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Vol. 31, No. 23
State interests coalesce for a budget revamp Business groups, accountants strategize on ways to streamline government, spending
MANUFACTURERS’ HIRING GEARS UP With staffing firms’ assistance, companies employ more help as production gets rolling By DAN SHINGLER dshingler@crain.com
A
rea manufacturers have gone from looking for busy work to being busy looking for people and, for once, might be leading the region in job production. “Over the last 10 days in particular I’ve been hearing it — there’s a lot of hiring going on,” said John Colm, president of Wire-Net, a manufacturing advocacy group on Cleveland’s West Side. Mr. Colm has been out talking to his members and other area manufacturers recently, and he quickly rattles off a list of businesses he says have been adding jobs:
23
See STAFFING Page 22
By JAY MILLER jmiller@crain.com
“Everything is on the table right now.”
Several Ohio business groups plan to make short- and long-term recommendations for solving the impending state financial crisis when the governor and the Legislature start to tackle the next biennial budget in the fall. The state’s eight major chambers of commerce as a group and the Ohio Society of Certified Public Accountants independently have begun working on studies of best govern-
– Carol Caruso, senior vice president, Greater Cleveland Partnership ment practices around the country. They hope to offer Ohio budget makers some ideas this fall for broad ways to streamline government in the future as well as more immediate solutions to what the Ohio Public Expenditure Council warns may be See BUDGET Page 21
Stem cell therapy may be boon for Athersys Pfizer, analysts see big potential for MultiStem By CHUCK SODER csoder@crain.com
The scientists at pharmaceutical giant Pfizer Inc. aren’t the only ones who have confidence in Athersys Inc.’s adult stem cell therapy. Three stock analysts who spoke with Crain’s Cleveland Business said they think the Cleveland biotech company’s MultiStem therapy one day might help patients with various medical maladies — and that it might be better than a competitor’s similar product that has received a lot more
attention. That competitor, Osiris Therapeutics Inc. of Baltimore, in November 2008 struck a deal that could be worth as much as $1.25 billion with pharmaceutical giant Genzyme Corp. The deal gave Genzyme rights to commercialize two of Osiris’ adult stem cell therapies in markets outside the United States and Canada. Osiris has an edge over Athersys in that the Baltimore company’s lead product, Prochymal, already is deep into Phase III clinical trials. By See ATHERSYS Page 20
ON THE WEB Get connected with Crain’s This week’s podcast takes you further into some of the stories that appear in this week’s Crain’s. To get closer to the news, visit www.CrainsCleveland.com /podcasts.
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CORRECTIONS The May 24 profile of Richard Bogomolny incorrectly identified the title of Ward Smith. Mr. Smith was president of the Musical Arts Association’s board of trustees from 1983 to 1995. A May 24, Page 4 story about the Calfee, Halter & Griswold LLP law firm’s search for a new office incorrectly reported the size of the firm’s Cleveland staff. The firm has a staff of about 300 in Cleveland, including 150 attorneys.
COMING NEXT WEEK Seeing green More businesses are helping companies and homeowners realize the economic benefits of becoming more energy efficient.
REGULAR FEATURES Best of the Blogs ..........23 Classified .....................22 Editorial .......................10 Going Places ................12 List: Nonprofits .............18
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JUNE 7-13, 2010
ALL IN THE FAMILIES In a mark of recession’s ferocity, the number of families with at least one person unemployed shot up to 12% in 2009 from 7.8% in 2008, according to just-released data from the federal government. The 12% figure was the highest since the government began tracking such data in 1994. (A family is defined as a group of two or more persons residing together who are related by birth, marriage or adoption.) The problem was most pronounced in the black and Hispanic communities. Here’s how the data break down across ethnic groups: Percentage of families with at least one unemployed member
2009
2008
White
11.1%
7.1%
Asian
11.4
6.3
Hispanic
16.9
11.0
Black
17.4
12.8
All U.S.
12.0
7.8
SOURCE: U.S. BUREAU OF LABOR STATISTICS; WWW.BLS.GOV
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Apartments’ popularity bucks recent trend K&D’s $70M project leases quickly, draws waiting list after others stumble downtown By STAN BULLARD sbullard@crain.com
All good things must come to an end, or so the saying goes. For K&D Group principals Karen Harrison Paginini and Doug Price, they just didn’t expect the end to come so soon. At least such is the case at the Residences at Six Six Eight, K&D’s just-completed, $70 million conversion of a long-empty office building at 668 Euclid Ave. in downtown Cleveland. As they toured Six Six Eight’s model apartment suites, Ms. Paginini and Mr. Price mourned the need to clear out the two models at the structure that contains 232 rental apartments and contemporary commercial space. Ms. Paginini said the furniture is coming out because the models are committed to renters, as are all but three suites specifically designed for handicapped people. Moreover, as
THE WEEK IN QUOTES “This is a really, really ugly subject, and there are no really good answers and no really popular answers.” — Rick Yocum, executive director, Ohio Public Expenditure Council. Page One
“I am seeing a different level of interest in Akron in the biomedical community than I’ve seen before. It has gotten notice of the biomedical community nationally.” — Baiju Shah, president, BioEnterprise Corp. Page 11
of last Thursday, June 3, K&D had 62 people on a waiting list for suites at the complex, which is carved out of a former downtown department store and warehouse. “I thought we’d be leasing here until the end of the year,” Mr. Price said. Ms. Paginini jokes the two business partners probably should get memberships at Six Six Eight’s Titans fitness center because this is the first year in the last decade that K&D will not have a major building project under way. The rapid lease-up of the complex — the first rental apartments finished downtown in years — is a positive development after a fair amount of bad news for the downtown rental market. This spring, the 340-suite Bingham Apartments was sold at an auction led by the Department of Housing and Urban Development after its Chicago-based developer defaulted on a loan insured by the See K&D Page 8
RUGGERO FATICA
Doug Price, a principal at real estate developer K&D Group, can’t help but be surprised by the popularity of the company’s Six Six Eight apartment complex in downtown Cleveland. “I thought we’d be leasing here until the end of the year.”
INSIGHT
Diverse lineup helps STO weather Indians’ slump But the Dolan family’s network still may not be financial windfall amid Tribe’s poor play By JOEL HAMMOND jmhammond@crain.com
When Jim Liberatore said in December 2005 as SportsTime Ohio was unveiled that the network would carry much more than the Cleveland Indians, people scoffed. High school sports? Small college athletics? Outdoors shows? On a network owned by the family that also owns its biggest programming property, the Tribe? But, as it turns out, the STO president’s ability to diversify the network’s lineup has buoyed its fortunes during an exceedingly poor on-field stretch by the Indians. No, Browns lineman Joe Thomas fishing on Saturday mornings and
FILE PHOTO/MARC GOLUB
SportsTime Ohio president Jim Liberatore (right), pictured with vice president Pat Kilkenney, says the network’s non-Indians programming has helped provide value to cable providers. Division III college basketball aren’t going to make millions. But with lackluster ratings and ad sales for
the network’s Indians’ games, the programming options on STO continue to provide value to cable providers, which is key: Analysts say the subscriber fees cable providers pay to regional sports networks such as STO can make up about 80% of those networks’ revenue streams. “We do not and cannot rely on the Cleveland Indians for our success,” Mr. Liberatore said. “We built (STO) to not exist on them. We’d love for the Indians to perform better, but our other programming gives people something to watch all year.” Mr. Liberatore said the network’s exclusive rights to Ohio High School Athletic Association events, such as the state’s football championships, “draw communities together.” In addition, STO pitches its exclusive Browns cable programming, and Mr. Liberatore said former WKNRAM personality Bruce Drennan’s “All Bets Are Off” and former WOIO-TV sports anchor Chuck
“For us, the key has been realizing that we just weren’t in half of the markets we Bill pushes notices of sheriff’s auctions, foreclosures out of court newspapers should be in.”
Galeti’s “Chuck’s Last Call” shows are performing well. “When the local teams aren’t performing well, people want someone to vent to,” he said.
Pluses and minuses Time Warner Cable communications manager Travis Reynolds wrote in an e-mail, “SportsTime Ohio provides great programming for our customers.” But that’s not to say the network is a windfall for the Dolan family, which owns the Indians and STO. The Dolans’ pocketbook definitely is stinging from the team’s on-field troubles and the subsequent falloff in home attendance — though specifics of how STO is faring financially remain murky and extremely sensitive. STO appears to have avoided the distribution pitfall encountered by other regional sports networks owned by team owners. Among them is the Minnesota Twins’ Victory See STO Page 14
Proposed legal advertising law could help big dailies
— Craig Kohrs, vice president, Corsa Performance Exhausts. Page 15
“It looks like manufacturing again will have this pool of openings. … I think again we will see those same difficulties.” — Karen Herpel, manager of manufacturing, education and training for Magnet. Page 17
By JAY MILLER jmiller@crain.com
Ohio’s major daily newspapers, hungry for revenue, could be the beneficiaries of a proposed change in state law that would send a chunk of advertising their way at the expense of a group of court and commercial newspapers. Critics say the change would raise the cost of a class of public notices advertising, which is paid for by banks and county governments. It would send the boilerplate advertising for sheriff auction sales of foreclosed properties and
mortgage delinquencies to the big dailies from newspapers such as Cleveland’s Daily Legal News. Operators of the legal newspapers are the main opponents of the measure now before the Legislature. But banks and some public officials also are unhappy with the proposed change. “It’s a money grab,” said Virginia Seitz, publisher of the Toledo Legal News. Ms. Seitz said the big daily newspapers “are trying to take our business.” House Bill 220 passed the Ohio House last Wednesday, June 2, and now heads for the Senate. It includes
requirements that local governments advertise in publications that the general public turns to for information on political, religious, business and social events. The bill changes the requirements for all legal advertising but makes specific distinctions for delinquent tax and sheriff sale advertising. Cuyahoga County Treasurer Jim Rokakis said daily newspapers, including The Plain Dealer, pushed for changes to the legislation because they are desperate for ad revenue. If the law passes, he said, it will more than double the cost of legal advertising for the county,
which spends about $140,000 a year on such advertising now. Jeff Karlovec, publisher of the Daily Legal News in Cleveland, said cities and counties already could use the major dailies for this advertising but don’t because of the cost. “This would be a crippling blow to us,” he said. Mr. Karlovec said this one class of advertising accounts for nearly half his paper’s revenue, though he declined to be more specific about revenue figures. Michael Adelman, vice president of state government relations at the Ohio Bankers League in Columbus, said his association opposes the bill because the banks believe the legal See LAW Page 6
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Community colleges pull ahead Local institutions up ante on graduation completion targets By SHANNON MORTLAND smortland@crain.com
Local community colleges seem to be ahead of their peers when it comes to helping students obtain their associate’s degrees. Six professional organizations for community colleges recently signed a “call to action” to boost student completion rates nationwide by 50% over the next decade. While commu-
nity colleges in other states have said the money just isn’t there for such measures, Ohio continues to work toward its own goal of raising the number of college graduates. “Community colleges in Northeast Ohio and the state have had that call to action for the last couple of years,” said Jackie Joseph-Silverstein, executive vice president of academic and student affairs at Cuyahoga Community College. In 2008, Gov. Ted Strickland charged Ohio’s public colleges with increasing the number of Ohioans with college degrees. Though local and state support for community colleges has dwindled, Tri-C and Lakeland Community College have
implemented and continue to create new programs that will help attract and retain students. One key to student success is to reach students earlier in their college careers so they don’t “get discouraged, get low grades and drop out,” said Marilyn Jones, Lakeland’s vice president for learning support and vice provost. As of April, all Lakeland students who already had earned college credits at some point in their lives must take a placement test at the time they are admitted so counselors can develop a better course of action for them. Students previously could take the placement test right before classes started, which didn’t give counselors and students enough time to work together on academic plans for the students, Dr. Jones said. Lakeland also is allowing students to work through remedial or developmental courses at their own pace, so they don’t need to spend an entire semester on them. “Sometimes students get very discouraged doing developmental work,” Dr. Jones said. “If we can fastpace them through it,” the dropout rate might decrease, she said.
