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Vol. 32, No. 24
Hiring agencies shore up own staffing levels Demand for recruitment services rises as employers seek to fill job openings By MICHELLE PARK mpark@crain.com
JANET CENTURY
Roger French grasps a stainless steel sample holder from the nearby 11-foot-tall spectrophotometer. The object contains a sample of a polymer, or piece of plastic, which the machine is testing to see how it withstands light.
SAVVY RESEARCHERS SEE THE LIGHT Case Western prof, local companies collaborate on $7.5M project that aims to improve solar panels’ durability By CHUCK SODER csoder@crain.com
R
oger French is building a torture chamber designed to test the limits of solar panels — and extend their useful life. Dr. French is heading up a $7.5 million effort to transform the fifth floor of the White Building at Case Western Reserve University into a place where he and other researchers can test the durability of solar panels and design ways to improve them. When complete, the Solar-Durability and Lifetime Extension Center will include simulators capable of exposing
NEWSPAPER
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SHED SOME LIGHT The Solar-Durability and Lifetime Extension Center at Case Western Reserve University is a collaboration between Roger French, the center’s director, and several companies. ■ Who: Solar electronics maker eQED LLC of Mayfield Village and weathering equipment and services firm Q-Lab Corp. of Westlake are among the project’s partners. ■ Focus: The project not only will subject the solar panels to stress tests but also will help researchers understand why the panels fail. Researchers then will use their material science expertise to fix them. ■ Financial support: The project is financed by two state grants totaling $3.8 million, as well as contributions from CWRU and other collaborators.
Put simply, they are hiring more people so they can hire more people. Several Northeast Ohio staffing companies are adding to their internal staffs — and, in some cases, to the number of their physical offices — to meet continued increased demand from client companies seeking to hire. Reacting to a “definite growth period,” Area Temps Inc. in Cleveland in recent weeks opened a new division, Area Professionals, to handle the direct hire and contract recruiting of professional, mid-management and executive positions, said presi-
dent Kent Castelluccio. That’s in addition to two other divisions, Area Office Services and Area Technical. The company has seen in the past six months a dramatic increase in emails and phone calls from employers who want to hire and applicants looking for work, he said. The goal, Mr. Castelluccio said, is to open over the next 12 to 18 months at least one more physical location, and possibly up to three. Area Temps had six locations before it closed three after the recession struck. See HIRING Page 9
INSIDE The family ties that bind us Some local business owners share the benefits and challenges of incorporating their children into the family operation. See this week’s Small Business section on Page 10.
Third Frontier may swap grants for seed loans By CHUCK SODER csoder@crain.com
So-called “venture seed loans” could end up replacing many of the grants the state of Ohio awards to technology companies. The commission that oversees Ohio’s Third Frontier economic development program is thinking about issuing venture seed loans instead of $50 million to $60 million in grants that it typically has awarded each year through the Third Fron-
tier’s cluster development program. The loans would bear similarities to both grants and private equity investments: A company would receive between $1 million and $2 million to finance the development and commercialization of a new technology. The firm would not have to pay back the full amount if its product never reaches the market. If the product sells well, however, then the company might need to pay back significantly more than it borrowed. See LOANS Page 18
Looking to save money on your health insurance? Look inside for more details...
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INSIDE: Corporate screening services company reports healthy uptick in business. Page 9
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COMING NEXT WEEK
Best of the Blogs .........19 Editorial ........................8 Going Places .................7 List: Privately held companies ..........15-16 Reporters’ Notebook....19 The Week ....................19
Valuable lessons
CALL FOR NOMINATIONS Nominations are open through July 15 for the annual Emerald Awards, which recognize Northeast Ohio companies, organizations and individuals that honor a commitment to sustainability and the “triple bottom line” — people, planet and profits. For more information, visit www. CrainsCleveland.com/marketing/ eanominate.html.
Our annual Prep and Parochial Education section explores the importance of schools’ relationships with their alumni, who not only are called upon for monetary donations but for support of programs and students. Also, we will look at one school’s efforts to introduce students to possibilities in health care professions, and the ways that other institutions’ are fostering leadership skills among female students.
JUNE 13 - 19, 2011
READY FOR THE WORST? More than 20% of U.S. companies and organizations are unprepared to deal with the sudden loss of key leaders, according to an online survey of 1,098 senior managers and executives by American Management Association Corporate Learning Solutions. Similarly, survey respondents were critical of their organization’s leadership pipeline, with just 10% saying their company’s leadership pipeline was “robust” and 39% characterizing it as “inadequate.” Here’s how the executives responded to the question, “How prepared is your organization to deal with a sudden loss of key members of the management team?”
Response Well prepared
Percent 14%
Somewhat prepared
61
Not at all prepared
22
Don’t know
3
SOURCE: WWW.AMANET.ORG
your banker should understand you as well as your business At KeyBank, we ask questions and take time to uncover what you really need. For example, you may think tapping into a line of credit is the solution for everyday expenses like payroll and inventory. By working together, we may instead find ways to maximize cash inflows and outflows so you can keep your cash longer. Because we get to know you and your business, we can offer more relevant advice and sound solutions. Start a conversation. And unlock your possibilities.
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Contractors at odds over reform proposal State budget likely will minimize current prevailing wage law By JAY MILLER jmiller@crain.com
The budget working its way through the halls of the Ohio Capitol includes provisions that would change dramatically the way construction contractors work with public agencies. The state budget that will emerge from the Legislature and be signed by Gov. John Kasich later this month
is expected to allow the state and its cities, counties and most other public agencies to design and construct office buildings using practices that have been applied in most other states and have been available to private builders for years. It also will free contractors who work for public agencies from the requirement to pay what is called the “prevailing wage” to workers on
most public construction jobs. Both changes were proposed by the Kasich administration as part of its effort to reduce the cost of government. The construction reforms proposed by the Kasich administration largely adopt recommendations made in 2009 by the Ohio Construction Reform Panel created by former Gov. Ted Strickland. That panel concluded that public agencies
could save as much as 10% on the cost of $3 billion in public construction annually using the alternative construction models.
Money matters The change in prevailing wage — the hourly rate typical in a community, which usually is the union rate — has been advocated as a way to save money by nonunion contractors for years without success until Gov. Kasich came along. “Achieving the reforms contemplated by this legislation is really
Magnet now assisting health care providers
Beachwood tech company finds its niche with wayfinding avatars at hospitals By TIMOTHY MAGAW tmagaw@crain.com
Issues often similar to those in manufacturing
M
eet Marie. She’s welcoming — a little stiff and a bit of a know-it-all, perhaps — but she’ll help you navigate the winding pathways of the Cleveland Clinic’s sprawling main campus. Marie isn’t a real person, but rather an animated Clinic employee displayed on an electronic kiosk. She dons the same red jacket as the health system’s human greeters, though, and she’s helped hundreds of Clinic visitors reach their destinations by offering step-by-step directions that can be printed or sent to someone’s phone. Marie also has provided a much-needed boost to her developer, LogicJunction, a software company in Beachwood that, according to its leaders, was struggling to gain momentum until it delved into the health care field over the last year.
By TIMOTHY MAGAW tmagaw@crain.com
See NAVIGATE Page 7
THE WEEK IN QUOTES “I don’t want anything to be lost because we need jobs, and the economy’s so crappy around here. Having a hospital nearby the residents that live around it, that depend on it, is important.”
— Robert Schepens, president, Champion Personnel System Inc. in Garfield Heights. Page One
— Response to a Big Issue question about the Cleveland Clinic closing Huron Hospital. Page 8
See WAGE Page 6
INSIGHT
A NEW WAY TO NAVIGATE
“I think overall our employers, businesses in general, are starting to take advantage of pent-up demand. The U.S. economy was so iffy. It still is iffy, but it’s not as iffy as it was before.”
vital to the industry,” said Jeffrey Appelbaum, an attorney in the Cleveland office of Thompson Hine LLP, and a specialist in construction law who helped guide the construction reform panel. “We are one of only a couple states in the union that uses only one method of procurement. “We simply have to have that flexibility if we’re going to deliver projects more effectively and more efficiently,” he said. Unions and contractors with collective bargaining agreements
“Pretty much anything that serves a small town might be needed by a film company.” — Ivan Schwarz, executive director, Greater Cleveland Film Commission. Page 10
“You’ve got to allow the second generation to put their ideas on the table.” — Adelbert “Chip” Marous Jr., president, Marous Brothers Construction. Page 12
The financial challenges facing health care groups due to declining government assistance are well documented, but a few local providers have found an unlikely partner in their quest to tame their finances. The Manufacturing Advocacy & Growth Network, a Cleveland-based economic development group aimed at growing the region’s manufacturing sector, is advising Northeast Ohio health care providers how to reduce costs by tweaking their operations to improve efficiency. “One of Magnet’s core services and strengths over the years has been improving companies’ productivity,” said Mary Ann Pacelli, a senior business consultant at Magnet. Magnet has a history of consulting local manufacturers on how to turn their operations into well-oiled machines by dissecting workflows and rooting out redundancies. However, this is the group’s first foray into the health care industry — a slightly different beast, but one with plenty of similarities, according to Ms. Pacelli. “So much of it seems like common sense, but people struggle to take time to step back and make the change,” she said. A $143,000 federal grant from the Department of Health and Human Services financed the first round of consulting, but Magnet plans to use its recent endeavors to further penetrate the health care market on a feefor-service basis. Health care groups struggle with the same problems as manufacturers, Ms. Pacelli noted, as both wrangle with staffing, scheduling and other workflow issues. In the health care arena, Magnet’s largest project to date was with the Humility of Mary Health Partners health system in Youngstown. With Magnet’s help, the three-hospital system reduced its overtime expenses by $1.7 million, or 24.6%, last year and See MAGNET Page 4
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Finance vet leads U.S. Bank locally Former Key, Nat City exec will head efforts in commercial lending By MICHELLE PARK mpark@crain.com
A 28-year banking veteran who has spent his career working for Cleveland-headquartered institutions now is driving efforts to expand the local presence of a Minneapolisbased competitor. Cleveland Heights native Alan Zang in late May became president of the Northeast Ohio market for U.S. Bank, the fifth-largest commercial bank in the country. His salary was not disclosed. Mr. Zang, 49, replaces Kurt Treu, who served as market president for seven years before his responsibilities increased dramatically this year within the bank’s Enterprise Revenue Office, which focuses on organic revenue growth. That change rendered Mr. Treu less available to fulfill the market president responsibilities. Mr. Treu, who has been promoted to executive vice president of that office, remains in Cleveland. Mr. Zang most recently worked for Cleveland-based KeyBank, where he was senior vice president of commercial banking for the past five years. Prior to that, he worked for 23
years for National City Corp., also locally headquartered before it was acquired in late 2008 by PNC Financial Services Group Inc. of Pittsburgh. As market president for U.S. Bank, Mr. Zang will lead commercial lending efforts. Zang He also is tasked with facilitating team interaction across several lines of business, including private banking and asset management. His role centers on commercial business, he explained, because that business tends to be a gateway for clients to use a bank’s other products and services. Mr. Zang said he aims to make more Northeast Ohioans, particularly those in the business community, aware of the bank’s offerings and, in doing so, increase its market share. “We have very aggressive goals to grow our commercial presence here,” he said. U.S. Bank’s deposits in the Cleveland-Elyria-Mentor Metropolitan Statistical Area totaled $1.6 billion as of June 30, 2010, which was equal to a 3.24% share of the market, according to the Federal Deposit Insurance Corp.’s Summary of Deposits. That figure was up from a 2.37% share of deposits as of June 30, 2009. Still, nine competitors commanded more local market share in terms of deposits than U.S. Bank in both years. The 2011 Summary of Deposits data
isn’t due out until October. Mark Wheeler, U.S. Bank executive vice president and regional chairman for a region encompassing Ohio, Kentucky and Tennessee, said he interviewed 15 candidates for the position. He chose Mr. Zang because of his commercial banking experience and his knowledge of the Cleveland market. “He knows a lot of people, and relationships are key to the way we do business,” Mr. Wheeler said. “There are certain legal issues with which we must comply from Alan’s previous employment (and) we will ensure we comply with that 100%, but over time, we really look for Alan to bring previous relationships with people and companies to U.S. Bank.” Mr. Wheeler confirmed he was referring to a non-compete agreement Mr. Zang has with KeyBank. Mr. Zang lives in Avon Lake with his wife, Rosemary. They have three children. “Anything in the outdoors,” including fishing, hunting and camping, is “right up my alley,” he said. His civic involvement includes serving as a board director for the National Multiple Sclerosis Society, Ohio Buckeye Chapter; a cabinet member of the United Way of Greater Cleveland annual fundraising campaign; and a trustee for the Lorain County Community College Foundation. ■
Magnet: Group targets smaller providers continued from PAGE 3
hospital officials expect to incur additional savings this year.
