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Vol. 34, No. 41
$2.00/OCTOBER 14 - 20, 2013
Entire contents © 2013 by Crain Communications Inc.
Zombies could be a dying breed
RICH WILLIAMS
Struggles of private equity funds to raise capital can be frustrating to investors and leave some as ‘walking dead’ By MICHELLE PARK LAZETTE mpark@crain.com
Lifeless zombies are multiplying in the world of finance and are a growing concern for investors, albeit a far different one than the flesh-eating creatures who imperil the lives of humans on AMC’s “The Walking Dead.”
INSIDE Cheers to you
typically until the assets of the private equity funds are sold. The situation means capital that could be returned and reinvested in other ways that arguably are more beneficial to society is held captive. It also can make for unhappy limited partners, or LPs, as the investors are known. See ZOMBIES Page 35
4.01
4.36
4.06
3.84
’04 ’06 ’05 ■ Source: PitchBook
2003
3.61
3.93
4.02
’07
’08
’09
Industry maintains healthy outlook, but cutbacks are on the rise By TIMOTHY MAGAW tmagaw@crain.com
Northeast Ohio has been fueled for years by the economic firepower of the health care business, but a recent surge of layoffs and staff reductions at area hospitals indicate the institutions might not be the
hiring machines they once were. In order to cut $330 million from its budget for next year, the Cleveland Clinic, one of the largest institutions in the country, announced last month it was offering early retirement packages to 3,000 employees and that layoffs likely were on the horizon. Summa Health System
4.79
4.98
’10
’11
5.36
’12
and Akron General Health System also reduced their staffs within the last month. And with a wave of hospital mergers on the horizon, health experts expect further cutbacks as health systems look to consolidate costly back-end operations. The reasons for the purge are many: Health care reform has blan-
keted the industry with uncertainty, hospital inpatient volumes are headed south, and government and commercial reimbursements often aren’t covering the cost of care. At the same time, the nation is grappling with how to transition to a health care system that pays providers for keeping people healthy, rather than on a fee-forservice basis when people are sick. See HOSPITALS Page 36
Compliance Trip Wires
7
NEWSPAPER
74470 83781 0
A look at the median number of years it takes private equity funds to exit, or sell, a portfolio company:
Hospitals are becoming leaner operations
41
■ Cleveland will have plenty of reasons for a toast at BeerWeek. One is the region’s status as a craft-brewing powerhouse. PAGE 3 ■ Crain’s salutes the CFOs of the Year. PAGE C-1
These zombies are private equity’s undead: funds that are “alive” in that they still own companies, but “dead” in that they’ve exhausted most, if not all, of their capital and can’t raise new money, often because of lackluster returns to their investors. All the while, investors’ money remains tied up in these zombies,
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CRAIN’S CLEVELAND BUSINESS
COMING NEXT WEEK
OCTOBER 14 - 20, 2013
IPOs JUST MIGHT BE BACK Capital markets showed strong momentum in the third quarter as the volume of initial public offerings, 63, matched the second quarter and was more than double the number in the third quarter of 2012, according to IPO Watch, a quarterly survey of IPOs listed on U.S. stock exchanges. The first nine months of 2013 recorded more IPOs than the 146 IPOs for all of 2012. Total IPO proceeds raised during the third quarter were up 76% from the third quarter of 2012. Here’s how IPO volume stacks up in the last two years:
Innovative efforts Many companies have a person in charge of innovation and new product development. Crain’s will look at their efforts, higher education’s role in innovation and more in next week’s special section.