On the advice offensive
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Tri-C also has implemented programs to retain students, such as enhanced mentoring and advising. “Proactive advising services help the student understand where they are in the process of their goal,” said Peter Ross, vice president for enrollment management at Tri-C. For instance, degree audits that now take place every fall and spring help students understand how many and what classes they need to graduate and how long it might take for them to complete those courses. Advisers help students understand how an associate’s degree will affect their lives, which it is hoped will encourage them to complete the program, Mr. Ross said. Sometimes students run into financial difficulties, so Lakeland has created an emergency fund to help them get over those hurdles and stay in school, Dr. Jones said. One student’s car died and, without transportation, the student couldn’t get to school, so Lakeland helped her get another used car so she could stay in school. “A little bit of emergency funding can make the difference between a student dropping out and persisting,” she said. However, times could get tougher for community colleges in the state’s next biennium budget, which begins July 1, 2011. The state faces a possible $9 billion budget deficit, so cuts in education support are expected. Still, Tri-C and Lakeland said they are committed to student retention services. Whether to keep student retention programs is “always a decision as we look at the budget, but these are priorities because they are the kinds of things students have come to rely on,” Dr. Jones said. ■
firstmerit.com 1-888-283-2303 Volume 31, Number 23 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 © 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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CFBank retools after CEO’s departure Exec resigns at shareholder request; stock’s decline, nonperforming loans likely play roles By ARIELLE KASS akass@crain.com
“We’re in a position to do well.”
Central Federal Corp. and CFBank board chairman Jerry F. Whitmer said he did not expect to be looking for a new CEO at the start of the company’s May 20 annual meeting. But by the end of the day, things had changed. Three shareholders spoke at the meeting, Mr. Whitmer said, with one asking that the Fairlawn-based company be sold to improve shareholder value and another requesting that Mark Allio, Central Federal chairman, president and CEO as well as the CEO of CFBank, resign from the company. After the meeting, Mr. Allio did just that. His resignation was effective June 1. In a voicemail, Mr. Allio said he “really can’t comment on anything.” In addition to Mr. Allio’s departure, CFBank president and chief operating officer Raymond Heh retired as of the same date. Mr. Whitmer said conversations with the board are confidential, so he could not say what transpired between Mr. Allio and Central Federal Corp.’s board members, except to say that Mr. Allio offered his resignation and the board accepted it. Mr. Whitmer said only
– Jerry F. Whitmer, board chairman, Central Federal Corp. and CFBank that banking is a complicated business and the reason for Mr. Allio’s departure had a “complicated answer.” Mr. Allio had been a director of the bank since 2003 and came on as president and CEO of the company and CEO of CFBank in 2005. He had been chairman of the company and CFBank since 2006. Mr. Whitmer said he had “a lot of respect for Mr. Allio,” but added that Mr. Allio’s departure from would not have “a big impact on the bank, at least not a negative one.” “We’re in a position to do well,” Mr. Whitmer said. Executive vice president Eloise Mackus has taken on the role of CEO on an interim basis; Ms. Mackus said she was “very interested in the permanent position.” She will be a candidate, Mr. Whitmer said. Ms. Mackus said she believed Mr. Allio was done in by the bank’s loss of $9.9 million, or $2.51 per share, in 2009, something that was the result of borrowers falling on tough times. The loss mainly was due to a $9.9
million provision for loan losses in response to nonperforming loans that increased by $10.8 million, for a total of $13.2 million at Dec. 31, 2009. A year prior, they had been $2.4 million. Net loan chargeoffs were $5.9 million at the same date, a big increase from $482,000 the year prior. As of March 31, 2010, the bank had $288.6 million in assets and $234.7 million in deposits. Going forward, Ms. Mackus said she plans to continue to develop the bank’s reputation and expand its residential mortgage lending. “We are a community bank. We view that as one of our real strengths,” she said. “We’re going to stay focused for the time being on customer service. Especially in this economic environment, clients are looking for a face to put with a voice, not to mention a name.” Mr. Whitmer said the bank is well capitalized and in a good place to move forward. There is no time frame for when a new CEO will be chosen, according to Mr. Whitmer, who said he is more concerned with doing it right than doing it quickly. Saying that “hindsight is always good,” Mr. Whitmer said that if not for broader economic issues, Mr. Allio likely would still be in charge of the Fairlawn institution. “The policies he had in place are probably sound if not for the collapse of the economy,” Mr. Whitmer said. “It’s a matter of circumstances that things ended they way they did.” ■
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Law: Original bill changed to exclude legal papers continued from PAGE 3
newspapers are the best way to reach the investors and creditors who buy most of the properties that go through public sales. Seven Ohio cities — the largest communities — have daily legal newspapers. The papers circulate to only several thousand subscribers in total, according to figures published by the Ohio Newspaper Association. Cleveland’s Daily Legal News is listed with a circulation of 1,000.
Change they don’t believe in House Bill 220 is the product of the Local Government Public Notice Task Force, created by the Legisla-
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ture in 2006. It was part of a national effort to bring legal notices into the Internet era. The bill would update the way cities, counties and townships notify the public about a variety of government activities, including allowing communities to use the Internet and free weekly newspapers to reach a wide audience at lower cost. It also allows governments to create preprinted inserts that can be inserted into newspapers at a lower cost than traditional advertising. Public advertising in a printed newspaper has been the traditional last resort for meeting legal requirement of notifying all interested parties of actions to be taken by courts or government agencies — everything from procurement bids and even legal name changes in addition to mortgage foreclosures and property auctions. Some of those notices are published in metropolitan and community dailies of general circulation, especially in smaller communities. However, some of the advertising is targeted to legal and commercial markets that traditionally have been reached at a reasonable cost in larger metropolitan markets by advertising in these legal newspapers.
“(Banks are) concerned that they ... were going to miss a population that is most inclined to bid on the properties.” – Michael Adelman, vice president of state government relations, Ohio Bankers League Mr. Karlovec and his fellow legal newspaper publishers supported the bill as it was initially introduced. That initial bill would have expanded the kinds of publications governments could advertise in and introduced some options for Internet publication. But by the time it reached the House Local Government and Public Administration Committee, a key change had been made that specifically excluded the legal newspapers from consideration when counties went to publish two specific types of ads — delinquent property tax notices and sheriff sale notices. These two categories comprise most of the money spent on legal advertising. “We supported the idea of changes,” said Dan Schillingburg, publisher of the Columbus Daily Reporter, that city’s legal newspaper. But that support disappeared, he said, “since the prohibition amendment was added.”
The public interest In its analysis of the substituted version of the bill, the Ohio Legislative Service Commission noted that the substitute bill added a clause stating that delinquent tax lists and auction sales of land “may no longer be published in a daily law journal.”
“They just slipped the stuff in,” said Ms. Seitz, referring to the Ohio Newspaper Association and, specifically, its lobbyist, Frank Deaner. Mr. Deaner did not return three calls seeking comment. Rep. Kathleen Chandler, the Kent Democrat who introduced the bill and was a member of the public notice task force, couldn’t explain the mid-course change. She contends that by moving these ads to newspapers with broader circulation, the public will be better informed. “It gets right down to the idea that we’re obliged as a government to give out public notice about selling your home in a sheriff sale” or if a delinquent tax notice has been issued, she said. “If we’re obliged to do that and if we place it in (a legal newspaper read by a small audience), that really doesn’t meet the public notice requirement.” The Ohio Bankers League’s Mr. Adelman and others, however, contend that by the time a delinquency is put in a public notice, the homeowner is well aware that the home is moving toward a sale at a public auction. “I hear from our banks that they are concerned that by not being allowed to advertise in (legal) newspapers, they were going to miss a population that is most inclined to bid on the properties,” Mr. Adelman said. ■
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You can pull ideas out of
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K&D: Firm eyes next downtown project continued from PAGE 3
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Federal Housing Administration. Bingham was the fourth downtown apartment to change hands after a mortgage default since 2005. K&D benefited from the improving economy as well as pent-up demand, Mr. Price said, although the Six Six Eight project also has gotten a boost from its inclusion in K&D’s newspaper, radio and Internet advertising for its regional apartment empire. K&D also took a different tack in planning Six Six Eight from some developers. Ms. Paginini said K&D planned for Six Six Eight to have asking rents at the existing market level rather than build it with the hope that rents would rise later. Suites in the complex rent for $800 to $1,500 monthly for a one-bedroom and $1,200 to $2,000 monthly for a two-bedroom. That works out to a rental rate of $1.15 to $1.60 per square foot, compared with $1.50 to $1.60 for most of downtown, Mr. Price said. “This project just worked out way better than anyone would have thought,” he said.
Relatively rosy rentals A few blocks east of 668 Euclid, David “Joe” Kaufman said he and his
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brother Jay — the team behind the this is success,” Mr. Price said, waving landmark Brothers Printing Co. his arms to point at one of the soonbusiness — have rented 60% of the to-be-rented model suites. 30 suites at their recently completed K&D’s plans for a big mixed-use University Lofts, 2010 and 2020 development at the former home Euclid. of the long-defunct Ameritrust “I’m shocked,” David Bank headquarters complex Kaufman said in referring came a cropper last year as to how quickly the Resifinancing for real estate dences at Six Six Eight rented development dried up in out, though he quickly the recession. Meanwhile, noted the property benefits Cuyahoga County found it from a location close to could not convey the Amerthe East Fourth Street itrust property to a new Neighborhood entertainowner because parking lot David Kaufman ment district and is more owner Lou Frangos maincentral to downtown. Although he tains he owns an interest in land jokes he is glad to have another underneath the long-empty bank business to rely on besides real complex at East Ninth Street and estate, Mr. Kaufman also is satisfied Euclid. The county, which owns the with his project. building, and Mr. Frangos are liti“I think we’re doing very well. gating the matter in Cuyahoga We’re two units ahead of where County Common Pleas Court. we thought we would be now,” Mr. However, K&D’s interest in a new Kaufman said. “We’re very satisfied downtown project is such that it is with our mix of residents and the looking for another challenge after sense a neighborhood is starting to capping off the largest development build here. We’re not going to give project in its history. Mr. Price has our product away.” toured the former May Co. building, Suites at University Lofts, he said, which is on the market, but he are upwards of $900 monthly for a called it a difficult project due to its one-bedroom. design. K&D is not interested in the No one tracks downtown apartEast Ohio Building, he said; that ment occupancy, but it looks to be empty skyscraper recently failed to holding its own, economic blues sell at a sealed-bid auction. aside. With development financing still According to the Northern Ohio scarce, it is surprising Mr. Price Apartment Association trade group, wants to pursue a new project. He downtown buildings participating said renovation projects such as in its survey — it does not identify Residences at Six Six Eight are them individually — range from attractive because they can obtain 85% to 97% occupancy, with most state and federal historic tax credits, in the 90% range. At K&D’s other but they take at least two years to downtown properties, Reserve Square prepare. He believes loans may be is at 90% and Stonebridge, 95%. available by that time. Besides, there’s another reason Time on their hands for undertaking another downtown For K&D, completing Six Six Eight project that does not revolve around is bittersweet. dollars, cents or even a waiting list. “We’d like to be doing another “Being in the heart of the city is project. We’d like to be doing the cool,” Ms. Paginini said. “There is Ameritrust project. What better an energy here that you don’t get at reason is there to do it than this — our other properties.” ■
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Crazy quilt
T
hanks in part to long, detailed amendments that have been made to it in recent years, the Ohio Constitution has become a patchwork quilt of laws that serve the needs of particular constituencies. With no end to this trend in sight, an amendment should be made to the constitution that would require a super majority of voters to approve proposed amendments placed on the ballot. Unlike the U.S. Constitution, which concisely lays out in broad terms the powers of the three branches of government and the fundamental laws of the land, the Ohio Constitution is like a short novel. Some of its 82 pages deal with the basics of governing. However, certain amendments wedged into the constitution over the last decade each run over multiple pages of the document. An example is the “Persian Gulf, Afghanistan and Iraq Conflicts Compensation Fund,” which was added to the constitution last year. Because of the specifics outlined in the amendment, it begins on page 53 and continues onto page 57. Here is just one excerpt: “A person designated by the United States department of defense as missing in action as a result of honorable service or held in enemy captivity, or the spouse, child, or parent, including a person standing in loco parentis for at least one year preceding commencement of service in the United States armed forces, of a person designated as missing in action or held in enemy captivity, is entitled to, and may apply for, a payment of five thousand dollars. … While the person is missing or held captive, the payment shall be made to the person’s spouse. If there is no spouse to claim the payment, payment shall be made to the person’s child or children. If the person does not have children, payment shall be made to the person’s parent or parents or person or persons standing in loco parentis for at least one year preceding commencement of service in the United States armed forces.” No disrespect intended to veterans of these conflicts, but setting such details in constitutional stone seems absurd — and isn’t without its drawbacks. Consider the amendment Ohio voters approved last November that cleared the way for the creation of casinos in four cities. The amendment identified specific parcels of land where the casinos could be built. But just a few months later, officials in Columbus decided a location different than the one cited in the amendment was a better place for that city’s casino, so Ohio voters were asked just last month to pass an amendment to the amendment. Now there is word that as many as five more constitutional amendments could go before voters this fall. Already certified for the ballot is a referendum on whether video slot machines can operate at Ohio’s seven horse race tracks. To stop the use of the Ohio Constitution as a tool of special interests, it should be amended so that proposed amendments put before voters require at least 60% approval. That hurdle would make special interests think twice about spending tons of money to bypass the legislative process and buy the laws they want.
