodlecat. Noodlecat, with Greenhouse
Tavern chef Brian Reilly at the helm, will serve traditional and modern Japanese noodles, interpreted with local ingredients. Think crispy veggie tempura soba with seasonal vegetables and miso paste or pork belly shoyu ramen with spinach, bamboo shoots, scallions, soy sauce braised egg and snap peas. Most menu items will range from $10 to $14. All noodles will be vegetarian-based, made by Ohio City Pasta. Tammy Oliver, spokeswoman for MRN Ltd., said in an email that the developer is pleased its property can be home to another Jonathon Sawyer restaurant. “Downtown needs more streetlevel, pedestrian-patron friendly businesses, and Noodlecat will
surely deliver the goods — in the form of delicious Sawyer creations,” Ms. Oliver said. Staffers earlier this year were sent to train at New York City inspirations such as Momofuku Ssam Bar and Momofuku Noodle Bar. “We want to be ahead of the curve,” Mr. Sawyer said. “Whatever Chicago or New York is doing, we want to be doing.” Meanwhile, Mr. Sawyer, business partner and wife Amelia ZatikSawyer, and partner Jonathan Seeholzer over the next year or two expect to unveil two more concepts, one planned for downtown and one on Cleveland’s East Side, though Mr. Sawyer could not discuss specifics. ■
JASON MILLER
Jonathon Sawyer, chef and owner of The Greenhouse Tavern and Noodlecat
When your capital works harder, you can rest easier.
GET DAILY NEWS ALERTS FROM CRAIN’S ! Register for free e-mail alerts and receive: ■ The Morning Roundup: A collection of the day’s business news from Ohio’s daily papers ■ Daily headlines: A collection of Crain’s-produced news and blog items from the day ■ Small Business Report: A weekly guide to small business news
SIGN UP NOW AT: CrainsCleveland.com/register
Improve your cash flow and strengthen your business. Cash flow is essential to the success of your business. Fifth Third’s comprehensive suite of Cash Management solutions can help maximize your receivables for quicker access to capital. Our Business Bankers will take the time to listen, so we can recommend a customized solution for your specific business needs. Let’s start the conversation today. Stop in your local Fifth Third Bank, call us at 877-804-2091, or visit 53.com/workingcapital.
Fifth Third Bank, Member FDIC.
Equal Housing Lender.
20110523-NEWS--10-NAT-CCI-CL_--
10
5/19/2011
4:38 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 30 - JUNE 5, 2011
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Told you so
A
deal is a deal. And, thanks to Ohio voters, Dan Gilbert and Penn National Gaming Inc. managed to swing a sweet deal for themselves when they convinced enough voters back in November 2009 to pass a constitutional amendment that gave them the right to build casinos in Cleveland and three other cities. Now it’s put up or shut up time for Gov. John Kasich and his Republican colleagues in the Legislature. Unless they’re prepared to go back to voters to amend the terms of that deal, they ought to pack up their objections to it so that they don’t further undermine the process of getting the casinos up and running. Keep in mind that we’re not fans of casinos. We urged Ohioans in October 2009 to vote against the casino amendment put forth by Mr. Gilbert and Penn National precisely because it would set in constitutional stone the $50 million, one-time licensing fee they’d pay the state per casino and the 33% cut of casino revenue the state could collect as a tax. We warned then that if the state “later believes the operators’ share of the take here is too generous relative to other states, it wouldn’t be easy to adjust that figure.” We also wondered whether the state could have done better if the licenses were awarded by competitive bidding. But, the people spoke a month later and a majority voted for the amendment, which gave Mr. Gilbert a constitutionally sanctioned monopoly to operate one casino each in Cleveland and Cincinnati and Penn National the sole right to run a casino in Columbus and another in Toledo. We don’t remember too many politicians of either party raising their voices with us back in the fall of 2009 to object to the terms of the Gilbert-Penn National deal. But with the state still scrounging for revenue here in 2011, Gov. Kasich and his cohorts are suggesting that the casino operators have gotten off easy and should be paying more in the way of licensing fees and taxes. The Ohio House in early May went so far as to include in the state’s two-year budget bill a provision that would apply Ohio’s commercial activity tax of 0.26% to all casino wagers, not just to the casinos’ take after winnings are paid off. That action, plus comments by the governor that Ohioans “got a bad deal” under the casino amendment, have created needless business uncertainty for the casino developers. Construction work that had been flying along inside the Higbee Building to transform the former department store into Phase One of Cleveland’s casino has been brought to a halt by the joint venture established by Mr. Gilbert and Caesars Entertainment Corp. to create the gaming hall. They don’t want to proceed without knowing whether the $350 million investment they are prepared to make in the casino will pay off in a manner that is worth the substantial expenditure. For a bunch that claims to be pro-business, the governor and his fellow Republicans are sending a negative signal in this episode about the state’s willingness to honor its commitments. It shouldn’t be when it suits their convenience.
FROM THE PUBLISHER
Awards to highlight HR executives
W
University’s snazzy new student center. e’re still trying to do what we Inside this issue, you’ll find a special can at Crain’s Cleveland supplement explaining EDGE and our Business to find and applaud joint awards program. our region’s unsung busiSo now, we plan to shine the spotlight ness heroes, and you can help. on another person who is a critical factor We started this process a few years ago at each and every one of Northeast when we began holding an annual event Ohio’s businesses and organizations — designed to honor the area’s chief finanthe human resources executive. cial officers. The thought was We’ve partnered with Howard that plenty of attention gets BRIAN & O’Brien to create a new heaped on a company’s chief TUCKER recognition program that we’re executive — and rightly so — excited about, called the Archer but that the man or woman Awards, so named because the working the numbers was a cruvery best HR executives help cial part of the success of any build their organizations’ success enterprise, whether for-profit or by creating the best mix of nonprofit, large or small. people, talent and culture to Thus was born our annual “hit their mark.” “CFO of the Year” event, sponWe are accepting nominasored by Marsh, which last year tions at www.CrainsCleveland.com/archer attracted a sold-out crowd of more than for a variety of categories within the hu600 for a night of celebration and uberman resources universe, both in public networking. and private businesses as well as nonThis past week, we partnered with profit organizations. Categories include: EDGE, our region’s economic and entreHuman Resources Executive of the Year, preneur development group, for a heady Innovation, Lifetime Achievement, Citinight in the ballroom of Cleveland State
zenship (philanthropy/community service) and Rising Star (recognizing the achievements of the next generation of our top HR professionals). The winners will be profiled in a special section in our Aug. 8 issue, and feted at an evening event at LaCentre on Aug. 17. **** CASINO STANDOFF: Gov. John Kasich wants more money from the two groups that won voter approval for Ohio’s four casinos, and has hired bigbucks consultants to help him do that. Consequently, Dan Gilbert, Cavaliers owner/Rock Financial CEO and casino winner, has stopped work inside what was to be the glitzy temporary gambling house in the former Higbee Building on Public Square. This I don’t get. The governor is upset, but that’s what happens when groups sponsor — and win — public referenda on such issues. They get what they hoped for because they spent enough money to win voter support. Kinda like how governors are elected … ■
LETTERS
Ohioans have lost appetites over gun law ■ In his May 2 commentary, Brian Tucker expressed a negative view toward legislation allowing guns into bars, restaurants and open-air stadiums in Ohio. In the two weeks since, three opposing viewpoints have appeared in your Letters to the Editor, all supporting guns and Second Amendment rights. Since the majority of us don’t carry guns (98.7% of the U.S. population does not belong to the National Rifle Association), I feel an obligation to offer a voice in support of Mr Tucker’s perspective. I, along with my large family, subscribe to a different interpretation of the Second Amendment, which includes the opening conditional clause, “A well regulated militia being necessary to the security of a free State …” Since I do not belong to militia, I do not feel it necessary to carry a
weapon designed to kill people into my local food service establishment, nor do I feel my rights are curtailed if I cannot. The First Amendment gives us all the right to express our opinion. In our culture, unfortunately, we give the most press to the loudest and most strident voices, even when they are in a small minority. The 1.3% do not speak for me, but Mr. Tucker did. Thank you. Jim Smith Parma Heights
What a view ■ I read your May 16 editorial, “Quit playing,” with growing frustration. What is striking is your advocacy of higher taxes to close the budget gap. Ohio is currently ranked 28th according
to the tax foundation in income tax. You suggest that more revenue is warranted by increasing taxes on business. Has it escaped you that historically most of the post-recession growth is created by small companies, and most small and startup companies are S corps, which are the most affected by tax increases? What we need in Ohio is more revenue generated from more business, not more taxes. Jim Kuras Macedonia
Sad state of affairs ■ Your comments in your May 16 editorial, “Quit playing,” almost match my letter to the editor that you published See LETTERS Page 11
20110523-NEWS--11-NAT-CCI-CL_--
5/19/2011
4:38 PM
Page 1
MAY 30 - JUNE 5, 2011
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
11
THE BIG ISSUE Should Gov. John Kasich seek to raise the taxes on casino operators, who have halted construction on the new casinos because of concerns their projects will be unaffordable if taxes on casino revenue are raised? PATRICIA JOHNS
ROBERT SHELTON
Pittsburgh
Bay Village
I don’t believe so. I believe they should be able to find other ways to get revenue.
No. Originally I wasn’t too thrilled with casinos anyway. Since they’ve already passed the law and construction has already begun, people are counting on jobs and the revenue. Maybe they could raise the taxes in the future.
DENISE SHELTON
ERIC DOMBROWSKI
Bay Village
North Royalton
Yes. I just think that it’s good for the public to get more revenue that way.
I disagree because the deal was made. (Gov. Kasich) is holding the project up.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
LETTERS continued from PAGE 10
March 28. Gov. Kasich (who I believe your paper endorsed) is on a path to make Ohio the Alabama of the North. His idea of low (or no) taxes which leads to low (or no) public services will enrich his donors at the expense of the majority. If you set up a system where the public schools are forced to lay off teachers and drastically increase classroom size, you then can say “we need more vouchers for private schools because the public schools are failing.” It’s a self-fulfilling prophecy. And guess who profits from more unaccountable charter schools? Why, it’s folks like David Brennan and his White Hat Management company, as an example. Here in Cleveland, the city was just forced to lay off police and firemen due to major cuts from the state. But in the governor’s eyes, this is a good thing, since those pesky police and firemen are the cause of the state’s financial problems anyway. I just hope the voters (and especially those who didn’t bother to even show up on Election Day) are thrilled with what they’ve brought to Columbus. They deserve it. Alan J. Larris Copley
Fear for your safety ■ To the voting residents of the City of Cleveland: Please save this letter for your next trip to the voting booth as an example of how low this once fine city has fallen. I would argue that an executive assistant straight from Bryant & Stratton could provide more leadership for the city of Cleveland than Mayor Frank Jackson in doing his job. His recent cuts in the police and safety forces clearly show his lack of leadership, courage to do what is right and his clear lack of intellect to deal with even simple budgetary measures. Balancing a budget, I would argue, is a relatively simple thing to do: Look at incoming revenues, look at all expenditures, prioritize those expenditures in terms of importance (hint: police and firemen — very top priority), and then start doing what every liberal hates to do — start cutting. Look, every single person reading this has gone through this process at some point in their lives. This is not hard. Yet politicians make it look like quantum physics. The courage comes in assigning the priorities for the expenditures and making the “right” cuts. The lack of intellect shows in the priorities and the final product. Tri-C, for
its part in Mayor Jackson’s education, might want to look at raising the standards in its finance, accounting and critical thinking classes. Republican or Democrat, I think both sides would agree that the first and foremost job of government is to provide for the safety of its citizens. So, then, why would you cut police and fire safety positions yet keep the recreation department and its pools open? How do you go to sleep at night knowing that you laid off a policeman, yet you kept the pools open for the summer? I would be ashamed of myself. Why cut police and firemen yet keep a city-owned golf course open that loses money every year? Why does the city still own it if is losing money? Who is in charge of it and why have they not been fired yet for incompetence? Why does the city have 19 council positions in a city half the size of Columbus, which operates with
EMBA
only seven? I cannot wait for the stupidity of the council responses to this letter justifying their ward seats. I know, I know, it is Gov. Kasich’s fault. The mayor of Cleveland should know and understand that the governor has to balance the budget. So, unless Mayor Jackson has a way of making a stone roll uphill instead of downward, the impending cuts from Columbus should be no surprise. How many of us woke up yesterday confident that Columbus would be sending more money our way? In addition, at what point does a politician ever take responsibility for anything anymore? Our president has made this an art form — never take any responsibility for anything that is bad, never take responsibility, period. Same thing applies for the mayor of Cleveland. Quit blaming the governor, act like a man and take responsibility for the fiscal operation of the city.
Honestly, could one imagine the silence of the room after a political speech on a serious matter whereby the politician actually took responsibility for something? Literally, I think the little bit of traffic that Cleveland has would stop. Look, this economic climate is not going to change anytime soon. Think the cuts were difficult now? Wait. In 10 years, it will be even more difficult to run a city. There is no magical amount of money that is going to come from Columbus or even Washington that is going to help us. So, as you are submitting your next vote, remember the incompetent efforts of your current mayor. Democracy is a wonderful thing; it is self-correcting over time. We as the voters provide the self-correction. Remember to do your part. Lou Bartulovic Twinsburg
WEATHERHEAD EXECUTIVE MBA
CONGRATULATIONS TO THE EMBA CLASS OF 2011 STARTING FRONT ROW, LEFT TO RIGHT SETH GLAUBERMAN VICTORIA TIFFT PRABHAT SHARMA ROBERT APPLEBAUM DANICA ZEISE VICENTA GASPAR-YOO ERIN DORSEY STEVE MILLARD GAVIN TURNER KAREN DAVILA JOSEPH MICLAT JORGE GARCIA-ZUAZAGA SCOTT ANGELO WILLIAM BONDAR BRIAN CAULKINS MICHAEL KOUTSIS
20110523-NEWS--12-NAT-CCI-CL_--
12
5/19/2011
2:52 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Sports talent firm scores within field Shaker Heights-based TeamWork Online fills high-profile positions By MICHELLE PARK mpark@crain.com
It appears more people believe this spot in the virtual world is the place to draft sports talent and to be drafted. The scoreboard for TeamWork Online LLC in Shaker Heights reveals fast-pitched growth for the webbased sports jobs network, which is manned by a local staff of three, including founder Buffy Filippell. Sports franchises, colleges and even a professional bull riders’ association use the network to fill positions ranging from internships to jobs commanding $300,000 salaries, Ms. Filippell said. On Thursday, May 12, more than 970 jobs were there for visitors’ viewing. TeamWork Online counted 734 employer users in the first quarter of 2011, up 21% over the first quarter of 2010 and 39% over first quarter 2009. And its number of applicants per job averaged 135 last quarter, up 27% from the year-ago period and nearly 57% higher than in the first quarter of 2009. Ms. Filippell said the number of hires the network facilitated — 2,154 in the first quarter — represented an increase of nearly 29% over the first quarter of 2010. Ms. Filippell had worked as an
MAY 30 - JUNE 5, 2011
GOING PLACES JOB CHANGES CONSTRUCTION
executive recruiter since 1987 and in 1999 digitized her process and branded it TeamWork Online. Some of the growth, she acknowledged, is due to an improving economy. Plus, the company in 2009 hired its first full-time salesperson. Sports hiring is up, said Tad Carper, spokesman for the Cleveland Cavaliers, but he believes TeamWork Online wouldn’t be growing if it didn’t provide the high-caliber service it does. Cleveland’s NBA team has used the network for more than a decade, he estimated. “They have grown and developed a network and a reputation that is just unparalleled in the sports industry,” Mr. Carper said. “They’re very thorough in getting the kinds of information that we need to review to evaluate candidates.” Another potential reason for the network’s growth, Mr. Carper said, is that some of today’s sports upper management was hired through the site and now those managers are using it to hire others. Daniel Helm was hired through the network a half-dozen years ago, when he landed a job with the West Virginia Power, Charleston’s minor league baseball team. He joined the Lake Erie Crushers, an independent league baseball team in Avon, as vice president of business operations in late 2009 and uses TeamWork Online exclusively to hire interns and staff. “I feel like I’m (their) No. 1 priority, like I’m the top team in their book,” Mr. Helm said. “They make you feel like that every time you have a conversation with them.” ■
PROJECT AND CONSTRUCTION SERVICES INC.: Gene Baxendale to vice president, business development.