In Memoriam
Bennett Yanowitz 1923–2011 For more than 60 years, Bennett Yanowitz was an exceptional advisor and preeminent real estate attorney. He viewed the law as “the lubricant of society.” He served as Kahn Kleinman’s Managing Partner from 1977–1992. The firm merged with Taft Stettinius & Hollister LLP in 2008. He proudly served our Greater Cleveland community’s businesses, charities, educational institutions and individuals. He influenced the shaping of our community as president of the Jewish Community Federation of Cleveland and as a director of the United Way of Cleveland. He served the broader community as the founding president of the Jewish Education Service of North America and as chairman of the National Jewish Community Relations Advisory Council. He was also a member of the Board of Governors of the Jewish Agency. Mr. Yanowitz was an inspiration and a role model to all of us. We are blessed to have known him and to have worked along side him. Taft Stettinius & Hollister LLP He will be missed.
www.taftlaw.com Cincinnati U Cleveland U Columbus U Dayton U Indianapolis U Covington, KY U Phoenix
“That’s a very significant amount,” said Molly Seals, senior vice president of human resources and organizational development at the health system. “When we started the project, we thought it was a $250,000 to $300,000 opportunity. By the time we really dug in and studied the data, we realized there was a huge opportunity here.” For instance, with Magnet’s help, the health system investigated why employees were filing for large chunks of overtime, and discovered that certain units of the health care system weren’t appropriately staffed. “We were finding that our staffing and the approach we were utilizing wasn’t putting the caregiver on the unit where we needed it,” Ms. Seals said. “We changed things like some scheduling practices and created a better predictive model for determining what may be needed on a particular day.” Ms. Pacelli said Magnet won’t likely seek out clients such as the Cleveland Clinic or University Hospitals that already employ such strategies but rather reach out to smaller providers. As such, Magnet is working with Montefiore, an operator of nursing homes in Beachwood and Bainbridge. Also, Magnet works with the Wingspan Care Group, a nonprofit parent company of Bellefaire JCB, a children’s home in Cleveland, and Applewood Centers, a behavioral
health center for children and teens with sites in Cleveland and Elyria. “Having an outside individual who is totally objective try to bring out all the challenges and all the things working well is really an ideal way to do it,” said Lauren Rock, CEO of Montefiore. Ms. Rock said one of the things Montefiore was looking to tackle was to standardize the admission process for new patients. While there was a process, she said it was rarely followed and Magnet helped the group iron out a clearer intake procedure. “Now there’s a plan for communication and that person will be personally escorted by a member of the team to their room,” she said. Bellefaire wanted to boost the productivity of its staff when a client didn’t show for an appointment, according to Karen Anderson, the group’s director of foster care and adoption. Otherwise, Bellefaire would have stomach the cost of paying therapists, physicians, psychiatrists or other workers when they could otherwise be productive. “We are really at a point where we need to gain more efficiency,” Ms. Anderson said. “It’s definitely been tight, and I think unfortunately the staff is being required to be more and more productive and have more face-to-face time with clients. We need them to be as efficient as they can.” ■
Volume 32, Number 24 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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Wage: Bill also would simplify bid-build process continued from PAGE 3
have opposed the changes that would exempt projects from the prevailing wage standard. Other construction reforms have been supported by those same contractors and opposed by trade contractors who specialize in major trades like plumbing and electrical work. Those trade contractors would lose their ability to bid directly for many state contracts under the construction reforms. Amendments considered in the House and the Senate could have beaten back significant parts of the Kasich proposals but the conference committee that reconciles the different bills coming from the two chambers mostly will be concerned with setting thresholds for at what point the changes kick in. For example, the current law requires contractors on state projects to pay prevailing wages for any project costing more than $78,258. The governor proposed raising that threshold to allow nonunion wages to be paid on all projects costing less than $5 million. The House reduced that to $3.5 million, and the Senate’s version sets the threshold at $125,000 during the first year after the law’s enactment, jumping to $250,000 after that first year. The other construction reform sections will require similar reconciliation, though all versions of the law will allow alternative construction management procedures.
Dissenting opinions Tim Linville, executive vice pres-
ident of the Construction Employers Association, said his group is one of those that supports construction reform but opposes the change to the prevailing wage statute. “We think (construction reform) is going to save the state a lot of money,” he said. “It brings Ohio into the 21st century.” The Construction Employers Association has about 100 members, including many of the region’s largest union contractors. So his organization is opposed to changing the prevailing wage law. “Repealing prevailing wage doesn’t save money,” Mr. Linville said, arguing that union apprenticeship training programs and the higher productivity of skilled union workers overcome any wage differential. “The prevailing wage law in Ohio is the only quality standard for construction done on public buildings.” Naturally, nonunion contractors are on the other side of the prevailing wage law. “I see no reason why a refugee from the 1930s (prevailing wage requirements) should even be around in the law,” said John Hitchcock, vice president of C.T. Taylor Co., a Hudson nonunion contractor. “Prevailing wage is an unfunded mandate on municipalities, libraries and universities.” Mr. Hitchcock said qualifications for state bidding and on-site monitoring assure quality work. In the middle is the Mechanical Contractors Association of Ohio. It supports the changes in the prevailing wage law but initially was opposed to the other reform proposals,
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which, it believed, would have crowded many of its members out of public contracting work. Mechanical contractors install heating and air conditioning equipment. “These provisions as currently written create a highway for the largest national and international corporations to come into Ohio and push out local contractors,” said association executive director Valerie Dahlberg in testimony before a House committee meeting May 19, before the bill was taken up by the Senate. The association now supports the Senate version of the plan, which will give its members greater opportunity to bid on state business. “As the budget progresses to conference committee and eventually implementation we will continue our work to ensure open access to the public construction market for Ohio small businesses,” Ms. Dahlberg said in a statement June 3 supporting the Senate version.
Changing the rules Under the current state law public agencies must use what is called the design-bid-build process. Public agencies hire an architect who creates a full set of drawings before the agency advertises for bids. Then the agency must bid out four separate packages — one for electrical work, one for mechanical work, one for plumbing and one for everything else, such as for painting, flooring and steel erection. Unless a single contractor makes the lowest bid on all four pieces of the project, the state must hire separate
contractors for each major piece of work. That setup, the reform panel said, can cause confusion about who is in charge and can lead to cost overruns that are borne by the public entity. The Kasich administration proposal offers two alternatives to the traditional process. One is the design-build method. This model puts architectural design under the same roof as construction, allowing the two processes to move more quickly in tandem, which, advocates argue, saves time and money. The second alternative is called construction manager at risk. Using this model, the public agency hires a construction manager who takes on the financial risk of delivering projects on time and on budget. A construction manager is chosen before the design stage is complete so the construction manager and architect can work together, which allows the contractor to suggest cost savings. The construction manager then gives the public entity a guaranteed maximum price and is responsible for any cost overruns. In exchange, the construction manager has some flexibility on which subcontractors will be bidding on the project, though the bid openings will still be public. It’s this aspect that has the trade contractors worried that they would be shut out of some business. However, the Senate version requires construction managers at risk to use open bidding for key trade subcontracts. ■
ON THE WEB
Story from www.CrainsCleveland.com.
Goodyear sells reinforcement arm for $50M Goodyear Tire & Rubber Co. agreed to sell its global tire reinforcement wire business to Hyosung Corp. of South Korea for $50 million. The business, which makes tire reinforcement wire in Asheboro, N.C., and Colmar-Berg, Luxembourg, employs about 600 people. Goodyear and Hyosung also will sign a multi-year supply agreement upon closing of the deal, according to the Akron-based tiremaker. The deal requires government and regulatory approvals and is expected to close in the third quarter. “This transaction reinforces our focus on providing innovative consumer and commercial tires in targeted market segments,” said Richard J. Kramer, Goodyear chairman and CEO, in a statement. Hyosung, headquartered in Seoul, has produced tire reinforcements since 1968. It has tire reinforcement operations in South Korea as well as in Brazil, China, Luxembourg, Vietnam and the United States. Goodyear sold its global tire fabric operations to Hyosung in 2006.
Solar: Added longevity the goal
of Northbrook, Ill.
continued from PAGE 1
Though some panels that use traditional materials have proven their longevity over the years, panels using new technologies constantly are under development, Dr. French said. For companies selling those technologies to succeed, they’ll need to give customers warranties guaranteeing them for 20 or 25 years, he said. They might be able to do a lot better than that. “There’s quite an opportunity that they could last 40 or 50 years,” Dr. French said. Hiroyuki Fujita, CEO of eQED, wanted to work with the center to make sure his company’s new microinverters are durable. The startup — a subsidiary of Quality Electrodynamics LLC, a fast-growing company that sells coils for MRI machines — developed the small microinverters as replacements for larger inverters used on solar farms. Dr. Fujita said he expects the microinverters, which attach to each solar panel and convert direct current to alternating current, should be more reliable and less expensive than typical inverters that serve multiple panels. Projects such as the S-DLE Center are needed if the region is to play a role in renewable energy electronics, Dr. Fujita said. “Of course, people have to realize it and start working on it,” he said. Several companies have expressed interest in using the S-DLE Center’s facilities and expertise; among them is GreenField Solar Corp. of Oberlin. The company, which makes “photovoltaic concentrators” that use mirrors to focus large amounts of sunlight onto solar panels, has technology that allows its panels to endure highintensity light. ■
solar panels to 1,000 times more solar radiation than they’d get from sunlight. Several existing offices will be converted to rooms where panels will face high heat, freezing cold, corrosive materials and other challenges. The S-DLE (pronounced “sundial) Center also plans to erect several outdoor poles that would be used to expose solar panels to natural sunlight, intensified with mirrors. The point of the project — financed by two state grants totaling $3.8 million, as well as matching contributions from CWRU and several companies with Ohio ties — isn’t just to figure out how much punishment various types of solar panels can take, Dr. French said. The effort also is meant to help Dr. French and other researchers at CWRU determine why various panels fail and use their material science expertise to fix them. “Now we can make a material that lasts longer,” he said. Another goal of the center is to help the alternative energy industry develop long-term reliability standards for solar panels, said Dr. French, who also is the F. Alex Nason Professor of Material Science, Macromolecular Sciences and Physics at the university. Two local companies — solar electronics maker eQED LLC of Mayfield Village and weathering equipment and services firm Q-Lab Corp. of Westlake — are among the collaborators donating money, products and services to the project. Another collaborator is the photovoltaics group within DuPont. For nearly 25 years, Dr. French worked at DuPont’s Wilmington, Del., head-
quarters, where he spent the past several years developing durable optic materials for products such as microchips, paints and solar cells.