Period
REGULAR FEATURES Classified ....................38 Editorial ......................10 From the Publisher ......10 Going Places ...............15
WWW.CRAINSCLEVELAND.COM
Letters ........................11 Reporters’ Notebook....39 Talk on the Web ...........10 What’s New..................39
IPOs 2013
IPOs 2012
Offering values 2013
Q3
63
30
$11.8B
$6.7B
Q2
63
33
$13.2B
x-$22.2B
Q1
34
45
$7.8B
$5.8B
160
108
$32.8B
$34.7B
Totals
Offering values 2012
■ Source: IPO Watch; www.pwc.com; x-Due to the Facebook IPO
700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Associate publisher/editorial: John Campanelli (jcampanelli@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Kevin Kleps (kkleps@crain.com) Sports Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Energy, steel and automotive Tim Magaw (tmagaw@crain.com) Health care and education Michelle Park (mpark@crain.com) Finance Rachel Abbey McCafferty (rmccafferty@crain.com) Manufacturing and energy Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Events manager: Jessica Snyder (jdsnyder@crain.com) Special events coordinator: Kim Hill (kroman@crain.com) Marketing strategist : Michelle Sustar (msustar@crain.com) Advertising director: Nicole Mastrangelo (nmastrangelo@crain.com) Senior account executive: Adam Mandell (amandell@crain.com) Account executives: Dawn Donegan (ddonegan@crain.com) Andy Hollander (ahollander@crain.com) Lindsie Bowman (lbowman@crain.com) John Banks (jbanks@crain.com) Office coordinator: Denise Donaldson (ddonaldson@crain.com) Digital strategy and development manager: Stephen Herron (sherron@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com)
Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Chris Crain: Executive Vice President, Director of Strategic Operations Brian D. Tucker: Vice president Dave Kamis: Vice president/production & manufacturing Mary Kramer: Group publisher G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation
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OCTOBER 14 - 20, 2013
CRAIN’S CLEVELAND BUSINESS
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INSIGHT
Shutdown deals random blows Government impasse is hitting NASA ‘harder’ than others By CRAIN’S STAFF
By the time you read this, the U.S. government might be back up and running normally. Or not. The government shutdown was hurting many Ohio workers and employers last week — and those
who talked about it were more certain of Washington’s incompetence than they were confident in its ability to resolve the problem quickly. Among those most affected are workers and contractors tied to NASA Glenn Research Center in Brook Park, said Michael Heil, president of the nearby Ohio Aerospace
Institute, or OAI. “NASA was hit harder than any other federal agency during the shutdown — a very high percentage of their employees nationwide have been furloughed,” Mr. Heil said. “The NASA Glenn Research Center, for all intents and purposes, is totally shut down.”
INSIDE: In a letter to the editor, a representative from NASA’s engineers union says federal employees are being used as pawns. Page 11 That means that center’s employees, as well as its civilian contractors, are out of work until the government reopens, Mr. Heil said. See SHUTDOWN Page 37
Bart Watson, staff economist, Brewers Association
— Christine Croissant, managing director of fundraising and investor relations for The Riverside Co. Page One
GETTY IMAGES
2. Pennsylvania
1,625,116
3. Colorado
1,291,771
4. Ohio
980,969
5. Oregon
764,226
U.S. total
13,235,917
■ Note: One beer barrel, also known as bbl, equals 31 gallons ■ Source: Brewers Association
State is fourth in the nation in craft brewery production; Northeast Ohio seems to have insatiable thirst for more By KATHY AMES CARR clbfreelancer@crain.com
T
he latest production numbers for Ohio’s craft breweries speak vats-full about the quality of and demand for their brew. The Buckeye State ranked No. 4 in the United States in craft brewery production in 2012, at about 981,000 barrels, behind California
“Just because it’s happening across the country doesn’t make it any less painful for anyone involved. There are a lot of good institutions that are belt tightening. If you look at a hospital’s cost structure, labor costs are a huge part of it.”
“As long as there’s been private equity firms, there’ve probably been firms that didn’t perform well. But I think you saw probably a pretty large swelling of the zombie population as the outcome of the great financial crisis.”
REGION LINES UP QUALITY BREWS
A look at the total production by U.S. craft breweries in 2012: 1.California 2,453,793 barrels
THE WEEK IN QUOTES
— Jennifer Stewart, managing director for The Advisory Board, a Washington, D.C.-based consultancy. Page One
“Ohio is viewed as a pretty strong power player.”
