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Company valuations rebound Partners LLC had set. The business owner’s reaction? “Elation,” said Ralph M. Della Ratta Jr., managing director of the Cleveland firm that advised on the sale, who was quite happy himself. The news here isn’t that one company drew a higher price than it would have two or three years ago. It’s that many companies are. Though serial entrepreneur Dan T. Moore said he couldn’t divulge
Strategic buyers, private equity outfits flush with cash generate M&A activity FILE PHOTO/RUGGERO FATICA
Ellis Yan, CEO of Technical Consumer Products Inc. of Aurora
TCP lights up with potential for growth
By MICHELLE PARK mpark@crain.com
Not even an investment banker with 25 years of experience expected this. A first-quarter auction of a middle-
market Ohio company drew 21 bids and ultimately in April snagged roughly $50 million — a price 10 times the company’s earnings before interest, taxes, depreciation and amortization (EBIDTA) and beyond the range Western Reserve
Aurora firm to expand compact fluorescent line
price or profits, he said he and other investors were surprised by the price they attained when they sold the Cleveland company, Flow Polymers, in late 2010 to a Chicago private equity firm. “It was higher than we thought it would be,” said Mr. Moore, president of Dan T. Moore Co., a business incubator. “You’re seeing a lot of high prices. See DEALS Page 17
ACCOUNTING HIRES ADD UP
By CHUCK SODER csoder@crain.com
Ellis Yan wants his light bulbs to replace Thomas Edison’s. Mr. Yan, CEO of Technical Consumer Products Inc. of Aurora, said he has spent the past four years preparing for 2012, when the federal government will begin phasing in a ban on traditional incandescent light bulbs. Starting Jan. 1 it will be illegal for companies to make or import 100watt bulbs. The same thing happens to 75-watt bulbs on Jan. 1, 2013, and 40- and 60-watt bulbs will join them on the banned list a year after that. Mr. Yan wants to make sure consumers replace many of those bulbs with compact fluorescent lamps made by TCP, one of the world’s biggest CFL manufacturers. Hence, ever since the federal government passed the Energy Independence and Security Act of 2007, he has been ramping up his company’s
Local businesses replenish staffing levels after recent years of industry tumult By MICHELLE PARK mpark@crain.com
T
he bloodbath is over. After a period of more accounting firm layoffs than one industry consultant can remember in decades, CPA firms are back in hiring mode. Ernst & Young LLP, one of the big four accounting firms, has hired more than 100 in Northeast Ohio in the last 12 months — an increase of about 10% for the market — and expects to add another 100 over the next year, said Lee Thomas, who becomes Cleveland office managing partner in December when Northeast Ohio managing partner Don Misheff retires. (Simultaneously, Ed Eliopoulos will become Akron office managing partner.) The firm’s three-figure hiring follows three years of reduced hiring, Mr. Thomas noted.
See LIGHT Page 5
INSIDE Laying down the law
See HIRE Page 6
25
Nationally recognized legal scholar Lawrence E. Mitchell on June 1 became the first non-interim dean at Case Western Reserve University’s School of Law since 2008, and he is motivated by the opportunity. Read Michelle Park’s story on Page 3.
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EDUCATION Fostering close relationships with alumni key part of prep and parochial schools’ mission ■ Page 11 PLUS: CAMPUS IMPROVEMENTS ■ GIRL POWER ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 25
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COMING NEXT WEEK Back from a bad place As part of our Comeback Kids section, Crain’s talks to three Northeast Ohio entities that worked through some tough times. Plus, turnaround specialists tell us the secrets of a good recovery.
REGULAR FEATURES Best of the Blogs..........19 Big Issue........................8 Classified.....................18 Editorial.........................8 From the Publisher.........8
Going Places................10 Letter ............................9 List: Highest-paid CEOs ..16 Reporters’ Notebook ....19 What’s New ..................19
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LOOK HERE If you’re seeking a job these days, your best bets are in business services, health care and leisure/hospitality. Government work, meanwhile, is hard to find. Those are some of the findings of new data from the Bureau of Labor Statistics, which reports the job openings rate for all industries was 2.2% in April. (The rate is computed by dividing the number of job openings by the sum of employment and job openings and multiplying that quotient by 100.) Professional and business services had the most job openings, at 3%, while government was the worst, at 1.4%. Here’s a breakdown by industry:
Industry
Job openings rate, April 2011
Professional and business services
3.0%
Education and health services
2.7
Leisure and hospitality
2.3
All industries
2.2
Trade, transportation and utilities
1.9
Manufacturing
1.9
Construction
1.7
SOURCE: DATA.BLS.GOV
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3
Manufacturers anticipate boost from natural gas
INSIGHT
Extraction process requires sand, industrial components produced by NE Ohio companies By DAN SHINGLER dshingler@crain.com
RUGGERO FATICA
Case Western Reserve University School of Law dean Lawrence E. Mitchell, in the school’s library
HE’S BRINGING ORDER New CWRU law school dean embraces talent, challenges in his attempt to bring stability where it’s been lacking By MICHELLE PARK mpark@crain.com
T
he new dean of Case Western Reserve University’s School of Law is determined to stay awhile, or, as he terms it, until the job is done. And that’s exactly what officials want for the school, where leadership has been in a state of transition for two-and-a-half years. Lawrence E. Mitchell, a nationally recognized legal scholar from a law
school ranked in the nation’s top 20, knew when he began interviewing for the deanship that the former dean, Gary J. Simson, had been criticized publicly and eventually stepped down in late 2008 after two years at the helm. The circumstances and instability worried Mr. Mitchell, he admits. But he also says he was struck by the talent at Case Western Reserve, and discussions with the board and administration instilled in him a confidence that
2007) from major donors and alumni for not paying enough attention to wealthy donors and for not updating the curriculum. While Mr. Simson touted his Center for Social Justice, local philanthropist Roe Green — the law school’s biggest benefactor — also wanted more of an emphasis on
See BOOST Page 7
THE WEEK IN QUOTES “When multiples go up, equity goes up, you wring your hands more, your palms sweat more, and it becomes a harder and harder decision. We have more money at risk if something goes wrong.”
“We believe we’re in the leadership position. Not ‘a’ leadership position, but ‘the’ leadership position.” — Jim Crowcroft, vice president of marketing, Technical Consumer Products Inc. Page One
— Stewart Kohl, co-CEO, The Riverside Co. Page One
See ORDER Page 9
THE PAST IS IN THE PAST Lawrence E. Mitchell took the reins of Case Western Reserve University’s Law School on June 1. Embattled former dean Gary Simson resigned in 2008; here, from a Crain’s story at that time, are details of Simson Mr. Simson’s struggles: Mr. Simson was under fire (in
If some experts are right, manufacturing in Northeast Ohio, and much of Ohio and Pennsylvania, is about to receive its biggest boost since the popularization of the automobile. “From a manufacturing perspective, the potential is huge,” said Jim Samuel, a Columbus-based economic development consultant for utilities and others with a big stake in the natural gas business. Mr. Samuel, also a fellow at Cleveland State University, says the industry springing up in our midst might do for Cleveland what oil
drilling did for Houston in the last century — by serving as the chief driver of a burgeoning local economy. This industry is not medical devices, wind turbines, motion picture production or just about anything else you’ve heard economic development officials pitching in recent years. It’s natural gas drilling, made possible by improved techniques to extract the stuff from beneath eastern Ohio and most of Pennsylvania. Analysts say about 3,000 natural gas wells will be drilled this year and in each of the coming years, until at least 2020. The activity already is creating a boom for area companies
terrorism and international law. The Roe Green Foundation in 2006 awarded the law school a three-year, $75,000 grant to fund seminars on global terrorism. However, the grant was not renewed after only one seminar because the head of that program took a job at the University of Utah’s law school. Read the full story at http:// tinyurl.com/3rdz3q4.
“Our alumni support their high school the way others support their college alma mater.” — Jon Bridge, director of advancement, University School. Page 12
“I think the strongest aspect is they really are trying to give these students very practical experiences.” — Dr. Maria Ramundo, a member of the MedTrack advisory board at Padua Franciscan High School. Page 15
Rosetta continues to hire after acquisition by French company Growth may force marketing agency to expand downtown in old National City building By CHUCK SODER csoder@crain.com
Being acquired by a French company won’t stop Rosetta Marketing Group LLC from expanding its Cleveland office. The interactive marketing firm plans to add 70 technology positions at its office on Euclid Avenue before the end of the year. This Thursday, June 23, at 5 p.m., Rosetta is hosting an open house for software developers, engineers and architects interested in joining the firm. The expansion might require Rosetta to take additional space within the building, said Kate Clegg, partner and vice president
of marketing for Rosetta, which is based in Hamilton, N.J., but employs roughly 450 people in downtown Cleveland. The company already nearly fills the 80,000 square feet on the top six floors at 629 Euclid Ave., which is the old National City Bank Building. If Rosetta can secure the space, it likely will expand downstairs, “one floor at a time,” as the office grows, Ms. Clegg said. “The most logical thing is to just keep moving down,” she said. Marketing giant Publicis Groupe SA of Paris announced in May that it struck a deal to buy Rosetta for $575 million in cash. The acquisition poses no immediate threat to the
future of the Cleveland office: At the time of the announcement, Publicis stated it would operate Rosetta as an “autonomous, standalone brand.” Plus, both Rosetta CEO Chris Kuenne and partner Jeff Shiner described the Cleveland office as the company’s “technology hub.” Moving that hub, which employs 70% of Rosetta’s technology staff, would be hard, Mr. Kuenne said. He expects it to remain in Cleveland “indefinitely,” he said. Rosetta as a whole is growing, driving the need to expand the office. The company’s revenue hit $218 million in 2010, up 23% from See ROSETTA Page 5
TRACKING ROSETTA IN NE OHIO ■ July 2008: Rosetta, based in Hamilton, N.J., buys Brulant Inc., a Beachwood-based provider of web development and marketing services. Rosetta keeps Brulant’s 395 employees at its Beachwood office while looking to add more. ■ January 2010: Rosetta signs a 10-year lease in the old National City Building at 629 Euclid Ave. in downtown Cleveland. ■ October 2010: Crain’s research shows Rosetta employs 404 in Cleveland, making it by far the largest marketing company in Greater Cleveland. A more recent estimate from the company puts the figure at about 450. ■ May 17: French advertising company Publicis Groupe SA buys Rosetta for $575 million in cash.
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Cost cuts help steady John Carroll Savings from staff salary reductions, growth in enrollment allow school to focus on construction By TIMOTHY MAGAW tmagaw@crain.com
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John Carroll University’s finances took a hit when the recession struck, but after slicing millions from its budget, school officials say the private university’s coffers are on the mend. “What has surprised people is that I’ve said more than once in the last few months that it’s been a good year,� John Carroll president Rev. Robert Niehoff said. “We haven’t had to cut the budget by millions.� John Carroll administrators say the school over the last two years cut about $4 million from what had been an $80 million budget in order to compensate for a chunk of financial aid for private school students that was reduced under Gov. Ted Strickland’s administration. The bulk of John Carroll’s cost savings came from a 4% salary cut for staff and administrators, according to Rich Mausser, John’s Carroll’s vice president for finance and treasurer of the corporation. The wage reduction program, which included 10 additional days off for employees, was implemented in June 2009 and was lifted May 31 of this year. Officials say students weren’t affected by the budget cuts, and the burden largely fell on administrators. Tuition increases were kept to a minimum — a 2.8% increase from the fall of 2008 to 2009, one of the lowest in the university’s history. This fall, tuition will rise about 4.8% from last year. Brian Williams, John Carroll’s vice president for enrollment, said such moves were necessary to keep enroll-
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ment stable and sort out the university’s finances. They appear to have paid off as the school is expecting a freshman class this fall of 737 students, surpassing the university’s goal of 700. That’s a healthy number, Mr. Williams said, and the university isn’t pursuing additional incoming freshmen. If the number of incoming students grew to between 750 and 760, the university might be faced with capacity concerns, he said.