Thanks, DuPont Dr. French joined CWRU last August as part of the university’s effort to expand its school of engineering. When he left DuPont, which makes materials for solar panels at a plant in Circleville, Ohio, the company let him take an 11-foot-tall spectrophotometer he developed to measure the reflectivity of materials, which can signify chemical bonds they contain. If certain types of materials that tend to break down all share a similar bond, for instance, researchers at CWRU could figure out how to strengthen the material by making it without that bond. The first piece of the S-DLE Center fell into place in January, when the university and Replex Plastics of Mount Vernon, Ohio, received a $900,000 grant from Ohio’s Third Frontier economic development program. They secured the money to prove that Replex’s ultraviolet light-absorbing mirror, which is used to focus more light on solar panels, will increase the panels’ power output and help protect them from solar radiation. Then, last month, the university and a broader group of collaborators were awarded a $2.88 million Third Frontier grant to form the S-DLE Center, which now includes the Replex Plastics project. In addition to eQED, Q-Lab, DuPont and Replex Plastics, the other collaborators are thin-film solar panel developer Xunlight 26 Solar LLC of Toledo and Underwriters Laboratories
Quest for long life
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GOING PLACES JOB CHANGES ARCHITECTURE RDL ARCHITECTS INC.: David Parrish to principal.
EDUCATION CLEVELAND STATE UNIVERSITY: Meredith Bond to dean, College of Sciences and Health Professions.
FINANCE CHASE: John Batcho to president, Akron-Canton-Youngstown market. OHIO COMMERCE BANK: Jessica Ulsenheimer to banking specialist.
FINANCIAL SERVICE LEAGUE PARK ADVISORS: Stephen Hrinda to associate. PEASE & ASSOCIATES INC.: Nicole Pfeiffer to staff accountant, tax department. SKODA MINOTTI: Alexandra Goodrich to paraprofessional, Small Business Services Group. STRATEGIC WEALTH PARTNERS: Chris Kichurchak to vice president.
for Sports Health. VILLAGE AT MARYMOUNT: Karen Ann Schaefer to director of marketing.
LEGAL JORDAN RESOLUTIONS LLC: Michael Jordan to principal. MCGLINCHEY STAFFORD PLLC: Susan E. Chylik to associate. ROETZEL & ANDRESS LPA: Sarah J. Moore to partner.
MANUFACTURING MOEN INC.: Steve Holdsworth to vice president, wholesale sales; Steve Janas to vice president and general manager, Retail Business Unit. RADIX WIRE CO.: MaryLou VerMerris to chairman; Brian Bukovec to president; Dave Leonard to director of sales; Kevin Bryant to manufacturing manager; Chris Birkas to commercial market specialist.
MARKETING ADCOM COMMUNICATIONS INC.: Dawn Urbas to finance manager.
HEALTH CARE CLEVELAND CLINIC: Dr. Mark Schickendantz to director, Center
NONPROFIT COLLEGE NOW GREATER CLEVE-
Navigate: LogicJunction poised to continue growth continued from PAGE 3
The 10-year-old company, which moved to Northeast Ohio from Atlanta about six years ago, focuses on developing customized avatars, or computer-generated characters. By coupling the avatars with navigation software, LogicJunction officials said, they’ve found a segment of the market with an illustrated need, according to Mark Jowell, the company’s CEO. “We’ve really focused on wayfinding in health care,” Mr. Jowell said. The company previously worked primarily as a custom shop creating an array of avatars for a number of specific uses — an arrangement that requires a hefty amount of resources and manpower. For one, LogicJunction designed an avatar for use at the Western Reserve Historical Society’s complex in University Circle to act as a museum curator to educate visitors. Likewise, the company designed a “virtual tour guide” for General Electric’s education center in Schenectady, N.Y., to inform visitors about the company’s role in developing power systems.Though he wouldn’t provide figures, Mr. Jowell said LogicJunction has experienced revenue growth over the last three years and is “poised to grow significantly over the next year” given its success with the wayfinding software. In addition to the Clinic, LogicJunction’s clients include the Lake Health system in Lake County and Sarasota Memorial Health Care System in Florida. LogicJunction still provides avatars for a number of other non-health care clients as well, including a “virtual insurance agent” for the Cleveland-based Council of Smaller Enterprises. Recent exposure at a few health care industry conferences, including the Clinic’s Patient Experience
Summit held last month, have sparked interest in the company’s products, which Mr. Jowell said is a sign LogicJunction is moving in the right direction. “We’ve got a lot of confirmation in what we’re doing,” he said.
All about the patient In the ever-competitive health care business in Northeast Ohio, care providers always are looking for ways to improve patient experiences, according to Mary Curran, senior director for special projects at the Clinic. The avatars help achieve that goal, as the kiosks also display activities around the Clinic campus, such as yoga classes, concerts or massages — events she said the hospital has had difficulty promoting in the past. “We try to take the health care experience to a whole other level,” Ms. Curran said. “It’s not just about sickness and health, but we want to give you something to do while you wait.” The Clinic, which has two kiosks and others on the way, isn’t looking to replace its army of 38 “red coats,” or Clinic employees donning red jackets who help patients and their families navigate its main campus. Rather, Ms. Curran said installing the kiosks is about giving patients “tools at their fingertips.” Last fall, Lake Health installed kiosks in the lobbies at Lake West Medical Center in Willoughby and TriPoint Medical Center in Concord Township as a method to ease anxiety and confusion when patients and their families enter the hospitals. “From people who are using digital technology, we’ve had very positive feedback,” said Diane Weber, director of radiology at Lake Health. “In some ways, it’s clearer than the volunteer or somebody at desk giving directions.” ■
Batcho
Hrinda
Chylik
LAND: Kittie Warshawsky to chief external affairs officer. ELIZA JENNINGS SENIOR CARE NETWORK: Jennifer Griveas to director of legal affairs. FUND FOR OUR ECONOMIC FUTURE: Emily Garr to manager, research, grants and evaluation. RAYMOND JOHN WEAN FOUNDATION: Jeffrey M. Glebocki to president. SAINT LUKE’S FOUNDATION: Bridget De Leon to grants manager.
Holdsworth Janas
Urbas
Shumyla to secretary; Paul Contoveros to treasurer; David Mayo, Jason Poelking, Guy Rodgers, Michael Haessly, Scott Fitzpatrick and Carl Duffield to committee chairs. CATHOLIC COMMUNITY FOUNDATION: Raymond Murphy (Adcom Group of Cos.) to chairman; Mike Shaughnessy to vice chairman; Dennis Bodziony to treasurer; Diane Roman Fusco to secretary.
SERVICE
OHIO ASSOCIATION OF INDEPENDENT TITLE AGENTS: Douglas A. King (Chagrin Valley Title & Escrow Agency) to president.
DIRECT RECRUITERS INC.: Robert Cohn to director, automation practice.
AWARDS
ENTRYPOINT CONSULTING LLC: Derek Abramovitch to vice president, corporate growth.
BOARDS AMERICAN SOCIETY FOR QUALITY, SECTION 0814 ELYRIA/LORAIN: John Cachat (Silico Corp.) to chair; Mark Miracola to vice chair; Kim
AMERICAN ASSOCIATION OF LONG-TERM CARE INSURANCE: Eric Rubin (Cedar Brook Financial Partners LLC) received the 2011 Long-Term Care Insurance Sales Achievement Award. CLEVELAND INTELLECTUAL PROPERTY LAW ASSOCIATION: Regan J. Fay (Jones Day) received
Garr
Glebocki
De Leon
the Distinguished Member of the Year Award 2010-2011. NAIOP: David O’Neill (OstendorfMorris Co.), Traveling Gun Broker Award; Robert Garber (Cresco Real Estate), Industrial Broker Award; Chandler Converse (CB Richard Ellis), Office Broker Award; David Sobochan (Cohen & Co.) and Amy Whitacre (First American National Commercial Services), Member of the Year Award; Scott Wolstein (Wolstein Group), Industry Recognition Award; Ross Farro (Premier Development Partners), Lifetime Achievement Award; David Cooper (City of Cleveland), President’s Award; David Sobochan (Cohen & Co.), Chapter Past President Award; Ken Fleming (Graystone Properties), Memorial Award.
RETIREMENT FIRSTENERGY CORP.: Paul J. Evanson, executive vice chairman.
Send information for Going Places to dhillyer@crain.com.
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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
It’s time
H
ospitals, like schools and libraries, are hard institutions to close. People who live where they’re located don’t like them to shut their doors, because they often are anchors of stability in neighborhoods that aren’t the bustling places they once were. Even when logic and the facts argue against keeping a hospital open, a cry will arise that it shouldn’t be done, that it can’t be done. It happened in the fall of 2003 when University Hospitals decided to close St. Michael Hospital in Cleveland’s Slavic Village neighborhood. Now it’s happening again with the Cleveland Clinic’s announcement last week that it will close Huron Hospital in East Cleveland within 90 days. Our view is that UH made the right decision then, and that the Clinic has made the right decision now. That’s not the message you’ll hear from politicians such as U.S. Reps. Dennis Kucinich, who assailed St. Michael’s closing eight years ago, and Marcia Fudge, who within two hours of the Clinic’s announcement last Monday already had issued a press release taking the Clinic to task for the planned closing of Huron. Rather than size up the situation objectively, Rep. Fudge played to the crowd. “I am deeply disappointed that the Cleveland Clinic is abandoning a critical component of health care for thousands of constituents in Cleveland and East Cleveland by eliminating in-patient service in an area where it is desperately needed,” Rep. Fudge stated. Critical component of health care? Not really. Data from the Clinic show the hospital averages fewer than 100 patients a day. That amount of business wouldn’t sustain a McDonald’s, much less a hospital. The data also indicate most people who live in the area around Huron Hospital — the people who Rep. Fudge said the Clinic “is abandoning” — already are choosing other health care options on their own. Only 17% went to Huron for key inpatient services in the first half of 2010. The rest are going to different hospitals, including others within the Clinic health system. Contrary to the tone of Rep. Fudge’s release, the Clinic won’t be leaving East Cleveland high and dry. It will continue to provide outpatient services at Huron until its new Community Health Center opens on the hospital’s campus Oct. 3. The Clinic said it also will provide round-trip shuttle service from the Huron campus to its main campus, as well as to Euclid, Hillcrest and South Pointe hospitals. Dr. Delos “Toby” Cosgrove, the Clinic’s president and CEO, knew there would be fallout from the announcement of the planned closing. However, he has no reason to apologize for the decision. Rather than sink more money into an aging, underused institution, the Clinic would do the greatest good in meeting the health care needs of the community by putting those dollars into the Community Health Center to focus on preventative care and management of chronic diseases such as diabetes, which is prevalent in the population near Huron. We take no joy in saying it, but Huron Hospital’s time has passed. It’s time to move on.