KEEP ’EM COMING
3
(2.45 million barrels), Pennsylvania (1.63 million) and Colorado (1.29 million), and ahead of Oregon (764,226), according to the Brewers Association. “The craft beer industry is pretty tight, and Ohio is viewed as a pretty strong power player,” said Bart Watson, staff economist for the Colorado-based industry advocacy organization. See BREWS Page 38
“My mother said each day when I left for school: ‘Do your best.’ She also said to check your work, and those words still echo with me.” — Terry Bichsel, CFO, FirstMerit Corp. Page C-1
“She’s a great example for all of our staff to do whatever it takes to fulfill our mission.” — William P. Harper, executive director of United Way of Greater Lorain County, regarding finance director Dianne Brehm. Page C-9
Cleveland startup hopes to be ‘the next Tumblr’ Tackk gets substantial investment from firm that was an early believer in Indiegogo By CHUCK SODER csoder@crain.com
According to John Frankel, “99.99% of the people who will use Tackk don’t even know it exists.” Tackk is a Cleveland social media
company that just received a $1.2 million investment led by Mr. Frankel’s firm, ff Venture Capital of New York City. The firm was an early investor in some popular Internet startups, including the Indiegogo crowdfunding platform
and 500px, a photo-sharing tool that generates 1 billion page views per month on various websites. Likewise, Tackk “has a lot, a lot of potential,” Mr. Frankel said. The company, he said, has developed a “crazy simple” way to create basic-
yet-attractive web pages and share them on other websites. Some Tackk pages work like digital flyers designed to sell stuff, be it a house or an old bicycle. Or they can be used to invite people to an event or accept donations for a
fundraiser. Some are just for fun, like the collection of cute baby videos Mr. Frankel created at Tackk.com/funnybabies. That Tackk page, which he created in less than five minutes, has about 2,000 page views, according to Mr. Frankel. See TACKK Page 16
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CRAIN’S CLEVELAND BUSINESS
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Tower Press developer could benefit from rising demand for apartments near CSU By STAN BULLARD sbullard@crain.com
The developer responsible for Tower Press Apartments, which pioneered market-rate residential rentals and live-work space in Cleveland’s Campus District, is on the move with another Superior Avenue project, but this time with a studentoriented bent. Construction crews are working inside and outside the century-old, three-floor building at 2320 Superior Ave. near Cleveland State University. Cuyahoga County land records show CFBank of Fairlawn provided a $3.5 million mortgage to 2320 Superior LLC for the project Sept. 23. David Perkowski, who developed Tower Press in 1998 and now does business under the name Tower Press Development Co., signed the mortgage and other documents associated with the building, a onetime clothing factory called the M.T. Silver Building. Bobbi Reichtall, executive director of the Campus District local development corporation, said construction crews are installing student housing in the building. The suites are designed to accommodate four
students with private bedrooms and a shared kitchen and living room, she said. She did not recall how many beds for students will go into the building. Like many real estate developments that were hatched before the 2008 financial crisis, the Silver Building’s rebirth has had a long gestation process. Land records show limited liability corporations Mr. Perkowski heads gained control of the building May 18, 2007. The Ohio Department of Development Services and Ohio Historical Society, which jointly administer the state historic preservation tax credit program, OK’d the Silver Building for a $2.3 million credit in 2008. Through a different limited liability corporation, Mr. Perkowski previously redid the adjoining Bloch Building as offices and art, photography and other studios. The two buildings together span the block on Superior Avenue’s south side between East 22nd and East 23rd streets and are a little east of the Tower Press Building, 1900 Superior. Look south past the Silver Building on East 23rd Street and you will see the rooftops of the just-completed Langston student apartments. Cleve-
land State began its push to develop a residential campus in the years since Tower Press Apartments made their debut, so Mr. Perkowski may be latching on to another development wave. Ms. Reichtall said student-housing market studies by a class at the Maxine Goodman Levin College of Urban Affairs at Cleveland State show demand for another 1,200 beds beyond already completed projects near the school’s campus. She said national developers of student housing — a hot button for real estate developers and financiers nationally — also are assessing the district for more projects. She declined to identify them. In a prior company called Charge Development, Mr. Perkowski and his brother Doug played a trailblazing role in 1996 as they began converting two old commercial buildings, the Merrill and Mezner buildings on West 25th Street, to loft rentals. Efforts to contact David Perkowski from Oct. 1 to Oct. 3 to discuss the Silver Building project were unsuccessful. No response was received by 3 p.m. Friday, Oct. 4, to three calls and an email to Mr. Perkowski’s Water Tower office, a phone call to the cell phone of his wife Karen Perkowski, who also works in the concern, and a business card left at the family-operated deli at Water Tower. â–
Crain’s makes moves on business side Crain’s Cleveland Business has promoted two employees and added a third on the business side of its operations. Jessica Snyder has been promoted to the position of events manager. Ms. Snyder joined Crain’s in September 2010 as events coordinator and has assumed positions of increasing responsibility in her three years with the publication. Michelle Sustar has been named
to the post of marketing strategist. Ms. Sustar joined Crain’s in October 2012 and was the publication’s sales and marketing assistant prior to Snyder her promotion. And Kim Hill has joined the staff of Crain’s as events coordinator. Ms.