A slight facelift With strong enrollment and solid finances, university officials say it’s time to move forward on a number of construction projects on John Carroll’s campus. John Carroll is undertaking $7 million of capital projects this summer. Its Bohannon Science Building will be demolished to make room for more parking, which became a scarcity when the university developed its quad and installed more green space between the Dolan Science Center and the Administration Building. John Carroll also is renovating the field and track of Don Shula Stadium at Wasmer Field on the northeast side of campus. The field will have new turf, and the track will be resurfaced and rebuilt. In the coming weeks, the university plans to address University Heights City Council and ask it to expand the hours the stadium is allowed to use its lights — a move Mayor Susan Infeld said likely will be approved. Beyond the walls of the campus, John Carroll has a history of locking horns with the city and its residents. The landlocked university owns substantial property adjacent to campus to accommodate future growth, which some residents say could hurt the surrounding community. John Carroll asked the city of University Heights to approve razing five university-owned houses on Milford Road for more athletic fields, but those plans are on hold as the university focuses on the Bohan-
“We are very busy raising money to fund some of the strategic priorities to make a real difference.� – Doreen Riley, vice president for university advancement, John Carroll University non demolition and Shula Stadium upgrades, according to a university spokeswoman. Sasaki Associates Inc., an architectural firm in Watertown, Mass., completed a master plan for the campus in May 2008 and recommended John Carroll build two new, apartment-style residence halls at the front of campus. Those plans aren’t on the horizon, and officials maintain they have plenty of room to accommodate the growth of next fall’s freshman class. “We’re not going to have to build a new hall in time for the fall or rent rooms in a hotel,� Mr. Williams said. Rather, John Carroll plans to go forward with renovating existing residence halls, though the university hasn’t nailed down a timeline for such an effort.
Eye to the future John Carroll is celebrating its 125th anniversary this year, and the university is raising cash to finance its future endeavors. While the college’s fundraising efforts slowed during the recession, it has gained considerable steam over the last two years, according to Doreen Riley, John Carroll’s vice president for university advancement. For the last fiscal year, which ended May 31, the university raised more than $23.5 million in cash and pledges — a marked increase from fiscal 2010 totals that hovered at about $15.6 million. The two years prior, fundraising was between $10.5 million and $11 million. In addition to the construction projects, Ms. Riley said the university will continue to raise money for scholarships, endowed professorships and academic programs. “We are very busy raising money to fund some of the strategic priorities to make a real difference for John Carroll,â€? Ms. Riley said. â–
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Volume 32, Number 25 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 Š 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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Light: TCP braces for market share increase continued from PAGE 1
production capacity and flying across the country to educate highvolume bulb buyers about the law. “We’ve been preparing since then for this moment,” he said. The new law is one reason why TCP later this year plans to start producing CFL bulbs at a 100,000square-foot warehouse it owns behind its headquarters on Campus Drive. By Thanksgiving, the company expects to have 22 to 25 employees cranking out the coil-shaped lamps, which are both more expensive and more efficient than traditional incandescent bulbs, according to Mr. Yan and Jim Crowcroft, vice president of marketing for TCP. The company eventually could add more lines and shifts at that facility, Mr. Yan said. He declined to say how much TCP will spend on the project, but he noted that the state of Ohio and the federal government rejected TCP’s requests for incentives.
“We funded it ourselves — everything,” he said.
Made in the USA The new manufacturing workers would make up a relatively small portion of the total headcount at TCP, which employs about 7,000 worldwide, including about 200 in Northeast Ohio. Regardless, TCP’s plans to start a CFL manufacturing line in the United States represents a big change, not only for the company, but for the CFL industry as a whole. Founded by Mr. Yan, TCP started making CFLs in the mid-1990s, back when making the bulbs required workers to bend the glass by hand. So the company made them in China, where it has three factories. Other manufacturers took a similar route: Almost all CFLs are made overseas. Since then, however, automation technology has made it possible to make more bulbs with fewer people
— one reason TCP is able to start making CFLs in the United States. They’ll still be more expensive to make, but Mr. Yan, a Chinese immigrant, said the project still makes sense. The U.S. government, which prefers to buy products made in the country, is one potential customer, but consumers in general will pay slightly more for products if they know they are made in the United States, Mr. Yan said. And there will be a whole lot more consumers as the Energy Independence and Security Act of 2007 is phased in over the next few years. “This is huge in terms of light bulbs,” he said. In addition to preparing to start the new line, TCP has been working to increase total production capacity at its Chinese plants, which decreased during the recession but since then has come back up, Mr. Crowcroft said. The company can make about 1 million bulbs per day
Rosetta: New owner expands client base continued from PAGE 3
about $177 million in 2009, though at least some of the increase can be attributed to Rosetta’s September 2010 acquisition of Level Studios of San Luis Obispo, Calif. Rosetta did not return by press time a request for more information about how much revenue the acquisition contributed.
Rosetta now employs more than 1,100 people, with most of them working at offices in New Jersey, Ohio, New York and California. Mr. Kuenne said he expects revenue to hit $240 million in 2011. The company does not expect to make any acquisitions this year, he added. That growth means Rosetta will
need more tech expertise in the Cleveland office, Mr. Shiner said. Another reason behind the need for expansion is the growing focus on e-commerce at both Rosetta and Publicis, he said. “It’s becoming a core part of their overall strategy,” he said. When Publicis announced the
and is working to increase that number, he said, declining to go into more detail. The company lately has been funneling all of its profits back into the business to make sure it’s ready for when the law goes into effect, Mr. Yan said. “We believe we are ahead of everybody else in preparing for EISA,” Mr. Yan said. Mr. Crowcroft agreed. “We believe we’re in the leadership position. Not ‘a’ leadership position, but ‘the’ leadership position,” he said.
Efficiency experts Mr. Yan would not say how big of a piece of the incandescent bulb market he expects TCP to take, nor would he give sales figures. Mr. Crowcroft described recent sales growth at TCP as “moderate.” Today, CFLs account for about 25% of all light bulbs sold, said Joseph Higbee, director of communications and marketing for the
acquisition, which is expected to close in the second or third quarter of 2011, the French company said Rosetta would help it expand its expertise in digital marketing. It already owns three other digital marketing firms: Digitas, Razorfish and Publicis Modern. For Rosetta, joining Publicis means the New Jersey company will have access to the French firm’s global network and its expertise as it attempts to expand its client base
5
National Electrical Manufacturing Association of Rosslyn, Va. The bulbs are 75% more efficient than traditional incandescent bulbs, according to information from the association. Consumers also will be able to replace standard incandescents with halogen incandescents, which are about 28% more efficient than their predecessors, or light-emitting diode bulbs. Companies just recently have begun selling LED bulbs designed to replace standard incandescents. Among them is General Electric Co., which developed its bulb at its Nela Park campus in East Cleveland. LED bulbs, which can cost $20, $30 or even $40, are expected to eventually become a serious competitor to CFLs, which typically cost a few dollars each. The differences between the three technologies go beyond price and energy use, so each likely will take a piece of the market that belongs to incandescents, Mr. Higbee said. He declined to say which technology will win the battle. “As far as where the market will go, we’ll see,” he said. ■
worldwide, Mr. Kuenne said. He noted how a Publicis executive recently helped Rosetta find someone to work with a prospective client in Dubai on short notice. Rosetta also aims to open between four and eight “global hub” offices around the world over the next few years. Publicis will help the company figure out how to do it while also providing some financial backing, Mr. Kuenne said. The first hub could open in nine to 15 months. ■
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Hire: Reform a factor in staffing boost continued from PAGE 1
Similarly, local hiring by KPMG, another of the big four, began to pick up about a year ago and will continue into 2012, said John MacIntosh, managing partner of the Cleveland office. More than 50 recent hires will spend the lion’s share of their time in the Cleveland area, he said, noting that’s significant hiring compared to a year or two ago. And it’s not just the big four: Local CPA firms Pease & Associates Inc. in Cleveland and Corrigan Krause in Westlake have added a few CPAs this year, too, and plan to hire another handful this summer. Nationally, after three consecutive years of declines, CPA firms “finally” are projecting positive growth between 3% and 4%, said Allan D. Koltin, CEO of Koltin Consulting Group, a Chicago firm that specializes in the accounting profession. The industry had enjoyed enormous growth and enormous hiring between 2003 and 2007, Mr. Koltin said, but the recession year of 2008 ushered in a dark chapter. Many firms instituted hiring freezes and made cuts. Most of the 100 largest firms let go of anywhere from 10% to as many as 20% of their accountants, he said. “It probably was the worst bloodbath of layoffs that the accounting profession has had in well over a couple decades,” Mr. Koltin said. “The bloodbath is definitely over. Firms all over the country, Cleveland and everywhere, for the first time are doing serious hiring after a serious drought.”
Unfrozen Accounting firm hiring really began to pick up in the fourth quarter of 2010 and the first half of 2011.
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According to the U.S. Department of Labor, “notable job gains” occurred in May in accounting and bookkeeping services, which enjoyed a net gain of 18,000 jobs nationwide. Today, it seems virtually all firms are engaged in hiring, Mr. Koltin said, though today’s hiring pales in comparison with the frenzy that occurred before 2008. While he stopped short of saying that the hiring is an indication that the recession is over, Mr. Koltin sees it as a sign that the recession has leveled off. Many of the firms adding to their local ranks attributed their hiring to the growth other businesses are experiencing. “Two years ago, companies were kind of frozen,” said Mr. MacIntosh of KPMG. “Now, companies are making decisions (and) usually when they make decisions of action, they need some sort of help.” Others echoed that sentiment. As companies expand, they rely on accountants to guide them in different elements of growth, and that translates into more accounting jobs, said Greg Skoda Sr., chairman of Skoda Minotti & Co. in Mayfield Village, which grew its staff some 8% to 10% in the first half of 2011. “There’s a lot more business activity than there was a year ago,” he said, citing increases in merger and acquisition activity and bank financing. “We’re seeing a number of clients’ businesses moving forward.” Mr. Skoda anticipates the same amount of hiring in the second half of the year. The firm’s employment had remained relatively flat during the first six months of 2009 and 2010, he noted. Reform of many types also is driving an increased need for professional services, Mr. MacIntosh noted. The financial services sector is grappling with the requirements of recent reform, and health care reform will pose challenges to companies for years to come, he said.
Upside in Cleveland For some firms, current growth is driven by changes in strategy, too. Mr. MacIntosh estimated that market growth is driving probably 25% of KPMG’s local hiring; the other
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75% is the product of a corporate decision to strategically invest in Northeast Ohio. That decision was rooted, in part, in the net staff reduction that occurred at area professional services firms in recent years, he said. “(Cleveland) is, we think, an underserved market with a very large upside,” Mr. MacIntosh said. “There’s a chance for us to make KPMG even more relevant within Northeast Ohio.” Strategy is more important today than it was a couple years ago, when firms could grow based simply on the quantity of work to be done, said Gary Shamis, managing director of SS&G Financial Services, which has had a “nice rebound” this year and is “definitely in hiring mode again.” The Solon-headquartered firm is focusing on strengthening its advisory and accounting services for certain niches, such as health care, restaurants and public company work, Mr. Shamis said. “I believe that’s the way you’ve got to do it right now,” he said. “You’ve got to be really strategic.” The firm, which employs some 325 in Northeast Ohio, has hired 15 full-time people. “Not huge,” Mr. Shamis acknowledged, but considering the industry’s flat numbers in the past couple years, it is positive growth. SS&G had decreased its staff by about 6% or 7% in 2008, but had returned previously to those levels. Its most recent hiring will put the firm at an unprecedented headcount, he said. So who are the lucky new hires? Seemingly all firms are hiring a range of positions, from those that require more than a decade of experience to those requiring two or three years. In fact, because many of those cut during the recent past were entry-level people, those who have a couple years of experience are in high demand, Mr. Koltin said. “There’s this tremendous void of two- to four-year people,” he said. Those CPAs and advisers who specialize in an industry — for example, international tax, renewable energy and health care — also are in great demand, Mr. Koltin said. ■
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Treasurer seeks review of fund custodians By ROB KOZLOWSKI Pensions & Investments
Ohio state Treasurer Josh Mandel sent a letter last Tuesday, June 14, to state Attorney General Mike DeWine requesting a full investigation into foreign currency exchange practices of the custodial banks for the state’s employee pension funds and the Ohio Bureau of Workers’ Compensation. Mr. Mandel is “concerned that the banks may have manipulated foreign currency trade prices in order to maximize the banks’ profit, at the expense of Ohio public servants, businesses and taxpayers,” according to the letter.