FROM THE PUBLISHER
Union missteps lesson for teachers
L
simply digs in and fights to hold on to all ate last week, Cleveland’s busiit can. ness leaders who are part of the That worked really well for the steelcity’s chamber of commerce, the workers and the autoworkers at the Greater Cleveland Partnership, domestic car plants, now didn’t it? In bought an ad in The Plain Dealer those industries, the unions fought to the to support the efforts of Cleveland predictably bitter end, lost jobs for their schools CEO Eugene Sanders to radically members along the way, and then — transform his system. The question when the particular industry was at death’s is whether the community, and espedoor — the unions returned with cially the teachers’ union, will significant concessions. respond. BRIAN Have members of the teachers’ There is no question that TUCKER union learned nothing from Cleveland has lost population the past 10 to 15 years? More steadily since its apex in the importantly, have they not early 1950s. More inarguable is noticed as their neighbors lost the fact that it has lost thoutheir jobs and homes because sands more since the school of similar intransigence? district last tried to improve President Obama and Educathings by building a host of new tion Secretary Arne Duncan are facilities. right in pushing for changes Now, Dr. Sanders wants to in America’s hidebound public school close some buildings — always a sensisystems. Now the teachers have to join tive issue to the neighborhoods in with them, not fight them. which they’re located — and have some **** flexibility in how he manages those that IT’S NOT VERY OFTEN that you write remain. about a 159-year-old organization, but A big question is whether the teachers’ a religious order devoted to health care union is willing to be a partner, or
makes for a lot of history. The Sisters of Charity Health System, which operates our downtown St. Vincent Charity Medical Center, has been doing just that, while also offering untold other services to its communities. In addition to the obvious, the Sisters provide, for example, pre-natal care for teenage mothers, which improves the health of the newborn and greatly diminishes the amount of necessary future care. The hospital, like the others we are fortunate to have in and around Greater Cleveland, also delivers a significant amount of services and treatments for which it never receives payment. Not surprisingly, the Sisters also offer a variety of health-related services, such as low-income housing help and food pantries. Using a calculation method established by the Catholic Health Association, the Sisters of Charity system delivers nearly $50 million a year in services and assistance to their communities. Without its work, Cleveland would be a far different town indeed. ■
THE BIG ISSUE How would you assess the efforts of the federal government and BP to address the Gulf Coast oil spill?
JOANNE POPE
NADA CHAMOUN
MICK KASTEN
DAVID NYCZ
Shaker Heights
Middleburg Heights
Cleveland
Parma
It’s a huge problem, and it seems like the government is paying attention to it too late. They think the public is naïve and is going to believe that this is just an accident ... and no one knows how it happened.
(The government’s) hands are tied a little bit; they don’t have the expertise like they do in the oil industry. I also feel the oil industry should have been more prepared and had safety nets in place. … It’s a tragedy.
There’s got to be somebody out there that can stop this thing … or at least have a good idea of something that’s going to work. It’s a major catastrophe.
I think they’re a little overwhelmed. If they had a solution, they would have put it in place.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
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Austen BioInnovation Institute gains momentum Akron health care partnership spearheads developments that garner national attention By SHANNON MORTLAND smortland@crain.com
Still in its infancy, the Austen BioInnovation Institute in Akron has two main goals as it grows older. The institute aims to become a world leader in the use and creation of biomaterials and to improve delivery in the health care system, said Dr. Frank Douglas, who came to the institute last September as its first president and CEO. The institute was launched in September 2008 as a partnership among Akron Children’s Hospital, Akron General Health System, the Northeastern Ohio Universities Colleges of Medicine and Pharmacy, Summa Health System and the University of Akron. The partners, along with foundations, local companies, the state of Ohio, Summit County and the city of Akron, donated a combined $80 million to fund the institute’s first five years. “With the new health care bill having been passed, we have concluded that the barrier to access to care will be less about the individual affording care” and more about the ability to deliver care to more people, said Dr. Douglas, who founded the Massachusetts Institute of Technology’s Center for Biomedical Innovation and works for three pharmaceutical companies. The institute’s major initiatives are organized into centers of excellence, such as the Center for Simulation and Integrated Healthcare Education and the Medical Device Development Center. Changes in the medical landscape prompted by the health care bill already led the institute to combine two of its original centers of excellence to form the Center for Clinical and Community Health Improvement, Dr. Douglas said. The institute hired Janine Janosky last month to head up that center. She previously was vice provost for research at Central Michigan University.
Changing with the times Among the immediate projects Dr. Janosky is helping to launch is a wellness registry and a research network. The wellness registry will contain information about the local popula-
tion and will enable medical personnel to contact residents for events such as medical education programs and health screenings, Dr. Janosky said. Participation in the registry will be voluntary and anonymous. Dr. Douglas also envisions the registry as a database that would provide information about chronic diseases, such as diabetes, in various ZIP codes. Such data may help in directing residents to resources that could control their illnesses. Under the research network, physician practices in various specialties, public health clinics and the institute’s partners will pool health information about the local population so medical research can be better focused and can involve participants from Summit County, Dr. Janosky said. A registry of people interested in participating in clinical trials also could be useful in improving public health. People involved in such trials typically receive better care because they personally are involved in their own health care and their doctors are more familiar with them, according to Dr. Douglas. He said a pilot project for the registry will begin by fall.
better care, he said. The center even could help design doctors’ offices and hospitals, he said. “We have a lot of applications we can mock up,” Dr. Holder said. “Those things you take for granted, like where you put the hand-washing station or where you put the gurney,” can make a difference in efficient care.
Making an impression
JANET CENTURY
Dr. Frank Douglas, president and CEO of the Austen BioInnovation Institute in Akron, looks to foster the organization’s global reach. who previously was vice chairman of the Department of Biomedical Engineering and director of Medical Device Solutions at the Cleveland Clinic. In less than two months on the job, Dr. Davis already has hired two engineers and two interns from the University of Akron. He soon will hire someone to research market
needs and the intricacies of getting new products to market. The Center for Simulation and Integrated Healthcare Education is headed by pediatrician Dr. Michael Holder. It will enable medical students and existing medical staff to learn from their mistakes in caring for patients, communicating with patients and working together to provide
Working things out In the meantime, the institute is looking for a permanent home, is hiring more researchers and staff members and is moving forward with plans for its three other centers. The institute’s Center for Biomaterials and Medicine will be located in the University of Akron’s new National Polymer Innovation Center when it opens this month, said Aram Nerpouni, the institute’s chief administrative officer. The center will have enough space for five to seven researchers, plus their staffs of eight to 10 people each, he said. The Center for Simulation and Integrated Healthcare Education and the Medical Device Development Center have their own projects. Brian Davis, vice president of the Medical Device Development Center, said he is focusing on the use of medical devices in orthopedics and wound healing. For example, wounds in a diabetic sometimes lead to amputation. “What can we do to prevent that from happening?” said Dr. Davis,
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Though it’s only been in existence a short time, the BioInnovation Institute is turning heads across the country, said Baiju Shah, president of BioEnterprise Corp., which champions biomedical companies in Northeast Ohio and helped create the BioInnovation Institute. Those involved in biomedicine took notice when the institute hired Dr. Douglas as its leader because he is known worldwide, Mr. Shah said. The institute’s plan to hire a total of up to 35 researchers in its first decade of operation and the collaboration among all its partners is recognized as well, he said. “I am seeing a different level of interest in Akron in the biomedical community than I’ve seen before,” Mr. Shah said. “It has gotten notice of the biomedical community nationally.” ■
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STO: Network can adapt to changing media continued from PAGE 3
Sports One, which in 2004 folded after three months because the team was unable to secure distribution deals with any cable system in the Twin Cities area. STO struck a deal with Time Warner Cable in which Time Warner handles ad sales on a commission basis for the network. In turn, STO was widely distributed right off the bat. But according to an industry source, that arrangement came at a cost: Though the deal has escalators for STO, the source said, Time Warner at the outset paid STO $1 to $1.20 per subscriber — a figure below what other networks reportedly receive. For example, according to recent reports, Fox Sports Houston, which carries Rockets and Astros games, receives as much as $2.50 per subscriber from cable providers. “(Time Warner Cable) got a very favorable licensing fee,” said the source, who requested anonymity. Time Warner’s Mr. Reynolds would not comment on the cable system’s payment per subscriber to carry STO. He only would say that Time Warner, the largest cable company in Ohio, has 2 million customers in Ohio, 1 million in Northeast Ohio and that “many receive STO.”
So-so numbers Rights fees paid for live programming from a regional sports network such as Fox Sports Ohio, meanwhile, appear to be significant: Longtime
“(Rights fees) are guaranteed and can be the lifeblood of a team. But you’re shut out of any growth if you’re locked in. No matter how big a rights fee is ... down the road, it doesn’t look so good.” – Lee Berke, consultant to Major League Baseball teams and president and CEO, LHB Sports, Entertainment & Media Inc. sports television consultant Lee Berke said FS Ohio doubled its offer to carry Indians’ games — it previously was paying the Indians about $10 million a year, according to Mr. Berke — before STO launched. Add in production costs for Indians games — which vary from team to team but were estimated by the anonymous source at $30,000 a game — and it remains unclear how financially beneficial STO is to the Dolans. On the production front, STO dropped eight weekday afternoon games from its schedule this season; Mr. Liberatore told Crain’s in January that those games drew half the viewers typical weeknight games did, and “it wasn’t really advantageous to carry them.” Ratings of Indians games for the season as a whole last year fell 27% from 2008, to 2.84. Mr. Liberatore said ratings for STO-only games — those simulcast on WKYC-TV, Channel 3, draw higher numbers — are 3.1 so far this season, though the season-long number likely will decline to 2009 levels. Mr. Liberatore also said ad sales revenue was up marginally over last year, though the Time Warner official who handles
sales for STO was unavailable by a Crain’s deadline to quantify the network’s sales figures.