Sustar
Hill
Hill most recently was marketing coordinator for Greenfield Health Systems in suburban Detroit. â–
Volume 34, Number 41 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2013 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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CRAIN’S CLEVELAND BUSINESS
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Clinic proposing $12M office building near its foundation
1717 East 9th Street Former East Ohio Building Cleveland CBD
Geoff Coyle represented K&D in the purchase of this property. Residences at 1717 will feature high-quality DSDUWPHQWV DQG ¿UVW ÀRRU commerical space. Contact Geoff Coyle at 216.861.5286 to get information on the available commercial space at the
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Health care giant says it’s ‘premature’ to discuss plans for the three-story complex
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A proposal for a $12 million, three-story office building on the southeast corner of East 105th Street and Cedar Avenue may kick-start redevelopment of a triangular area called “The New Economy Neighborhood” near the Cleveland Clinic Foundation and University Circle. The site, currently a Cleveland Clinic parking lot on Clinic-owned land, is near the northern end of the proposed Opportunity Corridor, a boulevard that would provide improved access to University Circle from East 55th Street, where Interstate 490 abruptly ends. Real estate broker CBRE Group is circulating a brochure for the proposed building, called “Opportunity105.” The brochure includes a logo for Trammell Crow Co., an independent subsidiary of CBRE that serves as a real estate developer and construction coordinator. Trammell Crow has provided services for the Clinic in the past. For example, it produced a 2,900space parking garage and laboratory space across from the Clinic’s main building at Euclid Avenue and East 98th Street.
The brochure indicates the building would be a mirror-like, crystal wall structure similar to recent Clinic buildings. The 80,000square-foot building would be a multitenant property and would have an asking rent of about $19 a square foot. CoStar, the online realty data provider, has a listing for the proposed building that refers to CBRE and identifies the Clinic as the property owner and developer. Heather Phillips, a Clinic spokeswoman, said the health care giant declined to discuss the proposal because it’s “premature.” David Browning, CBRE’s Cleveland managing director, acknowledged two agents in his office are vigorously promoting the project, but he referred questions about it to James Murray-Coleman, a Trammell Crow senior vice president in Pittsburgh. An assistant to Mr. Murray-Coleman said any comment had to come from the Clinic. Mr. MurrayColeman’s online resume lists multiple projects at the Clinic.