Mr. Mandel’s request comes on the heels of an investigation by the Securities and Exchange Commission and legal actions aimed at State Street Corp. and Bank of New York Mellon, the two largest U.S. custodians. Attorneys general in more than 20 states are also investigating whether to sue over alleged overcharging by the banks when they traded U.S. dollars and other currencies. Mr. Mandel wants to know “whether these practices occurred and over what time frame,” according to Seth Unger, press secretary for the treasurer’s office. Most recently, Massachusetts Treasurer Steven Grossman said
Monday he will be meeting with his state’s attorney general later this week to discuss how to proceed in recouping what he called “significant” losses suffered because of “excessive” Forex trading fees levied by custodian Bank of New York Mellon. State Street is the global custodian for the $76 billion Ohio Public Employees Retirement System, the $65.8 billion Ohio State Teachers’ Retirement System and the $12 billion Ohio Police & Fire Pension Fund, confirmed fund representatives and Mr. Unger. BNY Mellon Asset Servicing is the global custodian for the $10.2 billion Ohio School Employees Retirement System, according to Mr. Unger. ■
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such as Fairmount Minerals, Chart Industries Inc. and Carlisle Brake and Friction, which sell materials and products used in the extraction and processing of natural gas and its byproducts. “By many accounts, you’re looking at the largest shale gas play in the world,” Mr. Samuel said. The play revolves around the Marcellus and Utica shale deposits beneath eastern Ohio, much of Pennsylvania and a few other contiguous states. The rock is full of gas that, until a few years ago, was largely inaccessible. But drillers have found that by drilling down, then horizontally through the shale deposits, they can get at least some of that gas by breaking up the shale through a process called “fracturing.” What they’re finding is no small amount of fuel. It’s estimated that between two and 50 times the amount of natural gas that the United States uses in a year will come from the region’s shale. And those estimates keep rising as drilling technologies improve, geologists and industry proponents say. It’s a multibillion-dollar business, and those already serving it say it is proving it can have vast positive effects for local industry.
Sales mount at Fairmount “I honestly believe that the implications of it are just so significant — I think people aren’t even realizing it yet,” said Jenniffer Deckard, president of Chardon-based Fairmount Minerals. “It creates a lot of jobs. It’s such a win-win for our country, it’s almost like it can’t even be real.” Fairmount is a big player on the natural gas scene, because it mines and processes special sands used by drillers. It even coats individual grains of sand with special resins to provide drillers with a better tool to get more gas out of the ground, Ms. Deckard said. In fracturing, cracks through which the gas can escape are created in the shale beds with water pressure and explosive charges. Sand is pumped into the well along with water so that the grains of sand can get into those cracks and hold them open, allowing more gas to be extracted. Sales of specialty sand to the natural gas industry have become Fairmount’s largest source of revenue and still are growing faster than any other part of its business, which includes providing sand for uses in such diverse products as industrial
abrasives and swimming pool filters. “It’s a very, very large majority of our sales now,” Ms. Deckard said. “Ten years ago, it was probably 30% of our sales, then 50% — now, it’s a good majority of our sales. And it’s still accelerating.” Also accelerating is the number of jobs created by mining, processing and delivering that sand. “At Fairmount alone we’ve added several hundred jobs (over the last five years), and most of that is related to natural gas,” Ms. Deckard said.
Equipped to capitalize Natural gas production also is driving up revenues at Chart Industries in Garfield Heights, which makes heat exchanges and other equipment used to compress industrial gases as well as natural gas. Chart is involved in the natural gas industry worldwide, not just in the big shale deposit here, but the potential of more work in this region was one reason the company recently revised its revenue estimates for 2011 upward, to about $750 million from $710 million. “It’s is a driver, absolutely, particularly as (the industry) is evolving — our equipment is used in a high percentage of natural gas processing plants,” Chart CEO Sam Thomas said. In Solon, Carlisle Brake and Friction, formerly known as Hawk Corp., makes friction materials used in brakes and clutches. It, too, is seeing sales fueled by natural gas exploration, said CEO Chris Koch. Trucks used in drilling and exploration operations have clutches, as do the machines that turn the drills themselves — and they all need friction materials to work, Mr. Koch said. Carlisle says it is the preferred supplier of friction materials to three of the top four transmission makers serving the oil and gas industry. Customers are building 50% more transmissions than they did in 2010 and four times the number they were building in 2009, according to the company.
Still time to jump aboard Folks such as Mr. Samuels, the consultant, say those are just a few of the first companies to benefit from natural gas exploration — and he predicts more will follow. Mr. Samuels said he expects to see companies from outside the region move operations here from places such as Houston. “As the drilling and other related industries move into this area, a lot
7
of their supply chain is going to move into this area as well,” Mr. Samuel said. “Particularly in Northeast Ohio and the Mahoning Valley, and even parts of Appalachia — it’s an opportunity for the great revival of some big industries.” For those companies that have not seen any increased business from natural gas drilling, it’s not too late, said Walter Good, vice president of economic development for the Youngstown/Warren Regional Chamber. “We’re still in the early days of this. No one’s missed it yet,” Mr. Good promised. “We see this as a transformational opportunity, not only for direct job creation and investment, but to reposition Northeast Ohio as a producer of products for this industry,” he said. ■
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Join together
C
onsensus is hard to come by in the political arena these days, but on this point there should be no debate: Moving a company from one Northeast Ohio community to another does not qualify as economic development. Cuyahoga County Executive Ed FitzGerald and members of his administration are well aware of that. To their credit so early in their tenure, they’re trying to do something about it with what Mr. FitzGerald describes as an “anti-poaching” agreement. It calls on Cuyahoga County communities to agree not to solicit businesses in other county communities by offering financial incentives to move their operations. Such an agreement isn’t a cure-all, as county government cannot (and should not) prevent a company from moving from one city to another as it seeks a business advantage. But minimizing the competition among Cuyahoga County communities for existing businesses is both good public policy for taxpayers and a reinforcement of the notion that Northeast Ohio’s economy will be stronger when its cities work together, not against each other. Mr. FitzGerald isn’t just relying on the kindness of county neighbors to make his anti-poaching plan work. He wants to tie participation in the agreement to access to a $100 million economic development fund the county expects to create by the end of this year. In essence, communities that want to tap into that fund would have to declare themselves on board with a broader, more cooperative vision of economic development in Cuyahoga County. That’s more than a reasonable use of political hardball. The plan emerging in Cuyahoga County has other smart components. One of those is a provision that a community that receives an inquiry from a company about a possible relocation notify the company’s current community about the plan. Another involves the creation of a program that would offer information to companies on possible sites and sources of public financing across the county. In Summit County, an anti-poaching agreement has been in place for a couple years and has the participation of about two-thirds of the county’s communities. Jason Dodson, chief of staff to Summit County Executive Steven Pry, told Crain’s reporter Jay Miller that the agreement has been used explicitly a few times and, he believes, has served as a deterrent to stop intra-county movement. The Summit County initiative differs in one major respect from what Mr. FitzGerald is proposing, in that it has a tax-sharing component. A Summit County community that gains a business agrees to share the income tax revenue it gains with the community that is losing the company. Mr. FitzGerald recognizes that the often-fractious Cuyahoga County isn’t there yet and that it would be difficult or impossible to get communities to support an agreement that includes tax-sharing. Cuyahoga County may get there in time, but the anti-poaching agreement as outlined is a good start toward creating a more productive economic development climate. We urge all communities — even those rich in land that usually emerge as winners in company relocations — to support this plan.
FROM THE PUBLISHER
For pols, a step forward and two back
W
hy can’t politicians stop at sion aimed at keeping new college gradsignificant change? uates inside the Buckeye State. Republicans in the General Good idea, right? Assembly may be asking themNot so fast. selves that very question if a statewide Under his proposal, out-of-state referendum undoes the reforms put in students at Ohio’s public universities place by the passage earlier this year of would get a break from paying the outSenate Bill 5. Rather than simply reform of-state surcharge that’s levied on top of the ways in which public emthe basic tuition package if they ployees’ unions have saddled BRIAN stayed here the entire five years. Ohio with costs it cannot afford, TUCKER Trying to keep young talent the newly dominant GOP here is a good idea, but the decided to try and strip away senator added a spin that’s the underpinnings of collective untenable to the universities. bargaining. If the out-of-state student Early opinion polls show who gets the credit moves out most Ohioans, despite general of Ohio before the five-year support for reform, think the period is completed, he or she pols went too far. Don’t be would repay the tuition surcharge surprised if voters overturn it — to the state rather than the assuming the opponents get enough university. Great, so the state keeps valid signatures to get it on the ballot. cutting and cutting what it invests in the Now comes a Republican state senator “state-supported” universities — in this from Celina, Tim Faber, who starts with budget by an estimated 15% — then an interesting idea, then mucks it up in does this as well? much the same way. The (Cincinnati) Enquirer reported on Sen. Faber inserted into his chamber’s its website that the University of Cincinversion of the new state budget a provinati estimated it could lose as much as
$40 million a year if such a proposal were made law. Multiply that by the thousands of out-of-state students that populate our public universities across Ohio and you get a sense of how this plan further damages our system of higher education. The state universities prefer an Ohio House proposal that would offer a tax credit to out-of-state students who graduate and stay here to begin their careers. That idea also has the support of Ohio Board of Regents Chancellor Jim Petro. Stay tuned. **** SPEAKING OF OUR STATE UNIVERSITIES, Kent State has released a study that has come up with 240 ways for local governments to share services and save money. KSU’S Center for Public Administration and Public Policy teamed with the Fund for Our Economic Future to do the study, which has never been more needed than in these days since the onslaught of the Great Recession. Now if we can just get the self interests of office holders out of the way in favor of the interests of our citizens. ■
THE BIG ISSUE If resigned U.S. Rep. Anthony Weiner, or any public official who had sent out revealing personal photos and then lied about it, were to run again for public office, would you vote for him or her?
MARK NUSS
SEWELL ROBINSON
DONNA CONRY
DAVE VOYTEK
Chesterland
Cleveland Heights
Shaker Heights
Cleveland
What he does in his personal life is his personal life and I have also no problem in anybody participating in whatever they want, but when they are a public official they should be held to a higher standard.
I would absolutely not vote for him (because he lied). Everybody has their secrets. People are people.
No. I think it shows bad judgment. I can’t believe that he didn’t think he would get caught. It’s just a lack of judgment and so I have to question his judgment on other things.
Honestly, maybe. I don’t really care what he was doing in private. I look at the issues, the political issues at hand, and if he seemed to support my side, I guess, yeah, I would (vote for him).
➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.
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New Huron Order: Dean plans to better market programs health site no match for trauma care continued from PAGE 3
■I understand that the Cleveland Clinic, as well as many other health care providers today, faces daunting challenges, including those outlined by the Clinic as its justification for closing Huron Hospital — a difficult economy, a declining population and a shift toward outpatient care. I also understand the deeply held concerns of people who rely on Huron Hospital. These are mostly individuals with the least ability to use other medical facilities for their inpatient and trauma care. They are not a “crowd to be played to� as Crain’s June 13 editorial, “It’s time,� suggests. They are the people I represent, and many are worried about where they will receive emergency and inpatient care. I take their concerns seriously. It’s unfortunate that the Crain’s editorial left out the rest of my statement issued on the day the Huron closing was announced. I acknowledged the benefit of the Community Health Center under construction and will repeat it here: “Quality care must be accessible care. While the opening of the Cleveland Clinic Huron Community Health Center in October is important for meeting the needs of residents, it should not be viewed as a replacement for emergency and inpatient medical care.� Most people don’t choose to go to a doctor’s office if they’ve just broken a leg, been shot or faced a severe asthma attack. They want to go to the nearest hospital. The people of Cleveland and East Cleveland are no different. Did the editorial staff review statistics of where the majority of penetrating trauma cases (such as knife or gunshot wounds) originate? You may find the highest rate in the state of Ohio in the ZIP codes near Huron Hospital. I would welcome serious discussion of expanding trauma care close to the area now served by Huron Hospital, whether that’s in East Cleveland, at the main campus of the Clinic or any other medical institution in the vicinity. For emergency medical responders in Cleveland and East Cleveland, the distance of Hillcrest Hospital (the Clinic’s preferred level II Trauma Center) from their borders poses a tremendous burden in terms of lost response time as well as greater financial cost. I’m sure city leaders care as much for the well-being of their patients as the Clinic does for theirs. It’s a legitimate concern. When the Clinic first announced plans to end level II trauma services at Huron, I sought more facts to assess the impact on the entire community. I called for a postponement of implementation while that impact was studied. There was no rush to judgment on my part. I will continue to seek more information about the change in plans to close Huron altogether and I encourage the Clinic to fully engage the community. Until then, I will continue to listen to my constituents, and yes, speak out when they lose a critical component of health care.