Adjusting to a digital age What STO does provide the Dolan family is flexibility. Mr. Berke, a Shaker Heights native who worked for New York regional sports network MSG and helped the Yankees co-author the business plan for Yankees Entertainment Sports Network (YES) — considered the crown jewel of team-owned networks — said the relationship with Fox or similar rights holder would limit a team’s ability to grow with the marketplace. That’s not just population growth, which Cleveland lacks, but also the digital media landscape, which allows teams to deliver content in other ways and earn more revenue. That’s taking place now with the Astros and Rockets, who jointly may create a new regional sports network with a partner, such as Comcast. While the teams’ 2004 deal with Fox Sports Net was viewed as a windfall, the landscape has changed and the television
rights’ value has soared, according to Astros owner Drayton McLane, who recently told the Houston Chronicle, “A lot has changed, particularly in digital media. We’re anxious to get something new going.” The teams reportedly are earning more than $18 million per year from Fox Sports Net. Such third-party rights fees “are guaranteed and can be the lifeblood of a team,” said Mr. Berke, who also consulted with Kansas City Royals on the launch of Royals Sports Television Network, which was started in 2003 but was shut down in 2007 when the Royals went back to Fox Sports Kansas City. “But you’re shut out of any growth if you’re locked in. No matter how big a rights fee is, two, three or four years down the road, it doesn’t look so good.” STO is well-positioned to capitalize on that growth because of its programming beyond the Indians, said Vince Gennaro, author of “Diamond Dollars: The Economics of Winning Baseball,” and a consultant to the Indians on their valuebased ticket model, which assigns different ticket values to different games throughout the season. “When an RSN (regional sports network) like STO gets that momentum with other sports properties, you have a bona fide RSN that caters to fans all across Ohio,” Mr. Gennaro said. “There are plenty of strong RSNs remaining around the country.” ■
COMINGUP 2010 CFO of the Year nominations now open This October, Crain’s will recognize the region’s top financial officers for their strategic leadership and outstanding fiscal management during the deepest recession in a generation. How has your CFO’s vision and direction positively impacted your operation’s ongoing success and viability in an ever-changing economy? New for 2010: The Lifetime Achievement Award, recognizing a current or former senior financial executive (CFO) who has honorably represented his or her company/ organization with exemplary performance and leadership throughout his or her career. Visit www.CrainsCleveland .com/cfonominate to nominate your CFO for this prestigious award.
Emerald Awards nominations also open Profits. People. Planet. The window to nominate individuals and companies for our 2010 Emerald Awards is now open. Is your company or organization a champion of sustainability? Do you know an individual whose leadership is making a difference in our region? Tell Crain’s how their commitment to the triple bottom line is building a better and brighter Northeast Ohio! Download entry forms and additional program details at www.CrainsCleveland.com/ emerald.
Can you handle the truth? The truth is most investors’ portfolios did not handle the past years’ market volatility well. A more alarming truth is that most plans have not been changed to mitigate future risks or capture opportunities. We have helped many investors with an honest assessment of their current portfolio and plan. May we help you?
Bill Caster (216) 464-4244 bnymellon.com/truth
©2010 The Bank of New York Mellon Corporation. All rights reserved. Products and services may be provided by various subsidiaries of The Bank of New York Mellon Corporation.
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17 DESPITE RECESSION, WORK FORCE ISSUES REMAIN.
FINDING ANOTHER WORLD Manufacturers aim for new end markets as traditional revenue sources sag or dry up By DAN SHINGLER dshingler@crain.com
A
fter seeing some of their traditional markets either dry up or become more volatile than they ever imagined, many area manufacturers are seeking to diversify like never before — and all of them are searching for new end markets that offer sustained growth, increased margins or both. With varying degrees of success — and through a variety of strategies — they are finding them. Sometimes, it’s a matter of being in the right place with the right product at the right time. That was the case for Bedford Heights’ Cardinal Fastener, which was going about its business making bolts for heavy equipment and construction projects back in 2007, when it got its first order for bolts to be used FILE PHOTO/JASON MILLER on wind turbines. Corsa Performance Exhausts vice president Craig Kohrs said, “the key “We didn’t even know it was has been realizing we just weren’t in half of the markets we should be for wind when we first got the in.” order,” Cardinal CEO John Grabner says now. That order was the start of something big, though, and Cardinal was quick to capitalize on it, enabling the company to grow right through the recent deep recession. It added employees and revenues all along the way, while other manufacturers lost both. And it couldn’t have come at a better time, because while the wind was blowing Cardinal to new See WORLD Page 16
THEINTERVIEW JASON WATTS Vice president of business development Sheffield Metals International By AMY ANN STOESSEL astoessel@crain.com
S
heffield Metals International’s ambitions can be sky-high when it comes to its focus on sustainable products. Indeed, the Lorain County company recently facilitated the
installation of a solar roofing system at Mount Union College’s Peterson Field House that is operating at a level that could power seven homes for more than a year. The two-story building in Alliance is generating its own electricity — enough for 16 treadmills, 14 ellipticals, 16 flat-panel televisions and other appliances. Sheffield Metals, under the direction of CEO Tony Mazzella
STEVE BENNETT PHOTO ILLUSTRATION
and president Mike Blake, has 25 employees and annual sales of $25 million. Its other major Northeast Ohio projects include work at the city of Cleveland’s Zelma George Recreation Center, Stonewater Golf Club and the Castaway Bay Hotel at Cedar Point. Sheffield Metals vice president of business development Jason Watts answered questions from Crain’s Cleveland Business regarding the 15-year-old company and its focus on the green building sector.
Q: What effect did the recession have on Sheffield Metals? Were there decreased sales or cutbacks of any kind?
business is in green building products? What type of opportunity is present in that sector for today’s manufacturers?
A: In 2008, Sheffield Metals experienced record sales. As with all U.S. businesses, the economic turbulence of 2009 did affect our company, and our sales and staffing did diminish. Fortunately, however, after the first four months of 2010, we are once again fully staffed and up 10% in sales from 2009. We fully anticipate continued growth for the remainder of the year.
A: All of our business efforts are rooted in providing sustainable products to our customers. We have a minimum of 25% recycled content in all of our steel products, and they are 100% recyclable. Our COOLR roofing product is designed for standing-seam roofs and is highly reflective, allowing for more efficient building insulation and reduced energy costs. It is
Q: How much of Sheffield Metals’
See WATTS Page 16
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Watts continued from PAGE 15
also Energy Star approved and U.S. Green Building Council Leadership in Energy and Environmental Design compliant. Another product, TOPR, is a retrofit roof framing product that fits directly on top of a building’s existing roof, thus eliminating all the waste that would have been generated by removing the old roof. Less waste means less material put into landfills. Perhaps our most sustainable product is the SOLR thin film solar laminate offering. SOLR is a true building integrated photovoltaic material that’s flexible and lightweight. This product can be adhered to roofing panels before they are placed on a building, therefore reducing labor and mitigating risk during installation. And, it has the capability of producing enough power to cover all of a building’s electrical costs. Advancements in technology and production processes have opened the door for building product manufacturers. Not only can companies now create sustainable products, but the
entire process can become more environmentally conscious. Companies that are willing to invest the initial capital costs can create low- and zero-waste production facilities while still generating a high-quality product. Q: What are some of the biggest challenges that your firm is facing looking ahead to the future? A: To keep updated on current technologies and to stay abreast of the vast amount of incentives that are available for our customers. Q: What are the biggest concerns in implementing a large-scale project such as the one completed at Mount Union? A: I was very confident going into the project because of the team we put together. A concern on any project is coordination between different trades and making sure the owner is satisfied when the job is completed. We had some obstacles to overcome, but everyone worked together and we now have a very nice finished product. Today, Mount Union College’s system is generating enough power to operate its two-story fitness center. Q: What are some of the obstacles in putting together financing for
such a project? Specifically, how easy or hard is it to take advantage of grant opportunities? A: The biggest challenge in most solar projects is the initial, upfront capital costs. Though a 100% return on investment can often be achieved in only a few years, solar power systems are still expensive in the initial installation and implementation phase. Recently, banks have been reticent to loan money for renewable energy projects. However, this has given rise to private investors and state governments taking a more active role. With the Mount Union College project, we were able to utilize a power purchase agreement and receive a grant from Ohio’s Department of Development. Ohio, in particular, has a variety of funding resources, but they all require specific application and filing processes. Sheffield Metals was able to act as the primary consultant to Mount Union in this application process, and everything went very smoothly. The system at Mount Union will pay for itself within three years. Q: What are the firm’s future plans? Are there any expansions or additional hiring in the works?
A: We are planning to keep growing the business with increased sales and additional locations. We also expect to expand our reach into the solar market with a broader product offering. There may be some opportunities for Sheffield Metals International to offer additional renewable energy products that integrate well with our current product lines. In 2007 and 2008 we opened in two new regions of the country: one in Dallas, Texas, and one in Denver, Colo. This expanded our
coverage well beyond our existing operations in Atlanta and Sheffield. Both these locations were in their infancy when the recession hit and while they have done well, we still expect significant growth out of both regions. We do expect to continue our expansion. In November 2009 we hired a product development engineer, Andrea Stephan, to primarily assist with the SOLR product line. If our growth continues, we fully expect to hire additional employees at all of our locations. ■
World: New opportunities may still exist in current markets continued from PAGE 15
heights, the company’s traditional construction and heavy equipment markets were deflating. Cardinal’s story is a well-known exception in local manufacturing circles — according to Cardinal’s own web site, some 15,000 articles have documented the firm’s success in wind since then-President-elect Barack Obama visited the company’s facilities in early 2009 to tout its success in wind energy. Others have had to perhaps fight harder to discover a new niche, and they’ve done it through a variety of means. Some have gone after whole new markets and others have developed new products for existing markets.
Playing the markets In Brooklyn Heights, Die-Matic Corp. was hard hit by the initial slowdown and subsequent upheaval in the auto industry for which the company made the bulk of its small, stamped parts. DieMatic was used to being an innovator and constantly was coming up with ways to replace two parts with one or to eliminate manufacturing steps, such as welding, by working closely with customers on engineered solutions. But finding whole new markets was a bigger challenge. Die-Matic president Jerry Zeitler says he has been able to get into markets such as mining, military and medical devices, in part, by using outside sales representatives. “I think the key to diversifying when you rely on reps is to find sales reps who are not in automotive or who have a significant amount of contacts within other industries,” Mr. Zeitler said. In addition, a long-term investment is paying off for Die-Matic. About six years ago, the company began working with a fuel cell manufacturer making custom parts for what Mr. Zeitler initially considered a pet project. Today, that same customer is one of the company’s five largest, he said. Other companies have found opportunities in existing markets. Berea-based Corsa Performance Exhausts always has served the marine market with high-performance exhaust systems and has long had a loyal following among Corvette owners looking to juice up their rides. But it wasn’t until 2009 that Corsa went after what is now its fastest-growing market — trucks, said Corsa vice president Craig Kohrs. “For us, the key has been realizing
that we just weren’t in half of the markets we should be in,” Mr. Kohrs said. In the last two years the company has branched out with new products for Jeeps and also has targeted select products made by Ford and Chrysler. Any car or truck that appeals to the performance crowd is a potential market for Corsa and its high-end aftermarket exhausts, Mr. Kohrs said. Corsa’s exhaust technology is easily transferable from boats to cars to trucks, but other companies have been able to take their core technological strengths and conquer whole new end markets. In Parma, GrafTech International is perhaps best known for producing graphite electrodes for the steel industry, which uses them to smelt steel in electric furnaces. But lately, the company has been finding ways to put its expertise with graphite to use in serving new markets, ranging from electronic components to LED lighting and, most recently, thermal storage systems that help solar power plants capture and hold heat from the sun. “We’re taking graphite technology that’s been around for a long time and taking it into new markets,” GrafTech director of corporate research and development Lionel Batty said at a May 27 meeting of the Product Development and Management Association in Independence.