A possible seed Promoting economic development in the city, as well as improv-
ing traffic access from the south to University Circle’s cultural, educational and health care resources, often are cited as reasons for creating the $330 million Opportunity Corridor, which has been years in planning. The site the building would occupy is in an area that Opportunity Corridor planners dub a strategic block for redevelopment. The proposed building site is on the northwest corner of a triangular area roughly formed by not three but four streets: East 105th, Arthur Avenue, Stokes Boulevard and Cedar Avenue. The Fairfax Renaissance Development Corp.’s 2009 strategic investment plan identifies it as an area for redevelopment due to its proximity to the Clinic and University Circle. Vicki Eaton Johnson, executive director of Fairfax Renaissance, was out of the office last Thursday, Oct. 10, and did not return a call by Crain’s deadline. Fairfax and the Clinic have cooperated directly on real estate investment in the past, co-developing the Global Center for Cardiovascular Research, which offers rental lab space a short distance west on Cedar. A brownfield redevelopment plan by Fairfax and the Opportunity Corridor shows similar buildings spreading west on Cedar from East 105th. ■
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A maker of tube and hose assemblies used in fuel systems for compressed natural gas vehicles has increased its manufacturing and office space in Twinsburg by more than 700%, giving the company room to grow in an expanding market. “We have a tremendous amount of growth potential,” said Kevin Dickey, general manager of SSP AFV LLC. AFV until late August had operated out of a 4,000-square-foot space at SSP, its sister company and a critical supplier. A short move to 1333 Highland Road meant AFV could make improvements to its manufacturing process, Mr. Dickey said. AFV previously was working within the space it was given. The new location gave employees the chance to consider factors such as work flow and inventory when setting up the shop floor. It has 19,200 square feet of manufacturing space and 10,000 square feet of office space, Mr. Dickey said. AFV works with companies that
“We have a tremendous amount of growth potential.” – Kevin Dickey, general manager, SSP AFV LLC convert traditional engines to those designed to run on natural gas. AFV’s products can be used in light, medium and heavy-duty vehicles, but most customers are in the medium or heavy-duty categories. Those categories include vehicles such as shuttle buses, garbage trucks and semi trucks, Mr. Dickey said. The company expects its sales in 2013 to double those of 2012, and it expects to double them again by 2014, Mr. Dickey said. The company declined to share annual revenue. It has 25 employees, including three hired in the last three months, and it’s looking for another salesperson. Mr. Dickey just joined the company last December. The market for vehicles fueled by natural gas is growing rapidly, said Richard Kolodziej, president of Natural Gas Vehicles for America, of which AFV is a member. “It’s really amazing,” he said. Mr. Kolodziej said there have been benefits to using natural gas for vehicle fuel, such as better air quality and less reliance on imported oil, but the economics had to make sense. As natural gas became
less expensive with the shale drilling revolution, rapid growth began. Mr. Kolodziej said the expectation is that natural gas will remain cost competitive. While some of the larger vehicle markets — such as trash trucks and transit buses — are starting to get on board, Mr. Kolodziej said, there is still a large opportunity for other vehicles to be converted to natural gas. Mr. Dickey agrees. He said a lot of pent-up demand exists as people wait for the natural gas infrastructure and distribution system to mature. Paul Smith, senior director of infrastructure at America’s Natural Gas Alliance, said he thinks natural gas is reaching a “tipping point” where it soon could become mainstream. “It’s really cropping up everywhere right now,” he said. More original equipment manufacturers are offering that option, and there have been a lot of announcements recently that fleets are switching to compressed natural gas or liquefied natural gas, Mr. Smith said. At the moment, conversions are filling a void. There aren’t many vehicles coming off the line with compressed natural gas capabilities, and conversion systems allow companies to use the fleets they already have, he said. ■
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CRAIN’S CLEVELAND BUSINESS
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OCTOBER 14 - 20, 2013
Cleveland fund is rehabilitated, relocated Group is sharing space on top floor of 1240 Huron Building; complex’s owner has taken a 20% stake in international fund By JAY MILLER jmiller@crain.com
The Cleveland International Fund has completed its rehabilitation. Late last month, the specialized investment fund moved from Pepper Pike to Cleveland’s PlayhouseSquare district, physically leaving a tarnished legacy behind and, in the process, taking on a new partner. It will share space on the top, fourth floor of the 1240 Huron Building owned by the Greater Cleveland Partnership. In addition, Cleveland Development Advisors, the financing arm of GCP, has taken a 20% interest in the fund. Cleveland International Fund has played a key role in financing packages for several big real estate developments in the region. Among them are the Flats East Bank project and, more recently, the University Hospitals Health System expansion and the renovation of the Westin Cleveland Downtown hotel.
