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DOUBLE ISSUE

I-X Center gears up for expansion $30M renovation to improve trade show center’s capabilities By DAN SHINGLER dshingler@crain.com

he big gorilla of Cleveland’s trade show venues is about to receive a major face-lift as the International Exposition Center begins a $30 million renovation that will add interior display space and will spruce up most other areas of the gigantic meeting hall. “Obviously, we think the business justifies the investment — and it’s a positive for Northeast Ohio, too,” I-X Center president Robert Peterson said last Wednesday, June 22. All told, the former military bomber and tank factory has about 2.2 million square feet under roof, Mr. Peterson said, but only 1.4 million square feet is the display space people see when they attend events such as home and garden, automotive or industrial

PHOTOS PROVIDED

See EXPAND Page 17

ABOVE, CLOCKWISE: The Cleveland Auto, Piston Power and Fabulous Food shows are part of the I-X Center’s annual event schedule. The facility’s planned expansion will incorporate additional space to meet the needs of these and other larger shows.

Fine print of state budget reveals obscure tax breaks By JAY MILLER jmiller@crain.com

It’s easy to miss all the tax breaks lurking in a 5,000page document, such as Ohio’s next two-year budget. So it won’t be surprising if, in the end, several lesspublicized proposals consistent with Gov. John Kasich’s desire to make the state more business friendly by lowering taxes survive the negotiating process and make it into the

budget’s final form. For example, Gov. Kasich disclosed June 16 in a speech to members of the Ohio Society of CPAs that he would be taking to a House-Senate conference committee — thus bypassing public scrutiny before standing committees in the Legislature — a tax break he called “Invest Ohio.” Under this proposal, any Ohioan who invests in any Ohio business

NOTICE TO READERS Crain’s Cleveland Business will resume publication on July 11. Visit CrainsCleveland.com daily for the latest Northeast Ohiorelated business news, blogs and more. Follow us on Twitter @CrainsCleveland and Facebook.com/CrainsCleveland

See BUDGET Page 6

Lincoln showroom upgrades to showcase luxury of brand By DAN SHINGLER dshingler@crain.com

Lincolns are luxurious cars — just ask anyone who sells them for a living. Now Ford Motor Co. wants its Lincoln dealers here and around the country to walk the walk and is asking them to make big investments to upgrade their facilities. Ford says it will invest $1 billion in new vehicles by 2014, and it doesn’t want those fancy new cars and SUVs to be sitting in showrooms that don’t match their glitz.

At least some dealers see the logic. “We’ve got to provide the facility and the experience that Mercedes and BMW does. It makes sense,” said Nick Mayer, owner of Nick Mayer Lincoln in Westlake. “Just producing a good product isn’t going to get it done,” Mr. Mayer said. “The demographic they’re going after is much more picky, much more demanding (than the typical car buyer), and they’re used to being taken care of.” Ford would fare well if all its dealers See LINCOLN Page 6

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CALL FOR NOMINATIONS Go green

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You have until July 15 to nominate an organization for its commitment to sustainability by focusing on the triple bottom line: Profits, People and Planet.

Nominations for this year’s Forty Under 40 class are open until Aug. 8. For event nomination information, go to www.CrainsCleveland. com/events.

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Going Places ...............10 List: Engineering firms..16 Reporters’ Notebook....19 What’s New..................19

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RIDING ON THE METROS Ohio’s three largest cities were responsible for 59% of the Gross State Product in 2010, according to a report released last week by the U.S. Conference of Mayors. The report, which garnered much attention for its assertion that many U.S. cities won’t return to pre-recession employment levels until 2020, contained all sorts of information about the economic impact of metropolitan areas. Here’s a list of the seven Ohio metropolitan areas with Gross Metropolitan Product of more than $10 billion in 2010:

City

2010 GMP

Share of GSP

$105.1B

22.0%

Columbus

93.9

19.7

Cincinnati-Middletown

82.7

17.3

Dayton

33.7

7.1

Akron

27.6

5.8

Toledo

26.3

5.5

Youngstown-Warren-Boardman

13.2

2.8

All Ohio metro areas

417.2

87.3

Cleveland-Elyria-Mentor

your banker should understand you as well as your business

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Former Attevo employees sue company By CHUCK SODER csoder@crain.com

Plaintiffs challenge actions of IT outfit, which defends its position

Four former Attevo Inc. employees are suing the Cleveland company, and more could join them. Arguing that executives at the information technology firm broke Ohio law and have been dishonest with employees, the four plaintiffs are suing partly because three of them want the court to shred their noncompete agreements. The plaintiffs, who also are seeking

money that they claim Attevo owes them, recently have started two separate companies among them. The new businesses aim to compete with Attevo and hire former Attevo employees currently bound by noncompete agreements, said plaintiff Brian Stein, who left his position as a company director in May. Many of the foursome’s former colleagues also are upset with the

THE WEEK IN QUOTES

way Attevo has been run, according to both Mr. Stein and the lawyer for the plaintiffs, Kim Doucher of Doucher and Doucher LPA in Columbus. Ms. Doucher said several current and former Attevo employees have called to inquire about joining the lawsuit, filed May 26 in Franklin County Common Pleas Court. In the complaint, the four plaintiffs argue that Attevo executives

broke Ohio law by continuing to do business under the Attevo name after the state of Ohio revoked the company’s articles of incorporation. Attevo, which employs 65 people, lost its articles of incorporation in April because it owed about $47,000 in state taxes and failed to file its corporate franchise tax reports on time. The company has since paid that debt, and its articles were rein-

INSIGHT

Agency inks pact with union to link future wage hikes to revenue By JAY MILLER jmiller@crain.com

— Robert Peterson, president, I-X Center. Page One.

— Barbara Benton, vice president of government affairs, Ohio Society of CPAs. Page One

“I don’t think as a business leader you’re ever comfortable. I feel good about the things we’ve done, but that doesn’t mean I sleep better at night.” — Robert Meyer, president, Monarch Steel. Page 11

“We did learn how to fake confidence until (our recovery) became real … We’re always going to try to be as positive as we can.” — Marcie Goodman, executive director, Cleveland International Film Festival. Page 13

See ATTEVO Page 6

RTA takes a ride on the wild side with transit police

“The beauty of our facility and the Cleveland Convention Center is we really complement each other. We are really a B-to-C — business-toconsumer — venue, and they are primarily B-to-B.”

“CAT tax exemptions are always a concern for us because the goal of the CAT tax … was to keep the base very broad and therefore the rate very low. With each proposed exemption that becomes law, it makes it that much harder to keep the rate low.”

stated earlier this month. The plaintiffs — Mr. Stein, of Solon; Matt Wienke of Dublin, Ohio; Gary Dowdy of Hot Springs, Ark; and Ryan Hartley of Powell, Ohio — also argue that Attevo executives have engaged in other questionable business practices. Among other allegations, the complaint states that the company failed to make deposits into multiple employees’ 401(k) retirement accounts and Health Savings Accounts. The company also

JASON MILLER

Colleen M. Cotter, executive director of The Legal Aid Society of Cleveland, is worried about the stability of the nonprofit, which has had to tap into its reserves to buoy declining revenue.

A TROUBLING CASE Legal Aid Society concerned about ability to deliver services as demand soars, funding dries up By MICHELLE PARK mpark@crain.com

olleen M. Cotter stops short of calling it a crisis, but says it will fast become one if something doesn’t give. What once was the largest source of operating funds for The Legal Aid Society of Cleveland, which assists and represents low-

income people in civil matters, has plunged in value 72% since 2007. It’s a drop that has required the nonprofit to cut into its reserves to avoid layoffs, and has impaired the organization’s ability to serve a rising tide of clients, according to Ms. Cotter, its executive director. The money at issue here and nationwide comes from what are known as “interest on lawyers See LEGAL Page 5

LEGAL DILEMMA The Legal Aid Society of Cleveland’s overall revenues have been declining since 2007. Similarly, the revenue generated from interest on lawyers trust accounts, or IOLTA, that the Ohio Legal Assistance Foundation administers to the society also has been dwindling.

Year

Total revenue

IOLTA revenue from OLAF

2011*

$9.4M

$728,000

2010

9.2

928,000

2009

8.9

773,025

2008

9.5

1.8M

2007

3.4

* ANTICIPATED REVENUES

Transit police and the Greater Cleveland Regional Transit Authority have reached an unusual public-sector labor agreement that ties police wage increases to increases in RTA revenue. The agreement, which runs through February 2014, gives the 104 Fraternal Order of Police members a 1.75% wage increase in September, based on a 1.75% increase in RTA revenue in 2010 from 2009. Wage adjustments in March 2012 and March 2013 will be based on increases in RTA’s passenger and sales tax revenue for the prior year, with a 3% annual cap on increases. If revenue remains flat or declines, the police get no increase. “It makes sense for the times we’re in,” said Joe Calabrese, RTA’s CEO and general manager. “This is a way wages can be increased, but only when there’s a way we can afford them.” Calabrese Mr. Calabrese said the contract will help forestall service cuts and layoffs. “It made financial sense and is justifiable to the public,” he said. Fraternal Order of Police president Michael Gettings said his members understood that since labor is RTA’s biggest expense — nearly 63% of operating expenditures, according to the transit system’s 2010 annual report — fighting for a pay increase without a revenue increase would mean job cuts. “A lot of unions take the mentality, ‘We’ll take as much as we can’ and they forget that their future is tied to management’s future,” Sgt. Gettings said. “That’s something that, as a group, we understand. “We knew that if we tie (pay increases) to revenue, worst-case scenario, however well RTA is going See RTA Page 9

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ABSMaterials arm pumped up Subsidiary of Wooster-based water purifier nabs $11M investment for tech production By CHUCK SODER csoder@crain.com

purify two barrels of liquid per minute. The company also plans to build a larger machine made to A subsidiary of ABSMaterials Inc. handle five barrels per minute. in Wooster has received an $11 million ABSMaterials will benefit in two investment that it will use ways if the machines appeal to scale up production of its to drilling companies. Not water purification technolonly does the parent comogy, which the U.S. Departpany own a majority stake in ment of Energy says could Produced Water Absorbents help solve one of the biggest — a stake that will drop to problems facing the oil42% over the next few years and-gas industry. — but it also makes Osorb, The subsidiary, Produced Spoonamore the key ingredient used by Water Absorbents Inc., will the subsidiary’s machines. hire 12 people and will convert The subsidiary will buy the material, several part-time employees to fulla glass-like substance that sucks up time staff members as a result of the fuel oils and other chemicals. investment, which is led by Energy The parent company is pursuing Ventures of Norway. other ways to use Osorb, too. For Most of the new employees will instance, it has set up one subbe engineers, who first will focus on sidiary that markets the material building two machines that Proas a sensor to detect explosives duced Water Absorbents will use to or leaking fluids and another that purify water pulled from oil and gas uses it to extract oils used to make wells, said Stephen Spoonamore, perfumes and other products. who is CEO of the parent company Produced Water Absorbents, and the subsidiary. which also has an office in Houston, Harris and Harris Group Inc. of earlier in June signed a lease on a New York and a limited partnership 45,000-square-foot high-bay plant composed of Ohio-based industriin Wooster, where it will make the alists also invested in Produced Water smaller machines, Mr. Spoonamore Absorbents. Harris and Harris and said. The larger, 35-ton system likely some members of the partnership will be so big that its pieces will need previously financed ABSMaterials, to be shipped by rail and assembled which also counts two state-funded near the water source, he said. groups, JumpStart Inc. and North Opportunity abounds Coast Angel Fund, as investors. The new purification systems will ABSMaterials has proven that be automated versions of a 17-ton Osorb works, Mr. Spoonamore said. pilot machine that Produced Water He mentioned how the U.S. DepartAbsorbents already uses. Like the ment of Energy put out a news pilot unit, they will be designed to release in April calling it “a break-

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through in hydrocarbon removal technology.” ABSMaterials received a grant from the department in 2010. The pilot machine works, he said, and has been tested at nine sites. “We demonstrated that we could do this over and over again,” he said. One of those sites was a well in the Marcellus Shale. The geological formation — which stretches from the western edge of Virginia, up through eastern Ohio and Pennsylvania and into New York state — is said to contain enormous amounts of natural gas. Drilling companies now can access that gas using a relatively new technique called hydraulic fracturing, or fracking. The rush to tap into the Marcellus Shale and other previously inaccessible formations should create opportunities for Produced Water Absorbents and ABSMaterials, Mr. Spoonamore said. The companies’ location in Wooster puts them at an advantage, he said, adding that a deeper but bigger formation called the Utica Shale extends into Northeast Ohio. However, a lack of regulations on how water from drilling wells should be cleaned poses a challenge to the companies, he said. Some states have strict regulations, while others don’t, he said. The companies would go on a hiring frenzy, he added, if federal regulators decided that the Clean Water Act of 1972 applied to water produced from drilling. Still, there is no lack of opportunity for Produced Water Absorbents and ABSMaterials, said Kristian Lier, an investment manager with Energy Ventures. There is a “huge need” for a technology to purify water from oil and gas wells, Mr. Lier said. ■

Ford begins plans to demolish shuttered Cleveland Casting Plant By STAN BULLARD sbullard@crain.com

Ford Motor Co. is taking steps to demolish the closed Cleveland Casting Plant, perhaps as soon as July. That’s the word from Marty Surella, Brook Park building commissioner. He said he met Tuesday, June 21, with two contractors retained by the automaker to do the deed, construction manager Rudolph/ Libbe Inc. of Walbridge, Ohio, and Independence Excavating Co. of Independence. The companies plan to start razing the building at 5600 Henry Ford Boulevard in July. Only routine steps are required; the contractors need to register with the city and apply for a demolition permit. “Their intentions are to take the building down to the concrete slab (foundation) and leave it there,” Mr. Surella said. “They will fill tunnels, basements and cap utilities throughout the property. It’s no surprise to us.”