Competitive edge There may be no bad way to find a new market or at least one that holds the promise of sustained margins and volumes. In fact, experts say doing just that might be the key to survival for many manufacturers in the years ahead, as China and other nations continue to eat away at many traditional markets for U.S. firms. Working with customers to identify new needs, being able and willing to modify existing products and being able to provide custom solutions to customers, especially those in the U.S., are the keys to success, said Michael Collins, author of “Saving American Manufacturing” and a consultant who spoke at the recent PMDA event. He says that low-wage competitors might always have a leg up when it comes to producing high-volume standardized items, but not so when it comes to quickly providing U.S. customers with innovative solutions. “If you can customize things — China can’t,” Mr. Collins said. “They can’t compete with that, especially on a short time frame.” ■
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Recession doesn’t ease ‘Card check’ dead, but union efforts not objected to work force concerns Businesses measure, but NLRB still Anticipated openings in coming years troubling By AMY ANN STOESSEL astoessel@crain.com
A
ccording to some estimates, more than 2 million U.S. manufacturing jobs have been lost during the recession. So it should stand to reason that as manufacturers like Astro Manufacturing and Design Inc. wade back into the world of hiring, there should be no problem finding workers. “You would expect … that we’d have a line out to the parking lot, and we don’t,” said Rich Peterson, Astro’s vice president. Astro — where sales at the main plant in Eastlake are up 30% over last year at this time — is looking to hire for 10 positions. The company is on pace to increase its work force by 25% by the end of the year, potentially adding 25 workers to the 250 who staffed the firm at the beginning of 2010. Nationwide, 29,000 manufacturing jobs were added in May to the country’s payrolls, according to the Bureau of Labor Statistics, and factory employment has risen by 126,000 over the past five months. But according to those working in Northeast Ohio, the recession hasn’t done much to quell work force troubles that long have plagued the manufacturing sector: a shortage of skilled workers, and a lack of interest and understanding. Karen Herpel, manager of manufacturing, education and training for Magnet, a Clevelandbased manufacturing advocacy organization, said statistics show that while there might be a decrease in the actual number of manufacturing jobs through 2016, there will be an increase in the number of open positions due to anticipated retirements. “It looks like manufacturing again will have this pool of openings,” said Ms. Herpel, who said several years from now staffing troubles are likely to be widespread. “I think again we will see those same difficulties.”
Game of skill Judith Crocker, Magnet’s director of education and training, said there is a changing expectation of jobs and in some cases a consolidation of job classifications. “Companies are seeing they need a more flexible, more agile work force,” she said. Ultimately, there is a shortage of higher-skilled workers — and there will be in the future, according to Dr. Crocker. “The gap is getting very big. … We have this whole pool of individuals who are just not ready to fill the gap,” she said. John Gajewski, executive director of Cuyahoga Community College’s Workforce and Economic Development Division, said in a switch from last year at this time — when “it was very quiet” — employers are starting to call Tri-C again for help in finding workers who are “qualified, trained and talented.” The typical advanced manufac-
turing student at Tri-C is predominantly the “middle-career worker” — someone in his or her late 20s or 30s who has worked in a lowerskilled manufacturing position, which may have been lost to the recession. “They are simply looking forward to economic recovery,” he said. “They understand their skills were a mismatch for the technology employers require.” While enrollment year-over-year in Tri-C’s manufacturing training is flat, it hit record levels in fiscal year 2009 at 1,117 students. This year, 1,100 students are enrolled, which is in stark contrast to the 747 students enrolled in fiscal year 2008. Across the board, the general consensus is that it is critical to reach students at a young age. Magnet, for example, has an ambassador program in which area manufacturers provide student plant tours, internships and teacher externships. Tri-C’s Mr. Gajewski said there is some surprise on the part of younger students when they realize the amount math and other knowledge necessary for manufacturing. “The manufacturing worker of today and tomorrow is going to need more than a high school education,” he said.
Attitude adjustments Astro’s Mr. Peterson is active in efforts to get young people interested in manufacturing, often giving tours of the Astro facility. “I rarely get anyone who has any interest in manufacturing,” said Mr. Peterson, who noted that while he does manage to sway some preconceived notions, the general impression students have of manufacturing work is that it is “boring and monotonous.” He’s also involved with the organization, Alliance for Working Together, which is an ad hoc group of more than 50 manufacturing companies that is working to finalize plans for a two-year advanced manufacturing degree at Lakeland Community College. The hope is that the program will be launched this fall. As far as attitudes toward manufacturing: “It’s an extremely difficult challenge right now, and it’s compounded by the economic challenges,” said John Colm, president and executive director of Wire-Net, a Cleveland-based manufacturing group with connections to companies nationwide. Mr. Colm, whose organization also is involved in efforts to introduce students to manufacturing and the range of jobs available, said there’s still a lot more that needs to be done to adequately build a future manufacturing work force in Northeast Ohio. As for the current outlook, Mr. Colm said while there may be people available for hire, finding the right people still is a priority concern for manufacturers. “Talent is one of the key ingredients for a successful business,” Mr. Colm said. ■
could favor organizing By DAN SHINGLER dshingler@crain.com
T
he Employee Free Choice Act, once one of the business community’s most feared pieces of proposed Democratic legislation, appears to be dead. But that doesn’t necessarily mean efforts to make it easier for unions to organize workers have died with it. “In its original incarnation, yeah, it’s dead — but the objective is not dead,” said Peter Kirsanow, a labor attorney at Cleveland’s Benesch Friedlander Coplan & Aronoff law firm and former pro-business member of the powerful fivemember National Kirsanow Labor Relations Board in Washington, D.C. The act, which eventually became known as EFCA, previously had another moniker that pertained to its most dreaded feature: card check. That provision would have enabled unions to organize simply by getting a majority of a company’s workers to sign certification cards, with no secret-ballot elections. It also roused stiff opposition to the bill, and by the end of 2009, the so-called card-check provision had
KEEP
been dropped. Since then, however, conservatives generally have mounted stiff opposition to Democratic legislative efforts — and many believe the president and his party spent so much political capital on health care reform that other initiatives, such as EFCA, have no energy left. “I think any reasonable person looking at how difficult it’s been to get things through Congress would say it’s not in the stars,” said Harriet Applegate, executive secretary of the North Shore AFL-CIO Federation of Labor in Cleveland. Ms. Applegate said the focus of politicians is and should be on stimulating the economy, and said only if the Democrats manage to hold or build their majority this November would she expect EFCA to be revived by Congress. “And that’s a big if,” she pointed out. Mr. Kirsanow isn’t even focused on EFCA these days — because he says the threats of EFCA-like changes in the relationship between business and labor now will come from the NLRB, which has rulemaking authority over much of the unionization process. Card check is probably dead, he said, but that doesn’t mean the NLRB couldn’t tilt the playing field in favor of unions, possibly by speeding up the certification and election processes, Mr. Kirsanow said. The U.S. Senate must confirm NLRB appointments, but after that they enjoy tremendous autonomy, Mr. Kirsanow said, so their rulemaking authority is a potent force. “For example, now it’s around 37
days (between when workers notify a company they intend to vote on a union and when an election is actually held). They could make it 21 days or even 14 days or less,” Mr. Kirsanow said. “That would effectively deprive employers, especially smaller ones, of the ability to communicate with their employees in advance of the election.” Or, he said, the NLRB could require employers to recognize “minority unions” that would only cover those employees who wished to have union representation. Under that scenario, a company with 100 employees doing the same job could end up with, say, 10 of those employees in their own union, Mr. Kirsanow said. How that all plays out — and if it plays out at all — could be determined by the makeup of the NLRB itself, which currently has only four of its five members seated, Mr. Kirsanow said. He expects the president to nominate a probusiness candidate to fill that final seat, but said that would still leave the board predisposed to listen to the demands of unions. Typically, U.S. presidents arrange the board 3-2, with the majority supporting their own pro- or anti-labor position, Mr. Kirsanow said. So, while there’s a slight reprieve for those worried about greater unionization — or those worried that it will never happen — both Mr. Kirsanow and Ms. Applegate said they expect the issue to be revived in some form at a later date. “The threat’s not gone, but it was a much more significant threat in 2009,” Mr. Kirsanow said. ■
AHEAD OF THE
UR VE Innovative Ideas from a National Leader Lorain County Community College is a national leader in developing innovative, high-quality job training for the next generation of advanced manufacturing technology employees. Whether it’s retraining displaced workers in clean energy technologies or assisting a business in converting its assembly line to create cutting-edge products, LCCC’s Manufacturing Center for Excellence can help organizations across Northeast Ohio adapt to the changing economy and stay ahead of the curve. LCCC affiliations with nationally recognized organizations make it the premier place to turn when you’re looking to charge forward in your niche field. LCCC is one of only four community colleges to lead the implementation of the National Association of Manufacturers (NAM) Manufacturing Skills Certification System; it is home to nationally recognized training facilities and new technologies, including the Alternative Energy Technology – Wind Turbine program, the National Center for Welding Education and Training, and a Massachusetts Institute of Technology Fab Lab, one of only 30 digital personal fabrication labs in the world. Groundbreaking partnerships with regional organizations like MAGNET, NorTech and the Great Lakes Innovation and Development Enterprise (GLIDE), a regional business incubator on the LCCC campus, connect small and medium-sized manufacturers and entrepreneurs with the resources to turn ideas into actions. The manufacturing environment may be changing, but LCCC’s Manufacturing Center for Excellence is leading the way through these changes with nationally acclaimed programs and facilities that will spur innovation in our manufacturing and technology industries for decades to come.
For more information, contact LCCC’s Manufacturing Center for Excellence at (440) 366-4005 or visit www.lorainccc.edu/advancedmanufacturing.