23
The fund, which aims to attract foreign investment to Northeast Ohio, was thrown off track in early 2012 when its founder, A. Eddy Zai, was accused of — and eventually pled guilty to — defrauding two financial institutions. The illegal activity never touched Cleveland International Fund. Working with U.S. Attorney Steven Dettelbach, the fund’s current CEO, Steven Strnisha, and its chief operating officer, Adam Blackman, found new investors and took control of the fund from Zai. By July 2012, they were on the road to reestablishing the business. “When we made the decision last year with the ownership and management changes, and dealing with the U.S. Attorney’s office, (the affiliation with Cleveland Development Advisors) made a lot of sense as a show of good faith,� Mr. Strnisha said. “Also, we’re very aligned on deals. The same kinds of deals they look at are the kind of deals that we would be interested in.� The fund will be leasing its space
from GCP. Joe Roman, president of GCP, said his organization did not make a financial investment in Cleveland International Fund but is taking on a role in its governance. “This is tremendous,� Mr. Roman said. “The building is really becoming a condominium for economic development.� Cleveland International Fund is a federally registered EB-5 regional center, which means it can raise money from foreigners who, if they invest a minimum $500,000, can earn a visa allowing two years of permanent residence in the United States and, ideally, make a profit on their investment. The fund then uses the raised capital to participate in a variety of local development projects. Mr. Strnisha said he currently is involved in putting together a financing package for the second phase of the Flats East Bank development. Cleveland Development Advisors is involved in some of the same
Annual
Congratulations to Cleveland State University’s 2013 Distinguished Alumni Award Recipients LOUIS STOKES, JD ’53, Honorary Doctor of Laws ’89 U.S. House of Representatives (retired) Squire, Sanders & Dempsey (retired)
“When we made the decision last year with the ownership and management changes, and dealing with the U.S. Attorney’s office, (the affiliation with Cleveland Development Advisors) made a lot of sense as a show of good faith.â€? – Steven Strnisha, CEO, Cleveland International Fund deals as Cleveland International Fund including the Flats East Bank. Its investors are many of Cleveland’s leading corporations and its investment funds have access to federal New Markets Tax Credits, which can be attractive to some investors because they offer a credit against federal income tax. Now, it will be easier for the two organizations to collaborate on deals. It doesn’t hurt, Mr. Roman conceded, that he and Mr. Strnisha are longtime friends. Cleveland International Fund’s future was in doubt when Zai was accused of submitting fraudulent loan applications and personal financial statements to both St. Paul Croatian Federal Credit Union and Park View Federal Savings Bank to obtain more than $16 million in loan funds over a six-year period beginning in February 2004. Last February, U.S. District Court Judge John Adams in Akron sentenced Zai to 7Âź years in prison and ordered the 44-year-old Pepper Pike man to pay $23 million in restitution to the National Credit Union Association. â–
Pension plan funding levels are on rise Bolstered by solid investment returns, the funded status of pension plans sponsored by large employers crossed the 90% threshold in September, rising to their highest level in five years, according to a Mercer L.L.C. analysis released last week. On average, pension plans sponsored by companies in the S&P 1500 were 91% funded as of Sept. 30, up from 89% at the end of August and sharply higher from 74% at the end of 2012. Pension plan funding levels haven’t been this high since Sept. 30, 2008, when the plans on average were 99.7% funded. A month later, though, average funding levels had fallen to 89.4%, as the equities market sharply fell and the economy headed into the Great Recession. “It’s been a long road — nearly five years — for plan sponsors to get back over a 90% funded status,� Jonathan Barry, a partner in Mercer’s retirement consulting group in Boston, said in a statement. In the aggregate, the plans’ funding deficit at the end of September was $182 billion, down from $213 billion as of Aug. 31, and sharply lower than the record deficit of $557 billion as of Dec. 31, 2012. The aggregate funding deficit at the end of September was the lowest since April 30, 2009, when the deficit was $167 billion. — Jerry Geisel, Business Insurance
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
OCTOBER 14 - 20, 2013
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) ASSOCIATE PUBLISHER/EDITORIAL:
John Campanelli (jcampanelli@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Three-peat
F