Contractors will need months to demolish the nearly 60-year-old structure, which has 1.6 million square feet of factory space — as much space as nearly 28 football fields. Ford earlier this month executed an agreement with the Ohio Environmental Protection Agency to fill in two ponds on the property with foundry sand, according to Cuyahoga County land records. Experts say the covenant not to sue alerts potential future buyers the site cannot be used for residential purposes or as a location for drinking water. Stephanie Denby, a spokeswoman for Ford Land Co., which handles the automaker’s real estate, said the company would not comment on its plans until after it shares them Thursday, June 30, with Brook Park city officials. However, insiders expect little excitement from that session. Since the casting plant, shut last Oct. 30, sits between Ford’s Engine Plant 1 and 2, its most likely use is for potential Ford expansion. ■

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Legal: Attorneys urged to negotiate rates with lenders continued from PAGE 3

trust accounts,” or IOLTA. Attorneys are required to place into trust accounts certain client funds, including settlements and retainer fees. The interest earned on that money has been delivered for the last quarter century to legal aid societies in the state to help fund services for the needy. But because of today’s persistently and historically low interest rates, the rates paid on these accounts are the lowest they’ve been since 1985, when IOLTA accounts came to be in Ohio. As a result, the interest distributed to the six legal aid societies in Ohio in 2010 — $5 million — was the lowest it’s been since 1995. IOLTA revenue for the Legal Aid Society of Cleveland had fallen by last year to $928,000 from $3.38 million in 2007, when interest rates hit their latest peak. That’s no small amount of change in the world of the nonprofit. “It’s $2.5 million a year, so that’s easily 20 more lawyers that I could hire if we had that money,” Ms. Cotter said. “That translates to serving another four times (the number of) clients.” The drop has come as demand has soared for the nonprofit’s services because more people are poor and find themselves in need of legal help — a prominent reason for which is foreclosure. To adjust to the situation, the Legal Aid Society of Cleveland in

2009 began drawing from its reserves. But if IOLTA money doesn’t revive or some alternative source of funds isn’t found by 2013, the organization’s leaders project it will exhaust its current $4 million reserves and will be forced to reduce staff and serve fewer clients. Already, it is turning away more eligible people than it had previously, Ms. Cotter said. “At this point, the clock is ticking,” she said. “I think that we are holding off a crisis hopefully long enough to avoid it.”

Feeling a double whammy Nobody expected interest rates to remain this low for this long, said Angela Lloyd, who in January became executive director of the Ohio Legal Assistance Foundation, which disperses IOLTA funds to the state’s legal aid societies. “I’m wringing my hands,” she said. “In the short term, I am not sure what we can do to make up for the shortfall. Legal aids have been operating deficit budgets. Salaries have been frozen. The attrition of (staff) lawyers has been dramatic.” And there’s a double whammy: The foundation also funds legal aid societies with the surcharge fees on civil case filings, which also have decreased because fewer people are willing to spend money to bring civil actions such as divorces and lawsuits. The fees the state foundation collected in 2010 totaled $14.3 million — the lowest they’ve been

since 2005. Because of the drop in IOLTA money, the Legal Aid Society of Cleveland, which employs 53 fulltime attorneys at its four offices, has not hired an attorney for the past couple years and also has left a few lawyer vacancies unfilled. Salaries have been frozen since January 2010, too. If ILOTA money had not declined, Ms. Cotter estimates her group would be a staff of 75 attorneys serving 40% more clients. All the while, inquiries are mounting: In 2007, the Legal Aid Society of Cleveland received 67,851 calls for help. Last year, it received 108,945 — an increase of more than 60% that Ms. Cotter attributes to more need and more visibility thanks, in part, to a new website the nonprofit unveiled in February. “It breaks my heart,” Ms. Cotter said of serving only some of the people who need help. “Those lowincome people know we’re here, and they call us and we have to turn them away because we don’t have the resources.” From behind the bench, Diane Palos, the administrative judge for Cuyahoga County Domestic Relations Court, says anecdotally the number of people who can’t afford representation is up, something she attributes it to the economic hardship people face today. She also has observed a growing trend of “people who think they

can do it themselves.” While the court suggests those people seek assistance from the legal aid society, “we know there’s a huge waiting list and that there are not enough people to provide those services,” Judge Palos said.

No pot of gold Both the Ohio Legal Assistance Foundation and the local legal aid society are working to diversify their sources of financial support. While she believes IOLTA funds should remain a “bedrock funder of legal aid,” Ms. Lloyd said she is starting to explore other sources of revenue. But, she noted, it’s a big step and it’s complicated. “It’s not like we’re going to find a pot of gold that says ‘Legal Aid,’ and we’re going to use that,” she said. In the meantime, the foundation is encouraging attorneys to ask about the interest rates their banks are paying on their IOLTA products. Many attorneys, Ms. Lloyd said, don’t pay attention to them. “What we want to say to attorneys is, talk with your bank about improving the IOLTA rates,” she said. “Tell them: ‘We’re a good customer, and this money is doing some of the most important work in Ohio.’” The foundation also is working to strengthen its partnership with bar associations and is urging lawyers to perform more pro bono work with the state’s legal aid societies, Ms. Lloyd said.

Ulmer & Berne steps up Fortunately for the Legal Aid Society of Cleveland, the number of volunteer attorneys has climbed to 1,700 from 500 in 2006, Ms. Cotter said. On average, each volunteer attorney represents one to three people in need annually, though some represent 10 to 15, she noted. In addition, the money it receives from United Way in three of the five counties it serves has increased, as have other sources of support. In 2010, every type of donation — individual, corporation/law firm and foundation — was up from what it was in 2007. Those boosts have allowed the Legal Aid Society of Cleveland to refrain from slashing services, something Ms. Cotter argues is the best not only for the low-income community, but also the community at large. When foreclosures are averted, whole neighborhoods are improved, she said. And when people break down barriers to education and become gainfully employed, their tax dollars support whole communities. “When people have their rights enforced, it benefits all of us,” Ms. Cotter said. Early this year, Ulmer & Berne LLP in Cleveland made a commitment of $60,000 in support of the Legal Aid Society of Cleveland. It’s the second time it has made such a large commitment, said Kip Reader, managing partner. ■

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Attevo: Suit says deposits held continued from PAGE 3

had “repeatedly delayed the processing of payroll…,” the complaint states. Attevo executives failed to inform employees the company would not be depositing money into their retirement and savings accounts, Mr. Stein said. “It just didn’t show up,” he said.

Tough times The company has faced financial difficulties lately. The federal government in April filed a $2.8 million tax lien against the company, which failed to make full payments to the Internal Revenue Service from the fourth quarter of 2008 through the third quarter of 2010. Attevo chief financial officer Joe Burmester — who is listed as a defendant in the lawsuit along with CEO C. David Snyder, chief operating officer John Frankovich and human resources manager Marc Blessing — said in a previous interview with Crain’s that the firm was working with the IRS to get the amount of the lien reduced. Mr. Burmester cited the recession as the reason the company’s tax payments fell behind. Improved revenues should help the company pay off the lien over time, he said

during the interview, noting that Attevo turned a profit in 2010. In an email sent to Crain’s last week, Mr. Snyder, Attevo’s CEO, wrote that the firm has “turned the corner, and its future prospects are bright.” During the recession, Attevo laid off no one, according to the email from Mr. Snyder, who founded the company in 2004. Attevo did, however, “ask employees to help by deferring certain payments until things got better.” He wrote that retirement plan payments have since then all been made. One of Attevo’s lawyers, Albert Lucas of Calfee, Halter & Griswold LLP’s Columbus office, said he believes “there was no broadcast announcement of the deferred retirement payments.” Some employees, however, did know ahead of time, he added.

What’s in a name? The plaintiff’s legal arguments related to Attevo’s articles of incorporation do not hold up because companies that have their articles reinstated are able to continue forward “as if the articles had not been canceled,” Mr. Snyder wrote, quoting from the Ohio Revised Code.

Ms. Doucher disagrees. When a company’s articles are revoked, company executives cannot pursue new business under its name, she said. They can only work to wind down the firm or take actions related to reinstating the articles, she said. “If you continue to do ongoing business, knowing that the charter is wrapped up, you’re doing it as an individual, not as an ongoing corporation,” she said. As for the other allegations in the lawsuit, Ms. Doucher said the court could nullify the noncompete agreements if it finds that Attevo executives were not acting in “good faith.” If they had, Mr. Stein said the plaintiffs might have stayed at Attevo. Instead, he and Mr. Dowdy have started mobile technology firm Pervasive Path Consulting LLC of Solon. Likewise, Mr. Wienke, who led Attevo’s Enterprise Information Management practice in Columbus, started an IT consulting company called Infoverity LLC, which employs Mr. Hartley. “If they had engaged the management team to help fix the problems, we would have rolled up our sleeves and been in this together,” Mr. Stein said. ■

Insights from a business owner

JUNE 27 - JULY 10, 2011

Budget: Tax breaks would diminish state revenue continued from PAGE 1

large or small and holds that investment for two years will pay no state income tax on any gain from that investment. Also escaping public attention are a number of proposed tax breaks in the budget bill involving the state’s commercial activity tax, or CAT, which taxes a business’ gross receipts in Ohio at a rate of 0.26% once they exceed $1 million. (Companies with gross receipts under $1 million pay a flat $150.) A job retention tax credit — similar to one used to keep the headquarters of American Greetings Corp., Bob Evans Farms Inc. and Diebold Inc. in Ohio — would give large companies that commit to keeping employees in an existing location a CAT or income tax credit of as much as 75% of payroll for 15 years. In a similar vein, the House’s version of the budget exempts operators of private prisons from the CAT, while the Senate bill exempts those transactions involving the sale and exchange of enriched uranium. The latter exemption would be aimed at helping promote job creation at a proposed uranium enrichment plant in Piketon in southern Ohio. Barbara Benton, vice president of government affairs for the Ohio Society of CPAs, called the proposed budget “transformative.” But her Dublin-based group of tax accountants isn’t keen about exempting

any business revenue from the CAT. “CAT tax exemptions are always a concern for us because the goal of the CAT tax when it was created was to keep the base very broad and therefore the rate very low,” Ms. Benton said. “With each proposed exemption that becomes law, it makes it that much harder to keep the rate low.” The final budget also may include an extension of a key tax credit that has been instrumental in the rehabilitation of older office buildings in Cleveland and elsewhere. The provision was not in the governor’s budget proposal. Instead, the House added language to make permanent the Historic Building Rehabilitation Tax Credit, which was set to expire in July. However, the budget bill caps the amount of tax credits available annually at $25 million, down from $60 million a year in the expiring budget authorization. The tax breaks would mean lost revenue to the state. On the flip side, though, the Senate version of the budget bill calls for the creation of a Joint Tax Expenditure Review Commission to root out and eliminate existing tax breaks that don’t yield a sufficient economic benefit. The conference committee late last week still was haggling over the budget bill, which is likely to total nearly $56 billion for the two-year period that begins July 1. Under state law, the biennial budget must be approved by June 30. ■

Lincoln: Dealers express support, frustration over investment plan continued from PAGE 1