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LARGEST NONPROFITS RANKED BY 2010 EXPENSES
Name Address Rank Phone/web site
Expenses 2010 Expenses 2009 (millions) (millions)
Total revenue 2009 (millions)
Income from private support
Income for program services
2009 fund balance (thousands) Purpose
Top local executive
1
Western Reserve Area Agency on Aging 925 Euclid Ave., Suite 600, Cleveland 44115 (216) 621-8010/www.psa10a.org
$116.5
$114.9
$115.1
2.0%
88.0%
$563.6
To enhance the ability of older persons to main high levels of health, productivity and independence
Ronald Hill CEO
2
Catholic Charities Health and Human Services 7911 Detroit Ave., Cleveland 44102 (216) 334-2900/www.clevelandcatholiccharities.org
$108.7
$102.8
$97.8
38.5%
85.9%
$103,791.0
To provide leadership in the health and human service fields in the counties that comprise the Catholic Diocese of Cleveland
J. Thomas Mullen president, CEO
3
Hospice of the Western Reserve 300 E. 185th St., Cleveland 44119 (216) 383-2222/www.hospicewr.org
$93.1
$84.6
$94.4
8.0%
86.6%
$44,984.0
To provide palliative comfort care for people with David A. Simpson serious illness, support for their caregivers and CEO bereavement services
4
Menorah Park Center for Senior Living 27100 Cedar Road, Beachwood 44122 (216) 831-6500/www.menorahpark.org
$63.7
$62.6
$62.6
1.0%
81.0%
$26,900.9
A not-for-profit Medicare/Medicaid certified health Steven Raichilson care provider that operates residential and executive director outpatient services
5
Jewish Community Federation of Cleveland 1750 Euclid Ave., Cleveland 44115 (216) 566-9200/www.jewishcleveland.org
$58.7
$65.2
$65.4
99.0%
86.0%
$308,200.0
Allocates funds to social service, religious and educational organizations in Cleveland and worldwide
Stephen H. Hoffman president
6
Visiting Nurse Association of Ohio 2500 E. 22nd St., Cleveland 44115 (216) 931-1300/www.vnaohio.org
$54.7
$53.9
$50.7
3.5%
96.0%
$17,825.0
Comprehensive home health care services throughout Northeast Ohio since 1902, including hospice and personal care aides
Claire M. Zangerle president, CEO
7
PlayhouseSquare 1501 Euclid Ave., Suite 200, Cleveland 44115 (216) 771-4444/www.playhousesquare.org
$49.8
$53.1
$59.0
11.0%
84.0%
$65,165.7
To operate the performing arts center and help Art Falco restore and develop the PlayhouseSquare district president, CEO
8
The Cleveland Museum of Art 11150 East Blvd., Cleveland 44106 (216) 421-7340/www.clevelandart.org
$48.0
$48.6
$44.2
64.0%
88.0%
$707,194.3
One of the world's comprehensive art museums and one of Northeast Ohio's principal civic and cultural institutions
9
Positive Education Program 3100 Euclid Ave., Cleveland 44115 (216) 361-4400/www.pepcleve.org
$46.5
$47.7
$50.1
2.0%
90.0%
$20,748.0
To help troubled and troubling children and youth Frank A. Fecser successfully learn and grow by blending quality CEO education and mental health services
10
The Musical Arts Association(1) 11001 Euclid Ave., Cleveland 44106 (216) 231-7300/www.clevelandorchestra.com
$43.2
$43.7
$41.6
37.0%
85.0%
$132,861.0
To provide inspirational experience by serving the Gary Hanson art of music at the highest level of artistic executive director excellence
11
United Way of Greater Cleveland 1331 Euclid Ave., Cleveland 44115 (216) 436-2100/www.uws.org
$43.0
$42.5
$44.3
96.0%
87.0%
$32,005.0
The largest private funder of health and human services in Greater Cleveland
12
Cleveland Foodbank 15500 S. Waterloo Road, Cleveland 44110 (216) 738-2265/www.clevelandfoodbank.org
$39.0
$37.5
$38.3
80.8%
91.4%
$2,665.9
To alleviate hunger by providing food and support Anne Campbell Goodman to community organizations that feed the hungry president, CEO
13
Montefiore One David N. Myers Parkway, Beachwood 44122 (216) 360-9080/www.montefiorecare.org
$34.9
$31.9
$30.0
33.9%
92.9%
$28,200.1
To provide a comprehensive system of health care and wellness support services to older adults
Deborah Gribbon interim director
K. Michael Benz president, CEO
Lauren B. Rock president, CEO
SOUND SOLUTIONS FOR NON-PROFITS Contact Tim Novotny + tnovotny@maloneynovotny.com + 216.363.0100
14
Oriana House Inc. P.O. Box 1510, Akron 44309 (330) 535-8116/www.orianahouse.org
$34.4
$32.6
$33.7
2.0%
95.0%
$11,400.0
Community corrections programs and chemical dependency treatment
James J. Lawrence president, CEO
15
Judson at University Circle 2181 Ambleside Drive, Cleveland 44106 (216) 721-1234/www.judsonsmartliving.org
$34.0
$33.1
$32.7
85.0%
92.0%
$3,525.3
To provide programs and living options for individuals taking responsibility for their successful aging
Cynthia H. Dunn president, CEO
16
Berea Children's Home & Family Services 202 E. Bagley Road, Berea 44017 (440) 234-2006/www.bchfs.org
$31.8
$33.3
$32.6
8.0%
98.0%
$14,819.7
To provide an integrated system of effective behavioral health and family support services to children, families and adults
Richard R. Frank president, CEO
17
Cleveland Housing Network 2999 Payne Ave., Room 306, Cleveland 44114 (216) 574-7100/www.chnnet.com
$26.3
$24.9
$25.1
57.0%
95.0%
$20,135.0
To develop affordable housing for low- to moderate-income families and provide home ownership opportunities
Robert S. Curry executive director
18
Beech Brook 3737 Lander Road, Cleveland 44124 (216) 831-2255/www.beechbrook.org
$25.1
$25.8
$26.3
10.3%
88.0%
$35,374.2
To advance the emotional well-being of children, youth and their families by providing behavioral health, permanency and educational services
Debra Rex CEO
19
Stein Hospice Service Inc. 1200 Sycamore Lane, Sandusky 44870 (419) 625-5269/www.steinhospice.org
$24.5
NA
NA
NA
NA
NA
Provides hospice and palliative care to patients and families in Erie, Ottawa, Huron, Seneca, Sandusky and Lorain counties
Jan Bucholz president, CEO
20
Akron-Canton Regional Foodbank 350 Opportunity Parkway, Akron 44307 (330) 535-6900/www.akroncantonfoodbank.org
$24.4
$24.4
$24.6
80.0%
93.0%
$9,827.9
Provide food to charitable agencies that feed people in need in eight counties
Daniel R. Flowers president, CEO
21
Wesleyan Senior Living 807 West Ave., Elyria 44035 (440) 284-9000/www.villageliving.com
$24.3
$24.8
$25.0
55.0%
75.0%
$1,810.0
To provide quality housing and services to aging adults
Mike Rogan president, CEO
22
Vocational Guidance Services 2239 E. 55th St., Cleveland 44103 (216) 431-7800/www.vgsjob.org
$24.2
$22.6
$22.6
9.0%
84.0%
$17,751.0
Preparing people with barriers to employment for Robert E. Comben Jr. a brighter future president, CEO
23
Koinonia Homes Inc. 6161 Oak Tree Blvd., Suite 400, Independence 44131 (216) 588-8777/www.koinoniahomes.org
$23.2
$21.5
$21.6
0.8%
98.8%
$1,656.0
Koinonia provides residential, adult day support and vocational services to individuals with developmental disabilities
Diane Beastrom president, CEO
24
Jewish Family Service Association of Cleveland 3659 S. Green Road, Suite 322, Beachwood 44122 (216) 292-3999/www.jfsa-cleveland.org
$22.3
$21.3
$21.8
13.7%
83.0%
NA
To strengthen individuals and families at every stage of life
Susan Bichsel president, CEO
25
The Rock and Roll Hall of Fame and Museum Inc. 1100 Rock and Roll Blvd., Cleveland 44114 (216) 781-7625/www.rockhall.com
$20.6
$24.0
$38.2
65.6%
77.9%
$86,619.6
The Rock Hall educates visitors from around the world about music's impact on our society
Terry Stewart president, CEO
26
Laurel Lake Retirement Community 200 Laurel Lake Drive, Hudson 44236 (330) 650-0681/www.laurellake.org
$20.6
$21.3
$24.7
98.0%
89.0%
($1,399.0)
To enhance the quality of life for adults by encouraging wellness, self-determination and independence
David A. Oster executive director
27
Center for Families and Children 4500 Euclid Ave., Cleveland 44103 (216) 432-7200/www.c4fc.org
$20.5
$19.4
$19.0
27.0%
86.0%
$34,250.0
Changing lives and communities through client service, advocacy and collective action
Sharon Sobol Jordan president, CEO
28
Jennings Center for Older Adults 10204 Granger Road, Garfield Heights 44125 (216) 581-2900/www.jenningscenter.org
$19.3
$19.0
$20.6
NA
89.3%
$12,986.9
A nonprofit, Catholic-based continuum of care campus for seniors since 1942
Martha M. Kutik president, CEO
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JUNE 7-13, 2010
Name Address Rank Phone/web site
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Expenses 2010 Expenses 2009 (millions) (millions)
Total revenue 2009 (millions)
Income from private support
Income for program services
29
Volunteers of America of Greater Ohio 8225 Brecksville Road, Suite 206, Cleveland 44141-1362 (440) 717-1500/www.voago.org
$19.0
$17.0
$18.3
67.0%
74.0%
30
Christian Healthcare Ministries Inc. 127 Hazelwood Ave., Barberton 44203 (800) 791-6225/www.christianhealthcareministries.org
$18.7
$17.5
$17.5
100.0%
31
Community Care Network Inc. 2202 Prame Ave., Cleveland 44109 (216) 688-4114/www.ccnworks.org
$18.7
$26.4
$24.4
32
YMCA of Greater Cleveland 2200 Prospect Ave., Suite 900, Cleveland 44115 (216) 344-0095/www.clevelandymca.org
$17.9
$17.4
33
The Nord Center 6140 S. Broadway Ave., Lorain 44053 (440) 233-7232/www.nordcenter.org
$17.8
34
Coleman Professional Services 5982 Rhodes Road, Kent 44240 (330) 673-1347/www.coleman-professional.com
2009 fund balance (thousands) Purpose
19
Top local executive
$13,550.3
Spiritually-based human services organization providing social services that promote selfsufficiency and foster independence
Dennis J. Kresak president, CEO
92.0%
$1,034.3
To glorify God, show Christian love and experience God's presence as Christians share each other's medical bills
Rev. Howard S. Russell executive director
NA
NA
$705.0
The Community Care Network exists to provide innovative solutions through effective partnerships to build stronger communities
David Lundeen CEO
$17.1
91.7%
85.7%
$44,730.8
To put Christian principles into practice through programs and services that build healthy spirit, mind and body for all
Glenn Haley president, CEO
$18.1
$18.1
5.0%
97.0%
$1,161.2
Comprehensive behavioral health care services; residential, vocational, psychiatric, case management, counseling
William D. Bierie president, CEO
$17.5
$18.9
$19.2
30.0%
85.0%
$3,496.4
Behavioral health and rehabilitation programs that Nelson W. Burns improve the lives of individuals, families and president, CEO businesses in Northeast Ohio
35
Goodwill Industries of Greater Cleveland and East Central Ohio Inc. 408 Ninth St. SW, Canton 44707 (800) 942-3577/www.goodwillclevecanton.org
$17.3
$17.5
$17.8
NA
NA
NA
36
Ohio Aerospace Institute 22800 Cedar Point Road, Brook Park 44142 (440) 962-3000/www.oai.org
$16.6
$16.8
$16.9
8.0%
87.0%
37
The Salvation Army of Greater Cleveland 2507 E. 22nd St., Cleveland 44115 (216) 861-8185/www.salvationarmycleveland.org
$15.6
$15.8
$16.5
51.0%
38
ASM International 9639 Kinsman Road, Materials Park 44073 (440) 338-5151/http://asmcommunity.asminternational.org/ portal/site/www/
$15.2
$14.0
$13.4
39
Eliza Bryant Village 7201 Wade Park Ave., Cleveland 44103 (216) 361-6141/www.elizabryant.org
$15.1
$14.7
40
Cleveland Museum of Natural History 1 Wade Oval Drive, Cleveland 44106 (216) 231-4600/www.cmnh.org
$14.5
41
The Benjamin Rose Institute on Aging(2) 11900 Fairhill Road, Suite 300, Cleveland 44120 (216) 791-8000/www.benrose.org
42 43
To improve the quality of life and employment opportunities for people in the communities we serve
Ken Weber president, CEO
$8,314.5
Enhance and expand Ohio's aerospace capabilities through research and technology partnerships, education and training
Michael L. Heil president, CEO
85.0%
$42,187.8
A religious organization that provides an array of human services to help improve the quality of life Major Ricardo Fernandez divisional commander in Greater Cleveland
NA
NA
$16,490.0
World's largest society of professionals in applications/research of materials, supplying technical publications and education
Stanley C. Theobald managing director
$14.7
15.0%
90.0%
$15,172.8
A comprehensive provider of geriatric services; adult day care, transportation, well seniors, outpatient therapy, senior housing
Harvey M. Shankman executive director
$13.4
$7.8
64.0%
58.0%
$124,768.8
Operation of a natural history museum
Dr. Evalyn Gates executive director, CEO
$13.5
$12.3
$12.1
66.0%
81.0%
$99,998.0
To advance the health, independence and dignity of older adults by raising the standards for quality Richard Browdie president, CEO of care
New Avenues to Independence Inc. 17608 Euclid Ave., Cleveland 44112 (216) 481-1907/www.newavenues.net
$13.1
$12.8
$12.8
4.0%
85.4%
$3,101.0
To provide supports and services to individuals with disabilities
Thomas M. Lewins executive director
Mental Health Services for Homeless Persons 1744 Payne Ave., Cleveland 44114 (216) 623-6555/www.mhs-inc.org
$11.6
$15.8
$15.8
3.0%
88.0%
$4,011.9
Helping people gain control of their lives by forging solutions that resolve mental health crises and end homelessness
Susan Neth executive director
This list of 501(c)(3) status nonprofit organizations is an approximate compilation of the largest organizations in Northeast Ohio. Universities, colleges, foundations and hospitals were excluded. Source: Information is supplied by the organizations unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Total revenue includes $2.3 million of bridge funds which are providing temporary support of the structural operating deficit. (2) 2009 total revenue does not include unrealized gains on investment. Percentage of income from private support includes distributions from the Benjamin Rose and other trusts.