ENGINEERING ENGINEERED CONCRETE STRUCTURES: Scott Jacob to director of business development, DesignBuild Division.
FINANCE OHIO COMMERCE BANK: Steven Skaggs to vice president, senior credit officer.
FINANCIAL SERVICE CEDAR BROOK FINANCIAL PARTNERS LLC: Azim Nakhooda to managing principal; Peter Franz to chief investment officer.
GOVERNMENT CITY OF MEDINA: Kimberly Rice to economic development director.
INSURANCE MEDICAL MUTUAL OF OHIO: Ann Levin to manager, regulatory compliance.
LEGAL TUCKER ELLIS & WEST: Terri Brown to director of marketing and communications. VORYS, SATER, SEYMOUR AND PEASE LLP: Laura A. Kulwicki to of counsel.
MANUFACTURING MOEN INC.: Tim McDonough to vice president, global brand marketing.
NOVOLYTE TECHNOLOGIES: Ralph Wise to chief technology officer, Energy Storage Business. TRANSFORMER ENGINEERING LLC: Jeff Boyd to president, North and South America; Mark Scudiere to vice president, global sales and marketing.
Jacob
Levin
Brown
Kulwicki
McDonough Boyd
Scudiere
Kogelschatz Millis
Lewis
Green
MARKETING ADCOM COMMUNICATIONS INC.: Eric Kogelschatz to director of strategy and insights; Diane Millis to account executive; Brendan Lewis to assistant account executive. THUNDER::TECH: Alexa Marinos to account executive; Matt Stevens to manager of multimedia services; Andrea Aber to account manager; Marc Theodore to operations manager; Justin Smith to interactive developer; Marissa Mendel to public relations coordinator.
NONPROFIT CLEVELAND ORCHESTRA: Jacob Nissly to principal percussionist; Katherine Bormann and Ying Fu to first violin section; Jeffrey Zehngut to second violin section. ELIZA JENNINGS SENIOR CARE NETWORK: Lisa Green to executive director, Eliza Jennings at Home; Heather Freemont to executive director, The Renaissance.
Freemont
LUTHERAN HOME AT CONCORD RESERVE: Katie Palm to clinical dietitian.
tives; Bob Latina to senior account executive.
REAL ESTATE
BOARDS
CB RICHARD ELLIS: Lisa Santa Maria to transaction coordinator, Global Corporate Services Group.
AMERICAN ASSOCIATION FOR HOMECARE: Joel D. Marx (Medical Service Co.) to chairman.
HOWARD HANNA: Janis Caesar to sales associate, Aurora.
METALS SERVICE CENTER INSTITUTE, NORTHERN OHIO CHAPTER: John Zasadni (Yarde Metals) to president; Tim Sinclair to first vice president; Rush Williams to second vice president; Dennis Phelps to treasurer; Michael Procop to secretary.
MOHR PARTNERS INC.: James Robey to managing director.
SERVICE ACTION MANAGEMENT SERVICES: Michelle R. Andree, Susan E. Moyer and Mark K. Hopton to senior account executives.
AWARDS
CASNET: Jeff Comer to chief technology officer.
DIVERSITYBUSINESS.COM: Scott S. Hardwick (Rockwell Automation) received a 2011 Champion of Diversity Award.
PARK PLACE TECHNOLOGIES: Rachelle DeLuca and Mark Casey to business development representa-
Send information for Going Places to dhillyer@crain.com.
TECHNOLOGY
Leadership. It’s what we promote at Apple Growth Partners. Our irm teaches leadership skills and extends
WHAT MAKES CLEVELAND SHINE?
management opportunities to our staff. If you want to be a leader in your profession, I’d like to share my Apple Growth Partners experience with you. See my story.
Jason Bogniard, MBA, ASA, AVA, EA Principal jbogniard@applegrowth.com
From green cleaning techniques to applied Six-Sigma & Kaizen ƉƌŝŶĐŝƉůĞƐ͕ ŽƵƌ ŝŶŶŽǀĂƟ ǀĞ approach makes GCA much more than a cleaning company. We’re your janitorial and ĨĂĐŝůŝƟ ĞƐ ŵĂŝŶƚĞŶĂŶĐĞ ǀĂůƵĞͲ added partner. We’re GCA Services Group, headquartered in downtown Cleveland.
Get the free mobile app at
http://gettag.mobi
For a FREE site analysis, call James Norton at 216-536-7384 or email jnorton@gcaservices.com
20110523-NEWS--13-NAT-CCI-CL_--
5/19/2011
9:55 AM
Page 1
WITH VERIZON TECHNOLOGY, YOU’RE NOT JUST BOOSTING PRODUCTIVITY, YOU’RE INCREASING POTENTIAL. NEW! SAMSUNG 4G MOBILE HOTSPOT OR VZW 4G LTE USB MODEM 551L Connect on the fastest 4G network in America
$
99
$149.99 2-yr. price – $50 mail-in rebate debit card. New 2-yr. activation on a 4G EACH Mobile Broadband plan required.
99
NEW! ThunderBolt™ by HTC VZW 4G LTE USB Modem 551L
Samsung 4G LTE Mobile Hotspot
Business Apps
ThunderBolt™ by HTC
Verizon Exclusive
Verizon’s first 4G LTE smartphone
$
TO GET THE BEST TECHNOLOGY FOR YOUR BUSINESS, SEE A SMALL BUSINESS SPECIALIST AT A VERIZON STORE TODAY.
99
249
No rebate required. New 2-yr. activation & data pak required.
1.800.VZW.4BIZ(4249) verizonwireless.com/smallbusiness
Activation fee/line: $35 IMPORTANT CONSUMER INFORMATION: Subject to Cust Agmt, Data Plan & credit approval. Up to $175 early termination fee ($350 for advanced devices). Offers & coverage, varying by svc, not available everywhere; see vzw.com. While supplies last. Restocking fee may apply. LTE is a trademark of ETSI. © 2011 Verizon Wireless. D5031
20110523-NEWS--14-NAT-CCI-CL_--
14
5/20/2011
3:05 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
Date filed: April 14, 2011 Type: Employer’s withholding Amount: $154,900
TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.
LIENS FILED Gigante Construction Co. 16142 York Road, North Royalton ID: 34-1825115 Date filed: April 5, 2011 Type: Employer’s withholding, unemployment
WWW.CRAINSCLEVELAND.COM
Amount: $691,906 SJT Enterprises Inc. 28045 Ranney Parkway, Suite L, Westlake ID: 34-1638133 Date filed: April 19, 2011 Type: Employer’s withholding Amount: $669,886 SJT Enterprises Inc. 28045 Ranney Parkway, Suite L, Westlake ID: 34-1638133 Date filed: April 19, 2011 Type: Employer’s withholding, unemployment Amount: $317,132 Apple Child Care Inc. 6827 Bunker Road, North Royalton ID: 34-1489009
J & R Health Associates Inc. 26612 Center Ridge Road, Westlake ID: 34-1483083 Date filed: April 7, 2011 Type: Employer’s withholding, failure to file complete return Amount: $138,136 Ran-Dan Transport Inc. 2506 Grovewood Ave., Parma ID: 92-0184993 Date filed: April 5, 2011 Type: Employer’s withholding Amount: $111,863 C & C Investors Inc. 4411 Clark Ave., Cleveland ID: 34-1655137 Date filed: April 26, 2011 Type: Employer’s withholding, unemployment, corporate income
MAY 30 - JUNE 5, 2011
Amount: $104,302 Doona Enterprises LLC Stone Mad 1306 W. 65th St., Cleveland ID: 32-0233883 Date filed: April 26, 2011 Type: Employer’s withholding, unemployment Amount: $100,297 Lakeside Building Services Inc. P.O. Box 470433, Broadview Heights ID: 51-0585756 Date filed: April 19, 2011 Type: Employer’s withholding Amount: $99,521 County Cork LLC 22901 Millcreek Blvd., Suite 360, Highland Heights ID: 34-1954256 Date filed: April 7, 2011 Type: Employer’s withholding Amount: $79,271
Nita Childcare LLC 3655 Lee Road, Shaker Heights ID: 20-5602962 Date filed: April 21, 2011 Type: Employer’s withholding, unemployment Amount: $57,999 Bar West Corp. Red Lantern 17446 Lorain Ave., Cleveland ID: 34-1279547 Date filed: April 7, 2011 Type: Employer’s withholding Amount: $55,534 FTAC Inc. 5310 Hausermann Road, Parma ID: 20-5743672 Date filed: April 7, 2011 Type: Employer’s withholding Amount: $47,920 Academy of Learning Enrichment Center 25988 Highland Road, Richmond Heights ID: 26-4566770 Date filed: April 26, 2011 Type: Employer’s withholding Amount: $45,175 Gray Container LLC 2800 E. 90th St., Cleveland ID: 20-3598415 Date filed: April 14, 2011 Type: Employer’s withholding Amount: $44,298 Extreme Cabling Inc. 17216 Sedalia Ave., Cleveland ID: 25-1905442 Date filed: April 5, 2011 Type: Employer’s withholding, unemployment Amount: $41,736 Action Calibration Services Inc. 17820 Englewood Drive, Suite 13, Middleburg Heights ID: 34-1879978 Date filed: April 14, 2011 Type: Employer’s withholding Amount: $38,349 Hal-Comm Inc. 9000 Bank St., Valley View ID: 34-1870185 Date filed: April 26, 2011 Type: Employer’s withholding, corporate income Amount: $32,316 Westfall Legal Services LPA 75 Public Square, Suite 914, Cleveland ID: 20-2368829 Date filed: April 28, 2011 Type: Employer’s withholding Amount: $31,312 Sam-Tom Inc. Royce Security Services 3740 Euclid Ave., Suite 102, Cleveland ID: 34-1965620 Date filed: April 28, 2011 Type: Employer’s withholding, unemployment, corporate income Amount: $29,939 Baker Motors Towing Inc. 12214 Detroit Ave., Lakewood ID: 20-5027878 Date filed: April 7, 2011 Type: Employer’s withholding Amount: $27,674 JSSE Inc., Anago of Columbus 7055 Engle Road, Middleburg Heights ID: 56-2359423 Date filed: April 7, 2011 Type: Employer’s withholding Amount: $25,170 Paul E. Larson LPA 815 Superior Ave. E., Suite 1201, Cleveland ID: 20-4936045 Date filed: April 21, 2011 Type: Employer’s withholding Amount: $24,816
20110523-NEWS--15-NAT-CCI-CL_--
5/19/2011
3:48 PM
Page 1
INVESTORS NOW MORE CAREFUL They’re involving themselves earlier, often after years of not knowing details
By MICHELLE PARK mpark@crain.com
M
ichael Cicek no longer counts himself among the investors who don’t know how they’re
invested. Previously invested heavily in stocks, Mr. Cicek and his wife lost roughly 35% in their portfolios when the market crashed, almost all of which they’ve recovered in the years since. Before the downturn, “we were in it, but we didn’t know why we were in it,” said the 36-year-old Bainbridge resident. Their investment adviser’s words
“went in one ear and out the other.” “That’s not going to cut it anymore,” said Mr. Cicek, who’s been investing for about 17 years. Today, Mr. Cicek is involving himself more than ever in the investing process, asking questions, requesting diversification and monitoring his statements. And he’s far from alone. Local advisers say that while investors appear to be growing hungrier for investment growth as the economy recovers, many are reading the menu more closely and continue to have a diminished appetite for risk. See CAREFUL Page I-7
LAUREN RAFFERTY ILLUSTRATION
INVE$TINGGUIDE2011 INSIDE: Don’t delay estate plans PAGE I-2 ■ Target-date funds PAGE I-2 ■ Superstar 10 PAGE I-4 ■ Market valuations PAGE I-5
Poor service, not financial losses, drives some to switch advisers By MICHELLE PARK mpark@crain.com
During sustained downturn, communication becomes more important
“F
adviser. That’s where these people are saying, ‘Well, they don’t care about me.’” So they find someone else. It’s a recession lesson investment advisers continue to heed: The best advisers must communicate more to retain and attract clients. And retention efforts may be more important now than before: An April survey by Northstar Research Partners and Sullivan revealed that more than a third of investors indicated they’re willing
rankly,” Gene Luciano remarks, “it wasn’t the losses.” The people he knows who’ve changed investment advisers following the economic downturn didn’t make the switch because of the net worth they lost when their portfolios plunged, he explained. “Everybody got losses,” said Mr. Luciano, an Avon investor in his early 60s whose adviser is Cedar Brook Financial Partners LLC in Pepper Pike. “I think a lot of people don’t get attention from their
to switch firms and advisers in the coming year. Many say they are not getting the attention they need. When the market is doing well, “I don’t think people expect much from their adviser,” remarked Mark Tepper, president of Strategic Wealth Partners in Seven Hills. “This increased volatility is becoming the new normal, and it’s becoming more and more important for people to receive a better level of service from their advisers.” Local advisers say they’ve lost
only a few clients in recent months. Some say they’ve lost them for reasons unrelated to the firm’s performance, for example, a client’s relocation. Several advisers, though, note they’ve added clients who left other firms, displeased with the way their portfolios were managed previously. In the last 12 months, Mr. Tepper has added some 50 new household clients, increasing his firm’s assets under management to $82 million from $40 million. He believes the “constant communi-
cation” the firm provides, which includes weekly market updates and quarterly conference calls, has a lot to do with that.