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shared Mr. Mayer’s exuberance. The automaker told its dealers at a recent meeting that it expects them, on average, to spend $1 million apiece to upgrade their showrooms. If they don’t, Ford said, it will seek to take back their franchises, though it would compensate them for doing so, according to the auto industry newspaper Automotive News, a sister publication of Crain’s Cleveland Business. So far, local Lincoln dealers say they intend to stay with the brand and are willing to spend the money Ford wants. Their hope, they say, is that a raft of new vehicles Lincoln has been promising quickly will come to market and will make the upgrades worthwhile. At least one, though, wishes Ford would give dealers the new product first and the ultimatums second — instead of asking for them to spend big money when sales of all autos are still far from their pre-recession levels. “Is it fair to us, today, as a Lincoln dealer? I’d say the answer is no,” said Bob Ganley, vice president of the Ganley Automotive Group, which owns Ganley Lincoln in Bedford and Cleveland. “Now, is it fair in two or three years, when they have seven or either new products? Probably,” Mr. Ganley said. “But bring out the new products you’re saying you’ll bring out, let’s sell a few of them and then let’s talk about investing in new facilities.” Nonetheless, Ganley Lincoln will spend the money and probably will start remodeling late this year — though Mr. Ganley said he does not

yet know how much it will cost. It’s not the money, he said. Ganley Automotive Group has been buying dealerships for other brands in places such as Phoenix in recent years and has built or expanded Toyota, Mercedes, BMW, Subaru, Hyundai and Nissan dealerships across Ohio. “We’re not afraid to invest in brick and mortar,” Mr. Ganley said. The Marshall Superstore Ford/ Lincoln dealership in Mayfield Heights likewise will spend money at Ford’s request, said general manager Greg Gromack. It will do a complete remodel of its showroom — also at a yet-to-be-determined cost — and Mr. Gromack said he understands why Lincoln wants dealers to make the upgrades. “They want it to look more welcoming for the customer when you walk in the front door, more of a Lexus/BMW atmosphere — the way Lincoln used to be,” he said. That was the understanding of all three dealerships reached by Crain’s, and all said they supported the effort and would bow to Ford’s wishes. None seemed as excited about Lincoln’s prospect as Mr. Mayer, however, who said he’s spending even more than what Ford suggested to remodel his dealership, which was built in 1978 and includes 22,000 square feet of showroom, service and office space on four acres. Mr. Mayer said Ford has shed itself of underperforming lines and heavily is investing in future products. The least dealers can do is reciprocate, he said. “Ford can’t do it alone,” Mr. Mayer said. “The dealers that don’t realize that — they’re incompetent.” ■

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Ronald McDonald House

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 27 - JULY 10, 2011

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

It’s a start

he towns are small, and the process launched by their mayors never may lead to its ultimate objective. We nonetheless give a shout of support to the mayors of Moreland Hills, Orange Village, Pepper Pike and Woodmere for beginning the informal process of exploring a merger of their four communities. Mergers are common in the private sector. Managers know the marketplace and investors reward efficiency, and that the greatest efficiency sometimes can be gained when duplicate layers of management and redundant operations are eliminated once two businesses combine. The same motivation to merge hasn’t existed in the public sector, at least not until recently. Communities don’t like to lose their identities, and politicians and the other people who run municipal governments don’t like to lose their jobs. So, local governments have gone merrily along without serious regard as to whether they’d be able to use taxpayer dollars more efficiently if they were to combine with another city, town or village. However, the financial squeeze local governments have felt since the Great Recession has gotten their attention. With local income tax revenues sagging or stagnant and with the state slashing the amount of money it funnels to cities as it pushes its own budget pain down the line, the concept of collaboration with other communities as a way to cut costs has entered into the conversation of municipal leaders. Now along comes last Wednesday’s press conference announcing that the four aforementioned eastern suburbs in Cuyahoga County are pondering a merger. As Crain’s government reporter Jay Miller informed readers of CrainsCleveland.com last week, the mayors of the four communities said they were willing to begin discussions because they believe a merger can save them money. “It does not make sense, in the opinion of many of us, for a county of this size to have 57 different political subdivisions,” said Mayor Bruce Akers of Pepper Pike, who is a longtime advocate of regional collaboration. “The time has come where we can no longer do business as usual.” Mayor Akers couldn’t be more correct. We believe there are multiple towns in Cuyahoga County — and in many other counties, for that matter — that could pair up and in so doing could devote more money to the actual delivery of city services by eliminating overlapping management positions. A big impediment to such combinations, we suspect, is the reluctance of city officials to merge themselves onto the unemployment line. Not that merging communities is a snap. State law makes it a multiple-step process that can take a couple years before voters give a final “yea” or “nay” to a combination. But it’s a process more local leaders would do well to undertake for the good of the taxpayers they serve. County Executive Ed FitzGerald was correct last week in praising the four mayors who are exploring the merger of their communities for “the political courage to step up to the plate and say, ‘We need to think about doing things differently.’” Let’s hope the four are the vanguard of a trend.

FROM THE EDITOR

A view from our hypocrite, Mr. Vegas

h, crap. Craps is coming to our editorial page over the years, as I Cleveland. have been the author of nearly all our Darn you, Dan Gilbert, for editorials that have argued against every bringing temptation my way. casino gambling initiative ever proposed You wouldn’t have seen me write in Ohio. those words as recently as two weeks The hypocrite in me succumbed to the ago. That was before my family’s weekcraps table. long vacation in Las Vegas. On four of our six nights in Vegas, I We stayed at the Flamingo, in the headed to the cashiers’ cage, cashed a heart of The Strip. We’d plant travelers’ check and eagerly ourselves from morning until MARK threw a $100 bill onto the table mid-afternoon at the hotel’s ter- DODOSH in exchange for a like amount in rific Beach Club pool, which is chips. lined with palm trees and cabanas Now, keep in mind I never to help escape the desert sun. had played a casino table game Then we’d shower up and enjoy before (I don’t count as “playing” an evening meal at a wonderful the $40 I lost in the course of 20 restaurant. (My favorite was minutes at a roulette wheel a Mon Ami Gabi, a wonderful couple years back). So, I was sidewalk café at the Paris hotel; learning as I went along. my oldest son, Nick, treated the I lost the full $100 the first family to dinner, and we feasted on meltnight and $65 more the second night I in-your-mouth steaks — I recommend the played. However, by the third time I bellied steak bordelaise — while watching peoup to the table, I was catching on to the ple and the beautiful Bellagio fountains.) game and I managed to win $85. On the That’s the innocent stuff. However, fourth night, I walked away up $50 the next revelation will be shocking and, (though I’d been up $100 at one point) likely, appalling to anyone who has read after deciding that losing $30 overall for

four nights of entertainment wouldn’t be a bad way to end the trip. Now, why would I share this story and risk the ridicule of anyone who ever has disagreed with our stance on casino gambling? Because I liked it, perhaps a bit too much. I don’t believe I am an addictive personality — anal, yes, but not addictive. Yet, I know I easily could have returned to the craps table every night if our trip in Vegas had been longer. And that frightens me — not so much for me, but for the many people who are sucked in by games of chance and lack the willpower to walk away from them before they empty their wallets, and eventually their bank accounts. Soon, they won’t need to fly to Vegas or drive to Detroit to get their gambling fix. Mr. Gilbert’s casino in downtown Cleveland is slated to open about a year from now, and I can see hundreds if not thousands of them laying down on the tables more money than they can afford to lose. That’s why I still don’t favor this form of so-called economic development. If that makes me two-faced, so be it. ■

THE BIG ISSUE Do you think the city you live in should consider a merger with another city or other cities, as four eastern suburbs in Cuyahoga County are exploring?

RUSH STEVENSON

KUNO BELL

GARY MCGHEE

CATHIE TAMME

Columbia Township

Avon

Cleveland

We live in a Lorain County township, but I think it would be a good idea to merge with Strongsville. I’d enjoy it. We would have more services and better zoning control.

If you are eliminating overhead and redundancy in providing services, why would you not merge together? I have yet to hear a good reason against it.

If it was to logically save money and would not cost jobs, I’d consider it. However, it would be weird. We all live in a comfort zone with the way things are.

It’s inevitable in terms of cost reduction. With police layoffs in Cleveland it just makes sense. I don’t really see a downside. That is, unless it’s some proprietary information about how some city operations (work).

➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com

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WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

Homebuilders begin moving dirt By STAN BULLARD sbullard@crain.com

Pulte Homes, the Bloomfield Hills, Mich.-based national builder, is moving dirt in Copley Township in Summit County and plans to do the same later this year in Hudson for new residential subdivisions. “A year ago, we would not have thought of doing this,” said Tony Barbee, president of Pulte Homes Ohio, which is headquartered in Solon. “But this year, we will open nine new communities in Northeast Ohio.” While Mr. Barbee stresses the firm has been buying land for new developments in communities where it believes buyers want to buy — such as the 20 acres in Copley it shelled out $1 million for last March — it is moving because it is encouraged by the marketplace. Nearby on Rotili Lane, Pulte sold half the 22 lots in the last months. “The market is down in terms of historic production, but there are still opportunities to deliver products to customers,” Mr. Barbee said. While empty lots abound, Pulte and other builders gradually are beginning to develop land once more. Even more builders are pushing new homes on sites they are acquiring from other builders, land developers and even foreclosed subdivisions they are buying from banks. Although it is a case of moving from the deep freeze to the refrigerator in terms of the market warming, builders are starting to construct an increasing number of homes as the region shakes off the long downturn in new-home construction from the combined whammy of a housing

collapse-forced recession, a stillailing housing market and tight lending policies. Evidence of that comes from Atwell LLC, a Southfield, Mich.-based land engineering services provider with a Solon office. Atwell forecasts builders in Northeast Ohio will pull permits for 2,800 single-family, townhouse and condominiums this year, a 16% increase from 2,411 in 2010. Moreover, recently compiled Atwell statistics show that such home starts climbed 6% in 2010 from 2,280 units in 2009 as the market bottomed out. That ended a precipitous six-year drop from 10,156 permits in 2004, the last year housing starts climbed in Northeast Ohio. The statistics cover Cuyahoga, Geauga, Lake, Lorain, Medina, Portage and Summit counties. Not all builders are scraping dirt to produce more lots. Most are harvesting unused leftover lots from the boom, such as K. Hovnanian Homes, a Red Bank, N.J.-based builder with a regional office in Canton and home sites throughout the region. K. Hovnanian has added 194 additional lots to its inventory this year, all from banks or other builders and land developers, said Derek Lewallen, its marketing manager. “It’s more affordable (than land development). And we’re able to pass that savings on to homebuyers.” For instance, K. Hovnanian this year entered Olmsted Falls with lots on Evan Miller’s Trail that it acquired from an affiliate of First Federal Savings Bank of Lakewood, according to Cuyahoga County land records. Mr. Lewallen declined to discuss individual transactions.

Although starts may be starting to inch up, the number fell so low “that it was as close to zero as you can get,” said Bill Sanderson, senior vice president for joint ventures at Forest City Land Group, which sells sites to builders. “And we are a market that never boomed.” Now, he said, “There’s more life in the market this year than last.” However, the market is at its barest essentials, fed by buyers transferred from out of town who can buy what they want, people able to sell their homes, or wealthy enough to build what they want, Mr. Sanderson said.

Competition by design With competition from steeply discounted foreclosures and existing homes, builders have had to prove the benefits of a new home to an existing one to an unheralded degree. In Pulte’s case, Mr. Barbee said the company fine-tuned its designs to offer products different from existing homes. For example, some models drop or diminish dining and living rooms in favor of great rooms. The den is giving way to a small bonus room. A mud room is more important than a dining room. “We’re focusing on building houses that reflect how people live today,” Mr. Barbee said. Similarly, Mr. Lewallen said K. Hovnanian emphasizes the use of locally-sourced materials and energy conservation. The firm heavily promotes an estimate that more efficient heating and cooling systems and more insulation saves the average buyer at least $600 yearly compared with an existing home. ■ Creating Value.

ON THE WEB

Story from www.CrainsCleveland.com.

Urban Partnership Bank names exec A former KeyBank executive now leads business banking for Urban Partnership Bank and also oversees the Chicago-based bank’s daily operations in Cleveland and Detroit. Michael T. Jeans, 37, is director of business banking for the community development bank, which acquired ShoreBank nearly a year ago and has one Cleveland branch. He formerly was vice president, senior relationship manager in business banking for Key. In his role as director for Cleveland and Detroit, Mr. Jeans will manage all banking activities in the regions and will guide the extension of services in both. He’s helping to open a new microbranch location in Detroit and is to do the same in Cleveland, spokesman Brian J. Berg said. Microbranches slated for Detroit and Cleveland will be equipped with the latest technologies to give consumers more convenient access to affordable financial services and products, according to a company news release. “Michael Jeans brings a strong track record in commercial banking and a deep and abiding passion for creating opportunities that will strengthen our urban neighborhoods,” said William Farrow, president and CEO of Urban Partnership Bank.