RESEARCHED BY Deborah W. Hillyer
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JUNE 7-13, 2010
Athersys: Product has broader impact continued from PAGE 1
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comparison, Athersys has yet to complete a Phase I trial of MultiStem. And though Athersys has its own deal with a big-name pharmaceutical company — Pfizer in December said it would pay Athersys $6 million up front and up to $105 million to help it commercialize the use of MultiStem for inflammatory bowel disease — that deal is smaller than Osiris’ in terms of dollars. The securities analysts who spoke with Crain’s, however, say Athersys has some advantages of its own. Dr. Duane Nash says MultiStem looks “very promising” and he doesn’t even cover Athersys: He follows Osiris, which was founded in Cleveland but moved to Baltimore in 1994. MultiStem’s main advantage is that it should be cheaper to produce, said Dr. Nash, vice president for equity research at the San Francisco office of Wedbush Securities Inc. Dr. Nash cited Athersys’ claim that a single donor could provide enough stem cells to produce hundreds of thousands if not millions of doses. Osiris has gone only so far as to say that “thousands” of doses of Prochymal could be produced from a single donor’s cells. Dr. Nash also noted that the multipotent adult progenitor cells that form the basis of MultiStem could prove to have broader capabilities than the mesenchymal stem cells Osiris uses, though he added that MultiStem’s flexibility might make the therapy harder to control when treating patients for various conditions.
Imagine that Jonathan Aschoff, who covers Athersys for Brean Murray, Carret & Co., was similarly optimistic about MultiStem for the same reasons. Dr. Aschoff added that MultiStem appears to be safe and has performed well in animal trials, but now Athersys needs
Symposium
to prove it works. “I’m very comfortable with the safety. Now all we need is the efficacy,” said Dr. Aschoff, senior vice president of equity research at the firm’s New York office. Stephen Brozak, president of San Diego-based WBB Securities LLC, was even more enthusiastic about MultiStem’s prospects. He lauded the therapy’s safety and its scalability, and he added that few drug companies understand how their products work as well as Athersys understands the mechanisms behind MultiStem. The potential for MultiStem’s use in treating so many illnesses makes it all the more valuable, said Mr. Brozak, who noted that he owns no shares of the company. “The imagination is the only thing that contains them,” he said. MultiStem consists of adult stem cells — taken from human bone marrow — that can sense bodily injury and can make proteins in response. Those proteins can reduce inflammation, form new blood vessels and protect existing tissue. Now Athersys, which has about 40 employees, is working to prove that the therapy will work in humans. The company is testing MultiStem in people whose bodies are rejecting bone marrow transplants, and it has finished enrolling patients for another clinical trial that will test the therapy’s ability to help them recover from heart attacks.
Gaining in credibility Athersys has won federal approval to test MultiStem in stroke patients, and it’s working with Pfizer to prepare MultiStem for testing in patients with inflammatory bowel disease. The Pfizer partnership has done a lot to boost investor confidence in Athersys, said CEO Gil Van Bokkelen. “That (partnership) enabled us to achieve a certain amount of credibility,” Dr. Van Bokkelen said. After hovering at about $1 per share, Athersys’ stock price more than quadrupled a few days after the partnership was announced but has since lost some steam. The stock’s price stood at $2.94 when markets closed last Thursday, June 3. Ruth McKernan, head of Pfizer’s regenerative medicine unit, was not available to comment for this story. However, during a series of panel
discussions that Athersys organized last month to educate investors about MultiStem as well as obesity drugs it is developing, she described Athersys as “a cornerstone” of Pfizer’s adult stem cell strategy. Dr. McKernan added that their collaboration might not end with work on inflammatory bowel disease. “Obviously we are interested in discussing other indications, too,” she said during the event. Other scientists and doctors at the event praised MultiStem’s potential as well. Plus, Pfizer isn’t Athersys’ only drug partner: The company since 2006 has been working with Angiotech Pharmaceuticals Inc. of Vancouver to develop and test the use of MultiStem on heart attack patients.
Potential job generator It will take Athersys years to win regulatory approval for MultiStem, but once it gets approval to use the therapy on one medical condition, it should have an easier time winning approval for the others, Dr. Van Bokkelen said. Even starting clinical trials for different uses of MultiStem became easier after Athersys won approval to begin the first one, he said. “The amount of leverage you can eventually get … is truly astounding,” Dr. Van Bokkelen said. As part of Athersys’ partnership with Pfizer, the big drug company is covering costs related to development and clinical trials of MultiStem for inflammatory bowel disease on top of its cash payments, which will increase as Athersys hits development, regulatory and commercial milestones. Should the product reach the market, Pfizer would pay Athersys royalties on its sales for that condition, though Athersys could elect to co-develop the drug with Pfizer. Athersys expects that partner companies such as Pfizer will handle sales and marketing for most uses of MultiStem as they win regulatory approval. Athersys currently contracts out manufacturing of the stem cells, but it eventually plans to bring that capability in house, said chief operating officer B.J. Lehmann. He estimated that a plant making MultiStem for a single condition might employ 50 to 100 people. “If you were doing several large disease areas, you might have several of those,” Mr. Lehmann said. ■
We are pleased to announce that Kevin M. Piunno has been hired as the new Director of Leasing for the Optima Ventures U. S. Real Estate Portfolio. “I’m very excited to be part of a company that is thoroughly committed to Cleveland. To date, Optima Ventures portfolio consists of One Cleveland Center and 55 Public Square. We are continuing to grow with new acquisitions here and across the country.”
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JUNE 7-13, 2010
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Budget: Organizations want to be more proactive continued from PAGE 1
an $8 billion shortfall in the state’s next two-year budget, which begins July 1, 2011. While the separate efforts are not far along, it’s likely some of the broader recommendations will shake up things at the Statehouse and in local city halls. “We are in the very early stages of research,” said Carol Caruso, senior vice president of Cleveland’s chamber group, the Greater Cleveland Partnership. “Everything is on the table right now. We need new and creative ideas.” Last July, the state Legislature balanced a $50.5 billion, two-year budget, but it took $5.8 billion in federal stimulus money and a twoyear delay in an income tax rollback to do it. Rick Yocum, executive director of the Ohio Public Expenditure Council, a Columbus nonprofit that tracks state budget issues with support from businesses and local governments, said he expects to see in the next budget cuts in education, entitlement programs and local government money. “This is a really, really ugly subject, and there are no really good answers and no really popular answers,” Mr. Yocum said. The business groups hope to help narrow that budget gap, but they also want to get the administration and the Legislature thinking about dramatic, long-term changes in the way government in Ohio is run and how much it costs. “Hopefully, if we can start to turn the ship around now, we won’t have quite so big a problem in the future,” Ms. Caruso said.
Green eyeshades give a look The Ohio Society of Certified Public Accountants decided to get involved after the last budget was patched together last July and Gov. Ted Strickland said he would like to hear from anybody who had ideas about how to solve the state’s budget problems. The CPA society was up for the challenge, said James Gero, a shareholder in Hobe & Lucas CPAs Inc. of Independence. “The society decided to take an active role,” said Mr. Gero, a member of its Budget Advisory Task Force. “We said, ‘The state of Ohio is your
client and they are in a financial crisis situation. What would you recommend to start taking a look at?’” By November of last year, the group had a 22-page report to present to the governor that outlined in broad strokes a variety of opportunities to balance the budget. Now it plans to expand on that outline by this fall with a series of white papers on the key areas they believe can help solve the budget problem. The CPAs’ solutions ranged from eliminating for one year $850,000 in licensing fees paid to the state’s two professional football teams for use of their logos in lottery games to increasing some user fees and consolidating school districts to reduce administrative overhead. “The next step is to expand the research into greater detail,” Mr. Gero said. “We’re doing it to generate discussions and solutions.” Mr. Gero said the CPA society is starting to speak to community organizations and media around the state. Before the November elections it expects to present detailed white papers on more specific ways to make government more efficient and find ways to increase revenue.
such as Medicaid and Medicare. Mr. Osborne said at the time that governments in the United States “need to change the basic model in the public sector that we inherited from the past,” and he argued for “dramatic changes in the culture of government that (makes it) more accountable.”
Anthony Paglia, vice president of government affairs with the Youngstown Warren Regional Chamber, said that one area of likely interest, which Mr. Osborne emphasizes, will be the cost of municipal government and school districts. “That’s where a lot of the taxes are,” Mr. Paglia said. “Because of the
local duplication of services, we are not competitive with other parts of the country.” Organizations participating in the research are the Ohio Chamber of Commerce, the Greater Akron Chamber, the Cincinnati USA Regional Chamber, the Columbus Chamber, the Dayton Area Chamber of Commerce, the Greater Cleveland Partnership, the Toledo Regional Chamber of Commerce and the Youngstown Warren chamber. ■
Lending to small businesses is a #1 priority for us
Big changes required The chambers of commerce are beginning their program by bringing in two consultants. One is David Osborne, co-author of a seminal 1992 book, “Reinventing Government.” He also was a senior adviser to former Vice President Al Gore’s task force on reinventing government. Mr. Osborne now is a senior partner of The Public Strategies Group, a St. Paul, Minn.-based consultancy to public organizations. The second consultant is R. Gregory Browning, who was state budget director under Gov. George Voinovich and is now president of Capital Partners, a Columbus lobbying firm. The chambers’ first step, like the CPAs, will be to examine best practices in other states. But it’s likely, given Mr. Osborne’s philosophy, that this effort could recommend sweeping changes. In a speech last year at a City Club of Cleveland program sponsored by the Fund for Our Economic Future, Mr. Osborne said, “We live in an age of permanent fiscal crisis” because of rising costs of government-financed health care programs
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Staffing: Firms see boost in manufacturing Aaron Grossman founded the company in 2001. The firm’s manufacturing business has more than doubled in the last 12 months, and today, with more than 400 workers placed at about 60 clients, it’s the largest and fastestgrowing segment for the company, Mr. Grossman said. Alliance itself just hired six new people to recruit and screen candidates. Mr. Grossman said the activity is not limited to any specific manufacturing niche or product category. “It’s across the board — window manufacturers, companies making lawnmowers or making mixers for Starbucks,” he said.
continued from PAGE 1
“Metal fabricating, forging, some consumer goods companies, manufacturing reps, steel processing — this is really broad based and it’s everything from people bringing back a few folks to a dozen or dozens in some cases,” Mr. Colm said. Some area companies are running nearly at full throttle, and are looking for more employees to ramp up production even further. On Cleveland’s East Side, Talan Industries is running its metal stamping presses 20 hours a day on weekdays, and another 12 hours on Saturday, president Steve Peplin said. “This is about as busy as we get, with that schedule,” Mr. Peplin said. At Alliance Staffing Solutions in Independence, recruiting for manufacturing has come to represent nearly half of the firm’s revenues — and manufacturing wasn’t even part of the business plan when president
Contact: Phone: Fax: E-mail:
Try before you buy Companies say they are turning to staffing agencies not because they’re afraid to make long-term hires like they were at the end of 2009, but because they get to try out someone
else’s employees before they make direct hires themselves. Mr. Peplin said nearly every one of his company’s 50-some employees were once temps — including some machine operators that were trained by the company for their jobs after they were hired. “Almost everyone, 95% of our people, start off through a temp agency,” he said. “It’s basically a tryout.” Besides, Mr. Peplin said, it already has become hard again for manufacturers to find qualified workers in spite of Ohio’s still-high unemployment rate of more than 11%. “We’re having a hard time finding people, so we want to get them on permanently when we can,” he said. Mike Gordon, president of Tendon Manufacturing in Bedford, a custom machining and fabrication shop, finds himself in the same boat. “I am using (staffing agencies)
JUNE 7-13, 2010
because I can’t find any people on my own,” Mr. Gordon said. Privately, some manufacturers wonder if at least some people aren’t choosing to remain on unemployment compensation rather than find jobs. But, as Mr. Grossman attests, there also simply is a lot of hiring suddenly going on in a short time frame. “We had a client go from zero to more than 70 production workers in three weeks,” Mr. Grossman noted. Mr. Grossman thinks there’s another reason manufacturers might be frustrated about finding new hires so soon after a recession — they’ve often trimmed down so much that they don’t have the internal resources to recruit, hire and train new employees the way they once did. In slower times, a manufacturer might not mind training a new hire, but in busy times they want every hire to hit the ground running, he said.