Constant communication In Northeast Ohio, where the population isn’t growing, the only way you grow is by stealing others’ clients, said Frank Fantozzi, president and CEO of Planned Financial Services in Brecksville. But some advisers say some of their new clients didn’t have advisers before them. In seeming unison, smaller firms say they are the beneficiaries of a See SERVICE Page I-9
20110523-NEWS--16-NAT-CCI-CL_--
I-2
5/19/2011
1:50 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
INVE$TINGGUIDE2011
MAY 30 - JUNE 5, 2011
Despite tax flux, estate planning is vital Target-date funds draw support, some criticism By JAY MILLER jmiller@crain.com
and in the number of estates that were subject to the tax. At the time, only estates of less than $1 million were exempted from the estate tax. By 2009, only estates larger than $3.5 million for an individual or $7 million for a couple were taxed, at a 45% rate. Then the next year, 2010, the rate dropped to zero. But the Bush tax cuts were set to sunset and the estate tax would revert to its 2001 level for 2011. Then last December, as part of the messy year-end tax compromise, Congress and the president agreed to restore the estate tax for 2011 and 2012 at 35% after an exemption of the first $5 million for an individual and $10 million for a couple. Come 2013, the two-year extension will expire and the tax rate could revert to the 2001 level. Or it could be something entirely different. None of the attorneys or estate planners contacted for this story wanted to bet on the exemption or the rate. At the same time, Ohio Gov. John Kasich is saying he wants to end Ohio’s estate tax. He believes it is driving wealthy retirees from the state. Ohio is one of only 17 states with an estate tax and it has the lowest threshold. Estates of between $338,333 and $500,000 pay a 6% estate tax. For estates over $500,000 the tax is $9,700 plus 7% of the estate’s value. Planners are more focused on the federal tax changes, in part because it packs a bigger wallop and in part because it has been a political hot potato for more than a decade. Also, Gov. Kasich, a Republican,
J
ust because state and federal estate tax laws are in a state of flux, it doesn’t mean you should be putting off making decisions about your family’s financial future. Financial planners and trust and estate lawyers are in general agreement that putting off making a decision on an estate is actually a decision, and a bad one. “My simple message is keep doing what you’re doing,� said N. Lindsay Smith, name partner and leader of the estate and business planning group of Smith and Condeni LLP, an Independence law firm. “If you wait to see what our government is going to do you’re going to wait forever. By the time you get there they’re going to do something we never expected.� The advisers say that if you have a plan in place you may be able to tweak it to take advantage of the current situation. The big tweak being a change in the gift tax exemption. And if you don’t have a plan, they say, don’t wait for the dust to settle. The estate tax is on a roller coaster at the moment, at both the federal and state level. Both are in place for 2011, after a one-year federal estate tax holiday. After that, what the future holds is anyone’s guess. The up-and-down ride began in 2001, when the George W. Bush tax cuts began a gradual reduction in the rate of the federal estate tax
We put the
‘SIT’ in DEPOSIT remote merchant deposit
A deposit ASY Stop running all over town! The MiddleďŹ eld
wants the state estate tax killed, and the Republican Legislature is likely to grant him his wish. So with a foggy future, what’s a person to do? Some people, usually against advice, are waiting. “It’s been hard to get people to have any sense of urgency about action in the current environment,â€? said Molly Balunek, senior financial adviser with Inverness Holdings, a Beachwood investment advisory firm. “There’s a reluctance to act in the face of ambiguity.â€? However, the consensus among planners appears to be this: Don’t wait for the muddy water to clear. Erica McGregor, a trusts and estate attorney with Tucker Ellis & West LLP of Cleveland, said concerns about an untimely death, divorce and other family life changes generally override any concerns about taxes. “Fear about the uncertainty should not cause people to do nothing,â€? she said. “There are still good reasons to do (estate planning) now.â€? If a person hasn’t started an estate plan, this might actually be a good time to start, though it may take a little more planning. For someone starting with a blank sheet of paper, “it may take a little more thinking through where they are going,â€? said Jennifer Savage, a partner in the personal and succession planning practice group at Cleveland’s Thompson Hine LLP. “Because you can’t know what the rules are going to be.â€? A quirk in the way the new law was implemented gives people another reason to act now. “For high net worth individuals this is a good window of opportunity to transfer assets because unexpectedly, Congress gave us a $5 million gift tax credit this year and next year,â€? Mr. Smith said. “That came as a total surprise.â€? With the December compromise, while the estate tax was restored, the new law for 2011 and 2012 set the gift tax exemption at the same level as the estate tax exemption — $5 million. It had since 2002 been stuck at $1 million. In other words, the amount you could pass tax free to your potential heirs while you are alive suddenly — and probably temporarily — rose to $5 million from $1 million. â–
By DAN SHINGLER dshingler@crain.com
I
f all you know about investing is when you want to retire, so-called “target-date� funds are aimed directly at you. But there are varying opinions as to whether they’ll hit their mark. “Target-date funds are a strategy to reach people who are not comfortable making asset-allocation decisions,� said Phil Seuss, a partner with Mercer Consulting in Chicago, a proponent of the funds who also serves the firm’s Cleveland office with investment advice. The funds — which have been a default option for worker retirement plans since the Pension Protection Act of 2006, but have come under scrutiny since the recession — follow a simple principle: Stocks generally outperform bonds and other investments over long periods of time, but they are less liquid. So, the further away from retirement you are, the more heavily invested you should be in stocks, while you should invest more in bonds and liquid assets as you near retirement. A target-date fund manages that asset allocation problem with a formulaic approach. Tell the fund your “target date� for retirement, and the fund automatically invests your money with a mix of assets appropriate to your time line — and automatically reallocates those assets as you age. It’s a sound concept, but it’s not always the best one, say investment consultants such as Michael McKeown, associate vice president of Aurum Wealth Management Group in Mayfield Village. “Just because we’re both retiring in 2030, doesn’t mean I have the same risk tolerance that you do,� Mr. McKeown said, summing up one of his main arguments against target-date funds: they lump too many people into the same basket without taking into account individual circumstances. Target-date funds don’t do enough to take into consideration things such as what an investor’s liquidity needs will be once they
Banking Company }ÂˆĂ›iĂƒĂŠĂžÂœĂ•ĂŠ ĂŒÂ…>ĂŒĂŠ>Â?Â?ÂœĂœĂƒĂŠLĂ•ĂƒÂˆÂ˜iĂƒĂƒĂŠ ÂœĂœÂ˜iĂ€ĂƒĂŠĂŒÂœĂŠÂ“>ÂŽiĂŠ Vœ““iĂ€Vˆ>Â?ĂŠ`iÂŤÂœĂƒÂˆĂŒĂƒĂŠ
Stability
for your future.
Ă€Âˆ}Â…ĂŒĂŠvĂ€ÂœÂ“ĂŠĂŒÂ…iÂˆĂ€ĂŠ `iĂƒÂŽĂŒÂœÂŤÂ°ĂŠTake
For 100 years, RBC Wealth ManagementÂŽ has provided sound investment advice, exceptional service and an unbiased, independent perspective to help clients achieve their ďŹ nancial goals.
it EASY!
The MiddleďŹ eld Banking Company www.middleďŹ eldbank.com 888-801-1666 >ÂˆÂ˜ĂŠ"vwViĂŠĂŠnnn‡nĂ¤ÂŁÂ‡ÂŁĂˆĂˆĂˆĂŠĂŠUĂŠĂŠ7iĂƒĂŒĂŠĂŠ{{Ă¤Â‡ĂˆĂŽĂ“Â‡ÂŁĂˆĂˆĂˆĂŠĂŠUĂŠĂŠ Â…>Ă€`ÂœÂ˜ĂŠĂŠ{{ä‡ÓnĂˆÂ‡ÂŁĂ“Ă“Ă“ĂŠĂŠUĂŠĂŠ >ÀÀiĂŒĂŒĂƒĂ›ÂˆÂ?Â?iÊÊÎÎä‡xÓLJӣӣ >Â˜ĂŒĂ•>ÊÊÎÎä‡ÓÇ{‡ännÂŁĂŠĂŠUĂŠĂŠ"Ă€ĂœiÂ?Â?ĂŠĂŠ{{ä‡{ÎLJÇÓääÊÊUĂŠĂŠ iĂœLÕÀÞÊÊ{{ä‡xĂˆ{‡ÇäääÊÊUĂŠĂŠ ÂœĂ€ĂŒÂ?>˜`ĂŠĂŠĂŽĂŽĂ¤Â‡ĂˆĂŽĂ‡Â‡ĂŽĂ“Ă¤n
We share the conservative, proactive approach to risk management and rigorous operational discipline that has helped our parent company — Royal Bank of Canada (NYSE; TSX: RY) — earn its reputation for integrity and ďŹ scal responsibility.* (216) 774-8900 4VQFSJPS "WFOVF 4VJUF t $MFWFMBOE 0IJP
Create your path forward. * Royal Bank of Canada and RBC Capital Markets , LLC, carry separate balance sheets and are responsible for separate debts. Ž Registered trademark of Royal Bank of Canada. Used under license. Š 2011 RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.
retire, or the cost and valuation of stocks and other assets when they are purchased, Mr. McKeown says.
In the crosshairs To be sure, the funds have had their critics — especially in 2008 and 2009 when the stock market crashed, as did the value of target-date funds. Too many of them were too exposed to the equity markets, critics claimed. But according to Morningstar Inc., which tracks mutual funds generally, many target-date funds quickly redeemed themselves. “Target-date funds were subject to a maelstrom of investor ire and governmental scrutiny over the past year, and none more so than 2010 funds. At issue has been the funds’ 2008 losses, which were an ungainly 23% on average,� Morningstar wrote in a 2010 report on target-date funds, referencing funds invested with a 2010 retirement date. But, the report continues: “While governmental agencies and Senate subcommittees were convening hearings on the target-date industry in 2009, many 2010 funds were making back a good chunk of their investors’ money. In 2009, the average target-date 2010 fund returned a healthy 22.4%, with the top performer rising nearly 31%.� That’s a reason firms such as Mercer recommend the funds, especially to larger clients, Mr. Seuss said. The funds enforce a certain amount of contrarianism, said Mr. Seuss — they buy stocks as they are falling in price and sell them when they are rising, contrary to what the market is doing generally. That’s because, as stocks fall in price, they make up a smaller percentage of each investor’s holdings — and the fund must buy more stocks to bring the percentage of assets invested in stocks back up. The opposite happens when stocks rise in price, causing the fund to sell some of them at a profit.
Getting participants invested The funds are probably a worthy option for employers with hundreds or even thousands of employees in their plan, said Norm Klopp, managing partner of Midwest Investment Management LLC in Cleveland, which helps small employers in the area manage their employee retirement funds. Midwest doesn’t offer target-date funds, largely because its clients typically have fewer than 40 employees — and sometimes as few as 10. Companies that small can spend time with each employee, or their adviser can, to help each participant determine a specific asset allocation and investment plan. By working with each investor individually, many more factors than a target date for retirement can be considered, Mr. Klopp said. But employers with many more employees to worry about might not be able to work so closely with each one on their investments. For them, target-date funds probably have a place, he said. The success of target-date funds “is driven, in part, by this idea that we must get the participants invested,â€? Mr. Klopp said. “And anything that enables or forces a participant to be invested is a good thing.â€? â–
20110523-NEWS--17-NAT-CCI-CL_--
5/19/2011
9:59 AM
Page 1
INVE$TINGGUIDE2011
MAY 30 - JUNE 5, 2011
CRAIN’S CLEVELAND BUSINESS
I-3
Take steps to ensure savings yield healthy retirement income Several options available to protect balances
W
hen we think of our retirement savings, most of us focus on the balance we have in our 401(k) or 403(b) accounts. But it’s more important to know how much annual income your account balance safely can produce when you really need it. The good news is that this is not difficult to estimate. In addition, the retirement industry is developing new investment products within 401(k) and 403(b) plans that will help participants translate their account balances into income once they reach retirement age. Pending legislation also may be adopted that would require retirement providers to expand your statement to include not only your account balance but also an estimate of the income it would generate in retirement. It is important to remember that you have options on how to turn your savings into income at retirement. The following is a discussion of some of the most popular options, to help you determine how to get the most out of your account balance.
Periodic withdrawals The most common way to generate income from an account balance is to take periodic withdrawals from savings to fund living expenses in retirement. Experts say the “magic number” to withdraw each year is 4% to 5% of your account value, adjusted upwards each year for inflation. Anything higher than that and one risks eventually running out of money. Social Security, pension income and other assets such as brokerage, savings or IRA accounts, in addition to your 401(k) or 403(b) balance, collectively will fund your retirement. But even when all of these pieces are considered, some Americans are finding that the numbers do not add up, and they must delay their retirement or seek out other options.
life during retirement. While the investor is still working, the in-plan annuity may offer protection against the risk of a market drop (like the one we experienced in 2008), but will still be able to provide growth during times of positive market performance. Generally speaking, an in-plan annuity costs between 0.50% to 1.5% as a percentage of the account balance, on top of any other plan fees and expenses. At retirement, the product is “annuitized” to provide the investor annual income for life. Instead of needing to roll the account over to
ERICENDRESS
ADVISER an outside annuity provider, the investor is able to create an income stream from the balance within the plan. Further, as part of a group retirement plan, the investor may receive lower wholesale pricing than in the retail annuity market. The portability of in-plan annuities
is an issue that is being discussed in the retirement community. Currently, there is no clear answer to the question of what happens to the account if you leave your employer, or if your company replaces its current retirement provider and the new provider does not offer such a feature. In the future, we expect to see a generally accepted and standardized portability solution that will alleviate this issue for investors and plan sponsors.
Weigh your options Careful analysis of the pros and cons of these annuity products, as opposed to simply taking periodic withdrawals from your account
after retirement, will help you choose which method is right for you. In any case, the availability of these products indicates that the marketplace clearly is trying to help workers achieve the all-important goal of converting their balances into the income they will need once they retire, without eventually depleting their savings. ■ Mr. Endress, a chartered financial analyst and accredited investment fiduciary, is an investment analyst with CBiz Financial Solutions Inc., a subsidiary of CBiz Inc.; member of the Financial Industry Regulatory Authority Inc. and Securities Investor Protection Corp.; and an SEC-registered investment adviser.
MY BENESCH “We’re opportunity-focused and so is our law firm.” RICHARD & STEVEN SOCLOF Soclof Enterprises
Annuities Another popular way to fund retirement income is to purchase an annuity through a rollover of your 401(k) or 403(b) balance. In its most straightforward form, a life annuity is a way to turn an account balance into guaranteed income for life, which minimizes the risk of quickly depleting your savings. You may receive higher annual income from an annuity than if you take periodic withdrawals of 4% to 5% from savings. On the downside, you typically forfeit your principal balance when purchasing the annuity, leaving less flexibility for medical emergencies (or other large expenses) and beneficiaries. The products also can carry high fees and commissions. Make sure to do your homework prior to purchasing an annuity, because there are many variations with different features and expense structures.
MY TEAM
Cleveland Columbus Indianapolis Philadelphia Shanghai
Soclof Enterprises is a growing business with an entrepreneurial spirit. This commercial real estate company is focused on acquiring, developing and managing properties to enhance the long-term value of their TRIMAX Real Estate Funds. Their business moves quickly and they need to be able to react to opportunities as they arise. The Benesch team approach provides Soclof Enterprises with the necessary legal expertise and business experience to make sound decisions.