FROM THE PUBLISHER
No winners in Huron Hospital closing
T
hospital,” Mayor Jackson said in a statehe realities of a shrinking city are ment. “In fact, when asked directly about challenging at best, and tragic at the future of Huron Hospital, Clinic offiworst; perhaps nothing exemplicials stated there was no intention to fies that as vividly as the closing close the emergency room, let alone the of a hospital. Witness last week’s stateentire hospital.” ment by Cleveland Mayor Frank Jackson The Clinic responded — on the day it that he was considering a legal challenge announced the plans — with a full-page to the Cleveland Clinic’s planned closure ad in the newspaper, saying of Huron Hospital in three that the 135-year-old Huron months. BRIAN Hospital “was not built for 21st This is a classic no-win situa- TUCKER century healthcare” and pointed tion facing both the mayor as to the fact that it will open a well as Clinic CEO Toby Cosnew community health center grove. The Clinic can’t afford in East Cleveland this fall, proving supporting a medical facility “our commitment to East that’s underused when it operCleveland is stronger than ates other facilities in its system in ever.” close proximity. The mayor knows Fact of the matter is, Mayor the closure will be another body Jackson needs to be seen as blow to his eastern fringe and defending the interests of his East Side the struggling suburb of East Cleveland. citizens, while Dr. Cosgrove has few The mayor and his counterpart from options in dealing with a shifting NorthEast Cleveland thought they were dealing east Ohio population base and a shrinking in “good faith negotiations” regarding Cleveland. the Clinic’s planned shutdown of Huron’s The city has lost St. Luke’s, Mount trauma center. Sinai and St. Alexis hospitals in recent “At no time did the Cleveland Clinic years. Huron Hospital is just the latest to disclose their intent to close the entire
shut its doors. And in the end, as was the case with St. Alexis, it won’t matter what political leaders say or do, the hospital system will act in what it perceives as the best interests of its entire service area. Cleveland, like all other old manufacturing towns, is reinventing itself, and it’s doing so in many interesting ways. But the process is nonetheless painful. The population is far less than half of what the city — and its infrastructure — was built for, and that’s a reality that cannot be ignored. The mayor, along with business and civic leaders and organizations, has launched many initiatives that show promise for the future. Downtown may be at a transformative point, with the new construction at Cleveland State, the convention center/medical mart, casino and the new office building/hotel development along the river. The only city neighborhood that showed population increases in the last census was downtown. But progress will be slow, and we must show patience, and that is a characteristic that has long been missing from our collective psyche. ■
THE BIG ISSUE Do you think the Cleveland Clinic was justified in announcing plans to close Huron Hospital?
ELIZABETH BATTS
KRISTIN HOPKINS
NINA AMORE
JC CAROTHERS
Cleveland
Cleveland Heights (also a principal planner for the Cuyahoga County Planning Commission)
Cleveland
Warrensville Heights
I don’t want anything to be lost because we need jobs, and the economy’s so crappy around here. Having a hospital nearby the residents that live around it, that depend on it, is important.
I don’t have an opinion as far as if they were justified. I don’t want to speak on what their business model is, but I just don’t think the hospital should be closed. There should be one (hospital) there to help save people’s lives.
I mean, if it’s a business decision, I could be sympathetic to that. At the same time, East Cleveland is a war zone. It’s a really hard place to live. So I have sympathy for the people that are living there, too.
I think that it’s a bad decision. It’s devastating for the city of East Cleveland because it’s one of their bigger employers so they get a lot of income tax.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
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Hiring: Full-time jobs opening up continued from PAGE 1
The firm is perusing potential sites for new locations, including in Mentor in Lake County, Mr. Castelluccio said. Also looking in Lake County is Champion Personnel System Inc., a staffing service based in Garfield Heights. President Robert Schepens expects the company to double its number of offices to eight within a year. The new offices would be used exclusively for recruiting talent. “To meet the demand (of employers), we have to be able to find the right people, and with a few offices, we can’t reach out geographically as effectively as we can with offices that are placed (elsewhere),” he said. Mr. Schepens said Champion Personnel did not close locations during or after the recession, but did shut a Mentor office prior to the downturn because business was lacking. Now, though, it is considering new space in Lake County as well as Brunswick, a site near Lorain, and Strongsville, Medina or Parma. The company also is in the process of filling four new sales and recruiting positions, which would represent a 20% increase to its existing staff of 20, Mr. Schepens said. That’s more hiring than the company has done in two years, he noted. Northeast Ohio isn’t alone is seeing this trend. Alexandra Karaer, director of research for the American Staffing Association in Alexandria, Va., said the number of workers hired nationwide via staffing agencies picked up dramatically last summer and last fall. Federal statistics seem to affirm that observation. The number of people employed through temporary help services totaled an estimated 2.2 million last month, up 9% from 2.06 million in May 2010 and up more than 26% from 1.77 million in May 2009, according to nonseasonally adjusted data from the U.S. Department of Labor’s Bureau of Labor Statistics. The Federal Reserve Board’s Beige Book report on the economy released last week also revealed that staffing-firm representatives in the Cleveland district, which includes Ohio and parts of Kentucky, Pennsylvania and West Virginia, were reporting moderate growth in the number of new job openings, with vacancies concentrated in health care and manufacturing.
Try before you buy Insiders agree: What’s different today compared to the temp rush in late 2009 is an increased number of employers aiming to employ people permanently. “As businesses feel more confident, they begin to shift their
A POSITIVE REALITY CHECK It doesn’t do staffing, but this company, too, has seen an uptick in business that bodes well for local job applicants. After two down years in 2008 and 2009 and an uptick in 2010, “we’re going crazy” in 2011, said Greg Dubecky, president of Corporate Screening Services Inc. in Middleburg Heights. The company provides background screening for clients. Revenues from January to May were up 23% this year over the yearago period and were 38% higher than in the like period in 2009. That growth led the company to move in mid-May into about 1,000 square feet of additional space at the Interstate Plaza building, where its administrative offices have been housed. It also has increased its sales staff and now employs 71 workers,
requests to us for permanent hires,” Aaron Grossman, president of Alliance Staffing Solutions in Independence, said in a May press release. “That’s what we’re seeing now, and the volume of work has increased so much for us that we’ve expanded our own staffing levels.” The recruitment agency has added 13 full-time permanent positions — an increase of 23%. The new hires include recruiters and account managers and a new position: director of talent management. Brandon Thimke, director of communications for The Reserves Network, a commercial staffing firm based in Fairview Park with 30 offices in eight states, is seeing more clients inclined to do full-time hiring. “What’s encouraging now is that a lot of employers we’re working with, (they want) to see if that employee is going to be a good fit” for the longer term, Mr. Thimke said. His company is on track for an 18% increase in revenue this year over 2010 and has hired probably a dozen people in Northeast Ohio year-to-date. The number of interim workers that are transitioning to full-time employment is up “fairly dramatically” over last year, Mr. Schepens said. That said, many employers only make them full-time employees after they’ve had the chance to observe a worker’s productivity and have some assurance there will be enough business to merit giving the worker health care coverage, he said. Business revenues are up more than 30% year-over-year for Champion Personnel, Mr. Schepens noted.
up from 50 in May 2010, Mr. Dubecky said. And it plans to boost its staff another 15% throughout the rest of the year, mainly by hiring more sales personnel to generate leads. A lot of organizations were testing the waters in adding temporary staff in 2009 and 2010, Mr. Dubecky said. But he sees the increased demand for Corporate Screening’s services as a sign that more employers are adding permanently to their staffs. “You probably still have a number of organizations that are happy with temp staff, and they’re going to continue to do that until they see signs that indicate to them things are going to turn around,” Mr. Dubecky said. But, he noted, “The level of confidence is a lot higher than in 2010.” — Michelle Park
“I think overall our employers, businesses in general, are starting to take advantage of pent-up demand,” he said. “The U.S. economy was so iffy. It still is iffy, but it’s not as iffy as it was before.”
PolyOne Corp.’s new distribution center in Shanghai, China, will be its first in Asia — and its first outside North America — when it opens July 1. “We are very excited about our first expansion for our customers that will be outside of North America,” said Michael Rademacher, president of PolyOne Distribution Co. “Distribution is the last piece of the puzzle for PolyOne in Asia. We have been encouraged by our ma-
jor health care customers in North America to locate there,” he said. “We can support them with products, solutions, and in sales, operations and warehouse capabilities.” Distribution currently provides roughly 35% of the $2.6 billion in revenues for the polymer producer based in Avon Lake. The distribution center will enable PolyOne to reduce the time its customers must wait for materials to arrive in Shanghai from the United States to just “a few days,” Mr. Rademacher said. The new distribution center is
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Global view Global Technical Recruiters, which is based in Cleveland’s Kamm’s Corners neighborhood, has had in 2011 the best start to a year in its 10-year existence in the number of jobs it has filled for clients, said Patrick Murphy, co-owner. Some of that strong start is related to his sales employees reaching out to companies that need assistance in hiring, Mr. Murphy acknowledged. But, he noted, “It’s a lot busier this year than it was last year.” The company isn’t seeking to do significant hiring right now, but plans to add a few recruiters and salespeople, according to Mr. Murphy. “I definitely anticipate us growing,” he said. “There is a demand out there. I see a lot more companies utilizing staffing agencies more,” particularly as a tool to find the “best possible employee.” Mr. Schepens, too, anticipates staffing demand will continue to increase. The general Northeast Ohio economy is improving, he said. “One of the changes I’m seeing is a different, more positive attitude on the part of business operators and owners,” he said. “They’re not looking just to the international world scene. They’re looking at how can they do more business on a very targeted basis.” ■
PolyOne launching Shanghai distribution site By MIKE VERESPEJ Plastics News
Are you looking for
focused on health care. “Over time, there will be opportunities to support other customers and other markets, and will open up opportunities for other PolyOne materials to be specified for that market,” Mr. Rademacher said. The distribution operation will be located within existing PolyOne facilities in Shanghai and will leverage existing capabilities in credit, accounting and banking that PolyOne already has there. ■ Mr. Verespej is a reporter with Plastics News, a sister publication of Crain’s Cleveland Business.