LETTER
Marcia L. Fudge U.S. Representative 11th District of Ohio
he would be “permitted to do my job for a long time.� On June 1, he became the first non-interim dean of the school since November 2008, and, absent unforeseen circumstances, he expects to stay for seven to 10 years. His salary was not disclosed. “This law school has had some leadership problems in the past,� said Mr. Mitchell, 54, who most recently was a professor of business law at George Washington University Law School in Washington, D.C. “Because of that, it hasn’t met its full potential.� And that, it seems, made Case Western all the more attractive to him. “What I wanted was a law school where I could create better opportunities for everybody else,� Mr. Mitchell said.
Finally ready to lead A native of Brooklyn, N.Y., Mr. Mitchell practiced corporate law for six years before entering academia in 1987. He estimates he’s been courted for deanships for the past 15 years, but each time, got cold feet and decided he wasn’t ready as a scholar, or as a person. This year was different, in part because he’d led the creation in 2009 of a global think tank at George Washington’s law school that under his direction became an institutional force. “It was only through that experience that I could know that I was ready to take on a far more significant leadership role,� he said. Mr. Mitchell said he knew Case Western Reserve’s law school had “hit a few rough patches.� Friends had emailed him links to news stories that detailed how alumni
and donors had criticized Mr. Simson for his priorities. Indeed, every candidate for the deanship questioned the recent leadership changes at both the law school and the university, which hired a new president in 2007, said Jessica Wilen Berg, a Case Western Reserve law professor who has participated in two dean searches since fall 2005, including the most recent and the one that culminated in Mr. Simson’s hiring. The law school experienced an “unquestionably unstable� period of time, Ms. Berg said. Robert Rawson Jr., a partner at the global law firm Jones Day who became interim dean in December 2008, agreed to remain in that post long enough to allow for a longer dean search. He’s been interim dean since then and will stay through June to assist Mr. Mitchell in the transition. “People were anxious that we get to the point that we have a dean who would be here for a period of time,� said Mr. Rawson, who plans to return full time to the practice of law.
Embracing the world Mr. Mitchell stood out because he has an “incredible sense of enthusiasm,� Ms. Berg said. She hopes it will be contagious. “We’ve clearly turned a corner there,� she said. “I think we should be feeling very positive about where we are, not because things were so horrible, but because it’s time for us to move ahead in new directions.� Mr. Mitchell intends to continue building the law school’s experiential program, which, in part, allows students to study abroad for a semester or the summer. Mr. Mitchell said he will appoint
an associate dean of experiential education and aims to expand the program, perhaps into Brazil, Vietnam and Eastern Europe. “I wish when I had been in law school, I had the opportunity to do something like this,� said Mr. Mitchell, a 1981 graduate of Columbia University School of Law. But too few people realize it is an opportunity at Case Western’s law school, Mr. Mitchell said. And therein lies another of his goals: Getting the word out. Plans include a new promotional brochure for the school’s experiential education program and a revamped website, which Mr. Mitchell wants operational by Sept. 1. “While our home is Cleveland, our reach is global,� he said. “That’s something I want to make everyone aware of. “My ambition at the end of my deanship is to be nipping at the heels of the top 30 law schools,� he added. “I’m in this for the long term. I will be here until the job is done.� Case Western tied with five other schools at No. 61 in the most recent U.S. News and World Report law school rankings.
Alums will be courted In this, his first administrator role, Mr. Mitchell is focused also on improving philanthropic support. To that end, he’s planning a national tour to meet alumni in major cities this year and in 2012. Mr. Mitchell acknowledged his tour is driven, in part, by the schism
that emerged between Mr. Simson and a number of alumni, some of whom told Crain’s in 2007 that they no longer would give to or teach at the school. Some criticized Mr. Simson’s plan to create a Center for Social Justice as too age-old an issue — something several law professors later penned support for in letters to the editor. Other critics felt he wasn’t making enough of an effort to reach out to donors. “My message to (alumni) will be: ‘You have a great law school, and it will be even greater,’â€? Mr. Mitchell said. “But I also need your help.â€? Roe Green, a philanthropist who is the honorary chair for a coming university capital campaign, publicly had voiced her disappointment in Mr. Simson’s priorities, which she felt weren’t forward-thinking. She said she believes graduating students with specializations such as terrorism and computer law is paramount. “I feel that this school should become one of the best in three areas,â€? she said. “This is where you put yourself on the map.â€? Ms. Green, who met Mr. Mitchell at a recent dinner, described him as “sharp.â€? “The school means a great deal to me,â€? said Ms. Green, whose family has donated more than $3 million to the school, where her father, Ben C. Green, received his law degree. “I want a dean who will make it successful, and I think this guy can do it, but only time will tell.â€? â–
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SALT • SALT • SALT
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Crane maker hits new heights
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EMH grows with material handling industry
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Things are looking up, and going up, at Valley City-based EMH Inc. — also known as Engineered Material Handling. The 50-person company specializes in making cranes for industry and is doubling in size with a 60,000square foot addition that should be up and running this fall. EMH says it’s seeing a strong increase in demand for its product from manufacturers. In fact, its sales have not only completely recovered to their pre-recession highs, but are on pace to far surpass them. “We’re already pretty close to having our best year ever,” manager of marketing communication Darryl Kozel said, noting that the year was not even yet half over. The private company does not disclose its actual sales figures. EMH makes overhead bridge and
gantry cranes, not the kind that tower over cities and build skyscrapers, but the kind that span and crawl across the ceilings of many manufacturing plants. They lift anything from small items to coils of steel, large molded plastic products and concrete castings — and can handle between 35 pounds and 500 tons, depending on size. EMH has gotten several large projects this year that have helped spur the need for the expansion, Mr. Kozel said, noting that the new facility will better enable the company to construct larger cranes. The company recently received orders from Texas-based oilfield and power distribution equipment-maker Lufkin Industries, for plants it is building in the United States and Romania, as well as for a Mitsubishi plant in South Carolina, Mr. Kozel said. When EMH is busy, that’s a positive sign for the economy generally, since its business is almost wholly
tied to capital investments made in manufacturing in the United States, where the company does about 90% of its business. “The business we’re in is very much tied to the business cycle,” he said. Business started picking up for the company late in 2010 and has accelerated this year, Mr. Kozel said. The company and its industry are hoping the trend sticks. “The predictions for the material handling industry are positive through 2013,” Mr. Kozel said. There are signs that others are growing as well. In Solon, Demag Cranes and Components also is growing. A company representative could not be reached, but Demag has introduced new modular crane products this year and the company’s website was soliciting job applicants for positions in its design, production and sales functions. For EMH, this is the second expansion in five years. The company increased its footprint from 40,000 square feet to 60,000 square feet in 2006, also at its present facility. ■
GOING PLACES JOB CHANGES CONSTRUCTION FORTNEY & WEYGANDT INC.: Joe Stinolis to project manager; Gerald Gentz to business development manager.
EDUCATION CASE WESTERN RESERVE UNIVERSITY: Mary E. Kerr to dean, Frances Payne Bolton School of Nursing.
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FINANCE FIFTH THIRD BANK, NORTHEASTERN OHIO: Lorraine Harper to vice president, public funds relationship manager; Judith Ulrich to vice president, commercial banking relationship manager. U.S. BANK: Alan Zang to Northeast Ohio market president; Kurt Treu to executive vice president, Enterprise Revenue Office.
FINANCIAL SERVICE MIDWEST INVESTMENT MANAGEMENT LLC: Keith A. Vargo and Susan S. Nye to managing directors. SCHLABIG & ASSOCIATES LTD.: Jason White to senior accountant. SS&G HEALTHCARE SERVICES LLC: Caroline Urgo-Licursi to billing specialist.
KNOTICE: Michael D’Arguma to content specialist; Bridget Liszewski to QA analyst; Scott White to account executive; Kelly Weissfeld to marketing coordinator; Jaclyn Jimison to accounting operations specialist.
NONPROFIT
EMERALD DEVELOPMENT AND ECONOMIC NETWORK INC.: Elaine Gimmel to chief operating officer; Irene Collins to chief financial officer; Michelle English to controller.
REAL ESTATE TRANSACTION REALTY: Augusta Chauhan to sales associate.
RESERVES NETWORK: David Brooks to director of recruitment, Professional Search Group.
SWAGELOK CO.: Robert Sitzwohl to director, valve services group.
Ulrich
Vargo
Nye
Albanese
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Kistler
Oddi
Mancuso
Brooks
UNITED STATES GREEN BUILDING COUNCIL, NORTHEAST OHIO CHAPTER: Michele Kilroy to executive director.
INSURANCE
CALFEE, HALTER & GRISWOLD LLP: Steven W. Day to associate.
Harper
CLEVELAND MUSEUM OF ART: Barbara Tannenbaum to curator of photography.
DIRECT RECRUITERS INC.: Gina Mancuso to director of life sciences/ lab equipment.
MICHAEL L. DAVIS INSURANCE AGENCY: Laura Davis to director of sales and marketing.
Gentz
BEECH BROOK: Nancy Peppler to vice president, external relations.
WELLS FARGO ADVISORS: Frank Albanese to managing director, market manager, Northeast Ohio market.
BRITTON-GALLAGHER & ASSOCIATES: Jeremy Moor to private client services manager.
Stinolis
OPTIEM LLC: Craig Kistler to director of user experience; Shannon Oddi to senior account executive.
SERVICE
MANUFACTURING facebook.com/yoursewerdistrict
MARKETING
SS&G WEALTH MANAGEMENT LLC: Teresa Loll to associate.
LEGAL Opening doors for Northeast Ohio minority-owned, women-owned, and small businesses.
VICTORY WHITE METAL CO.: Peter Carroll to vice president, sales and marketing.
BOARDS CLEVELAND ZOOLOGICAL SOCIETY: Robert J. Rogers (Findley Davies Inc.) to chair; Virginia Benjamin to president; Michael A. Cogan to vice president; Eric Hall to treasurer; Justin C. Horton to secretary. EMERALD DEVELOPMENT AND ECONOMIC NETWORK INC.: Margaret Slifcak to president; Jessica Gonzalez to vice president; Dr. Elise Jancura to treasurer; Dr.
Catherine Roscoe-Herbert to secretary.
AWARDS AMERICAN SOCIETY OF HEALTHCARE PUBLICATION EDITORS: Morgan Lewis Jr. (Medical Economics) received a 2011 Gold Award for Best Profile and a 2011 Gold Award for Best Feature Article. ATHENA INTERNATIONAL: Julia Hall (Brockman, Coats, Gedelian & Co.) and Annemarie M. Grassi (Open Doors Academy) received 2011 Young Professional Leadership Awards. OHIO ACADEMY OF SCIENCE: George Newkome appointed an honorary fellow.
Send information for Going Places to dhillyer@crain.com.
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INSIDE
14 LOCAL SCHOOLS RAMP UP WOMEN’S LEADERSHIP PROGRAMS.
11
EDUCATION PREPANDPAROCHIAL
ALUMNI TIES STAY STRONG Schools say close relationships with former students key part of mission By JOEL HAMMOND jmhammond@crain.com
L
JANET CENTURY
Lynnette Jackson, relationship manager and vice president at Key Private Bank, attributes her professional success in part to her alma mater, Laurel School, to which she still is closely affiliated.