White Plains Wilmington
To learn more about our relationship with Soclof Enterprises, visit beneschlaw.com/myteam
www.beneschlaw.com
In-plan annuities Recently, certain providers of 401(k) and 403(b) retirement plans have begun offering annuity products within their plans that can be purchased during the working years and then converted into income for
Featured team members (left-right): JEFFREY WILD, LEE KORLAND, KEVIN MARGOLIS, MARILYN DULIC, PETE ELLIOTT, THEO VERGINIS and LESLIE DROCKTON. © 2011 Benesch Friedlander Coplan & Aronoff LLP
20110523-NEWS--18-NAT-CCI-CL_--
I-4
5/19/2011
1:51 PM
Page 1
INVE$TINGGUIDE2011
CRAIN’S CLEVELAND BUSINESS
MAY 30 - JUNE 5, 2011
Rebound from ’08, ’09 losses fuel manufacturer sweep As companies drastically cut expenses during down time, revenue uptick has bigger impact
CRAIN’S SUPERSTAR 10 RK COMPANY
M
anufacturers rule. Those two words describe the dominance of manufacturing companies in the 2011 class of the Crain’s Superstar 10. No company in any other business sector managed to crack the elite list of high performers among the public companies headquartered in Northeast Ohio. The reason is fairly simple. Manufacturers as a group were hammered by the economic slump that began in late 2008 and continued to drag them down throughout most of 2009. During that period, these companies drastically cut their costs by laying off salaried and production workers, reducing their pension and 401(k) contributions and ratcheting back their output by closing production lines or entire plants. Even as the economy began to recover in late 2009 into 2010, many manufacturers continued to keep their costs down, in part by holding off on adding to their staffs. Profit margins that had been anemic or nonexistent suddenly were robust as revenues picked up but expenses were held in check. The result, as the accompanying chart shows, are triple-digit percentage increases in the net income of nearly all the companies in this year’s Superstar 10 list in their latest trailing 12-month reporting periods compared to the like periods a year earlier.
And, as might be expected, the big improvement in the bottom lines of these companies didn’t go unnoticed by investors. The oneyear total returns to shareholders of all the companies in the latest Superstar class rose by double digits in percentage terms, with half of the top 10 recording gains of more than 50%. Indicative of the comebacks staged by manufacturers in Northeast Ohio was Park-Ohio Holdings Corp., which sits in the pole position on the 2011 Superstar list. Propelled by a 16% increase in sales, the diversified manufacturing and logistics company in Cleveland saw its bottom line swing from a $5.2 million loss in 2009 to earnings of $15.2 million in 2010. ParkOhio’s strong showing has continued into 2011, with the company in early May reporting that its firstquarter earnings were quadruple its year-earlier profits as its sales climbed 26%. In an understated commentary on the company’s latest results, Park-Ohio chairman and CEO Edward F. Crawford had only six words to say in a press release announcing the big gains. “We are beginning to make progress,” Mr. Crawford stated. And how. A trio of performance indicators determines which companies make up the Superstar 10. A composite score for each public company in the 15 counties Crain’s tracks was obtained by adding its rank on three different lists — 12-month total return to share-
ed CFO. I was just vot (Chief Fun
+
<I
<<B
@E;0
4 <N
O= :<I
SAN
By MARK DODOSH mdodosh@crain.com
1-YR. TOTAL 1-YR. NET NET INCOME RETURN RETURN COMPOSITE TOTAL RETURN INCOME % CHANGE ON ON EQUITY SCORE RETURN RANK CHANGE RANK EQUITY RANK
1
Park-Ohio Holdings Corp.
14
65.66
4
391.55
6
32.75
4
2
Nordson Corp.
19
60.29
6
229.58
11
34.49
2
Cliffs Natural Resources Inc.
19
51.35
7
397.27
5
26.52
7
4
Timken Co.
28
62.92
5
305.08
8
14.28
15
5
GrafTech International Ltd.
30
37.60
15
1,306.32
1
14.35
14
6
Materion Corp.*
35
40.46
13
475.78
3
12.08
19
7
PolyOne Corp.
37
28.39
20
228.49
12
31.51
5
8
Lubrizol Corp.
38
51.10
8
46.21
27
33.24
3
Parker Hannifin Corp.
38
38.53
14
203.72
13
16.69
11
Eaton Corp.
45
42.71
10
142.56
17
12.62
18
10
SOURCE: NUMERICAL INFORMATION PROVIDED BY COMPUSTAT, WWW.COMPUSTAT.COM * — BRUSH ENGINEERED MATERIALS RENAMED ITSELF MATERION IN EARLY 2011
The big improvement in the bottom line of these companies didn’t go unnoticed by investors. The one-year total returns to shareholders ... rose by double digits in percentage terms, with half of the top 10 recording gains of more than 50%. holders, percentage change in profits in the trailing 12-month period reported before April 29 versus the like period a year earlier, and return on equity during the latest 12 months reported by the company. As in golf, the lower the composite score, the better a company’s
DUSKY
OHIO
> I GC8EE@E> 8E @E:I<;@9C< FLK@E CC K?< :I<;@K N<EK KF D< =F KF BJ DFJK F= K?< NFIBd 1?8E <M<E K?FL>? <;8I -F@EK ;@; ?@E> 9C8JKd <;8I -F@EK ?8; JFD<K 8 K?<D FLI <EK@I< >IFLG ?8; LIJ< :F F= C@E> J?FNJ 8 9<8:? 8E; =FI <M<IPFE< K8JKP =FF; J@QQ K?< 9<JK I@;<J @E K?< LE@M<IJ<d = <M<IPK?@E> =IFD D8B@E> 1?< =I@<E;CP JK8== KFFB :8I< F E K ;<8C FE K@:B<KJ KF :8K<I@E> 8 JLI< N< >FK K?< 89JFCLK< 9<J J JK 8 J =8 JK 8 P AL K 9 C8EE@E> N<E 8CC^PFL^:8E^<8K D<8Cd 1?< G JFD< F= K?< I@;<J. EK<; K@:B<K GIF>I8D K?8K\J <;8I -F@EK 8CJF ?8J 8 ;@J:FL F@EKd:FD >IFLGJ FI :8CC 8IG >FF; 8EP ;8P 'LJK M@J@K :<; < ;<K8@CJ FE 9FK? GIF>I8DJd S^ZRR^VVZ^TVTZ KF ><K 8CC K? I
6FL\CC ?8M< K?< 9<JK K@D< <M<
)8K<I Linda
©2011 Peanuts Worldwide LLC. Peanuts.com
overall performance is considered to be. Take Cliffs Natural Resources Inc., the Cleveland-based producer of iron ore and metallurgical coal that through strategic acquisitions has transformed itself into a supplier of raw materials to steelmakers around the globe. It ranked seventh in one-year total return to shareholders, fifth in percentage change in profits and seventh in return on equity. Adding seven, five and seven gives Cliffs a total score of 19, which ties the company with Nordson Corp., a maker of automated spraying equipment, for second place on the Superstar list. There are three companies that made the Superstar rosters in 2010 and 2011. One is Park-Ohio, which checked in at No. 7 last year. Also on both lists was this year’s No. 7 company, polymer producer PolyOne Corp., which was No. 2 in 2010, and Lubrizol Corp.; the maker of specialty chemicals and lubricant additives is tied at No. 8 in 2011 and was No. 3 in 2010. It should be Lubrizol’s last year on the list, provided Warren Buffett’s Berkshire Hathaway Inc. proceeds with its planned, $9.7 billion cash acquisition of the company. As with most of the companies in this year’s class, the remaining
DATA AS OF APRIL 29, 2011
HOW STARS ARE MADE Crain’s determines its Superstar 10 list by obtaining a composite score for each publicly traded company in the 15-county coverage area. The composite score is the total of three rankings: ■ 12-month total return to shareholders ■ 2010 percentage growth in profits ■ 2010 return on equity
superstars are all multinational giants that have benefited from improvements in the global economy. They are No. 4 Timken Co., a producer of bearings and specialty steel; No. 5 GrafTech International Ltd., a producer of graphite electrodes used in steelmaking; No. 6 Materion Corp., a supplier of beryllium alloys and specialty materials that until recently was known as Brush Engineered Materials; No. 8 (tie) Parker Hannifin Corp., a producer of motion and control technologies; and No. 10 Eaton Corp., which makes power management systems and truck components. ■
20110523-NEWS--19-NAT-CCI-CL_--
5/19/2011
2:51 PM
Page 1
INVE$TINGGUIDE2011
MAY 30 - JUNE 5, 2011
CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS
Two-year runs propel Eaton, Parker
TOP MARKET VALUATIONS
Big companies leapfrog insurance giant Progressive Corp., last yearâ&#x20AC;&#x2122;s No. 1
RK COMPANY
By SCOTT SUTTELL ssuttell@crain.com
E
aton Corp. is on the move, both literally and figuratively. The Cleveland-based producer of power management and electrical systems is building a headquarters in Beachwood that it expects to occupy in late 2012. Eatonâ&#x20AC;&#x2122;s 470,000-square-foot structure is sure to be impressive, though at a cost of $170 million, the new HQ is minor stuff compared with another move: the companyâ&#x20AC;&#x2122;s ascent to the top of Crainâ&#x20AC;&#x2122;s Cleveland Businessâ&#x20AC;&#x2122; list of Largest Public Companies.
value on April 30, 2009, was $6.67 billion, which means the company has increased market value by nearly 174% in two years â&#x20AC;&#x201D; no small feat for a company of such size. And Eaton says business continues to look strong. First-quarter 2011 net income rose 85% to $287 million, or 83 cents per share, from earnings of $155 million, or 46 cents a share, in the like period of 2010. As a result of that strong performance and what CEO Alexander M. â&#x20AC;&#x153;Sandyâ&#x20AC;? Cutler called a â&#x20AC;&#x153;slightly stronger market outlook for the year,â&#x20AC;? Eaton raised its full-year 2011 guidance by 15 cents a share to net income of between $3.66 and $3.96.
Of the 60 companies on our public companies list, 47 saw their market values rise â&#x20AC;&#x201D; four of them by more than 100% â&#x20AC;&#x201D; since last yearâ&#x20AC;&#x2122;s Investing Guide. Eaton saw its market valuation rise 55.9% to $18.27 billion as of April 29, 2011, from $11.72 billion on May 28, 2010, the 11-month period covered in Crainâ&#x20AC;&#x2122;s 2011 Investing Guide. That surge â&#x20AC;&#x201D; illustrative of the generally muscular recent performance of Northeast Ohio manufacturing companies (see Superstar 10 story, Page I-4) â&#x20AC;&#x201D; helped elevate Eaton to the top of our public company rankings, past No. 1 on the 2010 list, auto insurer Progressive Corp. in Mayfield Village. Progressive slipped to No. 3 on this yearâ&#x20AC;&#x2122;s list, even though its market value rose 9.5% to about $14.39 billion. Another manufacturing company, Parker Hannifin Corp. of Mayfield Heights, now is the second-largest public company in Northeast Ohio with a market value that rose 54.3% to $15.26 billion as of April 29, 2011. Both Eaton and Parker, which makes motion and control technologies, are on ridiculously strong two-year runs as they heal from the deep global recession of 20082009. (Some would argue itâ&#x20AC;&#x2122;s not over, but weâ&#x20AC;&#x2122;ll stick with the governmentâ&#x20AC;&#x2122;s definition that it ended in June 2009.) For instance, Eatonâ&#x20AC;&#x2122;s market
In a trajectory similar to that of Eaton, Parkerâ&#x20AC;&#x2122;s market value on April 30, 2009, was $6.13 billion, so its market cap has risen nearly 149% in the same time frame. Parker also is maintaining its momentum. The company reported that net income in the third quarter that ended March 31 totaled $281.6 million, or $1.68 a share, up 82% from $154.4 million, or 94 cents a share, in the year-earlier third quarter. Sales at Parker climbed 24%, to $3.2 billion from $2.6 billion, and the company raised its quarterly cash dividend by 16%. The 11-month period that ended April 29, 2011, was kind to most Northeast Ohio companies when it comes to measuring their market valuation. Of the 60 companies on our public companies list, 47 saw their market values rise â&#x20AC;&#x201D; four of them by more than 100% â&#x20AC;&#x201D; since last yearâ&#x20AC;&#x2122;s Investing Guide and 12 posted a decline. One company on this yearâ&#x20AC;&#x2122;s list was not on the 2010 list. On a percentage basis, the biggest gainer on this yearâ&#x20AC;&#x2122;s list was TravelCenters of America LLC, the Westlake-based operator of highway travel centers. Its market value rose just over 181% since last year, to $141.6 million from
DID YOU LOSE MONEY INVESTING IN
Leveraged or Inverse ETFs ISSUED BY ANY OF THESE COMPANIES?
DIREXION â&#x20AC;˘ PROSHARES â&#x20AC;˘ BARCLAYS IPATH â&#x20AC;˘ UBS â&#x20AC;˘ RYDEX FACTORSHARES ETFs with names like Ultra, 2X, Double Long, or Inverse are unsuitable for most investors. If youâ&#x20AC;&#x2122;ve lost money investing in these products, please contact our firm. We may be able to help you recover some or all of your losses.
$50.3 million. That increase moved TravelCenters of America up on the list by eight spots, to the 44th- largest public company in Northeast Ohio from 52nd last year. The biggest such jump, though, came from Chart Industries Inc. of Garfield Heights, a maker of equipment used in the production, storage and end-use of hydrocarbon and industrial gases. Chartâ&#x20AC;&#x2122;s market value rose 165.3% to more than $1.4 billion from $528 million a year ago. That increase made Chart the 24thlargest company on the list, up nine spots from last year. Like fellow manufacturers Eaton and Parker, Chart continues to post strong results so far this year; in the first quarter, it earned $7.5 million, or 25 cents per share, compared with earnings of $1.4 million, or five cents per diluted share, for the first quarter of 2010, and sales rose 38% to $162.9 million. Chart said it now expects 2011 sales in the range of $740 million to $780 million, compared with previous guidance of $710 million to $750 million, and its full-year earnings per share to be in the range of $1.65 to $1.85, up from the previously forecast $1.50 to $1.70. There were two other 100%-plus market valuation gainers: Preformed Line Products Co. of Mayfield Village, a producer of cable anchoring hardware for utilities and telecom companies, up 130.2% in market value to $378.7 million, and Associated Estates Realty Corp. of Richmond Heights, an apartmentfocused real estate investment trust, up 124.7% in market value to $688.6 million. â&#x2013;
VALUATION VALUATION PERCENT 4/29/11 5/28/10 CHANGE
1
Eaton Corp.
18,274.6
11,723.6
55.9%
2
Parker Hannifin Corp.
15,268.7
9,897.3
54.3
3
Progressive Corp.
14,386.0
13,135.1
9.5
4
Cliffs Natural Resources Inc.
12,712.6
7,565.2
68.0
5
FirstEnergy Corp.
12,181.2
10,733.2
13.5
6
Sherwin-Williams Co.
8,760.9
8,409.0
4.2
7
J.M. Smucker Co.
8,706.3
6,577.9
32.4
8
Lubrizol Corp.