Leader of the pack Mr. Colm laughs when asked if manufacturers are finding it difficult
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to hire quality employees, because he remembers that challenge was the sector’s biggest complaint during better times. “You have more candidates,” Mr. Colm said, “but it still takes time to find good people. It takes time and it takes a good process.” The plus side of the hiring challenge, Mr. Colm said, is that it’s proof so many of his industrial friends are rebounding soon — which has not been the case with past recessions. “Normally, we feel the pain first and we come out later. But, this time, it’s not housing that’s leading this recovery and it’s not financial services — it really is manufacturing,” he said. “Hopefully that is good news for this region, because this is still a manufacturing region.” Not only did Ohio lead the nation in job growth in April — creating 37,000 jobs, compared to secondplace Pennsylvania’s 34,000 — but more than 12,000 of those jobs were in the manufacturing sector, according to the Bureau of Labor Statistics. ■
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Sales – Large Machining & Fabrication We have an immediate opening for a sales professional with experience in LARGE MACHINING AND FABRICATION. Primary responsibility will be to identify and pursue customers whose needs match up with the Company’s unique capability to fabricate and/or machine extremely large parts. Engineering/technical background a plus, but not required. Knowledge of drawings and technical specifications required. You must be a solid communicator, have the ability to work closely with others in a team environment and be a self starter with an intense desire to land and maintain new business. Your office will be located at our production facility in Cleveland, with some travel required. Position reports to President or VP-Operations, depending upon qualifications and experience. We have the flexibility to tailor a compensation package to the individual, depending upon qualifications, experience and value to our Company. Emails only to ncarone@mcmach.com. All responses confidential.
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20100607-NEWS--23-NAT-CCI-CL_--
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JUNE 7-13, 2010
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CRAIN’S CLEVELAND BUSINESS
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THEINSIDER
THEWEEK MAY 31-JUNE 6 The big story: Philips Healthcare, a worldwide leader in medical imaging systems, will invest $33.4 million in a new Global Advanced Imaging Innovation Center to be based at University Hospitals Case Medical Center. UH Case Medical Center will collaborate with the company, which bases its computed tomography and nuclear medicine businesses in Highland Heights, in a five-year partnership to research and test a variety of medical imaging products developed by Philips. Another $5 million to support the new imaging center will come from the state of Ohio through its Third Frontier program. Backers believe the imaging center will boost Northeast Ohio into a worldwide center for imaging technology.
Who’s your daddy?: In its pursuit of Canada’s Big Daddy chromite deposit, Cleveland-based Cliffs Natural Resources made good on its threat to attempt a hostile takeover of Ontario-based Spider Resources, which owns a stake in the deposit that would give Cliffs control over Big Daddy. Big Daddy is one of several large Canadian deposits of chromite — an important mineral for Cliffs, which already supplies iron ore and other raw materials to the steel industry. Cliffs controls some of those other deposits, such as the nearby Black Thor site, but only owns a 47% stake in Big Daddy. The rest of Big Daddy’s ownership is held by two Ontario exploration companies — Spider Resources and KWG Resources.
Settle down: Diebold Inc. unveiled terms of a settlement related to an inquiry conducted by the Securities and Exchange Commission during the last several years. Diebold consented, without admitting or denying civil securities fraud charges, to a judgment requiring payment of a civil penalty of $25 million and an injunction against committing any future violations of certain specified provisions of federal securities laws. The maker of ATMs and bank security equipment expects to pay the penalty soon.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Sales pitch not needed with this pitcher in town
provide information to pilots in roughly two years, said Glen Dyer, who manages that technology program for ITT Corp. of White Plains, N.Y. ITT is among the businesses working with the Federal Aviation Administration to convert all of the nation’s air traffic control centers to satellite technology by 2020. The cost of the effort is expected to be between $2.1 billion and $4.1 billion. The satellite technology gives controllers a more accurate picture of where planes are in the skies and better ability to manage planes as they arrive and depart from airports. Plus, the system will give pilots the location of other planes, weather forecasts and other information, such as temporary flight restrictions. — Chuck Soder
Brisker, co-founder and CEO of Toa, which produces software that helps businesses track employees in the field. With 45 people in Beachwood, Toa will double its space when it moves in October from Richard E. Jacobs Group’s Chagrin Highlands buildings in Beachwood. Toa and other tenants have leased a total of nearly 44,000 square feet of the building, according to Developers Diversified. Other leasees are Singerman, Mills, Desberg & Kauntz Co. LPA,10,895 square feet; MidAmerica Management Corp., 7,486 square feet; Chase Shopping Centers Inc., 6,497 square feet; Winslow Asset Management Inc., 3,449 square feet; Health Data Innovations Inc., 2,491 square feet; and JND Properties LLC, 1,875 square feet. The new building’s office space is 75% leased; that figure includes the 55,000 square feet occupied by Developers Diversified last October. — Stan Bullard
Outside tenants head for expanded HQ
Truckin’ along at Kent State
■ The people who guide the traffic over Northeast Ohio’s skies will be ditching their radar technology in favor of something akin to the GPS system in your car. Both Cleveland Hopkins International Airport and the Cleveland Air Route Traffic Control Center in Oberlin will start using satellite technology to locate aircraft and
■ Add new space to a suburban office market that has gotten little of it for years and it will lease, recession be damned. That’s one message that could be deduced from Developers Diversified Realty Corp.’s success in leasing office space to outside tenants at its recently expanded headquarters at 3333 Richmond Road, Beachwood. Toa Technologies Inc. is the largest of six tenants that have committed to the space. Toa needed more space and decided the structure is the highest quality building available in the eastern suburbs, said Yuval
■ Kent State University TeleProductions is rolling in style. The 50-year-old video production center has added a high-definition production and satellite uplink truck to its technology tool chest. The truck will be used to cover events such as breaking news, sports and corporate gatherings with its five cameras. “Kent State now will be able to cover sporting events with more accuracy and precision for an all-around better viewing of the game,” said John Butte, director of TeleProductions. — Shannon Mortland
WHAT’S NEW
BEST OF THE BLOGS
■ Stephen Strasburg mania is reaching Cleveland. Mr. Strasburg, a rookie pitcher for the Washington Nationals, will make his majorleague debut with the Washington Nationals on Tuesday night against the Pittsburgh Pirates, putting him on track to pitch at Progressive Field on Sunday afternoon, June 13. He’s already upstaging three best sellers: marquee opponents, bobbleheads and $1 hot dogs. Indians director of communications Curtis Danburg said late last week that next Sunday’s game was the week’s top seller, a rarity for what it outsold: the Boston Red Sox (in town for a three-game series starting tonight, June 7); the Nationals game Saturday night, featuring a Shin-Soo Choo bobblehead; and Tuesday night’s game against the Red Sox, one of six dollardog nights at the ballpark this season. — Joel Hammond
Coming to an airport near you — GPS for controllers
Excerpts from blog entries on CrainsCleveland.com.
For auto dealer Moreno, iPad is more than a pretty toy
A new chapter: Privately held Aleris International Inc. in Beachwood emerged from Chapter 11 bankruptcy proceedings. The aluminum recycler and producer of aluminum rolled products was in bankruptcy reorganization for 15 months. Aleris chairman and CEO Steven Demetriou said the company used that time to “significantly improve our operations worldwide.” A majority of Aleris is owned by certain investment funds managed by Oaktree Capital Management L.P., affiliates of Apollo Management L.P. and Sankaty Advisors LLC. As part of the reorganization, Aleris secured a $500 million asset-based revolving credit facility.
Bright idea:
FirstEnergy Corp. said it will put $57.4 million in grants from the Department of Energy toward so-called “smart grid” technologies to improve the reliability and interactivity of its electric distribution network in targeted areas of the company’s Pennsylvania, Ohio and New Jersey service territories. Overall, Akron-based FirstEnergy said it plans to invest a total of $114.9 million on smart grid technologies.
Having a ball: Cleveland investment banking firm Western Reserve Partners LLC was hired by Hunt Sports Group of Texas to sell a minority ownership stake in the Columbus Crew soccer team. Clark Hunt, chairman of Hunt Sports, said he chose Western Reserve Partners because of the firm’s “successful track record and close relationships with business leaders in Columbus and throughout the state.” To keep up with local business news as it happens, visit www.CrainsCleveland.com.
COMPANY: Ridgid, Elyria PRODUCT: Tailpiece Extension Cutter The company says the Tailpiece Extension Cutter is the first cutter of its kind that provides “hassle-free ability to execute a clean, fast and straight cut on thin-walled plastic tube.” The extension cutter (Model P-TEC 2550) can be used on polyethylene, polypropylene and thin-walled PVC disposer kits, tailpieces and wall tubes of two standard sizes: 1¼inch and 1½-inch outer diameters. It’s an addition to Ridgid’s Under-the-Sink family of specialty tools used by plumbers, plumbing contractors and the DIY market. Ridgid says the product’s features include clean automatic deburring, in which the cut produces only a fine strand of plastic as opposed to the fuzz around the cut of a hacksaw. There’s no need for a second tool to deburr, as it automatically deburrs in parallel to cutting action, the company says. An automatic beveling function allows for immediate, easy joining to other sink drain pieces, according to Ridgid. For information, visit www.Ridgid.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
■ Bernie Moreno, owner of Mercedes-Benz of North Olmsted, already is a convert to the business possibilities presented by Apple’s iPad. Mr. Moreno’s dealership is among 40 nationwide that Mercedes-Benz Financial, which provides loans and leases, has equipped with iPads loaded with the MB Advantage application, The Wall Street Journal reported. Dealers can use the application to see the latest discounts and begin the credit application process. “When someone came in we would go out with a pad and a pencil and scribble down all the problems, like a scratch here or a dent there and then go back to the desk and enter everything in the computer,” said Mr. Moreno, who already is using his own iPad on a limited basis to handle leased vehicles. He told The Journal he has connected his desktop to the iPad, which he now carries with him outside when the customer arrives. “Now I can do it all right in front of the customer and it just gives us more of a sense of credibility,” Mr. Moreno said.
Cleveland’s not where the educational elite like to meet ■ Economists refer to clusters of highly educated people as “human capital,” and Cleveland is not particularly dense with such clusters, according to a fascinating analysis by Cleveland blogger Rob Pitingolo that drew the attention of The Atlantic. Mr. Pitingolo compiled data on what he
calls “educational attainment density” — college degree holders per square mile. San Francisco and New York are the leaders in human capital density with 7,031 and 6,357 college degree holders per square mile, respectively. Other leaders are Boston (3,871), Washington, D.C. (3,395), Seattle (2,853) and Chicago (2,543). The lowest human capital density is in Oklahoma City, 159. Cleveland is at 453.
It’s better to look good than to feel good ■ Count Medina software executive Keith Peer as an early adopter of what The New York Times sees as a trend: men wearing Spanx undershirts to firm up their chests and flatten their stomachs. Of course, this prompts some derision in U.S. culture, but The Times noted the Spanx for Men line “has been a huge retail hit” at Bloomingdale’s, Saks Fifth Avenue, Nordstrom and other high-end stores. Mr. Peer, 43, the CEO of antivirus firm Central Command, told The Times that he owns six Spanx crewnecks, which he credits with improving his posture and helping him look better in tapered shirts. “It enhances your figure, it fits tight, sucks you in,” he said. Mr. Peer said he was fed up with undershirts that bunched up and made it look “like you have a tire around your waist.” Lest you get too excited about this, fellas, The Times threw a little cold water at the end of the piece, noting, “Men have been known to express surprise when a Spanx-compressed woman disrobes in the bedroom only to reveal a less svelte figure. Now women can complain, too.”
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