FAST FACTS ■ The mascot for Holy Name High School in Parma Heights is the Green Wave. The Green Wave can be traced back to the 1920s when it was first used to describe the coordination of the school’s football team, which, according to the school’s website, “gave the appearance of a giant wave engulfing its opponents.” ■ Cleveland’s St. Ignatius High School originally was known as St. Ignatius College, and students were
admitted after six years of grammar school, receiving a bachelor’s degree after six years. In 1902, high school and college departments were established, and the high school program was changed to four years. In 1923, the college department changed its name to John Carroll University, eventually moving to University Heights. ■ Gilmour Academy student Andrew Bieber finished tied for 43rd place out of 94 participants this month in the U.S. Open Sectional
Qualifying Tournament played at Oakmont Country Club in Glendale, Calif. Andrew shot a 72 in round one and a 76 in round two for a total of 148. His total score included five birdies. The top five qualifying scores ranged between 137 and 139. Andrew was one of the youngest participants in this particular qualifier. ■ Among the notable alumni of St. Edward High School in Lakewood are Phil Donahue, former TV talk show host (1953); Paul Clark, regional president, Northern Ohio, PNC Financial
ynnette Jackson since 1997 has held influential roles in Cleveland’s public and private sectors, first at URS Corp., then in Mayor Jane Campbell’s office and now at Key Private Bank. INSIDE: Alumni donations foster And she says her schools’ ability to modernize their education at all-girls campuses. Page 12 Laurel School in Shaker Heights played a key role in her rise up the ladder, and it is the main reason she remains intimately connected to Laurel today. Alumni directors and advancement teams at prep and parochial schools across the Cleveland area say those types of connections are vital to their missions, with current students learning from alumni about careers and college life and often benefiting from former students’ donations. Ms. Jackson, who previously served on Laurel’s alumni board, didn’t flinch when asked in 2009 to become the president of the school’s alumnae association. She also serves on the board of Cleveland Bridge Builders, a leadership training course of which she was a member of the inaugural class, in 2000. See ALUMNI Page 13
Services Group Inc. (1971); Sean Hennessy, CFO, Sherwin Williams (1975); and chef Michael Symon (1987). ■ Shaker Heights’ Laurel School — originally called Laurel Institute — derives its names from the ancient Greek symbol of a wreath of laurel leaves, which signifies intellectual achievement. ■ University School boasts an average class size of 14 students. According to the school’s 2010-2011 profile, the US Upper School faculty totals 71, including eight with Ph.D.s
and 49 with master’s degrees. In addition, two faculty members have earned their J.D. degrees. ■ Andrews Osborne Academy in Willoughby does not horse around when it comes to equestrian sports. In fact, the school’s efforts led to the creation of the Interscholastic Equestrian Association, which is the only high school equestrian organization that is an affiliate of the Intercollegiate Horse Show Association. SOURCE: ALL INFORMATION IS FROM INDIVIDUAL SCHOOL WEBSITES.
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EDUCATION
Alumni donations contribute to campus modernization By JOEL HAMMOND jmhammond@crain.com
A
bout 13 months ago, the all-boys University School in Hunting Valley sat at $10 million in its drive to fund a 50,000-square-foot academic wing. And by the groundbreaking last month, the $27.5 million project, which includes the latest technology and will qualify for a silver rating in the U.S. Green Building Council’s Leadership in Energy and Environmental Design program, was fully funded. “Our alumni support their high school the way others support their college alma mater,” said Jon Bridge, the director of advancement at US. Alumni play a significant role in keeping campuses at prep and parochial schools across the area updated, from a new Hawken School site in University Circle to an auditorium restoration and theater arts facilities upgrade at Hath-
away Brown in Shaker Heights. Mr. Bridge said all but a couple million dollars of University School’s final total came from alumni, though he said parents typically have been generous, too. The alumni total includes $2 million from alumnus Richard Matson and his wife, Cornelia; a $4.26 million bequest from alumnus James Williamson; and $2 million from alumnus Richard Horvitz. Additionally, the school’s class of 1971 collectively raised $10.2 million, and an anonymous donor — aiming to see the project fully paid for by its groundbreaking — offered the last $1 million if the school could otherwise have the project funded. The total construction cost was $17 million, while $5 million went to soft costs (architectural fees and the like) and another $5 million went to establishing an endowment. Hathaway Brown, an all-girls school in Shaker Heights, gets about 70% to 75% of its donations from
PHOTO PROVIDED
University School in Hunting Valley broke ground last month on a $27.5 million, 50,000-square-foot academic wing. alumni, which is different than its peers in New York City, California and elsewhere, said Clarke Leslie, HB’s associate head of school for advancement. In those places, parents contribute a far greater percentage of overall funds, she said. Data from the National Association of Independent Schools back up that claim, as the Washington, D.C.-based nonprofit reports that in the 2009-2010 school year, the latest available, parents contributed 37.3% of the amount raised through annual giving, with alumni contributing 23.2%; the group counts alumni parents in the latter group.
Congrats Hawken Class of 2011.
Most recently at HB, Barb and Mal Mixon led the way on a new playground, and in 2009 the daughters of local philanthropist and Transtar Industries founder Monte Ahuja donated a combined $1 million to restore the school’s auditorium and for theater arts upgrades. Prior to that, during HB’s most recent major capital campaign, alumna Carol Butler and her husband, John, donated $4.5 million for the school’s highly regarded aquatics center. Hawken School in August opened its new University Circle campus and the Sally and Bob Gries Center for Experiential and Service Learning, named after the longtime Cleveland philanthropists. They led the way on the $6.5 million project, $2.8 million of which went toward the building purchase and renovation in University Circle. Kathleen Guzzi, Hawken’s director of development, said affinity for coaches and teachers has fueled other donations for capital projects, such as the school’s pool and athletic fields. “The passion (alumnae) talk about is unmatched,” said Laura Lewis Kovac, the school’s director of communications. “The place is beloved to them; every graduate is appreciative of that connection.”
Drives student enrollment At Gilmour Academy, updates and
We knew you’d go far. No school can promise admission to any given college or university, but Hawken does promise to advantage students in the process and to help find the right college match. Hawken students are more than twice as likely to get into a top national college or university and more than 35% of the Class of 2011 received merit scholarships. The proof is in the numbers. Get Ready. | HAWKEN.EDU COED PRESCHOOL – GRADE 12
Preschool to Grade 8 Lyndhurst Campus | 440.423.2950
Grades 9–12 Gates Mills Campus | 440.423.2955
new construction made possible by alumni donations have helped drive enrollment, said Mary Kate Farrar Vega, the school’s director of annual fund and constituent relations. That includes a new natatorium and ice arena at the school’s Gates Mills campus, a project for which the school raised about $15 million. The facility includes two National Hockey League-sized skating rinks, seven locker rooms and more. “Alums and parents have been instrumental in those efforts,” Ms. Farrar Vega said. “Enrollment is helped by these new facilities.” Henry Meyer, the former CEO of KeyBank and a 1968 graduate of University School, said at the groundbreaking of the school’s academic wing that the institution’s ability to raise funds even as the economy stagnates is easy to figure. “I am often asked, ‘How is University School able to take on this kind of project under these kinds of circumstances?,’” said Mr. Meyer, now the school’s chair of the leadership gifts committee. “It is because lives are changed here. Alumnus after alumnus recalls a moment in his life when a faculty member was present at just the right time. It is a result of a faculty dedicated to understanding how boys learn and grow. It is because alumni see this school as a launching pad for a fulfilled life.” ■
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EDUCATION
Alumni: Outreach also influences students continued from PAGE 11
In her stint as alumnae association president, she has implemented a series of events focusing on women’s health; last year was a wellness event, featuring alumnae specializing in yoga, OB/GYN and more. She also helped plan the school’s first Sarah Lyman Day of Community Service, where alumnae are encouraged to volunteer. (The event is named for Laurel’s early — 1904-1930 — headmistress.) “The curriculum was rigorous; community service was very important,” said Ms. Jackson, a relationship manager and vice president at Key whose sister also is an alumna. “My Laurel education put the foundation of success in my mind.”
Same goes elsewhere That sentiment also rings true for Rob Ondak and Henry Meyer. Mr. Ondak, a 1991 Gilmour Academy graduate and now a partner in commercial real estate at Cleveland law firm Benesch, became the president of the school’s alumni association in September. Mr. Ondak said the association has expanded its social calendar to include more charitable and networking events, such as participation in the nationwide Brothers of the Holy Cross service day and local alums playing host to
networking functions at their places of business. “Gilmour had a very profound impact on my life,” Mr. Ondak said of the co-ed school in Gates Mills. In addition to those programs, Gilmour three years ago launched a career workshop program for sophomores, said Mary Kate Farrar Vega, the school’s director of annual fund and constituent relations. Alums representing different fields speak to the school’s 10thgraders. For the graduates, it’s a chance “to see how Gilmour is today,” she said. Mr. Meyer, meanwhile, graduated in 1968 from University School in Hunting Valley and formerly was the president of the school’s board. Now, he is the chair of the leadership gifts committee; US in May held a groundbreaking ceremony for a $27.5 million academic facility that was funded fully in advance. The recently retired CEO of KeyBank said his three sons also attended US, and they, too, remain involved. “I guess by some measures, I’ve been successful, and I got a lot of those building blocks, that foundation, from my experience at University School,” he said. “I’m willing to invest my time and financial resources to perpetuate that.” US, through school-sponsored research, has found that 80% of
alumni hold US in higher regard than their college, according to director of advancement Jon Bridge. That sentiment results in what Mr. Bridge called a “disproportionate amount of support” from alumni, though he was quick to note parents also share the load. Those types of lasting connections with alumni are what any private school is looking for, said Julie Donahue, Laurel’s director of alumnae and communications. “We realize how important it is for them to feel connected to school in a very meaningful way,” she said.
Technology helps E-newsletters, biannual magazines, social media and passwordprotected school intranets — often including a directory of any living alumni who provide their information, a sort of nationwide Rolodex — are standard tools used in keeping alumni informed, and networking and mentoring opportunities abound. Mr. Bridge said a challenge many prep schools find is remaining in contact with young alumni, and co-ed Hawken School in Gates Mills targets them often. That includes a summer event before recent graduates go back to college, when alumni play in sporting events against current
Hawken students. Additionally, the school sponsors a TGIF event the Friday after Thanksgiving, when many are home from college. According to Eleanor Anderson, Hawken’s director of alumni relations and events, it also offers every other year a career roundtable for sophomores and juniors, when about 25 graduates or parents speak to the student body; former Browns coach Eric Mangini, a Hawken parent, participated while he led the team. “All of these events keep our alumni engaged and benefit our current students,” Ms. Anderson said. At all-girls school Hathaway Brown, also in Shaker Heights, alumni relations director Dana Capers — herself an alumna — said live streams of alumni speakers talking to students have been popular, as has news for the school’s alumni magazine compiled by alumni acting as “class correspondents.” HB also asks recent graduates to speak to current students, and it even has alumnae who graduated nearly 50 years ago communicating with third-graders, as pen pals of sorts. Those groups then meet at HB’s annual reunion, which takes place every May. ■
HONOR A CFO Nominations are open until Aug. 12 for Crain’s annual CFO of the Year program, which honors top financial officers in Northeast Ohio for their outstanding fiscal leadership and asset management. Awards will be presented in the following 10 categories, with three to five finalists selected from each: ■ Large, Medium and Small Public Company ■ Large, Medium and Small Private Company ■ Large, Medium and Small Nonprofit Organization ■ Lifetime Achievement Award The category sizes will be determined based on the nominees’ 2010 revenues. The Lifetime Achievement Award recognizes a current or former senior financial executive who honorably represents their company/ organization by exemplifying performance, leadership, integrity, strategy and growth throughout their career while bettering the finance profession overall. All finalists will be profiled in the Oct. 17 issue of Crain’s. Winners will be presented at an evening awards reception the week of Oct. 24. To nominate an individual, visit http://www.CrainsCleveland.com/ marketing/cfonominate.html.