8,613.9
6,037.3
42.7
9
KeyCorp
8,270.5
7,050.0
17.3
10 Timken Co.
5,515.1
2,787.5
97.9
11 Goodyear Tire & Rubber Co.
4,428.6
2,890.7
53.2
12 TransDigm Group Inc.
4,134.3
2,597.0
59.2
13 Nordson Corp.
3,886.4
2,273.5
70.9
14 Developers Diversified Realty Corp.
3,766.8
2,854.8
31.9
15 GrafTech International Ltd.
3,367.2
1,998.1
68.5
16 TFS Financial Corp.
3,355.3
4,082.1
-17.8
17 Lincoln Electric Holdings Inc.
3,309.8
2376.4
39.3
18 Forest City Enterprises Inc.
3,178.2
2,059.6
54.3
19 RPM International Inc.
3,065.1
2,567.4
19.4
20 Diebold Inc.
2,221.2
1,915.1
16.0
21 Steris Corp.
2,138.4
1,885.2
13.4
22 FirstMerit Corp.
1,899.5
1,692.7
12.2
23 Applied Industrial Technologies
1,496.8
1,167.0
28.3
24 Chart Industries Inc.
1,401.2
528.2
165.3
25 PolyOne Corp.
1,359.6
926.6
46.7
SOURCE: NUMERICAL INFORMATION PROVIDED BY COMPUSTAT, WWW.COMPUSTAT.COM
:H DUH *OHQPHGH Âł ZH UDOO\ DURXQG D VLQJOH OLQH RI EXVLQHVV LQYHVWPHQW DQG ZHDOWK PDQDJHPHQW )RXQGHG DV D WUXVW FRPSDQ\ LQ E\ WKH 3HZ )DPLO\ WR PDQDJH WKH DVVHWV RI WKHLU FKDULWDEOH LQWHUHVWV ZH VWLOO IROORZ RXU LQLWLDO PLVVLRQ Âł WR JURZ DQG SURWHFW RXU FOLHQWV¡ DVVHWV 8QOLNH PRUH FRPSOH[ RU SXEOLFO\ KHOG Ă&#x20AC;UPV RXU LQGHSHQGHQFH IUHHV XV WR VHW RXU RZQ FRXUVH 7KHUH DUH QR FRQĂ LFWV RI LQWHUHVW :H GR QRW XQGHUZULWH VHFXULWLHV PDNH ORDQV RU VHOO LQVXUDQFH SURGXFWV ,QVWHDG ZH PHDVXUH VXFFHVV VROHO\ E\ KRZ ZHOO ZH PDQDJH \RXU ZHDOWK $V D FOLHQW \RX¡OO UHFHLYH XQELDVHG DGYLFH DQG IXOO WUDQVSDUHQF\ <RX¡OO DOZD\V NQRZ H[DFWO\ ZKDW DVVHWV \RX RZQ DQG EH VHFXUH LQ WKH NQRZOHGJH WKDW WKH\ DUH XQGHU RXU FDUHIXO VFUXWLQ\ )RU D IRFXVHG DSSURDFK DOZD\V LQ \RXU EHVW LQWHUHVW Âł FRPH WR *OHQPHGH
Call HUGH BERKSON at 216-781-5515 or toll free at 877-215-0593
HERMANN | CAHN | & | SCHNEIDER Advocates for Aggrieved Investors WWW.STOCKMARKETLOSS.COM ALL INITIAL CONSULTATIONS ARE FREE - NO FEE IF NO RECOVERY* *Clients responsible for costs incurred. Š Murat BAYSAN - Fotolia.com
I-5
*OHQPHGH¡V VHUYLFHV DUH EHVW VXLWHG IRU WKRVH ZLWK PLOOLRQ RU PRUH WR LQYHVW 3OHDVH FDOO /LQGD 2OHMNR IRU D SHUVRQDO FRQYHUVDWLRQ _ _ OLQGD ROHMNR#JOHQPHGH FRP
20110523-NEWS--20-NAT-CCI-CL_--
I-6
5/19/2011
10:00 AM
Page 1
INVE$TINGGUIDE2011
CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS
MAY 30 - JUNE 5, 2011
LARGEST PUBLIC COMPANIES RANKED BY MARKET VALUE
Company/Ticker symbol This Last Headquarters year year Phone/Web site
Market value (millions) 4-29-2011
5-28-2010
Percent change
Net income (millions) 2010
2009
Percent change
2010 return on equity
Lines of business
Top local executive Title
1
2
Eaton Corp./ETN 1111 Superior Ave., Cleveland 44114 (216) 523-5000/www.eaton.com
$18,274.7
$11,723.6
55.9%
$929.0
$383.0
142.6
12.6
Electrical, hydraulic, aerospace, truck and automotive products
Alexander M. Cutler chairman, CEO
2
4
Parker Hannifin Corp./PH 6035 Parkland Blvd., Cleveland 44124 (216) 896-3000/www.parker.com
$15,268.7
$9,897.3
54.3%
$853.4
$281.0
203.7
16.7
Fluid power systems, electromechanical controls
Donald E. Washkewicz chairman, CEO, president
3
1
Progressive Corp./PGR 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com
$14,386.1
$13,135.1
9.5%
$1,068.3
$1,057.5
1.0
17.7
Insurance and financial company
Glenn M. Renwick president, CEO
4
6
Cliffs Natural Resources Inc./CLF 200 Public Square, Suite 3300, Cleveland 44114 (216) 694-5700/www.cliffsnaturalresources.com
$12,712.7
$7,565.2
68.0%
$1,019.9
$205.1
397.3
26.5
Full-service iron ore company
Joseph A. Carrabba chairman, president, CEO
5
3
FirstEnergy Corp./FE 76 S. Main St., Akron 44308 (800) 646-0400/www.firstenergycorp.com
$12,181.2
$10,733.2
13.5%
$784.0
$1,006.0
-22.1
9.2
Electric utility holding company
Anthony J. Alexander president, CEO
6
5
Sherwin-Williams Co./SHW 101 W. Prospect Ave., Cleveland 44115 (216) 566-2000/www.sherwin-williams.com
$8,760.9
$8,409.0
4.2%
$462.5
$435.8
6.1
28.7
Coatings and related products
Christopher M. Connor chairman, CEO
7
8
J.M. Smucker Co./SJM 1 Strawberry Lane, Orrville 44667 330-682-3000/www.smuckers.com
$8,706.3
$6,577.9
32.4%
$505.2
$467.8
8.0
9.4
Manufacturer of branded food products
Timothy P. Smucker, chmn., co-CEO; Richard K. Smucker, exec. chmn., co-CEO
8
9
Lubrizol Corp./LZ 29400 Lakeland Blvd., Wickliffe 44092 (440) 943-4200/www.lubrizol.com
$8,614.0
$6,037.3
42.7%
$732.2
$500.8
46.2
33.2
Specialty chemical company
James L. Hambrick chairman, president, CEO
9
7
KeyCorp/KEY 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com
$8,270.5
$7,050.0
17.3%
$554.0
($1,335.0)
NM
5.0
Bank holding company
Beth E. Mooney chairman, president, CEO
10 13
Timken Co./TKR 1835 Dueber Ave., S.W., Canton 44706 (330) 438-3000/www.timken.com
$5,515.1
$2,787.5
97.8%
$274.8
($134.0)
NM
14.3
Friction management and James W. Griffith power transmission president, CEO products and services
11 11
Goodyear Tire & Rubber Co./GT 1144 E. Market St., Akron 44316 (330) 796-2121/www.goodyear.com
$4,428.6
$2,890.7
53.2%
($216.0)
($375.0)
NM
NM
12 14
TransDigm Group Inc./TDG 1301 E. Ninth St., Suite 3000, Cleveland 44114 (216) 706-2939/www.transdigm.com
$4,134.3
$2,597.0
59.2%
$125.3
$154.1
-18.6
21.0
Designer and producer of W. Nicholas Howley highly engineered aircraft chairman, CEO components
13 17
Nordson Corp./NDSN 28601 Clemens Road, Westlake 44145 (440) 892-1580/www.nordson.com
$3,886.5
$2,273.5
70.9%
$187.2
($144.5)
NM
34.5
Adhesives, coating and sealant applicators
Michael F. Hilton president, CEO
14 12
Developers Diversified Realty Corp./DDR 3300 Enterprise Parkway, Beachwood 44122 (216) 755-5500/www.ddr.com
$3,766.9
$2,854.8
31.9%
($209.4)
($356.6)
NM
NM
Real estate investment trust
Daniel B. Hurwitz president, CEO
15 19
GrafTech International Ltd./GTI 12900 Snow Road, Parma 44130 (216) 676-2000/www.graftech.com
$3,367.2
$1,998.1
68.5%
$176.5
$12.6
1,306.3
14.4
Manufacturer of graphite electrodes and cathodes
Craig S. Shular chairman, president, CEO
16 10
TFS Financial Corp./TFSL 7007 Broadway Ave., Cleveland 44105 (216) 441-6000/www.thirdfederal.com
$3,355.3
$4,082.1
-17.8%
($4.9)
$11.8
NM
NM
Bank holding company
Marc A. Stefanski president, CEO
17 16
Lincoln Electric Holdings Inc./LECO 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com
$3,309.9
$2,376.4
39.3%
$130.2
$48.6
168.1
11.5
Designs and manufactures welding products
John M. Stropki chairman, president, CEO
18 18
Forest City Enterprises Inc./FCE-A 50 Public Square, Suite 1100, Cleveland 44113 (216) 621-6060/www.fceinc.com
$3,178.3
$2,059.6
54.3%
$58.7
($30.7)
NM
3.8
Owner and developer of real estate
Charles A. Ratner president, CEO
19 15
RPM International Inc./RPM P.O. Box 777, Medina 44258 (330) 273-5090/www.rpminc.com
$3,065.1
$2,567.4
19.4%
$179.4
$158.8
13.0
14.8
Specialty coatings for industrial and consumer markets
Frank C. Sullivan chairman, CEO
20 20
Diebold Inc./DBD 5995 Mayfair Road, North Canton 44720 (330) 490-4000/www.diebold.com
$2,221.2
$1,915.1
16.0%
($20.3)
$26.0
NM
NM
Integrated self-service delivery systems and services
Thomas W. Swidarski president, CEO
21 21
Steris Corp./STE 5960 Heisley Road, Mentor 44060 (440) 354-2600/www.steris.com
$2,138.5
$1,885.2
13.4%
$42.1
$126.4
-66.7
5.6
Maker of sterile processing and infection prevention systems
Walter M. Rosebrough Jr. president, CEO
22 22
FirstMerit Corp./FMER III Cascade Plaza, Akron 44308 (330) 996-6300/www.firstmerit.com
$1,899.6
$1,692.7
12.2%
$102.9
$82.2
25.2
6.8
Bank holding company
Paul G. Greig chairman, president, CEO
23 24
Applied Industrial Technologies Inc./AIT 1 Applied Plaza , Cleveland 44115 (216) 426-4000/www.applied.com
$1,496.9
$1,167.0
28.3%
$86.2
$25.2
241.9
14.6
Distributor and provider of industrial parts and service
David L. Pugh chairman, CEO
24 33
Chart Industries Inc./GTLS One Infinity Corporate Centre Dr., Suite 300, Garfield Heights 44125 (440) 753-1490/www.chart-ind.com
$1,401.2
$528.2
165.3%
$20.2
$61.0
-67.0
4.0
Maker of cryogenic Samuel F. Thomas processes and equipment chairman, president, CEO
25 26
PolyOne Corp./POL 33587 Walker Road, Avon Lake 44012 (440) 930-1000/www.polyone.com
$1,359.7
$926.6
46.7%
$162.6
$49.5
228.5
31.5
Provider of specialized polymer materials, services and solutions
Stephen D. Newlin chairman, president, CEO
26 28
Ferro Corp./FOE 1000 Lakeside Ave., Cleveland 44114 (216) 641-8580/www.ferro.com
$1,298.3
$776.0
67.3%
$5.7
($42.9)
NM
1.0
Manufacturer of specialty performance materials
James F. Kirsch chairman, president, CEO
27 27
OM Group Inc./OMG 127 Public Square, Suite 1500, Cleveland 44114 (216) 781-0083/www.omgi.com
$1,106.2
$910.6
21.5%
$83.4
($17.9)
NM
6.7
Producer/marketer of metal-based specialty chemicals
Joseph M. Scaminace chairman, CEO
28 29
Invacare Corp./IVC One Invacare Way, Elyria 44035 (440) 329-6000/www.invacare.com
$1,063.5
$773.7
37.5%
$25.3
$41.2
-38.5
3.9
Home health care equipment
Gerald B. Blouch president, CEO
29 31
Cedar Fair LP/FUN One Cedar Point Drive, Sandusky 44870-5259 (419) 627-2233/www.cedarfair.com
$1,051.3
$701.5
49.9%
($31.6)
$35.4
NM
NM
Amusement and water Richard L. Kinzel parks in the United States president, CEO and Canada Cedar Fair Management Inc.
30 25
American Greetings Corp./AM One American Road, Cleveland 44144 (216) 252-7300/www.americangreetings.com
$994.0
$930.9
6.8%
$87.0
$81.6
6.7
11.6
Greeting cards; character Zev Weiss licensing CEO
31 30
Nacco Industries Inc./NC 5875 Landerbrook Drive, Cleveland 44124 (440) 449-9600/www.nacco.com
$876.9
$704.5
24.5%
$79.5
$31.1
155.6
17.8
Coal mining, lift trucks, Alfred M. Rankin Jr. small electrical appliances chairman, president, CEO
Tire manufacturer
Richard J. Kramer chairman, president, CEO
See LIST Page I-8
20110523-NEWS--21-NAT-CCI-CL_--
5/19/2011
1:50 PM
Page 1
INVE$TINGGUIDE2011
MAY 30 - JUNE 5, 2011
CRAIN’S CLEVELAND BUSINESS
Careful: Risk-taking may be right approach now continued from PAGE I-1
“Most of my clients are, for lack of a better word, gun-shy,” said Dennis R. Marvin, president of Marvin Wealth Management in Westlake. “They are a lot more cautious, a lot more wary of anything to do with stock-market types of investments.” That said, the market run-up in recent months has piqued investors’ interest in aggressive growth strategies, Mr. Marvin noted. The Standard & Poor’s 500stock index has risen nearly 6% in 2011 and almost 17% over the past 12 months. Still, despite the run-up, many people haven’t embraced buying back into the stock market, said Frank Fantozzi, president and CEO of Planned Financial Services in Brecksville. Mr. Cicek and his wife are an example of this mindset. With the guidance of an adviser at Cedar Brook Financial Partners LLC in Pepper Pike, the two now invest less in stocks and more in low- and moderate-risk vehicles, including mutual funds and bonds, he said. “We won’t see that 20% increase, but we also won’t see that 20% decrease,” he said. “We’re worried more about protecting ourselves nowadays than we are about getting that 20% growth year over year.”
Going with the flow For the first time in a long time, cash is back, observed Azim Nakhooda, managing principal of Cedar Brook Financial Partners. Companies are leaner and are experiencing profit recovery, he noted, so there are record amounts of cash on balance sheets. People, too, likely have more cash than they did six months to a year ago, Mr. Marvin said. But, different from other times, many aren’t racing to tie up their increased cash in illiquid investments, Mr. Nakhooda said. What people thought were liquid investments in the past cycle proved not to be — for example, the real estate many believed they could sell or borrow against if need be. When real estate dried up, many couldn’t access the
“There’s a percentage of the investing public that is forever scarred. They’re just not coming back to the risk assets ever.” – Azim Nakhooda, managing principal, Cedar Brook Financial Partners capital they expected to have. As a result, advisers and investors today question whether something affords true liquidity or liquidity that can change if the unexpected happens, Mr. Nakhooda said. There’s much more scrutiny of the “gray area,” he said. Dividend-yielding products — regarded by some as “plain vanilla” — have made a comeback, Mr. Nakhooda said. They’re particularly attractive now because they provide income at a time when interest rates are very low, noted Robert C. Smith, president and CEO of Spero-Smith Investment Advisers Inc. in Beachwood. Diversification remains a common goal, and alternative investments are increasingly popular. Also, commodities such as precious metals and emerging market equities, which are investments in companies domiciled in developing countries like Brazil, are attracting more dollars. “When you come out of any type of recession … everyone wants to find the next golden nugget,” said Mr. Fantozzi, who said he’s observed a “huge uptick” in the buying of commodities. “What’s surprising is people have short-term memories,” he added. “They just don’t learn from past mistakes. People get greedy. People want to get rich quick. They don’t want to be prudent.” The problem is when people follow trends, they risk shooting where the rabbit was, Mr. Smith said. Some clients have questioned why Mr. Fantozzi isn’t selling municipal bonds, which have experienced a “huge selloff.” But Mr. Fantozzi expects them to appreciate in value. And unlike the average client who might want to buy more bonds because they see bonds as less volatile than stocks, Mr. Marvin points out that interest rates will rise and when they do,
bond values will drop. So a couple months ago, the firm repositioned its bond portfolio in order to use a different bond vehicle that performs better when interest rates rise, he explained.