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10 CRAIN’S CLEVELAND BUSINESS
INSIDE
13 WET START HURTS PRODUCE GROWERS, SELLERS.
JUNE 13 - 19, 2011
SMALL BUSINESS Supporting roles open in NE Ohio with film growth
ALL IN THE FAMILY: FATHERS, SONS NAVIGATE TRICKY WORK-LIFE DYNAMIC
By JAY MILLER jmiller@crain.com
I
MARC GOLUB
Matt Brakey (left) and father, Mike, of Brakey Energy Inc., a consulting firm they run out of the elder Mr. Brakey’s Shaker Heights home
W
ith Father’s Day approaching, Jeff Susbauer has three rules for any parent who wants to bring a child into the family business: Have only one child. Have a competent child. Have a child who wants to join the company. Though plenty of parents are able to successfully bring children into the family business, doing so can create “a minefield” of problems, said Mr. Susbauer, who taught entrepreneurship and businessrelated courses at Cleveland State University for 40 years before retiring in 2010. He listed a few potential problems: The adult children can fight over who gets to take over the business, or they may not work well together. Plus, parents are “notoriously bad” at seeing weaknesses in their children and sometimes put their kids in positions they aren’t prepared to handle. And should the son or daughter take over the business and fail, they may not get a warm welcome at the next reunion. “It’s a lot like borrowing money from a relative. If you’re good for it and pay them back, everybody’s
going to be happy. If you’re not good for it, that’s a different story,” said Dr. Susbauer, who also has founded five companies. Businesses in some ways can benefit when the owner’s son or daughter joins the business. For one, he or she might be more loyal to the company than an outsider. Bringing kids into the family business also is a good way for parents to mentor their kids as adults — or at least stop them from moving hundreds of miles away, said Tony Micheli, a principal in the tax department at Cleveland accounting firm Cohen & Co. Still, he echoed some of Dr. Susbauer’s concerns. Parents, he said, need to evaluate their children like they would other employees. “It’s very different than running a business with people you don’t know,” he said. — Chuck Soder
ALSO INSIDE We check in on other father-son connections at area companies: The Kanan family at King Nut Cos. ■ Chip Marous and son, Mike, at Marous Brothers Construction READ THEIR STORIES ON PAGE 12
BRAKEY ENERGY
W
hen Matt Brakey joined energy consulting firm Brakey Energy Inc., he had nothing to lose. Things have changed. “Now it’s an ‘everything to lose’ proposition,” he said with a laugh. Mr. Brakey became the first employee to work under his father, Mike Brakey, not long after he graduated from Miami University in 2004. Back then, the political science major didn’t see too many opportunities on the horizon. However, the “training wheels” were just starting to come off at Brakey Energy, which his father started in 1999 with four clients. So he figured he’d give it a try. Today Matt Brakey is president of the company, which is run out of his parents’ house in Shaker Heights. Not only has joining the company proven to be a great opportunity career wise — the company today helps about 60 large energy users understand and cut their energy costs — but working at Brakey Energy also has helped him become closer with both his dad and his mom, Cindy, who joined the company in 2006. “We’ve really just gotten to know each other a lot better,” he said. Mike Brakey encouraged his son
LIKE FATHER, LIKE SON ■ Dad Mike Brakey learned from his son that the business needs to respond as quickly as possible to its clients. He also learned a lot about the online technology that helps the company with those responses. “It’s always good to get a second viewpoint, especially from the younger generation.” ■ Matt Brakey says his father taught him that building long-term relationships with clients is more important than going for “a quick buck.” He also showed him the power of specialization: “Having a niche in business and in life is very valuable.”
zzy Schachner is taking his shot at the movie business. No, he’s not enrolling in acting classes and moving to Hollywood. Rather, he went off to North Carolina and brought a truck back to Cleveland. A veteran of the catering business, Mr. Schachner thinks his StrEat Mobile Bistro & Production Catering can succeed providing location cuisine to film production companies that are coming to Northeast Ohio. Mr. Schachner thought he saw an opportunity for a production catering firm in Ohio and was drawn to North Carolina for two weeks last October when an experienced movie caterer was willing to put him to work and teach him the ropes. That’s all it took to convince Mr. Schachner to buy the business, which in this case was a truck converted to a mobile kitchen. “I wanted to make a commitment to the city and to the industry,” he said. “This is a growing industry here.” Like an army, a film production company travels on its stomach and quality catering on location is a key to making Northeast Ohio an attractive place to make movies and television shows. “I didn’t think he’d go buy a truck,” said Ivan Schwarz, executive director of the Greater Cleveland Film Commission, who counseled Mr. Schachner on the catering needs of film companies before his trip south. Mr. Schwarz is a film industry veteran who worked as a film company location manager, scouting places to shoot movies and then managing the logistics on location. He believes the film industry can grow to play a significant role in the regional economy.
Credit where credit’s due
to consider joining the business, knowing that he was an intelligent, motivated guy who would succeed if given the chance. “I knew he could become tops in the field,” the elder Mr. Brakey said. Mike Brakey brought more than 20 years of manufacturing experience to the company when he founded it in 1999, making him the company’s technical expert. Matt Brakey handles business development and energy generation contracts. Cindy Brakey, a former actuary, helps analyze energy bills. That is, when
Interest in shooting films and television shows in Ohio has exploded since the state Legislature passed in 2009 the Ohio Motion Picture Tax Credit. The film commission has announced that in the next few months, three films will be shooting in Northeast Ohio led by “The Avengers,” a superhero action film starring Robert Downey Jr. Other films scheduled to shoot in Northeast Ohio before the end of the year are “Fun Size,” a teen comedy starring Victoria Justice, and “Boot Tracks,” a crime thriller based on a 2006 novel by Matthew F. Jones. Mr. Schachner said it cost him less than $100,000 to join a small number of businesspeople in Northeast Ohio setting their sights
See BRAKEY Page 12
See FILM Page 14
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12 CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JUNE 13 - 19, 2011
SMALL BUSINESS A L L I N T H E F A M I LY : K I N G N U T C O S .
GRANDOPENINGS OASIS YOGA SPA 33180 Station St. Solon 44139 www.oasisyogaspa.com Janice Hanrahan, a yoga instructor with more than 15 years of experience, has opened Oasis Yoga Spa, a modern, mind-body sanctuary that fuses the benefits of yoga with healing spa services. Ms. Hanrahan’s yoga spa offers more than 35 classes a week, as well as Thai yoga massage, bodywork, infrared sauna, Reiki, raindrop technique, lifestyle counseling and acupuncture. In addition to yoga classes and spa treatments, Oasis Yoga Spa has a retail boutique carrying yoga wear. Instructors are available for private sessions, and the studio offers yoga parties. 440-523-0099
TRUE WEALTH DESIGN 29605 Lorain Road North Olmsted 44070 www.TrueWealthDesign.com True Wealth Design is a holistic wealth management firm headquartered in Fairlawn that provides advice to a select group of clients on retirement planning, investment management and tax planning needs. The North Olmsted office is the firm’s second. Phone 216-373-7670 Fax 330-247-0625 info@truewealthdesign.com
CREEKSIDE FINANCIAL ADVISORS LLC 30195 Chagrin Boulevard, Suite 208W Pepper Pike 44124 www.creeksidefa.com
Creekside Financial Partners’ founder is Nan Cohen, a 17-year veteran of the financial planning industry. Prior to starting Creekside Financial Advisors, Ms. Cohen was a principal at Cleveland’s Cedar Brook Financial Partners LLC. Ms. Cohen specializes in designing lifetime income, investment and estate plans for physicians, attorneys, business executives, business owners and women in transition. Ms. Cohen earned a certified financial planner designation in 1999. Phone 216-342-3380 Fax 216-342-3386 ncohen@creeksidefa.com
FIRSTLIGHT HOMECARE SOUTHWEST CLEVELAND 29605 Lorain Road North Olmsted 44070 www.firstlighthomecare.com Kim Hollett is the owner of FirstLight HomeCare in North Olmsted, a national provider of non-medical, in-home care for seniors and others with disabilities. Ms. Hollett’s business serves residents in Cleveland, Strongsville, Berea, Middleburg Heights, North Olmsted, Olmsted Falls, Brook Park and Westlake. Phone 440-777-7300 Fax 440-398-0610 khollett@firstlighthomecare.com To submit a new business, send the following information by email to Amy Ann Stoessel at astoessel@ crain.com: business name; address; city and ZIP; website; brief description of business; business phone number; business fax number; business e-mail address; and date that business opened. Call 216-7715155 with questions.
T
o describe why he loves working with his father at the King Nut Cos., Marty Kanan told a story about a friend who is the head of food services for a major airline. She recently invited her dad to the grand opening of a new airport kitchen in Seattle. He was so proud to finally see what his daughter did for a living, Mr. Kanan said. Mr. Kanan said he and his brother, Matthew, don’t have to wait for a special event to make their father proud. “We get to experience that feeling she had, but every single day,” he said. Marty Kanan is CEO of King Nut, a Solon-based company that makes peanuts, dried fruit, pretzels and snacks. His father, Michael Kanan, bought the company in 1989, served as CEO through 2003 and remains chairman. Matthew is executive vice president of sales and marketing. Marty Kanan previously had worked in sales for two automotive manufacturing companies in Michi-
F
irst there were the “B-3s.” Now they’ve been joined by the “G-2s.” A big group of fathers and sons runs Marous Brothers Construction of Willoughby. Though Adelbert “Chip” Marous Jr. is president, they all contribute ideas and help make decisions. The fact that the “B-3s” — brothers Chip, Scott and Ken Marous — have input from the second-generation, or “G-2,” Marous boys helps
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gan. When his dad asked him to join King Nut, however, he saw an opportunity that went beyond business. “What greater of an opportunity do you have than to work for your dad and work for your family?” he said. Both he and his younger brother joined the company in 1991. Though the partnership is “not always milk and honey,” the three Kanans work well as a team, Michael Kanan said. He’s the analytical one who tends to set lofty goals, while Marty Kanan is more outgoing and conservative in nature. Matthew Kanan helps them meet in the middle.
■ Marty Kanan picked up “thousands of things” from his father. One of them, though, is his dad’s tendency to analyze a situation in many different ways. ■ Dad Michael Kanan, meanwhile, said he’s learned a lot about how to be more of a people person. “That’s a great lesson for me … It has a big influence on how I act.” Michael Kanan said he wanted his sons to join him at King Nut because they all enjoy each other’s company. Plus, they’re capable guys. For instance, the elder Kanan described how, decades ago, after the Kanan family moved to a new neighborhood, 4-year-old Marty and his brother, Michael Jr., immediately went to meet the neighbors. “I’d be a fool not to want (Marty) to work for me,” Michael Kanan said. — Chuck Soder
LIKE FATHER, LIKE SON
Chip Marous
Mike Marous
ensure that the company doesn’t get stuck in its ways, Chip Marous said. “You’ve got to allow the second generation to put their ideas on the table,” he said. Chip and Scott Marous founded Marous Brothers Construction in 1980. Their brother Ken joined them in 1997. Shortly thereafter the “G-2s” began entering the business full time. Chip Marous’ sons Mike, Jeff and Jason, as well as Scott Marous’ sons Scott Jr. and Matt, work for the Willoughby company. Mike Marous, 30, manages Vintage Development Group, a real estate development subsidiary. It took him a while to land the gig,
Brakey continued from PAGE 10
she’s not helping decide disputes between her husband and her son. Another one of their children, Stephen, is interning with the company until this fall, when he starts his junior year at Marietta College
■ “From the boys I learned to be more open-minded and I think to be more patient, too,” dad Chip Marous said. ■ Mike Marous said his father taught him to “never take anything for granted” and to “work hard every day.”