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EDUCATION
Schools take steps to enhance women’s leadership programs By KATHY AMES CARR kcarr@crain.com
P
aige Pierce credits her alma mater with the current trajectory of her collegiate career. The incoming Heidelberg University senior is studying international relations and political science, interests that Saint Joseph Academy helped foster through its junior professional shadow experience. Ms. Pierce in 2007 shadowed for two weeks Strongsville City Councilman Michael Daymut, and the experience motivated her to pursue politics at the broader federal and international levels. “Through Saint Joe’s, I got a look at government on another level,” said Ms. Pierce, who this summer is interning at the Washington, D.C.-based Council on Competitiveness, which is composed of CEOs, university presidents and labor leaders working to
advance prosperity in the United States. Saint Joseph Academy, a Cleveland all-girls school, and other Northeast Ohio prep and parochial schools have been working to make their women’s leadership programs pack more of a punch so graduates have the right skills needed to be a hit at the upper echelon of the professional world. “Leadership development is a critical issue,” said Koyen Parikh Shah, director of Hathaway Brown’s Center for Girls’ and Women’s Leadership. “Girls come to us wanting to make the world a better place, and they have a takeaction mind-set to fix it. “We knew we needed to have a more solid plan in place to facilitate that,” Ms. Shah said.
C-suite view Saint Joseph’s career shadow experience is just one way students can tie in the realities of
the real world with their academic curriculum. The high school in 2006 began offering an annual women’s leadership symposium, which has featured such influential leaders as former Cleveland YWCA president and CEO Barbara Danforth, who now is senior vice president at executive search and placement firm Ratliff & Taylor. Most recently, Beth Mooney of KeyCorp, who in May became the first woman CEO of a top 20 U.S. bank, was featured at the event. “I was a senior executive at American Greetings before I joined Saint Joe’s,” said school president Mary Ann CorriganDavis. “I personally have lived through what it’s like to be a woman in business, and when I got here (in 2006), I thought we were missing an experience to expose students to real life.” To further the mission of empowering women, Saint Joe’s JOHN MULGREW
Beth Mooney, chairwoman and CEO of KeyCorp, shakes hands with Jacqueline Bova, who was a senior at Saint Joseph Academy in March when Ms. Mooney attended the school’s annual Women’s Leadership Symposium.
GILMOUR
ACADEMY
Where Inspiration HappensTM
The Class of 2011’s achievements say it all. Congratulations Lancers on all you have accomplished.
5
th
Sprinted to 1 state track championship and 2 state runner-up finishes
state golf championship in school history, with two individual state championships
Accepted!
11,000
hours donated to community organizations
to some of the nation’s most competitive colleges including: Massachusetts Institute of Technology, Dartmouth, Rice University, Brown University, Boston College, University of Notre Dame, Cornell University, Georgetown University, Stanford University, Wake Forest University, Washington University, Swarthmore College, University of California at Berkeley Skated to the state hockey championship finals 2 out of the last 4 years and advanced to the U18 Tier 1National Quarterfinals Ran to 3 state cross country championship meet appearances, including 1 state runner up
+
120
Speech & Debate National Forensic League points, earning the coaching team diamond status, with qualifiers at the state and national levels
www.gilmour.org
5,000
dollars donated to the Holy Cross Mission in Haiti, The Red Cross African Measles Initiative, Nuevo Paraiso, and The Gilmour Academy Scholarship Fund Swam to the best record in program history for boys and girls swimming
3
state final 4 appearances in volleyball, including 2 state runner-up finishes
Use your Smartphone QR to learn more.
launched a “Women Leading in the 21st Century” class, now in its third year. As part of the format, students are introduced to accomplished leaders such as Virginia Benjamin, partner of Cleveland law firm Calfee, Halter & Griswold LLP. “I think when you’re 15, 16 or 17 years old, you don’t think you have the power to make (leadership) happen,” Ms. Corrigan-Davis said. “These role models show them they can make it happen.” Hathaway Brown, meanwhile, in 2009 founded the Center for Girls’ and Women’s Leadership, which Ms. Shah said is “making leaps and bounds” in helping female students become leaders by connecting them with roles that nurture those skills, such as public speaking and opportunities for international travel. “What we’ve found with trends in leadership, coming from colleges and universities, is that leadership education is becoming more professionalized,” she said. “They’re looking at how much time students spend outside the classrooms, whether it’s (leadership) retreats or workshops.” The Shaker Heights school also in the 2011-2012 school year is implementing both a yearlong leadership course for high school students and a six-week leadership seminar that explores strategies, theories and how leadership is assessed. “It’s more about culture than curriculum,” Ms. Shah said.
Shape the future Meanwhile, the curriculum at Laurel School in Shaker Heights is shaped by its Center for Research on Girls, which focuses on developing faculty and student programming based on the latest academic research, some of which the center sponsors, said Ann Klotz, head of school. The center currently is partnering with Dana Hall School in Wellesley,
Mass., Boston University and Boston College to conduct a twoyear study that will be completed in fall 2012. The study, “21st Century Athenas: Aligning Achievement and Well-Being,” is delving into factors that promote young ladies’ well-being and performance. “We want to know how we can preserve the resilience in young women,” Ms. Klotz said. “Academic excellence is the engine that drives the train.” Magnificat High School in Rocky River in 2010 unveiled the Rosemary Saas Center for Women of Faith in Leadership as a way to foster the influence of that school’s female students, said Sister Carol Anne Smith, the school’s president. For example, beginning this August the center will link upperclassmen with incoming freshmen. The elder mentors will guide the younger women through orientation and their first year as high school students. “These girls go through a rigorous application process” to become mentors, said Moira Clark, dean of student life and formation. The leadership center also began a speaker series that exposes students to accomplished females with inspiring backgrounds. This fall’s series will feature nationally recognized author Loung Ung, who will recount her experiences as a small child in the 1970s who lived during the Khmer Rouge genocide in Cambodia before fleeing to the U.S. She has since published two books — “First They Killed My Father: A Daughter of Cambodia Remembers” and “Lucky Child” — and has been featured in The New York Times, The Washington Post and USA Today. “We’re hoping the students will be able to identify with these role models, and that they can be inspired to be agents of change,” Ms. Clark said. ■
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EDUCATION
Padua’s MedTrack exposes students to health care field By AMY ANN STOESSEL astoessel@crain.com
F
or Padua Franciscan High School principal David Stec, it simply was the right time and place to implement an advanced science track with a health care focus at his Parma school. “With any good product, idea or program ‌ it’s a matter of connecting current practice with future vision,â€? Mr. Stec said. In this case, Padua’s specially designed four-year course of study known as MedTrack — inaugurated in the 2009-2010 school year — is seizing upon the school’s already strong college prep program and trends taking place in the community, school and education as a whole. “I knew there was a marketplace here,â€? said Mr. Stec, pointing to Northeast Ohio’s health care institutions and work being done on the Cleveland Convention Center and Medical Mart. On average, 30 students, primarily freshmen, have been accepted each year for admission into the MedTrack program. About 830 students in ninth through 12th grades attend the co-ed school. A general emphasis within the public education arena on the STEM disciplines — science, technology, engineering and mathematics — also helped fuel the development of the specialized curriculum, said Mr. Stec, who noted that to his knowledge the program at Padua is unique. MedTrack students follow an advanced track of study heavy in math and science, receiving a special certification upon graduation. They also participate in extensive career exploration, with regular guest speakers and shadowing and externship opportunities. “I think the strongest aspect is they really are trying to give these students very practical experiences,â€? said Dr. Maria Ramundo, a parent of two MedTrack students and a member of the program’s professional advisory board.
Head of the class Make no mistake, MedTrack is not for the faint of high school heart: It’s a rigorous program with high standards and expectations. MedTrack students must maintain a minimum 3.5 cumulative grade point average, taking at least two additional credits of science and an additional credit of foreign language. It also includes a required 40 hours offsite for an externship in a health care-related field during the summer before junior year, and an online medical terminology course, also to be taken the summer. “We’re drawing students to this program who are the most capable,� said Mr. Stec, who believes the program is starting to serve as an
CRAIN’S CLEVELAND BUSINESS 15
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Hats off to the Laurel School Class of 2011!
attraction for potential students to the Catholic high school. “It’s a program that’s unique for us that’s in line with our mission.� Several aspects of the program’s curriculum are rooted in spirituality and the Franciscan tradition. For instance, MedTrack students in their senior year also are required to take a bioethics and Franciscan life issues course. Laurie Grabowski, Padua’s assistant director of institutional advancement, said when college recruiters come to Padua, school officials are working to familiarize them with MedTrack. And as the first class of MedTrack students moves closer to graduation in 2013, Padua plans to speak with even more colleges to make sure they are aware of the rigors of the program. Indeed, Shawn Grime, president of the Ohio School Counselor Association, said he believes course history in high school plays a critical role in college admissions. He also noted that with all of the opportunities available to students today, it’s never too soon to begin exploring careers. “The reality is, as incoming freshmen, it’s really important for kids to start thinking about what they want to do when they graduate,� said Mr. Grime, a school counselor at Bryan High School in Northwest Ohio.
We were honored to help inspire you to fulfill your promise and to better the world. We can’t wait to see what you accomplish as Laurel School alumnae who Dream. Dare. Do.
Dream. Dare. Do.
Call 216.464.0946 www.LaurelSchool.org Girls Kindergarten–Grade 12 Coed Pre-Primary Laurel School One Lyman Circle • Shaker Heights, Ohio 44122
Professional buy-in Joe Widenhofer and Annie Printy, both members of the class of 2013, see MedTrack as an opportunity for just that: Annie is interested in dermatology, while her classmate Joe expressed interest in both cardiology and gastroenterology. For their required externships this summer, Annie will be working with a plastic surgeon at MetroHealth Medical Center, while Joe will be at Parma hospital in cardiology. “The program allows you to explore all those different fields,â€? Joe said. An extensive advisory board has helped guide the development of the program. It includes representatives from a variety of fields and institutions, including University Hospitals Case Medical Center, MetroHealth Medical Center, NeuroMed Plus, the Cleveland Clinic and Parma Community General Hospital. Virgil Daniel, director of guidance, said ultimately the goal is to help students discern whether health care is of potential interest as a career. “I think the program is a win-win,â€? he said, stressing it is a success even if a student drops out of MedTrack, realizing it is not a good fit. Advisory board member Dr. Ramundo, who works at Akron Children’s Hospital and Northeast Ohio Medical University, said the program gives the students a dose of reality. “It’s more than just going to class,â€? she said. “This is teaching them how to think.â€? â–
Discover Our World of Learning CONGRATULATIONS TO OUR 2011 GRADUATES !
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HIGHEST PAID CEOS RANKED BY 2010 COMPENSATION Executive (Age) Company
Total compensation 2010 2009
% change
Salary
Bonus
1
Donald E. Washkewicz (60) Parker Hannifin Corp.
$17,312,616 $12,560,961
37.8
$1,097,250
$0
$5,983,413
$5,912,573
$2,197,768
$2,016,512
$105,100
$853.4
203.7
2
Alexander M. Cutler (59) Eaton Corp.
$12,798,596 $8,536,007
49.9
$1,175,100
$0
$3,595,263
$0
$6,665,063
$1,226,019
$137,151
$929.0
142.6
3
Anthony J. Alexander (59) FirstEnergy Corp.
$11,627,657 $12,441,092
(6.5)
$1,328,404
$0
$4,890,717
$0
$2,468,950
$2,883,006
$56,580
$784.0
-22.1
4
W. Nicholas Howley (58) TransDigm Group Inc.
$10,968,160 $11,757,143
(6.7)
$611,250
$575,000
$0
$0
$0
$0
$9,781,910
$125.3
-18.6
5
Alfred M. Rankin Jr. (69) Nacco Industries Inc.
$10,531,524 $3,488,334
201.9
$1,217,943
$0
$5,306,595
$0
$2,037,348
$1,628,046
$341,592
$79.5
155.6
6
Richard J. Kramer(1) (47) Goodyear Tire & Rubber Co.
$10,134,391 $5,553,042
82.5
$929,924
$0
$479,992
$1,392,000
$5,653,500
$1,626,814
$52,161
($216.0)
NM
7
Glenn M. Renwick (55) Progressive Corp.
$9,605,558 $9,128,036
5.2
$750,000
$0
$7,500,004
$0
$1,265,625
$0
$89,929
$1,068.3
1.0
8
Richard K. Smucker(2) (62) J.M. Smucker Co.
$7,977,283 $4,688,555
70.1
$820,000
$16,400
$2,345,750
$0
$1,558,000
$3,176,314
$60,819
$505.2
8.0
9
Christopher M. Connor (54) Sherwin-Williams Co.