Risky business Investors of this recovery appear to understand risk better than investors did in the 1990s, Mr. Smith remarked. In the ’90s, the question was, “How much can I make?” he said. Now it’s, “How much can I lose?” But taking risks can be the thing to do now for those who can afford to, Mr. Nakhooda said. As things are beginning to be worked out and companies emerge from bankruptcy, distressed assets are being freed up for trading, he said. Cedar Brook Financial Partners is taking advantage of such opportunities for certain clients, particularly higher net worth individuals who have the ability to buy such assets.
“There’s been a lot of pain out there,” he said, citing the “implosion” in the financial world and real estate. “If you have the buying power and the access … now’s the time to make some money.” How much investment strategy has changed and how long risk aversion will persist really depends on the investor, their circumstance and their relationship with their adviser, Mr. Nakhooda said. “There’s a percentage of the investing public that is forever scarred,” he said. “They’re just not coming back to the risk assets ever. They are essentially of the mindset: ‘I’m done with this.’” They, however, are not the majority, Mr. Nakhooda said. Younger investors, for one, had less to lose and have more time to make gains, he said. Mr. Marvin also believes the change he’s seen to some investors’ risk tolerance is lasting. Mr. Cicek can only speak for himself and his wife. “It’s permanent,” he said of the changes to their investment strategy. “We’re looking at everything with a conservative eyeglass. We’re really saying, ‘Let’s not rock the boat anymore.’ ” ■
IN BRIEF Ex-employees not moving 401(k) funds Workers who have left a 401(k) account behind upon leaving a job may need help figuring out what to do with it, according to a survey by Fidelity Investments. The firm surveyed about 1,100 participants who remain in an employer-sponsored retirement plan administered by Fidelity at least four months after leaving, and found nearly one-third said they didn’t even know what their options were for disposing of the account. Sarah Walsh, a Fidelity vice president, called it one of the “most surprising things” to come out of the survey. “There is a need for educating people,” she said. “There is an opportunity for providing people guidance.” Fidelity said its data show that only about one-third of participants move their money from a former employer’s plan within four months after leaving. Nearly three-quarters of those leaving the money there said they did so on purpose. Asked why, 59% said it was because of plan features, services or access to specific investments. — Investment News
Go for it. We’ve got your back. At Roetzel, our attorneys are like our clients - entrepreneurial, innovative and results-oriented. Just ask Bob Blackham.
Stifel Nicolaus: Among the fastest-growing in the industry. Financial strength and stability. Client interests first. A growing network of talented advisors.
All of these things have helped Stifel Financial Corp. grow to become the 7th-largest investment firm in the country, with approximately
Our Cleveland attorneys focus on maximizing opportunities and minimizing risks so you can focus on your business. Team members, including George Rooney, $ISJTUJOF 'MBOBHBO, %POBME 4DIFS[FS, 5PEE #SPTLJ, 5BNNJ -FFT and #PC #MBDLIBN, have your back.
1,900 Financial Advisors. In fact, Stifel Financial was recently named to Fortune magazine’s annual 100 Fastest-Growing Companies list for a second consecutive year, ranking #5 in the financial services industry and 65 overall.
To learn more, call 216.623.0150 or visit ralaw.com/cleveland.
See www.stifel.com for full details.
(216) 593-7400 | (800) 225-8520 30100 Chagrin Blvd., Suite 101 | Pepper Pike, Ohio 44124
member sipc and nyse | www.stifel.com
I-7
8"4)*/(50/ %$ t N E W Y O R K t CLEVEL AND t $0-6.#64 t AKRON t $*/$*//"5* 50-&%0 t '035 .:&34 t /"1-&4 t 03-"/%0 t 5"--")"44&& t '035 -"6%&3%"-&
20110523-NEWS--22-NAT-CCI-CL_--
I-8
5/19/2011
10:22 AM
Page 1
INVE$TINGGUIDE2011
CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS
MAY 30 - JUNE 5, 2011
LARGEST PUBLIC COMPANIES RANKED BY MARKET VALUE
Company/Ticker symbol This Last Headquarters year year Phone/Web site
Market value (millions) 4-29-2011
5-28-2010
Percent change
Net income (millions) 2010
2009
Percent change
2010 return on equity
Lines of business
Top local executive Title
32 34
Materion Corp./MTRN 6070 Parkland Blvd., Mayfield Heights 44124 (216) 486-4200/www.materion.com
$848.6
$512.2
65.7%
$46.4
($12.4)
NM
12.1
High-performance engineered materials
Richard J. Hipple chairman, president, CEO
33 32
A. Schulman Inc./SHLM 3550 W. Market St., Akron 44333 (330) 666-3751/www.aschulman.com
$783.9
$582.9
34.5%
$50.0
$9.8
409.2
9.8
High-performance plastic compounds and resins
Joseph M. Gingo chairman, president, CEO
34 39
Associated Estates Realty Corp./AEC 1 AEC Parkway, Richmond Heights 44143 (216) 261-5000/www.associatedestates.com
$688.6
$306.4
124.7%
($8.6)
$5.8
NM
NM
Real estate investment trust
Jeffrey I. Friedman chairman, president, CEO
35 36
National Interstate Corp./NATL 3250 Interstate Drive, Richfield 44286 (330) 659-8900/www.nationalinterstate.com
$435.3
$397.9
9.4%
$39.5
$46.4
-14.9
12.8
Specialty property and casualty insurance
David W. Michelson president, CEO
36 41
Stoneridge Inc./SRI 9400 E. Market St., Warren 44484 (330) 856-2443/www.stoneridge.com
$388.5
$246.6
57.5%
$10.8
($32.4)
NM
12.9
Highly engineered electrical and electronic components
John C. Corey president, CEO
37 37
Omnova Solutions Inc./OMN 175 Ghent Road, Fairlawn 44333 (330) 869-4200/www.omnova.com
$385.1
$358.9
7.3%
$101.1
$34.1
196.5
78.6
Decorative and functional interior surfaces
Kevin M. McMullen chairman, president, CEO
38 44
Preformed Line Products Co./PLPC 660 Beta Drive, Mayfield Village 44143 (440) 461-5200/www.preformed.com
$378.7
$164.5
130.2%
$23.1
$23.4
-1.0
11.8
Wire and cable products
Robert G. Ruhlman chairman, president, CEO
39 38
Myers Industries Inc./MYE 1293 S. Main St., Akron 44301 (330) 253-5592/www.myersindustries.com
$376.8
$316.9
18.9%
($42.8)
($0.7)
NM
NM
Polymer and metal products; equipment for tire service
John C. Orr president, CEO
40 35
CBiz Inc./CBZ 6050 Oak Tree Blvd. S., Suite 500, Cleveland 44131 (216) 447-9000/www.cbiz.com
$368.7
$411.7
-10.5%
$24.5
$31.4
-21.9
10.7
Provides outsourced business services
Steven L. Gerard chairman, CEO
41 40
Olympic Steel Inc./ZEUS 5096 Richmond Road, Bedford Heights 44146 (216) 292-3800/www.olysteel.com
$319.6
$299.9
6.6%
$2.1
($61.2)
NM
0.8
Steel service center
Michael D. Siegal chairman, CEO
42 43
Park-Ohio Holdings Corp./PKOH 6065 Parkland Blvd., Cleveland 44124 (440) 947-2000/www.pkoh.com
$252.4
$172.5
46.3%
$15.2
($5.2)
NM
32.7
Diversified manufacturer
Edward F. Crawford chairman, CEO
43 45
Shiloh Industries Inc./SHLO 880 Steel Drive, Valley City 44280 (330) 558-2600/www.shiloh.com
$190.7
$164.0
16.3%
$4.9
($12.2)
NM
4.8
Steel processing
Theodore K. Zampetis president, CEO
44 52
TravelCenters of America LLC/TA 24601 Center Ridge Road, Suite 200, Westlake 44145 (440) 808-9100/www.tatravelcenters.com
$141.6
$50.3
181.8%
($65.6)
($89.9)
NM
NM
Interstate travel plazas; fuel, food, convenience stores and truck repairs
Thomas M. O'Brien managing director, president, CEO
45 46
Agilysys Inc./AGYS 28925 Fountain Parkway, Solon 44139 (877) 374-4783/www.agilysys.com
$119.9
$155.7
-23.0%
($11.0)
($109.7)
NM
NM
Electronic components and industrial products
Martin Ellis president, CEO
46 48
Sifco Industries Inc./SIF 970 E. 64th St., Cleveland 44103 (216) 881-8600/www.sifco.com
$86.5
$59.8
44.7%
$4.6
$8.4
-45.9
9.2
Production, repair, plating, machining and marketing of jet engines
Michael S. Lipscomb president, CEO
47 51
Athersys Inc./ATHX 3201 Carnegie Ave., Cleveland 44115 (216) 431-9900/www.athersys.com
$53.2
$52.5
1.3%
($11.4)
($15.4)
NM
NM
Biopharmaceutical company
Gil Van Bokkelen chairman, CEO
48 49
PVF Capital Corp./PVFC 30000 Aurora Road, Solon 44139 (440) 914-3900/www.parkviewfederal.com
$52.9
$55.4
-4.5%
($5.8)
($13.6)
NM
NM
Bank holding company
Robert J. King Jr. president, CEO
49 55
LNB Bancorp Inc./LNBB 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com
$45.7
$36.8
24.2%
$5.4
($2.0)
NM
4.9
Bank holding company
Daniel E. Klimas president, CEO
50 50
United Community Financial Corp./UCFC 275 Federal Plaza West, Youngstown 44503 (330) 742-0500/www.ucfconline.com
$43.6
$54.7
-20.2%
($37.3)
($16.8)
NM
NM
Bank holding company
Patrick W. Bevack president, CEO
51 53
Ohio Legacy Corp./OLCB 600 S. Main St., North Canton 44720 (330) 263-1955/www.ohiolegacycorp.com
$31.6
$48.7
-35.1%
($3.1)
($6.7)
NM
NM
Bank holding company
Rick L. Hull president, CEO
52 54
First Citizens Banc Corp./FCZA 100 E. Water St., Sandusky 44870 (419) 625-4121/www.fcza.com
$31.4
$40.0
-21.4%
($1.3)
$1.7
NM
NM
Bank holding company
James O. Miller president, CEO
53 56
Middlefield Banc Corp./MBCN.PK 15985 E. High St., Middlefield 44062 (440) 632-1666/www.middlefieldbank.com
$27.8
$29.4
-5.4%
$2.5
$1.8
41.3
6.6
Bank holding company
Thomas G. Caldwell president, CEO
54 57
Wayne Savings Bancshares Inc. /WAYN 151 N. Market St., Wooster 44691 (330) 264-5767/www.waynesavings.com
$25.6
$24.8
3.3%
$2.2
$2.0
12.5
5.8
Bank holding company
Phillip E. Becker president, CEO
55 58
Energy Focus Inc./EFOI 32000 Aurora Road, Solon 44139 (440) 715-1300 /www.energyfocusinc.com
$18.7
$23.5
-20.5%
($8.5)
($11.0)
NM
NM
Fiber optic lighting systems
Joseph G. Kaveski CEO
56 60
Avalon Holdings Corp./AWX One American Way, Warren 44484 (330) 856-8800/www.avalonholdings.com
$11.0
$11.2
-1.7%
($0.5)
($0.8)
NM
NM
Hazardous and nonhazardous waste brokerage and management services
Ronald E. Klingle chairman, CEO
57 61
Datatrak International Inc./DATA 6150 Parkland Blvd., Suite 100, Mayfield Heights 44124 (440) 443-0082/www.datatrak.net
$9.6
$6.7
42.5%
$0.1
($1.9)
NM
NM
Provider of clinical research services
Laurence P. Birch chairman, CEO
58 62
Central Federal Corp./CFBK 2923 Smith Road, Fairlawn 44333 (330) 666-7979/www.cfbankonline.com
$4.8
$6.6
-26.3%
($6.9)
($9.9)
NM
NM
Bank holding company
Eloise Mackus CEO
59
Hickok Inc./HICKA.PK 10514 Dupont Ave., Cleveland 44108 (216) 541-8060/www.hickok-inc.com
$2.4
NM
NM
($1.3)
($2.5)
NM
NM
Products for the transportation industry
Robert L. Bauman president, CEO
60 59
Morgan's Foods Inc. (1)/MRFD.OB 4829 Galaxy Parkway, Suite S, Cleveland 44128 (216) 359-9000/www.morgansfoods.com
$2.3
$11.7
-80.2%
($0.0)
$0.3
NM
NM
Restaurants
Leonard R. Stein-Sapir chairman, CEO
Numerical information provided by Compustat, www.compustat.com. The Market Value data used the April 29, 2011 close price for each company, net income figures represent trailing 12-month data through the quarter ending December, January or February depending on the fiscal year end of each company. NA=Not available. NM=Not meaningful. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and other specialized business lists are available to purchase at www.crainscleveland.com. (1) Information is for the period ending November 2010.
RESEARCHED BY Deborah W. Hillyer
20110523-NEWS--23-NAT-CCI-CL_--
5/20/2011
3:01 PM
Page 1
INVE$TINGGUIDE2011
MAY 30 - JUNE 5, 2011
ONE-YEAR RETURN*
1
Preformed Line Products Co.
2
Chart Industries Inc.
144.13%
3
TravelCenters of America LLC
93.12
4
Park Ohio Holdings Corp.
65.66
5
Timken Co.
62.92
6
Nordson Corp.
60.29
7
Cliffs Natural Resources Inc.
51.35
8
Lubrizol Corp.
51.10
9
TransDigm Group Inc.
50.72
111.40
10 Eaton Corp.
42.71
11 Stoneridge Inc.
41.80
12 Shiloh Industries Inc.
41.75
13 Materion Corp.**
40.46
14 Parker Hannifin Corp.
38.53
15 GrafTech International Ltd.
37.60
INFORMATION PROVIDED BY COMPUSTAT, WWW.COMPUSTAT.COM; * — DATA AS OF APRIL 29, 2011 ** — BRUSH ENGINEERED MATERIALS RENAMED ITSELF MATERION IN EARLY 2011
TOP ONE-YEAR REVENUE CHANGE RK COMPANY
ONE-YEAR CHANGE*
1
Cliffs Natural Resources Inc.
2
Materion Corp.
82.09
3
Shiloh Industries Inc.
53.88
4
Olympic Steel Inc.