though: Like other second-generation Marous boys, he spent a lot of time visiting job sites and cleaning up the shop while growing up. After high school he paid his dues as a whipping boy in the union carpenter apprenticeship program. “We started from the bottom, and we worked our way up from there,” he said. The younger Marous said he respects what his dad has accomplished over the years. “Not only as a businessman, but as a father. I hold him up higher than anyone,” he said. — Chuck Soder
in southern Ohio. Matt Brakey jokes that he probably should have been fired years ago; let’s just say he speaks openly with his father. Luckily, they have a strong bond — which you better have before going to work for your parents. “You have to be pretty confident and comfortable with your family relationship,” he said. — Chuck Soder
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CRAIN’S CLEVELAND BUSINESS 13
WWW.CRAINSCLEVELAND.COM
SMALL BUSINESS
Delays in planting difficult for some to swallow By KATHY AMES CARR kcarr@crain.com
E
ven though the warm, dry weather of late has mitigated some of the effects of the spring deluge, many small businesses still are digesting the impacts of Northeast Ohio’s cool, soggy planting season. Floyd Davis, like many of his farmer brethren, is weeks behind in planting, which is eating into his income. “I’m looking at $1,500 a week I’m losing,” said the owner of Red Basket Farm in Kinsman, in Northeast Trumbull County. “I’ve had to skip a couple of farmers markets because I don’t have anything. It (stinks) turning away a restaurant customer.” Mr. Davis and other proprietors whose livelihoods thrive on the growing, selling or serving of local produce say their business has been squeezed by the wettest start to the year on record. While some local produce-dependent operations say they won’t let the unseasonal start to the spring dampen their outlook for the rest of the year, others say the economic damage will be hard to reverse. “People don’t understand how big agriculture is in Ohio,” said Donita Anderson, executive director of North Union Farmers Market, a nonprofit operator of six area markets. “It’s a $98 billion business in Ohio. Everybody was affected by (the delayed planting season).” Mr. Davis said his early projections called for an increase of about 43% in business this year over last, to about $100,000 in sales from $70,000. He currently grows and sells his produce to Cleveland-area restaurants and at farmers markets in Tremont, Peninsula and Akron. He also earns money through Red Basket Farm’s community-supported agriculture program, for which subscribers pay either $240 or $400, depending on the package, to receive 16 weeks of produce. “We’ve had to delay the CSA start, from about mid-June until the end of June,” Mr. Davis said. Mr. Davis said he’s planting more “quick turnaround crops,” such as radishes, spinach and other leafy greens, since corn, pepper and tomato plantings are delayed. He said he plans to increase later this year production within his four tunnel houses, or unheated greenhouses. “Not only has the rain affected plantings outside, but I’ve had some issues with gray mold and
A SLOW GROW According to Marty Mullen, senior meteorologist for the National Weather Service’s Cleveland offices at Cleveland Hopkins International Airport, Cleveland has experienced the wettest start to the year between Jan. 1 and May 31. As of May 31, Cleveland recorded 25.35 inches of precipitation, which is .31 inches higher than the previous record of 25.04 inches set in 1950. As of Sunday, June 5, two of Ohio’s main crops were significantly behind last year’s planting. Corn was 58% planted, which was 39% behind last year, and 26% of soybeans have been planted, which was 51% behind last year, according to the U.S Department of Agriculture.
produce not ripening inside my tunnel houses,” he said. Trevor Clatterbuck, CEO of The Fresh Fork Market, also delayed by one week the start of his CSA, which serves 1,000 subscribers. The first two weeks’ shares were light on produce and heavier on other offerings such as pasta, chicken, sausage and yogurt. Great Lakes Brewing Co., a codeveloper and licensee of nearby Ohio City Farm, paid “over $50,000” in exchange for produce between that operation and Hale Farm & Village in Bath. Saul Kliorys, Great Lakes Brewing’s
environmental programs manager, said he doesn’t expect the restaurant to receive its first harvest until July 1, although the setback has not impacted the brewpub’s menu. “We’ve made some investments in these farms,” he said. “We won’t get as much back as we hope to.” Shawn Belt, refugee empowerment agricultural program director for Ohio City Farm operator The Refugee Response, acknowledged that even though the Ohio City Farm’s planting season is about a month behind, the area restaurants it serves — including Great Lakes Brewing, Dante and Flying Fig —
“won’t lose any money. The season is just pushed back.” Meanwhile, Ben Bebenroth, chef and owner of Spice of Life Catering Co., which sources 95% of its ingredients from local farms, said he has asked customers to be flexible with menu offerings, which are leaning heavily on greens such as head lettuce, bok choy and arugula. However, the caterer’s produce suppliers are nervous, he said. The lack of spring sunlight likely will mean smaller peppers and tomatoes when they are harvested. Shorter corn stalks may only pro-
duce a couple of husks, rather than the typical six to eight. And strawberries won’t taste as sweet, Mr. Bebenroth said. The North Union Farmers Market’s Ms. Anderson said she thinks July will be “the worst month” for farmers and businesses that rely on local produce. She expects the sector to rebound in August as farmers’ production catches up. She still expects sales to increase about 20% this year, over the approximately $2 million recorded last year among the North Union Farmers Markets at Crocker Park, Shaker Square, the Cleveland Clinic’s main campus, Cleveland State University, Chagrin Falls and Lakewood. “We still had our best spring in sales this year,” she said. ■
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14 CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JUNE 13 - 19, 2011
SMALL BUSINESS
Resist temptation to use payroll tax funds for creditor bills
W
hen a business is struggling and decisions are made regarding cash flow, it may be tempting to cover more immediate costs by deferring payments of payroll taxes to the IRS — but that is a grave mistake. Business owners hoping to save a business have been known to use payroll tax money to pay suppliers in a desperate gamble to keep the company afloat. That gamble exposes the owner and possibly others connected to the business to full personal liability for these taxes. Two recent federal court cases should serve as a reminder to business owners that these payments should get top priority. The IRS will hold individuals personally responsible for a business’ failure to pay what are known as “trust fund” taxes. A trust fund tax is money withheld from an employee’s wages (income tax, Social Security and Medicare taxes) by an employer. These amounts are supposed to be held in trust until paid to the U.S. Treasury. If this money is used to pay other creditors and the taxes are not paid, the IRS will assess the person or people deemed responsible for the failure to pay. It does not matter whether the business is incorporated or is a limited liability entity. In order to have personal liability, two elements must be present. First, the person must be a “responsible person.” A responsible person is a person who has the power to direct the collecting, accounting and paying of trust fund taxes. This
CARLGRASSI
TAX TIPS person may be an officer, employee, director, shareholder, member or partner of a business. Second, a responsible person must act “willfully” in not paying the taxes. This means the responsible person was, or should have been, aware of the outstanding taxes and either intentionally disregarded the law or was plainly indifferent to its requirements. No bad intent is required; simply allowing available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness. A recent federal court case held all of the shareholders of the company responsible, even though an officer of the company had been instructed by the shareholders to keep current with all payroll taxes and work out a payment program for delinquent payroll taxes. The officer reported to the shareholders that an installment agreement had been entered into with the IRS, which apparently was not the case. While discussions were ongoing with the IRS about a possible agreement, the company continued to pay creditors other than the IRS. Soon after, the company’s creditors
filed an involuntary bankruptcy petition, at which time the owners of the company learned that the officer had failed to resolve the payroll tax deficiencies. The IRS assessed the full amount against each owner (as well as the officer) for the trust fund portion of unpaid payroll taxes, which amounted to more than $2 million. The court agreed with the IRS, finding that each of the five shareholders were personally liable for the full amount of the deficiency. The owners argued that while they did meet the criteria of a responsible person, the failure to pay the taxes was not willful on their part. They had directed the officer to pay the taxes and had received assurance from the officer that the issue was being taken care of. The court held that the delegation of responsibility did not constitute reasonable cause for the failure to pay. Furthermore, the reliance on the officer’s assertions that the matter was being handled did not constitute reasonable cause. In a separate case, a shareholder was held personally liable for unpaid trust fund taxes, even though the company’s bank, and later a surety, had taken over the company’s business and had failed to make the payments. In this case, the court found that while the bank and the surety were responsible parties, this did not mean that the shareholder ceased to be a responsible party, and therefore had the duty to make sure that the payments were being made. The lesson from both of these cases is that any person who could
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Film: Production companies often demanding of vendors continued from PAGE 10
on the growing film industry here. To help build the industry, the film commission and the Council of Smaller Enterprises even held a morning seminar May 24, “Becoming a Film Vendor.” “Film companies are looking for infrastructure,” Mr. Schwarz told a group of about 50 business people who attended. “Nobody wants to bring (equipment and services) in anymore.” The tax credit allows movie-makers to reduce the cost of their productions by a percentage of the amount of money they spend on wages and on the goods and services they purchase from Ohio businesses during the course of shooting in the state. A film company gets a credit of 35% of all wages paid for work done in Ohio and 25% of all other in-state expenditures. That requirement to spend money with Ohio businesses — and the growing expense of shipping in equipment and other supplies — makes the film companies eager to connect with all manner of local businesses. “Pretty much anything that serves a small town might be needed by a film company,” Mr. Schwarz said.
Tough audience
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Panelists
be deemed to be a responsible person must take any action necessary to make sure that trust fund taxes get paid. It is not enough that responsibility for payment is delegated to or legally assumed by someone else. Business owners should there-
In addition to catering, Mr. Schwarz said film companies that come to town might want to rent furniture, plants or antiques and they also need dry cleaning services, hair stylists and even medical services. “Movie people get sick; actors need physicals,” Mr. Schwarz said. Stephen Campanella, for one, said he serves the movie industry by selling his Cleveland-based film production services — he’s handled on-location production duties for film companies — and as a vendor. For one production, he said, his Belltower Productions sold the film company its film stock. “I have a relationship with Kodak, and I bought all the film,” he said. “They saved money by not paying shipping and getting the (tax) incentive because they bought (the film) in Ohio. Those dollars add up and (film companies) pay attention to every dollar to maximize their budget.” But film companies are demanding, Mr. Schwarz said. They work on tightly budgeted shooting schedules so having to stay on location for an extra day — housing and feeding a crew that could number in the hundreds — can bust a budget. Mr. Schwartz cautioned that would-be movie-company vendors must understand they are getting into an unpredictable 24/7 business and said that if a dry cleaner wants
to be the go-to launderer for film companies, he or she should know that a call could come at 3 in the morning for an emergency job that has to be done by 8 a.m. And failure, no matter how difficult the task, is not a good option. Mr. Schwarz said vendors are better off declining a film company’s business than taking on a job with a deadline they can’t comfortably meet. A company that does well on one job can have some confidence another film company will turn to it when it comes to town. Mr. Schwarz said location mangers talk to each other, seeking tips on who can reliably supply what. At the same time, he said, if a company doesn’t deliver, its stock in the film industry falls to the basement. Mr. Schachner’s time in North Carolina gave him some insight into the demands of the industry. “It almost has nothing to do with the food,” he said. “It’s logistics.” He said even if shooting runs several hours late, the cast and crew — and the producer paying the bills — expect a freshly prepared hot meal when they break.