$7,735,200 $7,495,810
3.2
$1,221,987
$0
$2,095,925
$1,964,476
$2,085,000
$0
$367,812
$462.5
6.1
10
James W. Griffith (57) Timken Co.
$7,711,127 $3,960,155
94.7
$1,025,004
$0
$802,518
$1,915,053
$2,562,502
$1,332,000
$74,050
$274.8
NM
11
Stephen D. Newlin (58) PolyOne Corp.
$7,511,135 $3,823,505
96.4
$860,000
$0
$967,589
$850,590
$3,030,236
$538,990
$1,263,730
$162.6
228.5
12
Timothy P. Smucker(2) (66) J.M. Smucker Co.
$6,830,263 $4,087,665
67.1
$820,000
$16,400
$2,345,750
$0
$1,558,000
$2,014,057
$76,056
$505.2
8.0
13
David L. Pugh (61) Applied Industrial Technologies Inc.
$5,756,925 $9,381,182
(38.6)
$945,000
$0
$1,435,480
$682,722
$1,890,000
$754,225
$49,498
$86.2
241.9
14
Joseph A. Carrabba (58) Cliffs Natural Resources Inc.
$5,595,592 $5,350,667
4.6
$814,000
$0
$2,859,784
$0
$1,483,074
$394,057
$44,677
$1,019.9
397.3
15
Thomas W. Swidarski (52) Diebold Inc.
$5,531,245 $4,594,850
20.4
$800,000
$0
$1,756,440
$1,222,725
$800,000
$787,477
$164,603
($20.3)
NM
16
Paul G. Greig (55) FirstMerit Corp.
$5,510,259 $5,907,300
(6.7)
$750,725
$691,927
$2,000,000
$0
$1,238,073
$627,261
$202,273
$102.9
25.2
17
Frank C. Sullivan (49) RPM International Inc.
$5,434,034 $2,696,374
101.5
$825,000
$0
$2,955,625
$818,000
$675,000
$69,981
$90,428
$179.4
13.0
18
John M. Stropki (60) Lincoln Electric Holdings Inc.
$4,967,208 $4,604,784
7.9
$783,333
$0
$956,889
$814,220
$1,493,968
$890,627
$28,171
$130.2
168.1
19
James F. Kirsch (53) Ferro Corp.
$4,742,543 $1,332,569
255.9
$885,000
$0
$441,375
$1,530,900
$1,770,000
$0
$115,268
$5.7
NM
20
Joseph M. Gingo (65) A. Schulman Inc.
$4,688,808 $3,702,557
26.6
$775,920
$250,000
$2,696,668
$0
$900,067
$0
$66,153
$50.0
409.2
21
Joseph M. Scaminace (57) OM Group Inc.
$4,623,249 $1,992,934
132.0
$917,600
$0
$745,038
$973,495
$1,776,458
$7,934
$202,724
$83.4
NM
22
Richard L. Kinzel (70) Cedar Fair LP
$4,487,548 $4,098,185
9.5
$1,340,000
$0
$1,600,000
$0
$1,433,800
$60,039
$53,709
($31.6)
NM
23
Michael F. Hilton(3) (56) Nordson Corp.
$4,140,168 N/A
N/A
$534,375
$0
$931,307
$873,877
$961,876
$82,359
$756,374
$187.2
NM
24
Daniel B. Hurwitz (47) Developers Diversified Realty Corp.
$4,023,359 $8,214,283
(51.0)
$616,000
$0
$1,481,600
$0
$1,848,400
$0
$77,359
($209.4)
NM
25
Zev Weiss (44) American Greetings Corp.
$3,881,709 $3,270,983
18.7
$944,495
$0
$368,769
$630,278
$1,716,715
$125,212
$96,240
$87.0
6.7
26
Kevin M. McMullen (50) Omnova Solutions Inc.
$3,772,698 $2,899,904
30.1
$671,400
$0
$927,971
$0
$1,967,034
$126,173
$80,120
$101.1
196.5
27
John C. Corey (63) Stoneridge Inc.
$3,714,673 $1,196,410
210.5
$655,000
$0
$1,296,116
$0
$1,056,000
$0
$707,557
$10.8
NM
28
Richard J. Hipple (58) Materion Corp.
$3,674,956 $2,536,391
44.9
$704,634
$168,450
$419,384
$615,717
$1,694,961
$40,506
$31,304
$46.4
NM
29
Craig S. Shular (58) GrafTech International Ltd.
$3,333,873 $3,446,396
(3.3)
$677,680
$0
$1,113,840
$567,840
$870,000
$18,133
$86,380
$176.5
1,306.3
30
Jeffrey I. Friedman (59) Associated Estates Realty Corp.
$3,301,317 $2,350,077
40.5
$487,479
$874,537
$1,724,116
$0
$0
$84,313
$130,871
($8.6)
NM
31
Marc A. Stefanski (56) TFS Financial Corp.
$3,244,812 $3,107,625
4.4
$1,080,000
$0
$499,800
$999,943
$338,742
$146,193
$180,134
($4.9)
NM
32
Gerald B. Blouch(4) (64) Invacare Corp.
$3,204,967 $2,564,202
25.0
$694,000
$287,800
$292,784
$394,500
$857,090
$575,221
$103,572
$25.3
-38.5
33
Walter M. Rosebrough Jr. (57) Steris Corp.
$3,052,301 $3,019,503
1.1
$750,000
$0
$1,115,450
$534,359
$555,900
$0
$96,592
$42.1
-66.7
34
Samuel F. Thomas (59) Chart Industries Inc.
$2,515,730 $1,640,395
53.4
$600,000
$0
$778,955
$559,672
$512,010
$0
$65,093
$20.2
-67.0
35
Robert G. Ruhlman (54) Preformed Line Products Co.
$2,370,100 $2,234,614
6.1
$675,000
$0
$675,000
$0
$675,000
$0
$345,100
$23.1
-1.0
36
Thomas M. O'Brien (44) TravelCenters of America LLC
$2,344,100 $2,352,675
(0.4)
$300,000
$1,300,000
$744,100
$0
$0
$0
$0
($65.6)
NM
37
John C. Orr (60) Myers Industries Inc.
$2,210,527 $1,569,300
40.9
$725,000
$454,160
$563,305
$254,280
$0
$161,014
$52,768
($42.8)
NM
38
Steven L. Gerard (65) CBiz Inc.
$2,156,012 $2,291,121
(5.9)
$675,000
$185,625
$270,000
$376,200
$354,375
$0
$294,812
$24.5
-21.9
Rank
Company net Nonequity Change in All other income 2010 Stock awards Option awards incentive plan pension value compensation (millions)
Source: Company proxy statements. 2010 net income and net income % change provided by Compustat, www.compustat.com. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and enhanced versions of most lists, with more companies, are available to purchase at www.crainscleveland.com. (1) Mr. Kramer was elected CEO and president on April 13, 2010 and elected chairman effective Oct. 1, 2010. (2) Effective Aug. 16, 2011, co-CEO Richard K. Smucker will become the sole CEO. Timothy P. Smucker will continue to serve the company as chairman. (3) Mr. Hilton was named president and CEO effective Jan. 16, 2010. (4) Mr. Blouch was named president and CEO on Jan. 1, 2011. He served as interim CEO since April 30, 2010.
Company net income % change from 2009
RESEARCHED BY Deborah W. Hillyer
20110620-NEWS--17-NAT-CCI-CL_--
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17
Deals: Valuations soon may peak, ebb later this year continued from PAGE 1
“When the market went down, nothing was worth anything,” he continued. “Around midway through last year, you began to see a sudden change, and it surprised a lot of people. I think it’s still surprising people. The frenzy is on.” Today’s acquisition market is one of stiff competition, and company valuations have reached aggressive, at times “eye-popping,” levels not seen since 2008 and 2007, according to many in Northeast Ohio’s dealmaking community. In the United States and worldwide, the average merger and acquisition “multiple” — the number multiplied by a company’s EBITDA to generate its purchase price — is the highest it has been since 2007, according to data from Thomson Reuters.
Declining chances to win Today’s hefty demand and lesser supply have driven up prices, insiders said. Strategic buyers have a lot of cash on their balance sheets and are eager to grow via acquisition. Financial buyers are hungry, too, particularly private equity firms, which lost about two years of investing during the recession. For some private equity firms, there’s a great sense of urgency because their agreements with investors dictate that if they haven’t invested the money by a certain time, they must return it, Mr. Della Ratta explained. The overhang of private equity capital is estimated at more than $450 billion, according to PitchBook, a private equity industry research firm. That has created quite the competition among buyers who need to put capital to work. “We’re being outbid more often in the U.S., particularly on the larger deals,” said Stewart Kohl, co-CEO of The Riverside Co., one of the region’s most prolific private equity firms. That’s part of the business, he noted, but is happening more frequently than it has since 2007. Riverside, which has made nine acquisitions this year, paid multiples ranging from 5 to 10. In other
recent years, the range was more like 4 to 8 or 9, Mr. Kohl said. “We have moved up in price because we need to, but we haven’t gotten crazy,” he said. It is harder today to close a deal, agreed John LeMay, partner of the Cleveland private equity firm Blue Point Capital Partners LLC. “Right now, for those auctions that we pursue, the probability for all of us … of being successful in winning one of those auctions has declined,” he said. Those are disappointing moments, said Tom Littman, senior managing partner of Kirtland Capital Partners in Beachwood, which last summer closed its most recent acquisition — Metrics Marketing Group in Westlake. And it’s expensive, Mr. Kohl said. “In some of these cases, we have spent a lot of time, effort and money … to develop our views and our bid, and all of that is ‘wasted’ if it doesn’t ultimately lead to us buying the company,” he said. “It is frustrating.” Another driver of the higher valuations: More money is available for such deals. Debt markets have improved, and lenders have warmed back up to financing buyouts. However, it is the larger transactions that can “find all the credit capital that they want,” said John Sinnenberg, chairman of the private equity firm, Cyprium Investment Partners. Smaller deals require more equity, he noted.
Seller’s market Of course, higher valuations make many a seller happy. The impact to private equity firms, which buy and sell businesses, is twofold. Like sellers, they’re relishing the better prices they receive for companies they sell. But when they’re buying, higher valuations require more equity. That, coupled with an economy that’s not growing quickly, means returns will be lower. “When multiples go up, equity goes up, you wring your hands more, your palms sweat more, and it becomes a harder and harder decision,” Mr. Kohl said. “We have more money at risk if something goes wrong, and our returns are lower because the same gain made
Olympic Steel to unveil wind turbine Olympic Steel Inc. the installation, ON THE WEB Story from hopes to get some www.CrainsCleveland.com. provided by the air. Ohio Department With some taxpayer help via the of Development’s Advanced Energy Ohio Department of Development, Fund. the Bedford Heights-based company Department spokeswoman Bethany is putting up a 120-foot-tall, 100McCorkle said Olympic is receiving kilowatt wind turbine, which it will that money in the form of a grant. unveil at a ceremony on Thursday, The turbine, a gearless, direct-drive June 23. design with a rotor that is 69 feet Once complete, the turbine is across, is mounted atop a 120-foot expected to provide about 15% of tower at Olympic’s facility on Richthe power consumed at Olympic, a mond Road. In addition to providing steel processor and service center power to Olympic, it will sell excess that sells steel to manufacturers. power to the local energy grid, The company isn’t saying how Olympic said. long it will take the turbine, which Olympic chairman and CEO cost $550,000, to pay for itself, Michael D. Siegal said the company but steel service centers use large worked with both the state and the amounts of electricity for both lighting city of Bedford Heights to put the and processing. A single service project there. center easily can pay thousands of “It is our intention to continue to dollars per month for its power. pursue these types of opportunities One factor that will help make to increase sustainability including that payback period shorter is and beyond our ISO 14001certifica$200,000 in funding to help pay for tion,” Mr. Siegal said.
MULTIPLICATION TABLES Company valuations are at levels not seen since 2007 and 2008, leading to a stiffly competitive acquisition market. Here’s a look at United States and worldwide multiples — the number multiplied by a company’s EBITDA to generate its purchase price — from Thomson Reuters.