53.81
5
GrafTech International Ltd.
52.80
6
A. Schulman Inc.
44.82
7
OM Group Inc.
37.28
8
Stoneridge Inc.
33.69
9
Omnova Solutions Inc.
33.61
continued from PAGE I-1
movement by clients away from bigger players. Dennis R. Marvin, president of Marvin Wealth Management in Westlake, believes a lack of communication at the larger firms is the reason why. However, one big player, Northwestern Mutual, has seen “a lot of growth” in its client numbers, according to Christopher Brown, investment specialist for the Fortune 500 company’s Northeast Ohio group. While it has lost some clients, the company’s seen a net gain overall of late, he said. It, too, is trying to increase the frequency and the substance of its contact with clients, Mr. Brown said. “We are finding that it’s important to reach out and talk to our clients much more than people have in the past,” he said. Cedar Brook Financial Partners started coffee talks during the downturn and continues them today, though they are scheduled less frequently and attended by fewer people now, said Azim Nakhooda, managing principal. Marvin Wealth Management recently improved its website to make it more interactive and userfriendly, Mr. Marvin said.
Also driven by the recession and responses gleaned through focus groups, Planned Financial Services began publishing more original content, including a piece it distributes a couple times a month. Clients wanted to know what the firm’s professionals really think, and this is one way of delivering, Mr. Fantozzi said. He estimated the firm has increased by 40% the time and money it spends on such outreach. At least one of the firm’s clients, A.J. Hyland, president and CEO of Hyland Software in Westlake, has noticed. “They’ve definitely increased the amount of communication,” Mr. Hyland said, citing newsletters he receives from the firm today that he didn’t when he first joined as a client four years ago. “They’ve definitely made efforts to cut through the rhetoric.”
Rebuilding trust The sheer velocity with which things changed a few years ago and the unprecedented failures and government bailouts were the initial fuel for more proactive outreach, Mr. Nakhooda said. From his vantage point, “The
communication aspect of our business is completely and irrevocably changed.” The added outreach also is rooted in a need for the financial industry to rebuild trust, he said. “You’ve seen so much bad behavior,” he said. “It’s one thing when markets go down. Those are things I think most rational people will accept. “(But) I think there is a huge amount of goodwill and trust that was lost,” Mr. Nakhooda said, citing the fraud that permeated the industry and the perception among many that finance executives “cashed out on the backs of losers.” Mr. Tepper agreed his firm has to work harder to gain new clients’ confidence. In fact, though it usually only permits clients to listen into quarterly conference calls, “we’ve felt the need to invite some prospective clients who were on the fence” to listen, he said. For the foreseeable future, Mr. Brown of Northwestern Mutual expects the demand for more outreach to continue. “I think it will continue because there is so much competition,” he said. “Clients have a lot of choices as to how they go about this.” ■
100.03%
10 Preformed Line Products Co.
31.53
11 National Interstate Corp.
30.44
12 Timken Co.
29.09
13 Nordson Corp.
27.99
14 PolyOne Corp.
27.23
15 TravelCenters of America LLC
26.87
INFORMATION PROVIDED BY COMPUSTAT, WWW.COMPUSTAT.COM; * — DATA AS OF APRIL 29, 2011 ** — BRUSH ENGINEERED MATERIALS RENAMED ITSELF MATERION IN EARLY 2011
BUSINESS.
Thursday, June 16 • 7:30 — 9:30 a.m. The Ritz-Carlton, Cleveland
FIGHTING FRAUD Safeguards for your bottom line Each year, fraud costs U.S. businesses an estimated $994 billion Learn how to protect your assets from internal and external theft • Management’s fiduciary responsibility
• Red flags to watch for
• Establishing internal controls
• Steps for conducting a thorough audit
• Defining and reinforcing anti-fraud behavior
• How to respond
Title Sponsor:
Commercial Banking is our business.
Delegate Sponsor:
LIBERTY BANK, N.A. N.A. BANK,
MEMBER FDIC
I-9
Service: Client trust harder to gain
TOP ONE-YEAR RETURNS RK COMPANY
CRAIN’S CLEVELAND BUSINESS
Underwritten by:
BEACHWOOD HQ
,]LU[ HUK YLNPZ[YH[PVU PUMVYTH[PVU!
216.359.5500
^^^ *YHPUZ*SL]LSHUK JVT )YLHRMHZ[
Building our bank one quality relationship at a time.
20110523-NEWS--24-NAT-CCI-CL_--
24
5/20/2011
2:13 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Liquor: Kasich touts economic payoff continued from PAGE 1
“If we are able to meet our goals and objectives, I believe this is how economic development will be done across the country,” Mr. Kvamme said. However, public finance and economic development specialists reached by Crain’s, as well as an outspoken critic of the plan and a state senator, are raising various questions about the deal. First, the finance professionals ask, what benchmarks will the state use to measure the success of JobsOhio compared to the state’s existing economic development program? Second, will the additional success JobsOhio might attain in bringing jobs and businesses to the state overcome the cost of $1 billion in new debt service? And last, is the state getting a fair price for its liquor business? None of the half-dozen finance and economic development professionals who spoke with Crain’s would go on the record with their concerns. All do business regularly with the state and, though skeptical about the financing plan, hope JobsOhio will spur business development. One, though, said he thought the Kasich plan was “high risk, high reward.” Where finance professionals are circumspect, JobsOhio’s chief critic is direct.
Not a fan “It’s a short-term strategy for money that is going to cost the state
for a long time,” said Brian Rothenberg, executive director of Progress Ohio, a Democratic-leaning political action group based in Columbus. “It twists the constitution, and it’s not a proven economic development tool by any means.” In April, Mr. Rothenberg’s group joined two Democratic state legislators and sued the governor in the Ohio Supreme Court over the JobsOhio plan. The suit argues that the law that created JobsOhio violates the state constitution on several counts, including the way it handles state debt and because it allows the governor to serve as chairman of the nonprofit organization. In addition, state Sen. Tim Grendell, a Republican from Chesterland, told The Columbus Dispatch last week that he, too, questions the plan’s constitutionality. He also believes the liquor profits could bring as much as $3 billion. Mr. Kvamme maintains the potential positives of JobsOhio trump the possible downside risk. As for Sen. Grendell’s contention that the liquor profits are worth $3 billion, Mr. Kvamme said he believes the $1.2 billion is a fair price. He said higher estimates are based on the state selling the liquor business, rather than just leasing the profits for 25 years, as JobsOhio is doing. Western Reserve Partners LLC, a Cleveland investment banking firm, made an unsolicited proposal to Gov. Kasich that estimated privatizing the liquor business could bring the
state between $2 billion and $2.5 billion. But Mark Fillipell, a Western Reserve Partners managing director, said he thought the $1.2 billion price for leasing the liquor profits — a different kind of transaction than his firm proposed — was fair.
How profits would flow Improving the state’s economic development efforts was a key plank in now-Gov. Kasich’s gubernatorial campaign, and creating a nonprofit economic development organization was his first major act as governor. On Feb. 18 he signed House Bill 1, creating JobsOhio, a private, nonprofit entity he would control that he described throughout the campaign as an organization that would “work at the speed of business to get jobs created.” The Legislature still must fund the organization’s startup in the two-year budget it now is considering, and it then must pass additional enabling legislation to give JobsOhio a structure before it takes the economic development reins next January. Gov. Kasich wants an organization that would have $100 million annually to attract business to the state in ways the current development department cannot — in particular, by making equity investments in businesses that want to come to or grow in Ohio. A lease of the state’s liquor profits by JobsOhio would provide it with that revenue stream. The state would use $700 million
MAY 30 - JUNE 5, 2011
of the $1.2 billion in lease proceeds it would receive up front from JobsOhio to refinance economic development debt already financed by the liquor profits. It also would send $500 million to the state general fund, in part to replace lost liquor profits over the next two years but also to help plug Ohio’s $8 billion budget gap. The finance professionals who spoke to Crain’s are unconcerned about the $700 million that already is used to finance economic development projects. To them, it is not new debt. However, the debt created to finance the other $500 million JobsOhio would pay the state will cost about $1 billion over the life of the liquor profit lease and is a new drain from the liquor profit stream. It’s that cost, critics say, that JobsOhio must recoup by getting a higher return on investment to prove its success.
Lemons before lemonade Mr. Kvamme said he believes the program can be successful and that JobsOhio will have the data to prove it. “I am very focused on metrics and we will have to show our shareholders — the people of Ohio — that we’re performing,” he said. “That’s very important.” He said independent auditors will have three core metrics to review: net new job growth on deals JobsOhio works on, net new capital invested in the state and the profit JobsOhio makes on its equity investments. The hardest of those to measure, especially in the short term, would be the increase in the value of
investments in the JobsOhio equity portfolio. The question, Mr. Kvamme understands, is whether voters will have the patience to wait for a payoff that could take three, five or even eight years to pan out. “In investing, there is something called the J curve,” Mr. Kvamme said. “The (investments) that don’t do well go out of business more quickly” and show up as losses in the early years. “The ones that do very well” make big profits eventually, he said. “You make lemons before you make lemonade.”
Florida switches back If the plan doesn’t bring big wins or at least bring them quickly enough, several observers questioned whether voters will give the plan time to work or clamor for its repeal. That’s what has happened in Florida. That state brought economic development operations back into state government after using a nonprofit for more than a decade. In January, new Florida Gov. Rick Scott fired the head of the nonprofit Enterprise Florida, saying he intended to bring the operation into the governor’s office. The Florida legislature wouldn’t go along with that plan, but it’s working on a plan to bring at least part of the Enterprise Florida operation back inhouse. Mr. Kvamme said his team has investigated the nonprofit efforts in other states and believes Ohio’s plan avoids the pitfalls that tripped up those programs. “I think the other folks got a little bit mixed up in how they implemented their programs,” he said. ■
Premiere Estate
32700 Jackson Road • Moreland Hills, Ohio
This home has over 17,000 square feet of luxury living space and took more than 10 years to build at an estimated cost of 8.7 million dollars. Much of the work was performed by Amish craftsmen including the most luxurious master suite imaginable and state of the art gym complex!
Now being offered at the incredible price of $2,995,000.00. Truly Cleveland’s best value and a once in a lifetime opportunity.
When buying or selling your home. Just ASK
Adam S. Kaufman 216.831.7370 Company Top Producer
Check out all of Adam’s listings at www.justaskadam.com
Pepper Pike Office: 28879 Chagrin Blvd., Woodmere, OH 44122
20110523-NEWS--25-NAT-CCI-CL_--
5/20/2011
10:24 AM
MAY 30 - JUNE 5, 2011
Contact: Phone: Fax: E-mail:
Page 1
CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com
REAL ESTATE
AUCTIONS
Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card
LEGAL NOTICE
AUCTION
FOR SALE RECEIVER DIRECTS SALE
NOTICE TO BIDDERS
June 7 at 12pm th
Martin House Apartments
First choice sells regardless of price!
Ag Real Estate Group, Inc., 216-504-5000 www.agrealestategroup.com
Prudential Lucien & Assoc.
Turn-around Opportunity In Copley, OH Eric M. Silver, Receiver
June 10, 2011 for: The Lease of County-owned property no longer needed for public use: (Permanent Parcel Nos. 101-09-027) located at The Marion Building, 1264 & 1276 W. Third Street, Cleveland, Ohio, 44113, as per County Requisition No. CT-11-20152. Retail, Restaurant or Office opportunity, the space is currently used as a convenience store and restaurant.
Perfect for doing business in downtown Elyria. Located in 10 story Lorain National Bank Building Adjacent to Lorain Co. Courthouse & County building. Great views overlooking Ely Park.
Powered by LoopNet, No. 1 in Commercial Real Estate online Looking for property? Search thousands of local listings
The official closing time shall be determined by the wall clock located in the Office of Procurement & Diversity, Room 110, County Administration Building, 1219 Ontario Street, Cleveland, Ohio 44113. Late bids will be returned unopened.
Selling or leasing a property? Get your property featured through Crainâ&#x20AC;&#x2122;s
Specification and proposal blanks may be obtained at the Office of Procurement & Diversity (Same Address). Interested bidders may visit the site (The Marion Building, 1264 & 1276 W. Third Street, Cleveland, Ohio 44113) for a walk-thru on Wednesday, May 25, 2011 at 2:00 PM.
See website for viewing times, photos, terms, and description.
Call 440-899-7887
Crainâ&#x20AC;&#x2122;s Cleveland Business Online Property Search
Any questions concerning the property may be directed to the Department of Public Works, Real Estate Division, at (216) 443-7095.
124 Middle Ave, Elyria, OH
SHOPPING PLAZA Fully rented with a strong anchor. Ready for expansion. Seller Retiring.
102 UNITS
Notice is hereby given that sealed proposals will be received in the Cuyahoga County Office of Procurement & Diversity, Room 110, County Administration Building, 1219 Ontario Street, Cleveland, Ohio 44113 until 11:00 A.M., (Local Time) on:
9 Commercial Condo Suites
25
www.CrainsCleveland.com/LoopNet
For advertising opportunities contact Genny Donley 216-771-5172
The County reserves the right to accept or reject any or all bids. Lenora Lockett, Director, Office of Procurement & Diversity
FOR SALE OR LEASE Auctioneer: Barry Baker, CAI, AARE, CCIM
One Story Building + Parking
OhioRealEstateAuctions.com
Up to 10,700 SF + 62 spaces available.
(877) BID-OHIO
For daily on-line updates, sign up @ CrainsCleveland.com/Daily
Adjacent to Playhouse Square. East 17th to East 18th on Payne Ave.
(216) 622-7556
REALTORS:
Publish in Crainâ&#x20AC;&#x2122;s Cleveland Business May 23, 2011 This notice may also be viewed at the following Cuyahoga County Internet Web Site: www.opd.cuyahogacounty.us by clicking on the â&#x20AC;&#x153;show eventsâ&#x20AC;? tab. A list of open bids / proposals will appear on the next screen. Click on the bid due date to view the legal notice.
Now is a great time to promote your Luxury Properties to high-end prospects AND receive reduced rates on your advertising.
Call Genny Donley at (216) 771-5172 for more details
CLASSIFIED BUSINESS SERVICES
FIRSTENERGY REBATE Improve your lighting, reduce energy costs and possibly receive full reimbursement for both product and labor for the entire project. Incentives are available on a first-come, first-served basis and must be submitted for pre-approval before placing an order for material. Call us for details, assistance in qualifying your projects and submitting your application.
FirstEnergy Rebates
Take advantage of HUGE FirstEnergy incentives to reduce your lighting energy costs by 50-70%! t "QQMJDBUJPOT mMFE GPS ZPV t /P EJTSVQUJPO UP ZPVS PQFSBUJPO t 1BZCBDL JO NPOUIT t FUNDS ARE LIMITED t , TR GU NJOJNVN
For Assessments
(800) 690-9409 www.flynnenvironmental.com
FOR SALE Better Than an Auction
LIQUIDATION Ceramic Tile Distributor Closing Forklifts, Trucks, Racking & Lots of Tile Bring Truck! Tues.-Fri., 9:30am â&#x20AC;&#x201C; 3:30pm 5400 Warner Road
216-641-STYS (7897) 440-382-8694
SPORTS & ENTERTAINMENT
Bill Merriman 216.287.6971 bmerriman@leffelectric.com
Indians Loge Box Bob Taussig
330-931-3905 Bob@ROI-Energy.com www.leffenergysolutions.com
FLYNN ENVIRONMENTAL
www.ROI-Energy.com
ATTENTION BUSINESS SERVICE OWNERS! Submit your business card to promote your service and receive a SUBSTANTIAL DISCOUNT off your ad price.