RTA: Union eyes future revenue uptick as projects materialize continued from PAGE 3

to do, we are going to do,” the transit police sergeant said.

‘We took the risk’ Part of the union’s calculation, too, is based on a belief that the coming of a new convention center, medical mart and casino in Cleveland will increase receipts from the 1% county sales tax that produces nearly 62% of RTA’s total revenue. “We took the risk,” Sgt. Gettings said. The vote on the contract was nearly unanimous, Mr. Calabrese said. Joseph Slater, a professor specializing in labor law at the University of Toledo College of Law, said it’s unusual to find this kind of agreement in the public sector. He said it is more common in the private sector where wages, bonuses or profit sharing are tied to profit targets. “Still, that seems like an interesting and creative idea for the RTA’s transit police,” he said. RTA said it was able to find only four public employee contracts that tied regular or supplemental wage increases to revenue increases. For example, a six-year agreement that commenced in 2009 between the city of Stockton, Calif., and the Stockton City Employees Association ties salary increases to an agreed-upon revenue growth formula but stipulates that increases will not be less than 2.5% nor more than 7%. Mr. Calabrese said RTA’s revenue

is continuing to rise this year. “So far revenues are doing well,” Mr. Calabrese said. “If they hold the way they are, the (police wage) increase next year will be in the 2½% to 3% range.”

Pattern for the future? The transit police had been operating without a contract since the old contract expired at the end of February 2010 and their wages have been frozen since. As part of the new contract, union members also agreed to an increase in the employee contribution to the cost of health insurance premiums, to 14% of premium cost from 12%. But that increase can be rolled back one percentage point for nonsmokers and one percentage point when employees and dependents take regular comprehensive physicals that are paid for by their insurance coverage. RTA still has not reached a contract agreement with the Amalgamated Transit Union, which represents 1,700 transit workers. The ATU has been without a contract for two years, and negotiations are continuing. Mr. Calabrese, declining to discuss ongoing negotiations, wouldn’t say whether RTA is seeking an agreement with the ATU similar to the one it reached with the transit police. “But,” he noted, “I certainly think something like this makes a tremendous amount of sense for all RTA employees.” ■

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 27 - JULY 10, 2011

GOING PLACES

LEGAL

NONPROFIT

JOB CHANGES

JAVITCH, BLOCK AND RATHBONE: Gene D. Karlen to director of human resources.

AIDS TASKFORCE OF GREATER CLEVELAND: Tracy Jones to CEO; John Farina to director of development and external affairs.

EDUCATION KENT STATE UNIVERSITY: Liquid Crystal Institute — Oleg D. Lavrentovich to Trustees Research Professor; Hiroshi Yokoyama to director. NORTHEAST OHIO MEDICAL UNIVERSITY: Dr. Elisabeth H. Young to associate dean for academic affairs, College of Medicine; Elizabeth W. Cline to executive director, research and sponsored programs administration; Walter I. Horne to executive director of industry relations.

FINANCE FIRSTMERIT CORP.: Wesley H. Gillespie to senior vice president, regional business banking manager,

North Coast region. J.P.MORGAN: Tracey Collins and Samir Gautam to vice presidents and private bankers. OHIO COMMERCE BANK: Jessica Derecskey to treasury management.

FINANCIAL SERVICE 212 CAPITAL GROUP/NEW ENGLAND FINANCIAL: Kent Von Der Vellen and Craig Orr to financial advisers.

MCGLINCHEY STAFFORD PLLC: James W. Sandy to associate.

MANUFACTURING MATERION CORP.: Deb Armstrong to chief human resources officer.

SS&G: Julia Dean to associate.

OURPET’S CO.: Greg Winiarczyk to supply chain manager; Sonal Pandya Webb to senior buyer/sourcing; Dawn Katona to scheduler/expediter; Michelle Seeber to marketing communications specialist; Sara Sinex to marketing coordinator; Kate Foster to customer service representative; Matt Gaarder to IT administrator.

SS&G WEALTH MANAGEMENT LLC: Michael W. Roush to senior associate.

ROSCOE MEDICAL: Paul J. Guth to president, CEO.

OPTIMA LENDER SERVICES LLC: Monique Winston to CEO. RETIREMENT SOLUTIONS: Elmin Ramovic to associate financial consultant.

REAL ESTATE TRANSACTION REALTY: Duane Linder and Kelly Draga to sales associates.

Derecskey Winston

Karlen

SERVICE DAVEY TREE EXPERT CO.: Joseph R. Paul to vice president. HUMAN ARC: Patrick J. Mulloy to CFO.

TECHNOLOGY SOFTWARE ANSWERS INC.: Janel Janke to human resources manager.

Sandy

Armstrong Guth

BOARDS CLEVELAND HEARING & SPEECH CENTER: Grover C. Gilmore (CWRU) to president; Maria O’Neil Ruddock to president-elect; Terry Fox Stoller to vice president; David J. Abood to secretary; Jimmy A. Forbes to treasurer. CLEVELAND METROPOLITAN BAR ASSOCIATION: Barbara K. Roman (Meyers, Roman, Friedberg & Lewis) to president; Carter E. Strang to president-elect; Jonathan B. Leiken to vice president; G. Christopher Meyer to treasurer; Robert D. Anderle to vice president of membership. LAKEWOOD HOSPITAL FOUNDATION: Ken Haber (OM Group) to president; Chas Geiger to vice president; Bob Potts to treasurer; Tom Baker to secretary. METROHEALTH FOUNDATION: Robert A. Durham (HKM Direct Market Communications) to chair; Leslie D. Dunn, David C. Jacobs, James M. Malz, Wiliam L. Aamoth and Robert A. DeAngelis to vice chairs; J. Christopher Manners to treasurer and vice chair.

AWARDS AMERICAN CERAMIC SOCIETY: Mrityunjay Singh (Ohio Aerospace Institute) received the John Jeppson Award. ASSOCIATION OF FUNDRAISING PROFESSIONALS OF GREATER CLEVELAND: Monte and Usha Ahuja received the 2011 Philanthropist Leadership Award; Victor Gelb received the 2011 Outstanding Fundraising Volunteer Award. CLEVELAND FOUNDATION: Stephen R. McPeake (North Coast Community Homes) received the Homer C. Wadsworth Award.

Send information for Going Places to dhillyer@crain.com.

GET DAILY NEWS ALERTS FROM CRAIN’S ! Register for free e-mail alerts and receive: ■ The Morning Roundup: A collection of the day’s business news from Ohio’s daily papers ■ Breaking news alerts: When major news happens, you’ll know ■ Daily headlines: A collection of Crain’s-produced news and blog items from the day ■ Small Business Report: A weekly guide to small business news

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CRAIN’S CLEVELAND BUSINESS PRESENTS

COMEBACK KIDS CLEVELAND, OHIO ◆ JUNE 27 - JULY 10, 2011

FIGHTING THE GOOD FIGHT

WHAT TO DO — AND NOT TO DO — IN TURNAROUNDS Dos ■ Analyze current financials on an ongoing basis. ■ Compare your performance with that of your competitors. ■ Increase prices to your customers if you find it’s necessary. ■ Be open and honest with your stakeholders. ■ Seek help if you need a second look at your turnaround plan.

Correcting course can be a daunting task, especially in challenging economic climate

Don’ts

By MICHELLE PARK mpark@crain.com

■ Don’t delay reducing costs because you believe there’s a potential sale (or something else) around the corner. ■ Don’t even think about not paying your taxes. Those can become personal liabilities and survive bankruptcy. ■ Don’t pump personal money into a company that’s losing money. ■ Don’t stop investing in your company’s systems, particularly those that analyze your financial information.

obert Meyer knew the company was headed for trouble. Though some drop-off in sales is normal after any first quarter for Monarch Steel, the decrease the steel processor service center experienced in early 2008 didn’t ease. Over the course of the year, revenues plummeted a scary 50%, and the drop persisted into 2009. The company’s profit margin was squeezed to zero, said Mr. Meyer, the Cleveland company’s president. Something was “really dramatically wrong” with its customer base. He’d later come to know, as all business leaders would, that The Great Recession had struck. To slow the bleeding, Mr. Meyer and other members of company management cut and froze wages and halted hiring. They allowed headcount to fall by attrition and began reusing things, such as packaging. Later, the company opted to focus on a more predictable segment of its business. Though the to-do list for turning around a company is fundamentally the same as it’s been for decades, today’s is a harsh environment for changing course, local turnaround professionals say. Recessionary pressures persist. There’s less of a market for selling excess equipment, and consolidating facilities is painfully challenging amid the depressed real estate market. Additionally, a lot of banks have been

SOURCES: TOM TYRRELL, MANAGING DIRECTOR, COLLABORX; JOHN K. LANE, MANAGING DIRECTOR AND CEO, INGLEWOOD ASSOCIATES LLC; CHRISTOPHER CARR, PROJECT MANAGER, HILLYER GROUP

ALSO ON THE TRAIL Cleveland International Film Festival PAGE 13 ATTENDANCE 2003: 35,173 ◆ 2011: 78,030 BUDGET 2003: $770,641 ◆ 2011: $1,587,550 MEMBERS 2003: 400 ◆ 2011: 1,064

GrafTech International

PAGE 14

SALES 2002: $596 million ◆ 2010: $1 billion NET DEBT 2005: $689 million ◆ 2009: $0 2010: $288 million (following two acquisitions) MARKET CAPITALIZATION 2002: $335 million ◆ 2010: $2.89 billion

See FIGHT Page 12

ON THE COMEBACK TRAIL: CHART INDUSTRIES By DAN SHINGLER dshingler@crain.com

ots of companies turn themselves around and survive, but few go from being unknown and bankrupt to profitable and, at least in some investment circles, famous. Count Garfield Heights-based Chart Industries Inc. as one of those few — and insiders and outside observers say the company has reaped huge benefits from wise strategic planning, sound management execution and, lately at least, a little luck that only is boosting the company’s strong performance. It’s hard to believe that less than 10 years ago, Chart was bankrupt

— though not for long. The company even managed its own bankruptcy with a great deal of aplomb. The company entered Chapter 11 bankruptcy in July 2003, unable to bear the weight of massive debt it had run up making acquisitions, said its chief financial officer, Michael Biehl. Operationally, the company was strong, he said. However, it could not keep up with its debt payments when there was a slowdown in Chart’s business, which revolves around providing equipment used to handle and process natural gas and industrial gases. It hinges upon large capital expenditures by other, generally larger corporations. In 1999, Chart had paid (and largely borrowed) about $250

million to buy Minnesota Valley Engineering. The companies, similar in size, made complementary lines of equipment, and both were hit hard when capital investments slumped. “Unfortunately, (the transaction) was done at the top of the market, and by the time it closed three months later business had deteriorated for both companies,” Mr. Biehl said.

On the bright side Fortunately, Chart had backers who believed it could prosper if the company could find a way to manage its debt. Two private equity firms stepped up and, for controlling interest in the firm, purchased most of the company’s debt. That allowed for a pre-packaged bankruptcy that only lasted about two

months — and from which Chart emerged a stronger company, Mr. Biehl said. Chart’s CEO, Sam Thomas, was hired at the end of the bankruptcy, leaving Chart with an improved management team, Mr. Biehl said. Mr. Biehl himself had only joined the company in 2001 and was already hard at work managing the company’s finances. “Both Michael and I had previous experience running highly leveraged or cash-strapped companies, so we applied a lot of cost disciplines,” Mr. Thomas said. Following the bankruptcy, Chart had more flexibility than before, the two men say. For one thing, it had access to credit — providing it with the cash it needed in the short term to close some of its older manufacturing facilities

INSIDE THE NUMBERS SALES 2003: $265.6 million 2010: $555.5 million 2011: $760 million* OPERATING INCOME 2003: - $2.1 million 2010: $47.5 million 2011: $92 million* CASH 2003: $18.6 million 2010: $165.1 million DEBT 2003: $112.6 million 2010: $224.9 million * COMPANY FORECASTS

to increase productivity and cut its long-term costs. It did so aggressively and it also moved into more profitable business See CHART Page 12

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

Chart continued from PAGE 11

lines and geographic regions. It expanded into products that could handle industrial gases and established operations in China and Czechoslovakia, as well as India and the Middle East. The company learned from its past mistake of over-leveraging itself or depleting its cash reserves, the two executives said, and that served it well. â&#x20AC;&#x153;It was a pretty short period of losses,â&#x20AC;? Mr. Biehl said. â&#x20AC;&#x153;In 2003, it struggled, but we were profitable from that point forward. Even in this most recent downturn we were profitable. â&#x20AC;&#x153;We had more than $200 million in cash on the balance sheets, knowing thatâ&#x20AC;&#x2122;s where the economy was headed.â&#x20AC;? The success brought more ownership changes, as the original private equity saviors cashed out in 2005, selling to another private equity buyer, which took Chart public in 2006. Following a second offering of stock in 2007, Chart was left with no controlling owner and a large group of mostly institutional shareholders, Mr. Biehl said. Those shareholders have done well. Shares of Chart that were selling for $15 in early 2007 fetch about $45 a piece today. The price dipped dramatically, to under $10 per share in 2009, but it quickly rebounded with the global industrial economy.