Setting the stage Mr. Schwarz said he wants to build a cadre of vendors registered with the film commission who can provide exceptional service. “I want to have (the film’s production team) walk away from their experience in Cleveland saying, ‘Wow, that was a great experience.’” He said firms interested in jumping into the film business can register with the film commission and their contact information and capabilities will be in a directory on the commission’s website. Mr. Schwartz said film producers are reliable payers — they must be able to show that their bills are paid to earn the film tax credit — but they are not lavish spenders. He said, for example, that a caterer wouldn’t negotiate a contract based on the number of people served. Instead, the film’s location manager would tell the supplier how much he has in his budget and the location manager and the caterer would negotiate what food and how many tables and chairs the film company will get for the amount it is willing to pay. Of course, until the time the film industry becomes a major local industry, serving the sector can only be a part of a business plan. Mr. Schachner knows that and he’s got a day job lined up. He said his plan is to run two businesses out of the same truck. On days when he doesn’t have film business, he plans to join the growing fleet of food trucks that offer daily mobile lunches throughout the city. ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
15
LARGEST PRIVATELY HELD COMPANIES RANKED BY ESTIMATED 2010 REVENUES
Company Address Rank Phone/Web site
Estimated revenue (millions) 2010
2009
Number of local employees
Year founded
Type of business
Top executive
1
Aleris International Inc. 25825 Science Park Drive, Suite 400, Beachwood 44122 (216) 910-3400/www.aleris.com
$4,117.0
$3,000.0
300
2004
Aluminum rolled products and extrusions, aluminum recycling and specification alloy production
Steven J. Demetriou chairman, CEO
2
Medical Mutual of Ohio 2060 E. Ninth St., Cleveland 44115 (216) 687-7000/www.medmutual.com
$2,000.0
$2,000.0
1,800
1934
Health insurance
Richard A. Chiricosta president, CEO
3
Jones Day(1) North Point, 901 Lakeside Ave., Cleveland 44114-1190 (216) 586-3939/www.jonesday.com
$1,616.0
NA
685
1893
Legal services
Lyle G. Ganske partner-in-charge, Cleveland
4
Westfield Insurance One Park Circle, Westfield Center 44251 (330) 887-0101/www.westfieldgrp.com
$1,475.0
$1,444.0
1,391
1848
Insurance, banking and related financial services
Robert J. Joyce executive chair, Westfield Group
5
Swagelok Co. 29500 Solon Road, Solon 44139 (440) 248-4600/www.swagelok.com
$1,300.0
$1,300.0
3,600
1947
Designer and manufacturer of advanced fluid system products
Arthur F. Anton president, CEO
6
Fairmount Minerals 11833 Ravenna Road, Chardon 44024 (440) 285-3132/www.fairmountminerals.com
$667.1
$398.7
70
1986
One of the largest industrial sand producers in the United States
Charles D. Fowler, CEO William E. Conway founder, chairman emeritus
7
Safeguard Properties LLC 7887 Safeguard Circle, Valley View 44125 (216) 739-2900/www.safeguardproperties.com
$662.3
$602.3
820
1990
Mortage field services company
Alan Jaffa CEO
8
The Carter Lumber Co. 601 Tallmadge Road, Kent 44240 (330) 673-6100/www.carterlumber.com
$652.0
$583.0
482
1932
Building materials retailer
Neil Sackett president, CEO
9
The Davey Tree Expert Co. 1500 N. Mantua St., Kent 44240 (330) 673-9511/www.davey.com
$591.7
$562.1
601
1880
Tree services, grounds maintenance, and consulting services for the residential, utility, commercial and government markets
Karl J. Warnke chairman, president, CEO
10
Squire, Sanders & Dempsey (US) LLP 127 Public Square, Suite 4900, Cleveland 44114 (216) 479-8500/www.ssd.com
$560.0
$540.0
362
1890
Global legal service provider
Frederick R. Nance, regional managing partner; David Goodman, Cleveland managing partner
11
Bendix Commercial Vehicle Systems LLC 901 Cleveland St., Elyria 44035 (440) 329-9000/www.bendix.com
$549.4
$520.0
432
1930
Leading developer and supplier of active-vehicle J. McAleese safety technologies, air brake charging and control Joseph president, CEO systems and components
12
Discount Drug Mart Inc. 211 Commerce Drive, Medina 44256 (330) 725-2340/www.discount-drugmart.com
$534.6
$530.6
1,648
1968
Retail drugstore
Parviz Boodjeh chairman
Year founded
Type of business
Top executive
Company Address Rank Phone/Web site
Estimated revenue (millions) 2010
2009
Number of local employees
13
Transtar Holding Co. 7350 Young Drive, Walton Hills 44146 (440) 232-5100/www.transtar1.com
$486.0
$450.0
200
1975
Manufactures and distributes automotive transmissions, transmission replacement parts, refinishing products, coatings
Gregory W. Gyllstrom president, CEO
14
Ohio CAT 3993 E. Royalton Road, Broadview Heights 44147 (440) 526-6200/www.ohiocat.com
$428.0
$365.0
740
1945
Caterpillar engine and equipment distributor, Ohio, Northern Kentucky and Southeastern Indiana
Kenneth E. Taylor president
15
Majestic Steel USA Inc. 31099 Chagrin Blvd., Suite 150, Cleveland 44124 (440) 786-2666/www.majesticsteel.com
$425.0
$354.0
215
1979
National distributor of prime galvanized steel coils and sheets.
Dennis Leebow president, CEO
16
Fred W. Albrecht Grocery Co. 2700 Gilchrist Road, Akron 44305 (330) 733-2263/www.acmestores.com
$400.0
$400.0
1,428
1891
Retail grocery and pharmacy stores
Steve Albrecht president
17
Baker Hostetler 1900 E. Ninth St., Suite 3200, Cleveland 44114 (216) 621-0200/www.bakerlaw.com
$386.0
$330.0
400
1916
Legal services
R. Steven Kestner, national executive partner; Hewitt B. Shaw, Cleveland office managing partner
18
Anderson-DuBose Co. 6575 Davis Industrial Pkwy., Solon 44139 (440) 248-8800/www.anderson-dubose.com
$338.0
$329.0
100
1991
Distribution of food, paper and beverage products
Warren E. Anderson president
19
Shearer's Foods Inc. 692 Wabash Ave. N., Brewster 44613 (330) 767-3426/www.shearers.com
$288.7
$192.3
950
1974
Manufacturer of snack foods
Bob Shearer CEO
20
Advanced Lighting Technologies Inc. 32000 Aurora Road, Solon 44139 (440) 519-0500/www.adlt.com
$250.0
NA
130
1984
Energy-efficient lighting
Wayne R. Hellman CEO
21
Cleveland Browns(2) 76 Lou Groza Blvd., Berea 44017 (440) 891-5000/www.clevelandbrowns.com
$242.0
$235.0
NA
1946
Professional football team
Randolph P. Lerner owner
21
Garland Industries Inc. 3800 E. 91st St., Cleveland 44105 (216) 641-7500/www.garlandco.com
$242.0
$229.3
508
1895
Manufactures roofing, flooring, coatings, sealants and maintenance systems for commercial, industrial and institutional buildings
David Sokol president, COO
23
Dave's Supermarkets 5300 Richmond Road, Bedford Heights 44146 (216) 763-3200/www.davesmarkets.com
$240.2
$228.2
991
1935
Supermarkets
Daniel Saltzman president
24
Cleveland Construction Inc. 8620 Tyler Blvd., Mentor 44060 (440) 255-8000/www.clevelandconstruction.com
$216.8
$337.6
55
1980
Commercial building contractor
Jon D. Small president
25
Donley's Inc. 5430 Warner Road, Cleveland 44125 (216) 524-6800/www.donleyinc.com
$205.0
$204.0
160
1892
Design/builder, construction manager and general contractor, self-performs concrete construction
Malcolm M. Donley president, CEO
25
MCPc Inc. 21555 Drake Road, Cleveland 44149 (440) 268-4000/www.mcpc.com
$205.0
$170.0
203
2002
A customer-focused technology solutions Trebilcock integrator experienced in solving complex business Michael chairman, CEO and IT challenges
See LIST Page 16
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JUNE 13 - 19, 2011
LARGEST PRIVATELY HELD COMPANIES RANKED BY ESTIMATED 2010 REVENUES Company Address Rank Phone/Web site
Estimated revenue (millions) 2010
2009
Number of local employees
27
Famous Enterprises Inc. 109 N. Union St., Akron 44304 (330) 762-9621/www.famous-supply.com
$185.0
$178.0
300
28
Thompson Hine LLP 127 Public Square, Suite 3900, Cleveland 44114 (216) 566-5500/www.thompsonhine.com
$184.2
$183.1
29
InfoCision Management Corp. 325 Springside Drive, Akron 44333 (330) 668-1400/www.infocision.com
$172.2
30
Cleveland Indians Baseball Co.(3) 2401 Ontario St., Cleveland 44115 (216) 420-4487/www.indians.com
31
Year founded
Type of business
Top executive
1933
Distributor of HVAC, plumbing, PVF, industrial, building products and training
Marc Blaushild president, CEO
325
1911
Legal services
James B. Aronoff partner-in-charge, Cleveland
$172.2
2,265
1982
Contact center solutions for Fortune 100 companies and smaller businesses. Inbound and outbound marketing
Carl Albright president, CEO
$168.0
$170.0
166
1901
Professional baseball team
Lawrence J. Dolan, owner Paul J. Dolan chairman, CEO
Family Heritage Life Insurance Co. of America 6001 E. Royalton Road, Suite 200, Broadview Heights 44147 (440) 922-5200/www.familyheritagelife.com
$166.8
$152.2
97
1989
Provider of life and supplemental health insurance
Howard L. Lewis president, CEO
32
The Ruhlin Co. 6931 Ridge Road, Sharon Center 44274 (330) 239-2800/www.ruhlin.com
$166.0
$181.4
150
1915
Building, industrial and heavy civil construction and James L. Ruhlin construction management services president, CEO
33
Cavaliers Operating Co. LLC(4) 1 Center Court, Cleveland 44115 (216) 420-2000/www.nba.com/cavaliers
$161.0
$159.0
350
1970
Professional basketball team
Daniel Gilbert majority owner
34
Stevens Engineers & Constructors Inc. 7850 Freeway Circle, Suite 100, Middleburg Heights 44130 (440) 234-7888/http://stevensec.com
$160.9
$104.5
260
1970
General contractor, heavy industrial engineering and construction management services
Thomas A. Snyder chairman
35
AdvizeX Technologies LLC 6480 Rockside Woods Blvd. S., Suite 190, Independence 44131 (216) 901-1818/www.advizex.com
$138.5
$114.0
39
1975
Information technology provider of e-services, mission critical, enterprise management solutions
Alfred A. Traversi president, CEO
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Revenue numbers from The Am Law 100, The American Lawyer, May 1, 2011. (2) Revenue number from Forbes, NFL Team Valuations, Aug. 25, 2010. (3) Revenue number from Forbes, The Business of Baseball, March 22, 2011. (4) Revenue number from Forbes, NBA Team Valuations, Jan. 26, 2011. Employee number is for Cavaliers Holdings LLC.
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CRAIN’S CLEVELAND BUSINESS
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JUNE 13 - 19, 2011
Loans: University involvement yet to be determined continued from PAGE 1
The change, which the Ohio Department of Development recommended in late May, would help the Third Frontier program support itself over the long term, said Norm Chagnon, executive director of the program. The Third Frontier, an initiative designed to stimulate Ohio’s economy through investments in technology companies and high-tech projects, has relied on state support since it was created in 2002. Ohio voters in November 2010 passed a $700 million bond issue that will support the program through fiscal year 2015. The Third Frontier Commission, which is in the process of making several changes to the Third Frontier program, does not take that support for granted, Mr. Chagnon said. That’s one reason why it wants companies receiving money
Contact: Phone: Fax: E-mail:
to put “more skin in the game,” he said. The cluster development program previously provided grants to companies in all sorts of industries projected to grow, such as advanced energy, biomedicine and advanced materials. It also carved out money for smaller industry segments within those clusters, such as fuel cells and medical imaging. The venture seed loans would replace grants for all those industries if the commission votes to accept the department’s recommendations at its July meeting, Mr. Chagnon said. “We would want to see if we could satisfy the needs in those areas,” he said.
A call for moderation Andrew Sherman says venture seed loans could work if they don’t require companies to pay back too
Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com
much, too early. The CEO of coatings technology company MesoCoat Inc. — a Euclid firm that in January was awarded a $2 million Third Frontier grant that it will share with the University of Akron — said such loans could hurt companies if they need to pay them back before they start generating significant sales. “It shouldn’t be hurting the job creation or the economic growth,” Mr. Sherman said. Universities often receive money through the cluster development program and sometimes are lead applicants on grants. The commission has yet to determine how universities will be involved in the program in the future, but the issue will be discussed, according to a spokeswoman with the Department of Development. The department didn’t recommend that the commission allot a specific amount of money for the
loans because the commission won’t vote on its overall budget for fiscal 2012, which begins July 1, until next month. The department has recommended other changes to the Third Frontier. Some of the new priorities include putting more focus on financing technologies that can reach the market faster, finding ways for the program to sustain itself and creating better metrics with which to measure the success of projects.