To find out more, contact Genny Donley at 216.771.5172
Share our home plate suite. At cost. Jen 614-218-3884
Crainâ&#x20AC;&#x2122;s Executive Recruiter POSITION WANTED
Account Manger Experienced Senior Marketing Account Executive wanted for a successful, high-energy marketing & advertising firm. If you can hunt, you can make money. If interested to make six figures email brandingyourproduct@hotmail.com.
Employers: Reach the most qualified workforce. Advertise your open positions in Crainâ&#x20AC;&#x2122;s Cleveland Business.
SPECIAL RATES AVAILABLE. Call Genny Donley at 216-771-5172
___
INSIDE SALES
Working knowledge of sheet metal, estimating, fabrication, plant operation or similar industries. No 3rd Parties.
Fax: 440-842-6537
JOB SEEKERS: Crainâ&#x20AC;&#x2122;s Cleveland Business is now posting POSITIONS WANTED in the Classified section of CrainsCleveland.com at
Where to find your professional! Confidential box numbers available @ $35 per ad.
www.SuitePartners.com
NO CHARGE. (Up to 150 words) E-Mail info to gdonley@crain.com Questions? Call 216-771-5172
WANTED: Your subscription to Crainâ&#x20AC;&#x2122;s Cleveland Business To sign up call toll-free at 1-877-824-9373
20110523-NEWS--26-NAT-CCI-CL_--
26
5/20/2011
2:33 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 30 - JUNE 5, 2011
THEINSIDER
THEWEEK MAY 16 - 22 The big story: And the winner is … Westlake. Greeting card maker American Greetings Corp. said it plans to establish a new world headquarters in Westlake and exit its longtime corporate home in Brooklyn for a location at Crocker Park. The company plans to develop a 700,000-squarefoot complex on a 13-acre site off of Main Street in the mixed-use development. The company plans to move into the new HQ, dubbed “American Creative Studios,” in 2014. American Greetings did not put a specific dollar cost on the project beyond its previously stated millions of dollars.
Global players: Digital marketing agency Rosetta Marketing Group, which has a large presence in Cleveland after its July 2008 purchase of Brulant Inc., was bought by Publicis Groupe SA. Publicis, a French advertising company, paid $575 million in cash for Hamilton, N.J.-based Rosetta. According to Crain’s Cleveland Business research, Rosetta had 404 employees in Cleveland as of last Oct. 4. Rosetta said it will continue to operate “as an autonomous, standalone brand” within Publicis. A match made in Romeoville: Olympic Steel Inc. of Cleveland said it’s buying Chicago Tube & Iron of Romeoville, Ill., for $150 million in cash in a deal it expects to close by June 1. With the acquisition, Olympic picks up 10 Chicago Tube operations in six states. The company provides a variety of steel and aluminum tubing, valves and related products across the Midwest and in North Carolina. Olympic said Chicago Tube had more than 1.2 million feet of combined space in its facilities, where it inventories more than 30,000 items. Highlight of their week: Private equity firm 3i Group PLC of London said it has bought a majority stake in Hilite International Inc., a Cleveland maker of fuel-efficient auto parts. Financial details of the deal were not disclosed, but Dow Jones and Reuters reported the deal was worth about $300 million. Hilite has six plants in North America, Europe and Asia. The downtown Cleveland headquarters is its only operation in Ohio. Hilite in 2010 generated revenues of $400 million.
UH is beaming: University Hospitals’ Seidman Cancer Center announced it will invest $30 million to establish a proton therapy center, which would make the new, freestanding hospital one of the few facilities in the country to offer this type of radiation treatment. Proton therapy uses a powerful beam of protons rather than the photons to target cancerous tumors. The new technology can help spare healthy tissue in the body, which can be damaged by traditional radiation treatments.
Turf battle: A proposed one-year extension of the Cleveland Browns’ parking agreement with its lakefront neighbor, the Cleveland-Cuyahoga County Port Authority, for parking spaces around Cleveland Browns Stadium failed to win the needed votes from Port Authority board members. The Browns sought the extension to allow the team to continue to use 3,878 parking spaces on Port Authority land on football game days. The 3-3 vote reflected some peevishness on the part of the dissenting board members on broader issues, including the looming postponement or cancellation of the pro football season and the way the Browns handled discussions with a select group of Port Authority board members over its proposal to redevelop the lakefront.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Kvamme’s link to LinkedIn ■ Ohio’s director of job creation, Mark Kvamme, spent part of his day last Thursday, May 19, ringing the bell to open trading on the New York Stock Exchange — and scoring the kind of financial home run he hopes to bring to Ohio. That day, the stock of LinkedIn Corp., the operator of the social media web site with a business slant, went public. With LinkedIn’s initial public offering, its early investors, including Mr. Kvamme and his old partners at Sequoia Capital, made millions — perhaps hundreds of millions — of dollars. Until he signed on to build Gov. John Kasich’s economic development program, Mr. Kvamme was a member of the LinkedIn board. In the days leading up to the IPO, the expected opening price kept rising from $32 a share past $45. Then after Mr. Kvamme rang the bell, he said it took 40 minutes of bidding up for the offering to open at $83 a share. It soon soared past $122 a share before closing at $94.25, giving the company a market value of nearly $9 billion. “It was pretty cool to be on the floor of the New York Stock Exchange while they’re trying to find a price,” Mr. Kvamme said. “The president of the New York Stock Exchange was saying this is something that doesn’t happen too often.” — Jay Miller
that is the new kid on the block, relatively speaking: downtown Cleveland. Real estate developer Bob Rains, a partner with John Carney in Landmark Management of Cleveland, says the partnership’s 400-suite apartment portfolio in the city’s Warehouse District is full. Moreover, it’s full for the first time. The apartment owners have not had the properties that long, for they began developing the suites that include the Bridgeview and Perry Payne buildings fairly recently, in 1992. Most of the region’s apartment stock is older. “If someone calls and asks for a suite in July, we say we may have one open up in August,” Mr. Rains said. Reports like that are enough to make an inquiring mind wonder why so many developers are killing each other to try and rehabilitate old buildings in downtown Cleveland for the mercurial hotel market, even with a medical mart and convention center and perhaps a casino on their way. — Stan Bullard
Our man Hannahan
next Casey Blake — repeatedly inquired. Mr. Hannahan prior to this season played for three teams in his four-year big-league career; he’s hitting .240 this season in 35 games. More important: Through last Thursday, the Indians were second in the league in fielding percentage and had made just 17 errors. — Joel Hammond
Egad! It’s e-agents at an e-branch ■ According to the CEO of Ohio Catholic Federal Credit Union, two other credit unions have asked to observe its “e-branch” for themselves once it’s up and running. Ohio Catholic has hired a team of four for its e-branch — a newly renovated space in its Garfield Heights location that’s surrounded by glass panels where “e-agents” and one manager will sit, said CEO Randy Trimm. Beginning June 2, customers who call in will be routed directly to the eagents instead of the main phone line, and the team will assist them with services ranging from inquiries to transactions and esigning of checks, Mr. Trimm said. The goal is to provide enhanced service to members who prefer to do business outside the institution’s six branches. Ohio Catholic plans to roll out by late June remote deposit capture, which, as the name implies, permits customers to deposit checks remotely. Mr. Trimm said it also will add live chat capability on its website, which the e-agents will handle. — Michelle Park
■ Here is another sign of the apartment market’s vitality, particularly in the submarket
■ The Indians signed journeyman infielder Jack Hannahan this offseason to help stabilize a defense that ranked 20th in the majors last season in fielding percentage. Little did they know he’d gain cult status so quickly. The Indians last week received their first batch of merchandise featuring Mr. Hannahan’s No. 9, after fans — including this reporter and his friends, in search of the
WHAT’S NEW
BEST OF THE BLOGS
COMPANY: Flaming River Industries, Berea PRODUCT: Flaming River Synthetic Power Steering Fluid
with pursuing an innovative strategy to retain air service at Cleveland Hopkins International Airport in the wake of the Continental/United merger. “In order to retain its hub, the Greater Cleveland Partnership, the largest chamber of commerce in the metropolitan ■ Scholars at the Brookings Instiarea, has created the Air Services tution have looked at economic Demand Task Force,” the magadata for the last five quarters and zine noted. “This group is devoted found the economic recovery is to working with local businesses real but uneven — and Cleveland to raise demand for travel from is among the winners. Hopkins. It also works to raise In the United States, “Output is United Continental’s yields by rising, credit conditions are working with local business leaders thawing and firms are hiring,” three to increase demand.” Brookings researchers wrote in a Aviation Week said Hopkins, Washington Post opinion piece unlike some other airports, “has last week. However, they note always been an origin-and-destithat “consumer and small-busination (O&D) market, with 72% ness confidence remain low by FILE PHOTO/MARC GOLUB pre-recession standards, which is Cleveland Hopkins In- of its 10 million annual passenperhaps not surprising with the ternational Airport di- gers from the local area.” Airport director Ricky Smith, unemployment rate at 9%.” rector Ricky D. Smith an ex-officio member of the But even among the metropolgroup, told the magazine, “We itan economies hit hardest by the Great Reneed to create an environment in which aircession, the differences in the speed of recovlines experience high yields on routes.” ery have been striking, according to the piece. “Areas heavily linked to the auto industry, such as Cleveland and Detroit, have benefited from the resurgence of manufacturing activity since 2009,” the Brookings researchers ■ Northeast Ohio is home to two of the 50 wrote. “On average, the unemployment best undergraduate entrepreneurship prorates of these urban economies have fallen grams in the country, according to two percentage points in the past year — Bloomberg Businessweek. double the national decline.” The magazine each year ranks underConversely, areas that were hit hard graduate business programs in a dozen because of their exposure to the housing specialty areas, such as operations managebust — think Las Vegas or Tampa — “have ment, ethics, sustainability, macroeconombeen slow to recover, with their housing ics, accounting, financial management and markets still facing significant structural business law. This year, Bloomberg Busiproblems.” nessweek added entrepreneurship and international business to its rankings. In the entrepreneurship rankings, John Carroll University is 43rd nationwide and ■ Aviation Week credits Cleveland officials Case Western Reserve University is 50th.
A full house in downtown Cleveland
The maker of steering and electrical components has developed a new line of synthetic power steering fluid that serves as a complement to the company’s Power Rack and Pinions and Power Steering Accessory product lines. Flaming River says its new power steering fluid, which is available in a one-quart bottle, “reduces operating temperatures and fluid expansion, resists foaming and increases the life of power steering systems by reducing internal wear and tear.” The steering fluid can be used for all power steering applications, according to Flaming River. “Simply purge the vehicle of its current power steering fluid and replace with Flaming River’s unique blend that easily mixes with any trace amounts of other steering fluid left behind,” the company says. Retail price for the power steering fluid is $14.50. For information, visit www.FlamingRiver.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
Excerpts from recent blog entries on CrainsCleveland.com
Reversal of fortune: Cleveland thrives as Sun Belt struggles
JCU, CWRU near head of the class in entrepreneurship
Hopkins airport takes innovation under its wing
20110523-NEWS--27-NAT-CCI-CL_--
5/19/2011
9:55 AM
Page 1
Together. It Starts Here.
Here is where steel starts. Here is where Cliffs Natural Resources Inc. (NYSE: CLF, Paris: CLF) furthers it’s position among the world’s top iron ore producers. Here is where acquiring Consolidated Thompson Iron Mines Limited boosts Cliff’s capacity to help meet the burgeoning demand for steel everywhere. Together. It starts here.
20110523-NEWS--28-NAT-CCI-CL_--
5/19/2011
9:56 AM
Page 1
of North Olmsted
Rumor has it the weather in Cleveland will get better. Be prepared.
Brand New 2011
Mercedes-Benz E350 Premium 1 Package MSRP of $61,725 includes:
699
$
l TEXT “E350” TO 69940 k FOR AN EXCLUSIVE OFFER
per month
lease for 36 months with $5,407 due at signing**
Leather Interior, Heated Front Seats, Harman/Kardon® Sound System w/Dolby 5.1, SIRIUS Satellite Radio, COMAND with Navigation and Voice Control, Airscarf - Ventilated Headrest, Dynamic Rear View Monitor, iPod/MP3 Media Interface Cable, Wood Trim, Soft Top.
Brand New 2011
Brand New 2011
Mercedes-Benz C300
Mercedes-Benz GLK 350
228 HP V6 / Traction Control
399
$
349
$
per month
per month
lease for 30 months with $4,769 due at signing** l TEXT “GLK350” TO 69940 k
lease for 33 months with $3,894 due at signing** l TEXT “C300” TO 69940 k FOR AN EXCLUSIVE OFFER Premium 1 Package MSRP of $38,350 includes: 7-Speed Automatic Transmission, Bluetooth,® Garage
Door Opener, SIRIUS Satellite Radio, Power Driver Seat and Steering Column, Auto Dimming Mirrors, Rain Sensing Wipers, Integrated Compass in Rear View Mirror, 4-Way Lumbar Support, Split Folding Rear Seats, Power Rear Window Sunshade, Heated Front Seats, Glass Sunroof.
FOR AN EXCLUSIVE OFFER
Premium 1 Package MSRP of $39,575 includes:
7-Speed Automatic Transmission, Bluetooth®, Garage Door Opener, Power Liftgate, SIRIUS Satellite Radio, Panorama Sunroof, Rain Sensing Wipers, Power Steering Column with Memory, Memory Drivers Seat w/Lumbar Support, Autodimming Mirrors, Heated Front Seats.
Collection Auto Group + + + + +
The #1 Volume Mercedes-Benz Dealer in the Central U.S. †
Mercedes-Benz of North Olmsted Best of the Best 2006•2007•2008•2009•2010
Proud Partner of the Cleveland Indians
We use the ONLY Mercedes-Benz Certified collision center in Northeast Ohio. Call 440-777-1717
Follow us on Facebook for additional specials and offers
Great Northern Blvd.
GREAT NORTHERN MALL
Clague Rd.
28450 Lorain Road • 888-205-1041 • www.mbohio.com
Lorain Rd.
Stearns Rd.
Mercedes-Benz of North Olmsted
Mercedes-Benz
of North Olmsted
71
480 AIRPORT
On the North Olmsted Auto Mile 28450 Lorain Road 10 minutes from the Airport 5 minutes from Crocker Park
*Based on 2010 Ohio registration data. **Financing or leasing through Mercedes-Benz Financial is subject to tier one credit approval. 2011 E350 – 36 months, 10,000 miles per year. 33¢ per mile thereafter. Rates as low as 1.9%. $5,407 total due at signing=1st payment $699, acq. fee $895, plus tax and title. 2011 C300 – 33 months, 10,000 miles per year. 33¢ per mile thereafter. Rates as low as 1.9%. $3,894 total due at signing=1st payment $349, acq. fee $895, plus tax and title. Rates as low as 1.9%. Doc fee not included. Lease offer expires 5/31/2011. © Mercedes-Benz USA, LLC. †Based on MBUSA YTD regional sales results 12/31/10 .