A whole new world Chart now benefits when markets such as China and India do well, and those markets have been growing faster than the U.S. economy in recent years. In 2003, 70% of the companyâ&#x20AC;&#x2122;s sales were from North America, compared to just 35% today thanks to growth overseas, Messrs. Thomas and Biehl report. Chart also is benefitting from a big increase in the production and

use of natural gas both at home and abroad. More nations are trying to use the clean-burning fuel to supply their energy, while in the U.S. vast supplies of the stuff are being discovered and exploited, including in Ohio and Pennsylvania. The gas play, in particular, has not gone unnoticed by investors and professional observers. Popular television stock analyst Jim Cramer even has picked up on Chart as a favorite stock â&#x20AC;&#x201D; and when he recommended it in February of this year the stock price quickly jumped by 10%. The company, Mr. Cramer said, was going to make big profits off of at least a dozen major natural gas projects going on around the world. Other analysts also have been impressed, and when Chart last released its earnings in May most predicted the companyâ&#x20AC;&#x2122;s stock would reach $60 per share or more in the following 12 months. At that time, Chart announced its orders were up 59% from the year before â&#x20AC;&#x201D; and its profits went from $1.4 million, or 5 cents a share for the first quarter of 2010, to $7.5 million, or 25 cents per share in the same period of 2011. The recent success has not surprised Pat Gallagher, senior vice president for Fahlgren Mortine public relations in Cleveland, which counts Chart among its larger clients. Mr. Gallagher says Mr. Thompson has been a major factor in the companyâ&#x20AC;&#x2122;s success. â&#x20AC;&#x153;Sam is a very hands-on guy, he spends his time out in the field, heâ&#x20AC;&#x2122;s meeting with customers, heâ&#x20AC;&#x2122;s overseas in China â&#x20AC;&#x201D; heâ&#x20AC;&#x2122;s very active,â&#x20AC;? Mr. Gallagher said. Chart is again in a position to grow via acquisitions, though theyâ&#x20AC;&#x2122;ll likely be smaller than some of the deals it did in the past, in order to avoid past mistakes, Mr. Thomas said. â&#x20AC;&#x153;There are several strategic acquisitions weâ&#x20AC;&#x2122;re looking at,â&#x20AC;? he said. â&#x20AC;&#x153;Nothing big though.â&#x20AC;? â&#x2013;

COMEBACK KIDS

JUNE 27 - JULY 10, 2011

Fight: Empowered employees can help continued from PAGE 11

burned in recent years, so many are more apt to cut ties than invest when they see a company barely treading water, said Tom Tyrrell, a serial entrepreneur who, since 1986, has taken over four companies that were foundering or had shut down.

turnaround professionals agreed. â&#x20AC;&#x153;You have to deal with it by controlling the things that you can control,â&#x20AC;? said Christopher Carr, a project manager with the business advisory firm Hillyer Group, which has locations in Cleveland, Canton and Akron.

Facing the music

Money is the object

Any turnaround, of course, begins with the admission that a problem exists. Unfortunately, many companies donâ&#x20AC;&#x2122;t â&#x20AC;&#x153;read the tea leavesâ&#x20AC;? and fail to take action before a hefty amount of money is lost, said John K. Lane, managing director and CEO of Inglewood Associates LLC, a local turnaround and workout firm. â&#x20AC;&#x153;There arenâ&#x20AC;&#x2122;t a lot of options once youâ&#x20AC;&#x2122;re down in that hole,â&#x20AC;? warned Mr. Lane, also president of the Ohio chapter of the Turnaround Management Association. So when does a company leader know the situation is precarious? There are two glaring indicators: not pulling in the revenues you expect and lacking the cash on hand to pay your debts, salaries and other expenses, Mr. Tyrrell said. â&#x20AC;&#x153;Without those things, you are going to get shut down,â&#x20AC;? he said. â&#x20AC;&#x153;The longer you wait, the harder it is, the greater the risk of failure.â&#x20AC;? Losing customers, or seeing signs that customers are looking to do business elsewhere, is another indication of trouble, Mr. Lane said. Unreturned phone calls and delayed ordering are two potential warning signs. Simply believing things will get better based on external factors â&#x20AC;&#x201D; for example, a sale thatâ&#x20AC;&#x2122;s â&#x20AC;&#x153;right around the cornerâ&#x20AC;? â&#x20AC;&#x201D; merely delays the inevitable in most cases,

It may seem elementary, but many a sputtering company hasnâ&#x20AC;&#x2122;t been doing it: Mind your money. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;ve got to treat every dollar like itâ&#x20AC;&#x2122;s your last dollar,â&#x20AC;? Mr. Tyrrell said. â&#x20AC;&#x153;Everybodyâ&#x20AC;&#x2122;s got to be on guard, to watch for things that are wasteful.â&#x20AC;? Refrain from spending money on things that wonâ&#x20AC;&#x2122;t make a difference in product or quality of service, he advised. Make sure someone is following up with the people to whom the company extends credit. If your company isnâ&#x20AC;&#x2122;t clamoring for its money and others are, the others likely will be paid first, he said. Business leaders must scrutinize and reconsider company costs, Mr. Lane said. While the company car may have become a â&#x20AC;&#x153;necessityâ&#x20AC;? for a time, returning to the shoestring budget of a companyâ&#x20AC;&#x2122;s more humble roots is smart practice. The human capital behind a turnaround is key, too, Mr. Tyrrell emphasized. Because the process is too timeconsuming for any one person to handle everything, involving people who are honest and who can tackle the challenges is imperative, he explained. â&#x20AC;&#x153;If you donâ&#x20AC;&#x2122;t get the right people, youâ&#x20AC;&#x2122;re dead,â&#x20AC;? Mr. Tyrrell said. Turnarounds shouldnâ&#x20AC;&#x2122;t be kept hush-hush, turnaround managers stressed. Stakeholders should know the bad news, and that includes employees, who otherwise tend to become afraid and distracted by what generally are the worst-kept secrets. Instead, Mr. Lane suggests leaders empower employees to assist the company in cutting costs and improving supply relationships. And if a company is going to disappoint a client, for example by delivering something late, the company should be proactive about it, Mr. Tyrrell said. â&#x20AC;&#x153;Regardless of what youâ&#x20AC;&#x2122;re going

Join. Save. Itâ&#x20AC;&#x2122;s that easy. 1VPU MVY :H]L ÂťZ PU OLHS[O WSHU WYLTP\TZ

to tell them, good news or bad news, call them on a consistent basis to give them the confidence that youâ&#x20AC;&#x2122;re on top of your game,â&#x20AC;? he said. â&#x20AC;&#x153;So many people â&#x20AC;&#x201D; when the companyâ&#x20AC;&#x2122;s struggling â&#x20AC;&#x201D; they move inward and think about themselves. They stop thinking about the customer. And thatâ&#x20AC;&#x2122;s the kiss of death.â&#x20AC;?

Weighing the options Sometimes, bankruptcy is the answer to a companyâ&#x20AC;&#x2122;s distress (particularly when significant debt or other obligations would be erased and when a company has sufficient funding to endure the process), Mr. Lane said. Other times, business leaders simply should give up the ghost. â&#x20AC;&#x153;The easy thing to do is to get up in the morning, take a shower, fight fires all day long, go home tired â&#x20AC;Ś get up the next day and fight the fires again,â&#x20AC;? Mr. Lane said. â&#x20AC;&#x153;The tough thing to do is to stop. â&#x20AC;&#x153;If you go through a reorganization plan, and youâ&#x20AC;&#x2122;re only going to be marginally better than you are today, it isnâ&#x20AC;&#x2122;t worth it,â&#x20AC;? he added. When Mr. Tyrrell considers a turnaround prospect, he first assesses: Does the company have a product or service for which thereâ&#x20AC;&#x2122;s opportunity, and does it have the facilities to supply it at an effective cost? Thereâ&#x20AC;&#x2122;s no standard time frame for turnaround. It depends on the company and the economy, Mr. Tyrrell noted. However, itâ&#x20AC;&#x2122;s safe to say that a firm thatâ&#x20AC;&#x2122;s sustained positive cash flows for some time â&#x20AC;&#x201D; again, it varies â&#x20AC;&#x201D; has regrouped. But, as in Monarch Steelâ&#x20AC;&#x2122;s case, where business is sound today and revenues continue to recover and grow, an achieved turnaround doesnâ&#x20AC;&#x2122;t mean those in charge should, or do, become any less vigilant. â&#x20AC;&#x153;I believe weâ&#x20AC;&#x2122;re out of the nasty cycle, but as sure as you and I are talking now, the governmentâ&#x20AC;&#x2122;s published more unemployment numbers,â&#x20AC;? Mr. Meyer said. â&#x20AC;&#x153;The nasty period certainly could return. â&#x20AC;&#x153;I think we have initiated enough activities that we would weather another storm,â&#x20AC;? he said. â&#x20AC;&#x153;I donâ&#x20AC;&#x2122;t think as a business leader youâ&#x20AC;&#x2122;re ever comfortable. I feel good about the things weâ&#x20AC;&#x2122;ve done, but that doesnâ&#x20AC;&#x2122;t mean I sleep better at night.â&#x20AC;? â&#x2013;

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COMEBACK KIDS

JUNE 27 - JULY 10, 2011

CRAIN’S CLEVELAND BUSINESS

ON THE COMEBACK TRAIL: CLEVELAND INTERNATIONAL FILM FESTIVAL By TIMOTHY MAGAW tmagaw@crain.com

or Tim Downing, one of his lowest points as president of the Cleveland International Film Festival’s board of trustees was when he passed around a hat and pleaded his fellow trustees for donations so the festival could make payroll. “People were generous, and we were able to do it, but it was a very dark time for the organization,” said Mr. Downing, a partner at Ulmer & Berne LLP, about the organization’s financial woes of the early 2000s. “That was the ‘ah-ha’ moment for many on the board. They thought it was bad, but not really that bad.” Facing an operating deficit in 2003 of about $110,000 out of an annual budget of about $770,000, the festival that had been operating since 1977 was in flux and its leaders were staring down the possibility of whether it had rolled its closing credits. Unlike many nonprofits that struggled in recent years, the film festival’s near-demise wasn’t spurred by the crippling recession or plummeting financial markets. Rather, it was a case of what its leaders characterized as “mission creep.” Simply put, the organization took on too much and lost sight of what it did best: produce a worldclass film festival. “We did learn how to fake confidence until (our recovery) became real,” said Marcie Goodman, the film festival’s executive director. “So if you asked how things were, we would say, ‘Great.’ We believe what you put out there is what you get back. We’re always going to try to be as positive as we can.” Today, the film festival’s narrative isn’t nearly as disheartening. With solid numbers in the books, a strong membership base and booming attendance numbers, Ms. Goodman said she and her staff of five others aren’t so much thinking about how to keep the doors open but rather how to make the festival a better experience each year.