Year
U.S.
Worldwide
2011
13.3
12.4
2000
12.7
11.9
2009
12.4
11.6
2008
12.8
12.4
2007
14.7
14.0
2006
13.8
13.7
2005
15.1
13.7
2004
13.8
12.5
2003
12.3
11.6
with more money is a lower return.” However, Mr. Sinnenberg noted, private equity can afford to generate lower returns at a time when the market as a whole is offering lower returns.
Those companies commanding some of today’s highest valuations are the companies perceived to possess stable cash flow, Mr. Sinnenberg said. Certain industries, too, are enjoying higher valuations than others, Mr. Della Ratta said. He cited health care (because “it never really lost a beat” in the recession), food (because buyers view its earnings stream as less risky) and technology (which typically draws higher multiples). Depending on the arrangement, investment bankers such as Western Reserve Partners stand to make more money when sale prices are higher. All four of the deals Mr. Della Ratta has personally closed in 2011 drew high valuations, and in three cases, earned the firm an incentive fee, he said.
At the top? Many dealmakers believe valuations are nearing their peak. Seemingly all predict that M&A activity will increase in the second half of this year, and that, according to Mr. Della Ratta, will cause company valuations to fall some time later. The ultimate outcome of the highly priced deals of today depends greatly
on the economy, Mr. Sinnenberg said. If it grows sustainably, companies should be able to reduce the leverage on them. If the economy stutters, Mr. Sinnenberg predicts it will result in “a lot of distressed companies.” Mr. Kohl believes it’s likely some deals will turn out unfavorably. “There are some companies that are trading … so high, that require so much equity, that they will not be good deals, and there will be disappointments to the buyers and their investors,” he said. “That’s one of the consequences to a time like this.” Paul Schneir, managing director of KeyBanc Capital Markets, a subsidiary of KeyBank and an investment bank, does not believe the current conditions are the making of a bubble. Although financing increasingly is available today, it’s doled out more judiciously than it was before the meltdown, he said. Plus, Mr. LeMay said, today’s is not the indiscriminate deal market it was several years ago. “Really good companies are getting very high valuations,” he said. “Weaker companies are not getting extreme valuations. People are drawing distinctions.” ■
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THEINSIDER
THEWEEK JUNE 13 - 19 The big story:
Agilysys Inc. is going south. The publicly traded information technology services company plans to close its Solon offices and move its headquarters to Alpharetta, Ga., north of Atlanta. The move is intended to save the company money by allowing it to reduce the amount of space it uses. It also will put the company closer to its two operating divisions. Its Hospitality Solutions Group is based in Alpharetta, and its Retail Solutions Group is in Greenville, S.C.
Doubling down: Gov. John Kasich wrangled a bigger cut of the profits for the state from the under-construction casinos in Cleveland and Cincinnati. He said the state will get an additional $110 million over the next 10 years on top of the $50 million one-time licensing fee and 33% tax on gambling revenues included in the 2009 constitutional amendment that ushered in gaming in Ohio. Casino part-owner Dan Gilbert said construction will resume this week on the transformation of the downtown Higbee Building into a temporary home for the Horseshoe Casino Cleveland and on construction of a new casino in Cincinnati.
The letter of the law: Philips Healthcare received a warning letter from federal regulators stating that the company’s Highland Heights division has not adequately fixed a list of 16 procedural violations identified during an inspection that took place during the second half of 2010. The Food and Drug Administration noted in the letter that, after three responses from Philips, the agency still did not have enough information to determine whether the company has taken adequate steps to fix many of the violations. Philips, which builds computed tomography, or CT, scanners and nuclear medicine scanners in Highland Heights, said it’s “applying all necessary resources” to fix the violations. Good grass: U.S. Sen. Sherrod Brown announced a $5.7 million award from the U.S. Department of Agriculture that he said could create up to 1,210 new jobs by enabling Northeast Ohio farmers to grow a clean energy biomass known as “miscanthus giganteus.” Farmers in Ashtabula, Lake, Geauga and Trumbull counties — as well as in several neighboring counties in Pennsylvania — will be eligible to receive the funds to grow miscanthus, a type of grass, which will be converted into biofuels at an Aloterra Energy plant in Conneaut. Hollywood North: The Ohio film tax credit attracted another movie shoot to Cleveland. “I, Alex Cross,” based on a book by mystery novelist James Patterson, will begin filming in Cleveland in August. This is the fourth film to get the tax credit for filming in Northeast Ohio so far this year. The Ohio Film Office estimates the $5 million tax credit will create 183 crew jobs and 1,700 movies extra jobs.
Quick turn:
MetroHealth’s chief financial officer, Sharon Kelley, will step down at the end of the month to “pursue other transformation consulting opportunities,” according to an internal announcement sent to the health system’s employees. The county-subsidized health system will conduct a national search for her replacement. Ms. Kelley has been at MetroHealth since 2008 and has been CFO since 2009.
At a standstill: Ohio’s unemployment rate was 8.6% in May, unchanged from April. The state said Ohio’s nonfarm wage and salary employment was virtually stagnant, increasing 12,000 over the month to 5,104,200 in May from the revised 5,092,200 in April. The number of workers unemployed in Ohio in May was 508,000, down from 509,000 in April.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
When business life gives you lemons … ■ Maybe, if I had participated in Lemonade Day as a kid, the lemonade stands I ran actually would have made money. You see, my friend Shawn and I only charged a quarter per glass — not enough to reach profitability, according to Greg Malkin. Luckily, Mr. Malkin’s students (some of whom are pictured at right) at University School discussed how to set prices before putting up their own lemonade stands on May 29. University School was one of five schools and school districts that participated in Northeast Ohio’s first regionwide Lemonade Day, a national event where students learn about entrepreneurship by selling lemonade. Participating students work with teachers and/or their parents to figure out how best to run a lemonade stand. That means raising money to buy lemonade, choosing a brand to sell, figuring out where to put the stand and marketing the product, even if that just means stapling flyers to neighborhood phone poles. Students can keep the profits, but they are encouraged to give some to charity. It’s a good way to get young kids excited about entrepreneurship, said Mr. Malkin, who is director of the Entrepreneurial Institute at University School, which has an elementary school in Shaker Heights and a high school in Hunting Valley. “It is an entire business. It’s got every-
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thing,” said Mr. Malkin, who also founded Beachwood-based Technical Software Inc., which merged with a group of similar companies in 1997. Now Mr. Malkin’s job is to get more Northeast Ohio kids to participate in Lemonade Day next year. He’s already putting together marketing materials to get the attention of other schools and youth groups. They’ll be able to participate for free, at least for one more year. The Burton D. Morgan Foundation paid a one-time fee that will allow any group in Northeast Ohio to participate for free through 2012. — Chuck Soder
White House + green paint = an award for Sherwin-Williams ■ Sherwin-Williams makes paint in almost every color imaginable, but its favorite at the moment might be green. After all, it’s always some form of “green” that gets people’s attention and, in this case, Sherwin-Williams’ new environmentally “green” paint landed it some praise from the White House as it earned the Presidential Green Chemistry Challenge Award for 2011. Sherwin-Williams CEO Chris Connor is heading to Washington, D.C., today, June 20, to accept the award from the White House and the U.S. Environmental Protection Agency. Mr. Connor credited his company’s R&D team with being able to formulate a paint that reduces volatile organic compounds (VOCs) by 60% and uses common and recy-
Local law firm pitches in as golfer hits IRS rough patch
Ridgid has expanded its product line with a tube cutter that it says provides “fast, easy cuts without the need for ratcheting” and with a digital monitor that offers “simple, full-feature digital recording.” The Ridgid cutter is intended for polyethylene, polypropylene, rubber hose, PVC and CPVC with a capacity up to 1 5/8 inches (42 millimeters) outer diameter. A 75-watt motor drives the product’s blade to provide a square, precise cut in four seconds, Ridgid says. The company says repeat cuts can follow with the use of the push-button blade release. Meanwhile the SeeSnake has a one-touch feature that enables the digital monitor to record still images and video. The monitor features video and image playback and the exclusive auto-log recording method, which compresses files to help save memory on the USB thumb drive, where digital inspections are stored, Ridgid says. For information, visit www.Ridgid.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
Program for uninsured reaps early benefits ■ Lower costs, fewer emergency room visits and better outcomes are pipe dreams for many hospitals, but the MetroHealth System appears to be making strides in those areas for thousands of uninsured patients with its Partners in Care program. MetroHealth in May 2009 launched the program to serve uninsured patients in a less expensive but more efficient way by partnering patients with primary care teams. The program is modeled after the “medical home” concept — an approach in medicine where a health care provider serves as the go-to spot for a patient’s care and tracks the outcomes. So far, the results are encouraging as patients in the program have seen better outcomes than those not enrolled, according to the first full year of clinical data available from the project. Emergency department visits by patients enrolled in the program were 6.8% lower, and the average cost of services for enrolled patients was 5.1% lower, or about $28 less per visit, than the cost for patients not in the program. Also, hospital admissions were nearly 35% lower among those enrolled in the program; average cost per discharge was 15% lower. — Timothy Magaw
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
COMPANY: Ridgid, Elyria PRODUCTS: Powered plastic pipe and tube cutter (Model TC-40) and the SeeSnake CS-10 digital monitor
cled ingredients to do it. “Incorporating simple ingredients like soybean oil and recycled plastic bottles into a first of its kind powerful paint formula, provides a winning transformational combination for our customers and the environment,” Mr. Connor said. — Dan Shingler
■ Cleveland law firm Kadish, Hinkel & Weibel is representing professional golfer Retief Goosen, the winner of the U.S. Open in 2001 and 2004, in a tax dispute over the share of his endorsement income generated in the United States. The firm has some work to do, as Bloomberg reported the U.S. Tax Court this month ruled Mr. Goosen understated his share of that income. “On the evidence presented, we cannot accept petitioner’s contention that less than 7% of his royalty income is U.S. source income,” Judge Diane Kroupa wrote in a ruling released June 9. The decision involved Mr. Goosen’s endorsement deals with companies including Electronic Arts Inc. and Rolex Group. The IRS determined that Mr. Goosen owed $20,224 for 2002 and $144,474 for 2003. The golfer challenged the IRS findings in tax court. “We’re in the process of reviewing it,” one of his tax attorneys, Matthew Kadish of Kadish Hinkel, told Bloomberg.
Cleveland Fed researcher sees economy shift to lower gear ■ U.S. gross domestic product should expand by less than 3% this year due to high energy prices depressing consumer spending and the lingering effects to the global economy from the major Japanese earthquake in March. So says Mark Schweitzer, research director at the Federal Reserve Bank of Cleveland, according to a Dow Jones story. He said the U.S. economy is unlikely to grow at a
very strong pace for some time as continued troubles in housing weigh on consumer confidence and spending. At the end of April, “the Fed projected that GDP would grow between 3.1% and 3.3% this year, but officials are likely to downgrade their forecasts at their next meeting on June 21-22,” according to Dow Jones. For 2012, Mr. Schweitzer “expects the economy to pick up some speed, expanding between 3.5% and 4.0%,” Dow Jones reported. “That is only slightly below the Fed’s April growth forecast of between 3.5% and 4.2%.”
Writer takes by-the-numbers approach to famous deaths ■ Northeast Ohio fans of true-crime writing might want to check out “Popular Crime: Reflections on the Celebration of Violence,” which has chapters on two of the region’s most notorious cases: the Marilyn Sheppard murder and the “Torso” killings in the 1930s. The book is written by Bill James, who introduced modern statistical analysis to baseball through his “Baseball Abstract” books. Critiquing “Popular Crime” in The New York Times, Bryan Burrough says Mr. James’ book gets at most of the famous U.S. crime cases. The review says Mr. James seldom argues with the verdict of history. “When James disagrees with history, however, he is a dog with an excellent bone,” he wrote. “He doesn’t believe Sam Sheppard murdered his wife in 1954. Instead, he spins a scenario … that Sheppard hired a handyman — who some believe committed the murder — to kill her.” The book starts slowly but then “begins to really hum as James pores over the intricacies of the ‘Torso Killer’ in 1930s Cleveland … and other (cases) in which the bodies are still warmish,” Mr. Burrough concluded in the review.
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