Change, big and small Ohio’s director of job creation, Mark Kvamme, has been voicing support for such changes since January, when Gov. John Kasich hired the Silicon Valley venture capitalist to help him turn the Department of Development into an independent nonprofit called JobsOhio. The department, which will
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remain in control of the state’s economic development efforts at least through December, also recommended that the commission create a program to encourage universities to commercialize technologies they develop. The program would provide $25,000 grants to help universities figure out whether a new technology could be commercialized, then it would provide $50,000 grants to help new companies turn those technologies into products. Two programs designed to help startup companies — the Pre-Seed Fund Capitalization Program, which finances nonprofit and forprofit groups that invest in startups, and the Entrepreneurial Signature Program, which pays for services to help entrepreneurs — will change little, Mr. Chagnon said. “There was very little pushback and call for change in those areas,” he said. ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
THEINSIDER
THEWEEK JUNE 6 - 12 The big story:
The Cleveland Clinic announced it will cease operations at Huron Hospital within 90 days after a special committee of the Clinic’s board and its management determined that the hospital in East Cleveland “is not sustainable for a long-term future.” A key factor in the Clinic’s decision was that only 17% of Huron’s primary market went to the hospital for inpatient services, such as heart care, oncology and pulmonology, in the first half of 2010. The rest are choosing other hospitals, with a large number of them choosing other hospitals in the Clinic system. See editorial, Page 8.
Grounded: Call it the end of an era in Cleveland’s aviation business. Goodrich Corp. said it will close its Marble Avenue landing gear plant in Cleveland by the end of 2012 due to what it called “program volume decline and the lack of appropriate new work to cost-effectively fill available capacity.” Goodrich said about 400 employees work at the plant, which supplies a range of landing gear equipment for commercial and military customers. Goodrich said the activities currently performed at Marble Avenue gradually will be transferred to other landing gear plants.
Academic’s challenge: The Cleveland Metropolitan School District ultimately decided to promote from within its own ranks, as the school board and Mayor Frank Jackson named Eric Gordon, the district’s chief academic officer, to lead the struggling district. Mr. Gordon replaces Peter Raskind, who has served in an interim role since January after Dr. Eugene Sanders unexpectedly resigned Gordon from the post. Mr. Gordon has served as the district’s chief academic officer since October 2007 and was a significant contributor to the district’s academic transformation plan.
Time for a slow boat: Most of the manufacturing work at Keithley Instruments’ Solon factory will be moved to China over the next year or so. The company, which last fall was bought for about $300 million by Danaher Corp. of Washington, D.C., said in a statement that “a majority of its manufacturing operations” will shift to China from Solon. The work will be moved to a factory where Tektronix — a Danaher subsidiary that was merged with Keithley — makes products already. Keithley makes equipment used to test electronic devices. The statement said that “work on the transition will begin immediately and continue through mid 2012.”
$40 million is easy to digest: Ganeden Biotech in Cleveland sold its Sustenex and Digestive Advantage brands of probiotic dietary supplements to Schiff Nutrition International Inc. for $40 million in cash. Ganeden also will receive royalties on Schiff products containing the probiotic bacteria Ganeden BC30. The sale includes the worldwide exclusive rights to use Ganeden BC30 in over-the-counter and dietary supplement products. Ganeden said it and Schiff “also intend to collaborate on extending the use of (over-the-counter) probiotic technologies into new areas of human health.”
You can beat the government: U.S. District Court Judge Donald C. Nugent found in favor of AmFin Financial Corp. in the action brought against it by the Federal Deposit Insurance Corp. In his June 6 memorandum opinion, Judge Nugent found the FDIC, which was seeking $518 million, failed to present sufficient evidence to establish that the former holding company of the failed AmTrust Bank had made a commitment to maintaining the bank’s capital. An advisory jury in the matter had come to the same conclusion in April.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Court ruling may impact future FDIC actions
Private equity spin cycle continues at KeyCorp
■ A lawyer whose client recently prevailed over the Federal Deposit Insurance Corp. in a matter in U.S. District Court believes this case, tried in Cleveland, may deter the FDIC from pursuing others like it. The FDIC had sued AmFin Financial Corp. for $518 million, alleging the former holding company of AmTrust Bank, which failed in December 2009, had committed to maintaining the bank’s capital. AmFin attorneys countered that no commitment had been made. Though this was not the first time the FDIC took legal action against the holding company of a bank or savings association on this premise, it’s the first time such a claim went to trial, according to Philip Oliss, one of the Squire, Sanders & Dempsey attorneys who represented AmFin. U.S. District Court Judge Donald C. Nugent last week filed a memorandum opinion in which he found the FDIC had failed to present sufficient evidence that AmFin had committed to maintaining the bank’s capital. “We think that will inform the FDIC’s efforts in the future,” Mr. Oliss said. “It may be discouraging enough that we don’t see a lot more cases. Had the court gone the other way, we would have most likely seen the FDIC doing this in any case where there’s a bank failure and a holding company.” But it isn’t over until it’s over, as the FDIC can appeal. Agency spokesman Greg Hernandez declined comment on whether the AmFin case sets a precedent that is unfavorable for the FDIC. — Michelle Park
■ Another private equity group has spun out of KeyCorp as a result of financial reform. Twenty-three staffers who formerly were Key Principal Partners Corp. have formed Cyprium Investment Partners LLC., which will continue to make non-controlling investments in companies in North America. KeyCorp will not be a major investor in Cyprium as it was for Key Principal Partners because the Dodd-Frank Wall Street Reform and Consumer Protection Act restricts the private equity investing banks can do, said John Sinnenberg, Cyprium chairman. It remains to be seen what additional regulations may come down the pike regarding what banks can and must do as it pertains to their private equity activity. Spinning off, Mr. Sinnenberg said, removes uncertainty for investors, portfolio companies and the management team. Six months ago, another KeyCorp subsidiary — Key Capital Corp., an entity that invested in private equity funds that in turn invest in companies — spun off to form Cuyahoga Capital Partners. It, too, continues to do business, just under a new name. That team moved first because it was out of capital and needed to leave to raise more, according to Mr. Sinnenberg. Cyprium still has $100 million to draw down of the last fund it raised and subsequently had more time to complete its move.
MILESTONES
BEST OF THE BLOGS
THE COMPANY: Americhem Inc., Cuyahoga Falls THE OCCASION: Its 70th anniversary
Excerpts from recent blog entries on CrainsCleveland.com
Americhem, a global provider of custom color and additive solutions for polymerbased products, was started in 1941 in Akron by Sylvester S. Caldwell, who called it, appropriately enough, The Caldwell Co. At the time, the company supplied fillers and additives to the rubber industry. In 1959, the company changed its name to Americhem Inc. Since 1965, Americhem has been headquartered in Cuyahoga Falls. It also has locations in North Carolina, Georgia, Texas, Europe and Asia. The company’s web site is www.Americhem .com.
THE COMPANY: EverStaff, Independence THE OCCASION: Its 10th anniversary Danny Spitz founded EverStaff, a recruiting and staffing firm, in 2001. In the past decade, EverStaff has grown from one location to 13 branch office locations, serving clients in 24 states with a team of more than 40 staffing professionals. Going forward, Mr. Spitz says he anticipates continued growth in existing locations with expansion in new markets due to new national clients. The company has made the Inc. 5000 list of the fastest-growing privately held companies in the United States. Its web site is www.EverStaff.com. Send information about significant corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.
Maybe lots of cupcakes would have foiled bin Laden ■ The British intelligence service MI6 clearly believes the products at Main Street Cupcakes in Hudson are the bomb. The Telegraph of London reported that MI6 hacked into an al-Qaeda online magazine and replaced bomb-making instructions with a recipe for cupcakes. The magazine was aimed at recruiting “lone-wolf” terrorists, the newspaper reported. “When followers tried to download the 67-page colour magazine, instead of instructions about how to ‘Make a bomb in the Kitchen of your Mom’ by ‘The AQ Chef,’ they were greeted with garbled computer code,” according to The Telegraph. “The code, which had been inserted into the original magazine by the British intelligence hackers, was actually a web page of recipes for ‘The Best Cupcakes in America’ published by the Ellen DeGeneres chat show.” The page, featuring recipes from Main Street Cupcakes, said “the little cupcake is big again” adding: “Self-contained and satisfying, it summons memories of childhood even as it’s updated for today’s sweettoothed hipsters.” It included a recipe for the Mojito Cupcake — “made of white rum cake and draped in vanilla buttercream”— and the Rocky Road Cupcake — “warning: sugar rush ahead!”
Nation’s job engine slows, but NE Ohio sets a good pace ■ The government’s recent jobs report was a pretty grim read, but a June 3 piece from
The new name took time to find, Mr. Sinnenberg said. “Naming a private equity group is like naming a rock band,” he said. “All the good names are taken.” One of his colleagues, though, came across “cyprium” in a dictionary. It’s Latin for copper. “Copper is a flexible, malleable metal,” Mr. Sinnenberg said. “We offer very flexible, noncontrolling capital structures to potential portfolio companies. Copper’s a good conductor, and we think we offer that to our portfolio companies.” — Michelle Park
On the trail of $10 million ■ The fundraising and advocacy arm of the Cuyahoga Valley National Park quietly is raising money to secure the park’s longterm finances with the goal of bringing in $10 million. So far, the nonprofit group has raised about $300,000 and plans to go public with the campaign this fall, said John Debo, the Conservancy for the National Park’s chief development officer. The hope is to reach $10 million by 2016 — the 100th anniversary of the National Park Service. Deb Yandala, the group’s executive director, noted that given the ebb and flow of federal budgets, raising a large amount of capital was vital to maintain the park’s trails. — Timothy Magaw
MarketWatch.com was much better, at least in Cleveland, which was fifth on Monster.com’s list of the best cities in which to find a job. The list measures the most online job ads per labor-force participant, which includes both the employed and the unemployed, according to Monster. Among the top 10 markets, which may include the city plus surrounding areas, “the average rate of jobs posted per participant is about double the national rate,” MarketWatch.com reported. “These markets are attractive because there is a robust demand for talent,” said Matthew Henson, a spokesman for Monster.com. “These major metro markets tend to be really attractive for job seekers. We are seeing the trend escalate.” In Cleveland and elsewhere, Mr. Henson says, there remains a talent gap in fields such as health care and IT, with demand for skilled workers outstripping supply. The only four cities with better job prospects than Cleveland are Washington, D.C., San Francisco, Baltimore and Minneapolis. The five that trail Cleveland are Boston, Seattle, Orlando, Pittsburgh and Kansas City.
For a good time, come to Cleveland ■ Cleveland apparently is quite a swinging place. A piece from StLToday.com looked at U.S. Census bureau data and found that Cleveland is No. 10 on a list of “most-single cities,” with 39% of households comprising single people. The best city for singles is Atlanta, at 44%. The numbers on singles followed other recent data from the Census Bureau that Clevelanders like to live with people they aren’t married to, as 27% of households here comprise unmarried couples. If we’re doing the math right, boring married people are in the minority in Cleveland.
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