In sets the ‘creep’ In the 1990s, the film festival broadened its mission in hopes of developing a filmmaking work force in Cleveland. As part of the shift, the group changed its name to the Cleveland Film Society and offered programming such as filmmaking courses and film appreciation classes. At the time, the Greater Cleveland Film Commission hadn’t formed and Cuyahoga Community College and Cleveland State University weren’t yet offering filmmaking courses. But as those other resources launched, the film society’s niche eroded and interested parties went elsewhere, Ms. Goodman said. “We took on a lot by doing that,” Ms. Goodman said. “That was really a contributing factor to the financial challenges we started to face in 2001 and 2002. We tried to do too much.” Eliminating that component of the festival and dropping the film society moniker was a difficult pill to swallow for many of the organization’s board members, Mr. Downing said. However, he noted the organization just “didn’t have the bandwidth to do it the way it needed to be done.” “Some were not happy we were not going to do those things anymore, and they left the board, but organizations like this need to make those decisions sometimes for the overall health of the

organization,” he said. Ultimately, the film festival restructured its board, adding 13 new members who were able to donate and raise significant funds for the film festival’s coffers. Likewise, the organization eliminated three of the festival’s six full-time positions. With the personnel shifts and a newly focused mission, the film festival started to climb out of the financial abyss in which it had fallen, and it did so fairly quickly. In 2004, attendance increased by 11.8% to 39,338 and it has improved steadily each year since. “That’s when all the figures started jumping. That was a very lean time around here,” said Patrick Shepherd, festival associate direc-

tor. “We had three of us here around the clock. We had an executive director answering the phone and door. They were lean times, but we pushed through it.” And the success of 2004 wasn’t a one-time blip, either. Between 2003 and 2011, the film festival’s attendance climbed from 35,173 to 78,030 — a 122% surge. Likewise, membership grew in that time period from 400 members to 1,064 members.

Getting better, not just bigger Though the film festival is on solid financial footing, Mr. Shepherd said the organization is keeping close watch of its finances as its largest funder — the county’s

cigarette tax for arts organizations — is slated to sunset in 2016 unless voters renew the measure. Through the end of this year, the festival will have received $536,937 in cigarette tax dollars. But given the tax’s diminishing revenue stream, grant dollars from the tax are expected to continue to decline. “It went from not being in our universe to being our No. 1 funder,” Mr. Shepherd said. “For many organizations, it helped ensure they were stabilized during the recession. For us, it continued to fuel our growth. That funding stream is so important to us.” Were it to sunset, the film festival’s leaders said they would find some way to plug the hole. The festival has diversified its funding stream in recent years through

more corporate sponsors. For one, every film at the festival now can be sponsored. Still, Ms. Goodman said the focus of the festival is to get better — not bigger — each year. She said it was important for the film festival to stay locked on its mission and provide the best film festival it could. And Ms. Goodman’s message is one that could be applied to other fledgling nonprofits, according to Kathleen Cerveny, director of evaluation and institutional learning at the Cleveland Foundation, one of the festival’s funders. “We considered them to be quite a success story — an example to others how you really need to look at your organization and focus with a laser on your core mission,” Ms. Cerveny said. ■

Our Members Are Leading The Charge Toward Corporate Recovery Established in 1988, the Turnaround Management Association is the only international nonprofit association dedicated to corporate renewal and turnaround management. TMA has more than 9,000 members in 47 chapters, including 32 in North America. The Ohio Chapter has over 200 members, including turnaround consultants and practitioners, attorneys, lenders, investors, liquidators, investment bankers and appraisers, among others. TMA members are a professional community who share a common interest in the restoration of corporate value. Please join us at one of our upcoming events: x

July – Annual Golf Outing held at the Mayfield Campus of The Mayfield Sandridge Country Club

September – Young Professionals’ Event with a speaker on networking and business building

October – Joint event with the Northeast Ohio Network of the International Women’s Insolvency & Restructuring Confederation (NEON/IWIRC)

November – Annual Education Conference presented in conjunction with the Cleveland Metropolitan Bar Association

To sign up for these events you can go to www.turnaround.org, email admin@tmaohio.org or call Louise Walsh at 216-861-5627. To learn more about TMA, contact our Chapter President, John Lane, at 216-533-5860 or jlane@ingw.com. Our chapter sponsors appreciate your support:

Baker & Hostetler LLP BBP Partners, LLP Centrus Group, Inc. First Business Capital Corp. Inglewood Associates LLC McDonald Hopkins LLC

The Meridian Group MorrisAnderson Phoenix Management Services Taft Stettinius & Hollister LLP Wells Fargo Capital Finance

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CRAIN’S CLEVELAND BUSINESS

COMEBACK KIDS

JUNE 27 - JULY 10, 2011

ON THE COMEBACK TRAIL: GRAF TECH INTERNATIONAL By CHUCK SODER csoder@crain.com

t was a bad situation, to say the least. In the late 1990s, the U.S. Department of Justice and several other government agencies from around the world began investigating a group of graphite electrode makers thought to be fixing prices. Among them was UCAR Carbon Co., which today is known as GrafTech International Ltd. and is based in Parma. The investigation sent the company’s CEO and chief operating officer to prison and saddled the firm with hundreds of millions of dollars in fines and lawsuits.

UCAR’s stock plummeted, and its lenders cut off the company’s lines of credit. On top of all that, UCAR had loads of debt to pay off. The company — which sells its electrodes to steelmakers who use them to heat up furnaces that melt the metal — was “on the verge of bankruptcy,” said GrafTech CEO Craig Shular, who in 1999 joined the company as part of a team assigned to clean up the mess. “Everything you touched was worse than what was expected,” said Mr. Shular, who was chief financial officer at the time. Today, the mess is gone. What remains is spick and span. A massive cost-cutting effort and an increased focus on research

and development helped transform UCAR, which adopted the GrafTech name in 2002. Not only has GrafTech been consistently profitable since 2006, but in the third quarter of 2009 the company paid off the last of its debt.

Strategy shift Now the company is playing offense: GrafTech in November 2010 bought two companies — needle coke producer Seadrift Coke LP of Seadrift, Texas, and graphite electrode maker C/G Electrodes LLC of St. Marys, Pa. — for $936.7 million in cash, stock

and debt. The purchase of the two companies, which had the same majority owner, was one of the biggest deals in the history of the graphite electrode industry, Mr. Shular said. He said GrafTech’s comeback officially was complete on April 29, 2010, when the company announced those acquisitions. That day, its stock price closed at $17.26 per share, up 28% from its closing price of $13.47 the day before. “We put the lock on the door in 2010,” Mr. Shular said, adding that GrafTech in February bought fine grain graphite maker Micron Research Corp. of Emporium, Pa., which is near C/G Electrodes, for $6.5 million in cash.

To survive, GrafTech had to make some tough choices, he said. The company ended up closing highercost plants in Clarksville, Tenn., Canada, Germany, Italy and Russia. Its total employment level dropped to 2,200 from 5,500. The company employs about 3,000 today. GrafTech moved equipment from shuttered factories to lower-cost factories in Mexico, Brazil, South Africa, France and Spain, doubling productivity at those plants. That plan helped the company raise financing after its credit lines were cut off, Mr. Shular said. In 2001, the company raised $86 million in working capital through a stock offering. It also raised $200 million by selling off other businesses within the company. It raised more debt and equity financing over the next few years to pay back previous debts. The cost cutting allowed the company to make money that it could reinvest in new product development. Its engineered solutions unit, which makes graphite products other than electrodes, accounted for about 17% of the company’s revenue in 2010, which exceeded $1 billion. You may own some of their products, even if you can’t see them: The company’s graphite technology is used to disseminate heat in consumer goods such as smart phones, TVs and computers. It also is developing ways to use graphite in fuel cells and other high-tech products. “If we didn’t invest in R&D, there’s no way we would be in smart phones, no way we would be in flat screen TVs,” Mr. Shular said.

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The increased focus on research and development was one reason GrafTech moved its headquarters to Parma, where its R&D team already was located, from Wilmington, Del., in 2006. The company also wanted to put all of its top executives under one roof, Mr. Shular said. A $1.5 million incentive package from the state of Ohio was a major factor as well. The restructuring has turned GrafTech into a consistent cash producer. After earning $45 million in 2006, earnings jumped to $138 million in 2007 and $242 million in 2008. Profits fell to $63 million in 2009, when the company cut its electrode production in half because of a drop in global steel production. The company largely recovered in 2010, earning $146 million. GrafTech’s comeback exceeded David Walker’s expectations. Mr. Walker, managing director with J.P. Morgan’s investment bank, said he decided to help GrafTech raise equity and debt financing because he believed not only in the plan, but also in the new management team, which at the time was led by Gil Playford. The group had a “can-do attitude” that was “grounded in reality,” he said. “We saw a management team that really wanted to succeed,” he said. The hardships GrafTech endured prepared it well for the recession, Mr. Shular said. Not only did the turnaround make the operation more efficient, but it taught company management a lot about leadership. For instance, when GrafTech cut salaries during the downturn, the top executives took the biggest pay cuts, while the lowest-paid staff members were spared. “Leaders have to lead from the front of the bus,” he said. ■

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 27 - JULY 10, 2011

LARGEST ENGINEERING FIRMS

RANKED BY NUMBER OF LOCAL REGISTERED ENGINEERS(1)

Rank

Company Address Phone/Web site

Number of local Number of registered local engineers employees

Corporate headquarters

Year founded

2010 projects

2010 local engineering billings ($ Top local executive millions) Title

URS Corp. 1375 Euclid Ave., Suite 600, Cleveland 44115 (216) 622-2400/www.urscorp.com

237

684

San Francisco

1904

Louisiana State University Medical Center, New Orleans; Cuyahoga Community College, Health Career and Technology Building; Tennessee Valley Authority

123.4

Gary R. Hribar, vp, URS division; William Colt, senior vice president

Middough Inc. 1901 E. 13th St., Cleveland 44114 (216) 367-6000/www.middough.com

358

Cleveland

1950

V & M TWO, Youngstown; Cleveland Play House/CSU Drama and Visual Arts Project; Husky Lima Refinery, boiler replacement, Toledo

43.5

Richard J. Ragan senior vice president, general manager

DLZ Ohio Inc. 614 W. Superior Ave., Cleveland 44113 (216) 771-1090/www.dlz.com

141

Columbus

1947

Cedar Ave. reconstruction, City of Cleveland; Program Management Services, City of Akron; new animal control facility, Summit County

22.5

Thomas G. Sisley senior vice president

GPD Group 520 S. Main St., Suite 2531, Akron 44311 (800) 955-4731/www.gpdgroup.com

305

Akron

1961

State route 82 Macedonia; State route 91, Twinsburg; Ohio Turnpike Commission

40.4

Dave Granger president

Arcadis U.S. Inc. 1100 Superior Ave., Suite 1250, Cleveland 44114 (216) 781-6177/www.arcadis-us.com

Highlands Ranch, Colo.

1888

NEORSD, Southerly WWTP renewable energy facility/ CWD; Garrett A. Morgan Water Works Plant, chemical facility; ODOT - State route 2 Lake County freeway

14.7

Jim Crandall senior vice president, principal in charge

CT Consultants Inc. 8150 Sterling Court, Mentor 44060 (440) 951-9000/www.ctconsultants.com

110

Mentor

1922

Cleveland Water, Suburban Water Main Renewal Program; Pearl Road, Strongsville; Delphos Wastewater Treatment Plant energy conservation projects

14.0

Dave Wiles president

Westlake Reed Leskosky 925 Euclid Ave., Suite 1900, Cleveland 44115 (216) 522-1350/www.wrldesign.com

Cleveland

1905

General Services Administration; Cleveland Clinic, Twinsburg Family Health and Surgery Center; Museum of Contemporary Art, Cleveland

14.0

Paul E. Westlake Jr. managing principal

HWH Architects Engineers Planners Inc. 1300 E. Ninth St., Suite 900, Cleveland 44114 (216) 875-4000/www.hwhaep.com

118

Cleveland

1908

GE Healthcare, Warrensville Heights; GE Transportation, Erie, Pa.; The Goodyear Tire & Rubber Co., Santiago, Chile

Peter P. Jancar chairman

Osborn Engineering 1300 E. Ninth St., Suite 1500, Cleveland 44114 (216) 861-2020/www.osborn-eng.com

Cleveland

1892

Cleveland African Elephant Exhibit; Cleveland Medical Mart; Mercy Medical Center Lorain, renovation

7.2

Lee Hooper president

Burgess & Niple 1300 E. Ninth St., Suite 612, Cleveland 44114 (216) 241-9600/www.burgessniple.com

Columbus

1912

NEORSD, Southerly WWTC Headworks Screen; City of Akron, Smith/Riverview roundabout; City of Elyria, water distribution model

7.6

Charles J. Zibbel director, Great Lakes region

Karpinski Engineering 3135 Euclid Ave., Cleveland 44115 (216) 391-3700/www.karpinskieng.com

Cleveland

1983

Cleveland Medical Mart & Convention Center; Eaton Corp. worldwide headquarters; Goodyear corporate headquarters

11.3

James T. Cicero president

R. E. Warner & Associates Inc. 25777 Detroit Road, Suite 200, Westlake 44145 (440) 835-9400/www.rewarner.com

Westlake

1951

Cleveland Clinic Heart Center, construction staking; Westgate Mall redesign; RTI International, titanium plating facility

5.8

David W. Sminchak chairman, president

Thorson Baker & Assoc. Inc 3030 W. Streetsboro Road, Richfield 44286 (330) 659-6688/www.thorsonbaker.com

Richfield

1993

Cleveland Casino; East Bank Flats; Barberton City Schools; Wadsworth City Schools

8.3

Gordon R. Baker Michael G. Thorson principals

Michael Baker Jr. Inc. 1228 Euclid Ave., Suite 1050, Cleveland 44115 (216) 664-6493/www.mbakercorp.com

Moon Twp., Pa.

1940

Fulton Road Bridge replacement

Stephen C. Collar Ohio principal

ms consultants inc. 9217 Midwest Ave., Suite 100, Cleveland 44125 (216) 581-4035/www.msconsultants.com

1963

Lakeshore Boulevard, Euclid

9.9

David J. Mosure vice president, construction services

Richard L. Bowen + Associates Inc. 13000 Shaker Blvd., Cleveland 44120 (216) 491-9300/www.rlba.com

Cleveland

1959

Tri-C Brunswick University Center; Vitamix expansion and solar panel array; Medina County Transit Center

Richard L. Bowen president

HNTB Corp. 1100 Superior Ave., Suite 1330, Cleveland 44114 (216) 522-1140/www.hntb.com

Kansas City, Mo.

1914

Opportunity Corridor Study; I-475 improvements; I-270 improvements

Scott Campbell office leader, associate vice president

Scheeser Buckley Mayfield LLC 1540 Corporate Woods Parkway, Uniontown 44685 (330) 896-4664/www.sbmce.com

Uniontown

1959

The Medical Center Co., chiller plant addition; Aultman Hospital, intensive care unit; Thomas Memorial Hospital, Clinical Pavilion

James E. Eckman president

Euthenics Inc. 8235 Mohawk Drive, Cleveland 44136 (440) 260-1555/www.euthenics-inc.com

Strongsville

1969

Pleasant Valley Road widening, Middleburg Hts.; Old Royalton Road bridge replacement, Brecksville; Independence Blvd. re-construction, Parma Heights

2.3

Ronald A. Bender president, CEO

The Equity Engineering Group Inc. 20600 Chagrin Blvd., Suite 1200, Shaker Heights 44122 (216) 283-9519/www.equityeng.com

Shaker Heights

2002

BP-Toledo Continuous Catalystic Reform; BP Houston NGL; Dakota Gassification RBI; UAE-ADCO RBI implementation.

David A Osage president

CDM 1100 Superior Ave., Suite 620, Cleveland 44114 (216) 579-0404/www.cdm.com

Cambridge, Mass.

1947

NEORSD, Southerly WWTC renewable energy facility; NEORSD, asset management implementation; Erie Water Works, RSW WTP improvements

Edward J. St. John principal

KS Associates Inc. 260 Burns Road, Suite 100, Elyria 44035 (440) 365-4730/www.ksassociates.com

Elyria

1987

Cleveland Clinic, Marymount Hospital, Garfield Heights; SR 57 twin bridge replacement for ODOT, Elyria; CMHA Garden Valley Estates, Cleveland

Lynn S. Miggins president

Barber & Hoffman Inc. 1100 W. Ninth St., 3rd floor, Cleveland 44113 (216) 875-0100/www.barberhoffman.com

Cleveland

1934

Cleveland Clinic Reference Lab; Cleveland Medical Mart & Convention Center foundation engineering; Huron Community Health Center

Robert Jordan president, treasurer

Hatch Mott MacDonald LLC 18013 Cleveland Parkway Drive, Suite 200, Cleveland 44135 (216) 535-3640/www.hatchmott.com

Millburn, N.J.

1966

NEORSD, Valley Belt Gravity Sewer; Heartland Corridor clearance improvement project; Sea-to-Sky highway improvement project

6.2

Michael G. Vitale, Michael F. McCarthy, Anthony T. Margevicius, vice presidents

The Austin Co. 6095 Parkland Blvd., Cleveland 44124 (440) 544-2600/www.theaustin.com

Cleveland

1878

Hills Pet Nutrition; Allen Foods Bakeries; Mitsubishi Power Systems, generator plant

4.5

Michael G. Pierce president

Chagrin Valley Engineering Ltd. 22999 Forbes Road, Suite B, Cleveland 44146 (440) 439-1999/www.cvelimited.com

Cleveland

1996

Engineering services and infrastructure and roadway projects for municipalities

Donald F. Sheehy president

Floyd Browne Group 450 Grant St., Akron 44311 (330) 375-1390/www.floydbrowne.com

Delaware, Ohio

1930

Akron-Canton Airport, runway 5-23 extension; City of Green, municipal engineering services; ODOT, Cleveland Innerbelt Project

4.0

Dwayne Groll vice president, director, Northeast Ohio operations

McHenry & Associates Inc. 25001 Emery Road, Suite 200, Warrensville Heights 44128 (216) 292-4696/www.mchenryassociates.com

Warrensville Heights

1986

CWRU Tomlinson Hall renovation; Maplewood Career Center renovation; Giant Eagle grocery stores

William Hulsey president

Peters, Tschantz & Associates Inc. 275 Springside Drive, Suite 300, Akron 44333 (330) 666-3702/www.ptaengineering.com

Akron

1953

Verizon Wireless, Twinsburg Data Center expansion; Allstate, Chubbuck, Idaho call-in center; Wang Theatre upgrade, Boston

4.2

James E. Peters president

Netsco 11700 Station Road, Cleveland 44028 (440) 236-9191/www.netsco.us

Cleveland

1984

Re-powering of the Great Lakes freighter Saginaw; Great Lakes freighter Reserve, conversion to self-unloading; Repowering of tug Karen Andrie

Richard A. Mueller president, CEO

PSI - Professional Service Industries Inc. 5555 Canal Road, Cleveland 44125 (216) 447-1335/www.psiusa.com

120

Oakbrook Terrace, Ill.

1881

University Hospital Cancer Center; Cleveland Clinic, laboratory; Cleveland State University student center and housing

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Numbers as of May 31, 2011.

10.5

Vijay Khosla executive vice president

RESEARCHED BY Deborah W. Hillyer

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equipment shows. The renovation will bump that number up by about 400,000 square feet as the building’s second floor, which is above roughly the southern third of the structure, is transformed so that it also will be usable display space. That change likely will happen later in the renovation process and will require extensive inside work, including the installation of escalators to link that space with the building’s huge ground floor. First, though, the place will receive general upgrades, many of which will take place this year and already are under way, Mr. Peterson said. The facility’s ballroom, which hosts exhibitor parties and special events, is receiving a makeover, as are all public restrooms, Mr. Peterson said. Outside, parking lots will be redone, lighting will be upgraded and new LED signage will direct traffic. “Certainly, it will make the facility sparkle and shine,” Mr. Peterson said of the first round of improvements. Other improvements will include better, full-facility air conditioning and the widening of I-X Center Drive to better handle traffic, Mr. Peterson said. The I-X Center estimates the total cost of the renovations will come in at $25 million to $30 million.

A really big showplace When the work is done sometime in 2014, one of the largest trade show halls in the nation — the I-X Center claims it is the eighth largest in the country based on square footage — will have an updated look inside and even more space for big events. It might need it, too. Some shows, such as the annual auto show, already have grown to fill the existing space, said Ed German, vice president of marketing for the I-X Center. He noted that Cleveland’s auto show is larger than any in the country, even Detroit’s, in terms of the floor space it uses. Because of the building’s size, neither Mr. Peterson nor local tourism officials think the I-X Center will do anything but play off development in downtown Cleveland that includes a new convention center, medical merchandise mart and casino, all of which are under construction.

“The beauty of our facility and the Cleveland Convention Center is we really complement each other,” Mr. Peterson said. “We are really a B-to-C — business-to-consumer — venue, and they are primarily B-toB. … The auto show can’t go downtown; they can’t handle that number of people.” There are few places that could handle some of the events that can be pulled off at the I-X Center, which still has 77-foot ceilings and 300-foot-wide hangar doors from its days as an aircraft factory. When the I-X Center hosts its annual “Piston Power” show, for instance, giant cranes, World War II bombers, fighter planes and a host of other huge machines easily can crawl into its cavernous space with room to spare. That’s why tourism officials are happy to hear of the center’s renovation, said Tami Brown, vice president of marketing for Positively Cleveland, the city’s convention and visitors’ bureau. “Something like the Materials Handling association, they have a show that’s been at the I-X Center for years — they bring giant machines in there,” Ms. Brown said. Besides the size of the machines, only the I-X Center among local venues has floors strong enough to hold up the equipment, she noted.

million and now leases the building back. It has options to lease the facility through 2039 — and expects to do just that, Mr. Peterson said. “Of course, it is our current intention, assuming our ongoing profitability, to exercise all options — thus, the reason for the investment,” Mr. Peterson said.

More events, eventually? To help make that investment pay off, the I-X Center hopes to host more events itself, Mr. Peterson said. It currently hosts and runs eight of the 30 to 40 events held there each year. The rest are staged by other entities that rent the center.

The I-X Center has put on events such as the Fabulous Food Show and International Beer Fest with great success, Mr. Peterson said, and it hopes to come up with more winning ideas. The self-hosted events can bring in more cash than merely renting the facility, Mr. Peterson said — but the events must be well marketed. “Picking an event that will appeal to the masses and draw a lot of people is critical,” he said. ■

THINGS ARE LOOKING

Expecting a ‘double win’ Like Mr. Peterson, Ms. Brown said she doesn’t believe the I-X Center will pull business away from the new downtown convention center, or vice versa. And, she said, it’s a good sign when someone such as Ray Park, CEO of Park Corp., which runs the I-X Center, invests in local tourism. “I think it’s a double win,” Ms. Brown said. “It’s a great thing for us in terms of our tourism product. And, on the flip side, Mr. Park is a very savvy businessman. If he’s willing to make this sort of investment in the tourism industry here, that’s good news for everyone.” Mr. Park’s company already has approved $3 million for this year’s renovation and has the cash available to fund the entire $30 million renovation, Mr. Peterson said. Its investment ultimately may be bigger than that, though, he said. Park Corp. once owned the I-X Center outright, but sold it to the city of Cleveland in 1999 for $30

U.S. Bank Welcomes Alan Zang In Greater Cleveland, things are looking up…for our customers, our communities, and our economy. Much of this success is due to our employees, and in particular, Alan Zang, U.S. Bank’s new Cleveland market president and head of Cleveland’s Commercial Banking Division. With over 25 years in the banking industry, Alan is a seasoned banking professional and brings a wealth of experience to U.S. Bank. He holds an MBA in Finance from Case Western Reserve University and a bachelor’s degree in Business Management from the University of Dayton.

Vadxx, Texas firm partner on oil project Vadxx Energy LLC Vadxx makes ON THE WEB Story from of Cleveland has www.CrainsCleveland.com. synthetic crude oil formed a joint venture and natural gas by with a Texas company to convert using raw material feedstock conrecovered plastic into synthetic sisting of petroleum-based plastics crude oil. in a process called thermal depolyThrough the joint venture, Vadxx merization. Mr. Delnick said Greenwill help Greenstar Recycling of star chose Vadxx as its partner in Houston “recover plastics from the plastics to energy because of Vadxx’s material stream and repurpose them “potential to scale to commercial as feedstock for the production of size and capacity based on Vadxx’s oil,” said Matt Delnick, CEO of continuous feed process, flexible Greenstar. design and expandable system.” He said the joint venture “will help Greenstar and Vadxx said in a us better serve our municipal cusnews release that they expect the tomers by providing a more consisjoint venture “will begin producing tent market value for their plastics crude oil in mid-2012 with the tarthat are otherwise largely unmarget location for the project in Ohio.” ketable. It will increase recovery Vadxx currently operates a crude rates by pulling more plastics out of oil production demonstration plant landfills.” in Akron.

As a Cleveland native, Alan is very active in the community and is in tune with the needs of this dynamic market. He serves on the board of directors of the National Multiple Sclerosis Society and is a cabinet member of United Way of Greater Cleveland annual fundraising campaign. All across America, businesses are reaching new heights of prosperity. Just look up, with us. Alan Zang 216-623-9228

usbank.com Member FDIC. 5683

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JUNE 27 - JULY 10, 2011

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Will divide. Crane, overhead doors, near I-490.

SALE Marcella Arms Apartments

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WAREHOUSE FOR LEASE

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Richmond Hts,, OH

$1,420,000 W. Greg Reed, Receiver

Cleveland Dream Condo Once in A Lifetime Opportunity Special offering of the most elegant and nationally known double two-bedroom condo at One Bratenahl Place including all furnishings. World-class European antiques, contents and appointments from a 40-year fine arts collection. Call 216-451-2161 or visit:

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COUNTRY RETREAT FOR SALE GEAUGA COUNTY

REALTORS:

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List your Industrial, commercial or Retail Space Here! Crain’s Cleveland Business’ classifieds will help you fill that space.

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Elevator to all floors, back-up generator, 3 car plus attached garage, 24’x24’ storage bldg, 12’x14’ shed, gated driveway, several stocked ponds, Property backs up to the Cuyahoga River, bordered on sides by City of Akron owned land which guarantees privacy. $795,900. Only qualified or bank certified buyers need apply. Send contact information to P.O. Box 1328, Middlefield, Ohio 44062.

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For information on these Confidential Listings Contact: Oreste Realty LLC Chris Foley (614) 915-8835 cfoley@SeniorsFamily.com

PUBLIC NOTICE The Jointly Administered Trust Fund for the Benefit of Lorain City School District Employees is requesting quotes from qualified insurance carriers and/or third party administrators to administer its employee health benefits programs which include medical, pharmacy, dental and vision benefits. Additionally, proposals are invited for wellness, disease management and population management programs. Interested parties can bid on any one or a combination of the above services and programs. Interested parties should contact Jeff Smith directly for a copy of the request for proposal documents.

Jeff Smith, MAAA, FCA Milliman, Inc. 1335 Dublin Road, Suite 209B Columbus, OH 43215 jeff.smith@milliman.com 614.481.3205

Improve your lighting, reduce energy costs and possibly receive full reimbursement for both product and labor for the entire project. Incentives are available on a first-come, first-served basis and must be submitted for pre-approval before placing an order for material. Call us for details, assistance in qualifying your projects and submitting your application. Bill Merriman 216.287.6971 bmerriman@leffelectric.com

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Crain’s Executive Recruiter Development Director American Red Cross of Greater Cleveland The American Red Cross of Greater Cleveland, a leader in humanitarian disaster response and preparedness, is seeking an experienced, high energy, self starter for the position of Development Director. A minimum of seven years of direct face to face fundraising experience is required. Must additionally have documented experience of having closed six-figure gifts, including both corporate and individual gifts. Relationship building, identification of key opportunities, attention to detail and overseeing effective project management are also essentials. We offer competitive compensation and benefits. Resume, cover letter and salary requirement should be emailed to HumanResources@redcross-cleveland.org by June 30, 2011. No phone calls please. EEO/AA

The University of Akron Director, UA Lakewood Location Lakewood, OH Director is responsible for the operation, organizational management, enrollment (credit and non-credit), and community engagement of The University of Akron Lakewood. A relevant Bachelor’s degree & 6 years management/leadership experience required.

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THEINSIDER

THEWEEK

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

JUNE 20 – 26

Sixth City heads to West Ninth

The big story: Moreland Hills, Orange Village,

■ The Waterstreet Grill has lost its sizzle. The Warehouse District eatery, at 1265 W. Ninth St., closed last Wednesday, June 22, to make way for a new concept under new management. New owner Daryn Kinkoph will reposition the 3,600-square-foot space for his Sixth City Diner, managed by parent company Wiggins Investments Inc. The restaurant should reopen in mid-July after about a three-week shutdown for renovations, Mr. Kinkoph said. “We’re catering to a younger crowd, the downtown residents and young professionals,” said Mr. Kinkoph, a former certified public accountant for Elyria-based wheelchair maker Invacare Corp. Mario Izzo, who most recently served as personal chef to former Cleveland Cavaliers guard Mo Williams, will command the kitchen of the 210-seat restaurant. Look for paninis and other sandwiches, with a choose-your-own ingredients format. Most menu items will be under $12. “We’re looking to keep the prices as low as we possibly can,” Mr. Kinkoph said. Former Waterstreet Grill employees will have the opportunity to interview, and Mr. Kinkoph expects to hire about 15 to 20 employees.

Pepper Pike and Woodmere have agreed to begin an informal exploration of merging into a single community. At a June 22 news conference hosted by County Executive Ed FitzGerald, the mayors of the four communities said they believed their communities, which all are part of the Orange City School District, were ready to consider joining together if they can be shown that a merger will reduce the cost of government. Mr. FitzGerald praised the mayors for “the political courage to step up to the plate and say, ‘We need to think about doing things differently.’” See editorial, Page 8.

Get out the checkbook: One of Cleveland’s signature skyscrapers is for sale. 200 Public Square, the 45-story tower built in 1985 as the North American headquarters of BP America, is on the block. Brian Boehmcke, a managing director at Harbor Group International of Norfolk, Va., said the company hired CB Richard Ellis to market the Class A building, which has a little more than 1.2 million square feet and is about 90% leased. A Harbor Group-led partnership in June 2005 paid $144.3 million for the office tower. Since then, Mr. Boehmcke said, Harbor Group has “spent a lot of time and effort to stabilize the rent roll” at 200 Public Square and has “achieved our investment objectives.” Let the fun begin: Cedar Fair Entertainment Co. found a successor to its beleaguered CEO, Dick Kinzel. The amusement park operator based in Sandusky said Matthew A. Ouimet, a former executive with Walt Disney Co., was named president, effective immediately. Cedar Fair said the 53-year-old Mr. Ouimet will succeed Mr. Kinzel, 70, Ouimet as CEO upon the expiration of the latter’s contract on Jan. 3, 2012.

Network news: PNC Financial Services Group signed a definitive agreement to buy RBC Bank (USA), the U.S. retail banking subsidiary of Royal Bank of Canada, in a deal valued at $3.45 billion. With approximately $25 billion of assets, Raleigh, N.C.-based RBC Bank (USA) has 424 branches in North Carolina, Florida, Alabama, Georgia, Virginia and South Carolina. When combined with its existing network, PNC will have 2,870 branches, ranking it fifth among U.S. banks. Parish the thought: White Hat Management, the charter school operator led by Akron businessman David Brennan, acquired five closed churches and two other properties in the city of Cleveland from the Catholic Diocese of Cleveland, according to Cuyahoga County records. White Hat bought properties in Cleveland of the former parishes at Annunciation, 4697 W. 130th St.; Corpus Christi, 4850 Pearl Road; St. Procop, 3181 W. 41st St.; St. Rose, 11401 Detroit Ave.; and Sacred Heart of Jesus, 4300 E. 71st St. The purchases also include two properties associated with St. Rose at 1418 and 4901 Detroit Ave. White Hat paid a total of $2.6 million for the properties.

Our work here is done: The chief financial and chief operating officers of Lubrizol Corp. will retire shortly after the closing of the company’s merger with Berkshire Hathaway Inc. Charles P. Cooley, senior vice president and CFO, and Stephen F. Kirk, senior vice president and COO, will retire “within a few weeks” of the completion of the nearly $9 billion deal, the company said in a regulatory filing. Brian A. Valentine will become CFO upon the effective date of Mr. Cooley’s retirement. The filing did not identify a successor to Mr. Kirk as COO.

WHAT’S NEW

Meanwhile, Mr. Kinkoph plans to pepper the walls with local artists’ work. “I’ve already purchased a lot of Cleveland concert poster art,” he said. Sixth City Diner will have a full liquor license. The eatery initially will be open Monday through Friday from 11 a.m. to 11 p.m., with brunch and an earlier opening on Saturdays and Sundays, although those hours have yet to be determined. — Kathy Ames Carr

Wind energy conference blows into town next month ■ Usually, conferences for wind and other forms of advanced energy are held in places like Dallas, Atlanta or other big-time convention cities. But thanks to Cleveland’s emerging, homegrown wind energy network, one finally will take place here. That seems appropriate because the theme of the conference — and the ongoing goal of its organizer, Cleveland’s Great Lakes Wind Network — is to make sure American manufacturing has a major role in the industry. The conference, “Cultivating the Wind Energy Supply Chain,” takes place July 13 and 14 at the Public Auditorium Building at 500 Lakeside

Retailers see spark for smart phone payments

Garland says this new addition to its line of metal roof and wall systems gives building owners “a lateral aesthetic option for architectural exterior walls.” R-Mer Guard is a concealed clip system “that is engineered for strength and longevity, as well as beauty.” It has been tested and approved to meet extreme wind uplift, as well as air and water penetration and missile impact. The panels are available in a range of colors, gauges and metal materials, including aluminum, zinc, copper and stainless steel, Garland says. Individual colors, profiles and metals “can be used in various combinations, and in conjunction with vertical walls, to create interesting contrasts of colors, textures, and materials, or can be installed uniformly for a clean horizontal line,” according to John Pierson, engineering services manager for Garland. “With this aesthetic extension of the R-Mer product line, architects can design the most complex integrations of metal roof and wall panels using aesthetically compatible materials from a single, reliable source,” he said. For information, visit www.GarlandCo.com. Send information about new products to managing editor Scott Suttell, ssuttell@crain.com.

Tremco raises the standards of what makes a good roof ■ You’d expect a company that makes roofing materials to have a pretty nice roof — and Beachwood-based Tremco Inc. has got several so good it thinks they’re worth gold. No, the RPM International Inc. subsidiary isn’t announcing a huge price increase. It’s going for gold Leadership in Energy and Environmental Design (LEED) certification from the U.S. Green Building Council. The company unveiled four types of roofs at its newly renovated headquarters, including a vegetated roof that saves energy while growing herbs for the company cafeteria and a thin-film solar roof that helps generate renewable energy. But to go for the gold, the company had to do more than install new roofs. Its building now has its own wind turbine, water capture system and a host of other features meant to save energy and reduce the waste and carbon footprint of the headquarters. — Dan Shingler

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com

COMPANY: The Garland Co., Cleveland PRODUCT: R-Mer Guard wall panels

Ave. The cost is $550 for those who register with Great Lakes Wind Network by July 1. Eight wind turbine companies already have signed up to attend, according to the network’s director, Ed Weston. — Dan Shingler

■ A Cleveland company is playing a big role in helping introduce smart phone technology to carry out transactions at retailers’ checkout counters. The Wall Street Journal reported that a Silicon Valley startup called Naratte Inc. has introduced a technology called Zoosh “that uses speakers and microphones on existing smart phones to complete short-range transactions through inaudible, ultrasonic sound.” Shoppers just need to download software, the company says, “compared to betterknown approaches that require smart phones with additional wireless chips,” according to The Journal. The company’s CEO, Brett Paulson, told the newspaper that Naratte’s software allows two handsets within inches of each other to exchange data, such as personal-contact information. “Smart phones could be used like mobile wallets, storing and transmitting digital versions of shopping coupons and loyalty cards — and eventually replacing debit and credit cards for payments, he said,” The Journal reported. One early Zoosh adopter is SparkBase, a Cleveland-based company that processes gift- and loyalty-card transactions for merchants. The Journal said SparkBase plans to use the technology for a service called Paycloud that stores and manages loyalty cards in the equivalent of an electronic wallet for smart phone users. SparkBase plans to start trials of the service

next month in Cleveland and Chicago. Douglas Hardman, SparkBase’s CEO, estimates as many as 250,000 U.S. merchants could be using Paycloud by the end of next year.

Eaton ramps up Russian revenue expectations ■ Eaton Corp. of Cleveland has big hopes in Russia. Reuters reported that the diversified manufacturer aims at reaching $250 million in annual sales through its Russian operations within four years. “We want to multiply times five our current volumes, that would lead us to shipments (to Russia) of about $250 million by 2015,” Eaton CEO Sandy Cutler said in an interview with the news service.

This must be one heck of a fancy hair salon ■ Does anything good happen in Jersey? NorthJersey.com reported that FBI agents this month arrested a Hackensackbased day trader on charges of bilking $1.5 million from Cleveland-based KeyBank in a student-loan scam. Victor E. Cilli, 45, also is accused of stealing $500,000 from investors in a commodity pool Ponzi scheme, “using some of his illgotten gains to pay for hair salon visits and a Harley-Davidson,” according to the story. He is alleged to have conspired with about 16 people, mostly from New Jersey, “to defraud KeyBank of Cleveland of more than $1.5 million between 2002 and 2006,” the web site reported. “The conspirators falsely represented they would attend Tab Express International, a pilot and flight crew training school in DeLand, Fla., and use the proceeds of student loans for their educational expenses.” But the group never intended to enroll at the school, nor repay the loans to KeyBank, the government contends.

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