rank Jackson is running for his third, fouryear term as mayor of Cleveland. He deserves to be re-elected. Casual observers — or those limited to television sound bites — probably wouldn’t ascribe the word “visionary” to Mr. Jackson. However, the mayor does have a vision for what he hopes to accomplish and the legacy he wants to leave. Mayor Jackson’s goal is to create what he terms an “institutionalized infrastructure” for how Cleveland should operate. His desire is to position the city for success regardless of who eventually will succeed him in City Hall. In our view, foremost among Major Jackson’s infrastructure-building efforts has been his attempt to give all school-age children in Cleveland access to a high-quality education. The mayor risked significant political capital last year when he championed the transformation plan for the Cleveland schools. The idea of the Cleveland Metropolitan School District partnering with, rather than competing against, charter schools probably didn’t win him many friends in organized labor circles. But it likely was the willingness of the district to share some of its property tax revenue with highperforming charter schools that convinced Cleveland voters last fall to impose a hefty 15-mill levy upon themselves. And they did so in overwhelming fashion — 57% to 43%. Mayor Jackson also has wrapped himself in the mantle of a distant predecessor — George Voinovich — and has worked to make the efficient operation of government a hallmark of his administration. Over the last four years, in balancing Cleveland’s budget, the mayor has had to contend with the effects of a recession and sharp cuts under Gov. John Kasich in the state’s support to cities. And yet Mayor Jackson has managed to make ends meet without running to voters for an income tax increase. Despite the role Gov. Kasich has played in inflicting pain on cities, the pragmatist in Mayor Jackson, a Democrat, has enabled him to forge a good relationship with Ohio’s Republican leader, much to Cleveland’s benefit. Asked why the relationship works, the mayor says simply, “I don’t do politics.” Actually, the understated mayor does do politics, and does it quite well. As Mayor Jackson himself acknowledged last week during an editorial board meeting with Crain’s, he gives the governor “his dues and his propers” when Mr. Kasich delivers such goodies as millions for the makeover of the West Shoreway. However, he doesn’t trash the governor when he may not agree with a policy decision. Mayor Jackson’s opponent, Cleveland businessman Ken Lanci, is an earnest candidate sincere in his desire to bring fresh eyes to an examination of the business of government in Cleveland. However, our sense after discussing his candicacy with Mr. Lanci is that he could become frustrated sooner than later with the cajoling and horse-trading that is necessary when dealing with 19 City Council members who treat their wards like their personal fiefdoms. Frank Jackson may be a reluctant politician, but he is an effective mayor. He has earned a third term.
FROM THE PUBLISHER
Thanks for nothing, D.C. leaders House speaker imitating the president in really, truly, honestly, sincerely did a floor speech) seemed too petty if it was not want to write again this week believed it could impact the debate. about the nonsense in Washington. This is what our politics has And as I wrote this column become, and it’s mind-numblast week, there were signs from BRIAN ingly frustrating for more and the nation’s capital that some more Americans. Our side says actual adults were trying to TUCKER it’s all their fault; their side says forge a compromise position to it’s all our fault. Nothing gets end the government shutdown done. Moderates who once and temporarily delay a debt helped join the sides of the limit crisis. aisles to get real work done That’s the good news, folks. It leave Washington rather than appears that all involved — deal with the nonsense. from the president to both One of those respected voices houses of Congress — are paywas our own George Voinovich, whose ing attention to the fury and disdain of brand of responsible, reasonable and fair the American people. They all have actpolitics earned him multiple terms as ed horribly in this fiasco, and it appears Cleveland’s mayor and Ohio’s governor that self-interest (namely, their desire to and senator. In a recent newspaper comkeep their jobs — and the president to mentary, he attacked Congress and his save his legacy) finally might have injectformer colleagues for the budget fight ed some reason into the hyper-partisan that shut down government. atmosphere in and around Washington. “It is criminal that after forcing these From the president on down to the incontinual debt debacles on the American dividual senators and representatives, people, members of Congress are still able this nation’s political leadership is failing to cash their paychecks,” he wrote. “It is units people. No act (witness the closing of just and unconstitutional the Congress the World War II Memorial to a bunch of should continue getting paid while hardvisiting vets in wheelchairs — or the
I
working federal employees such as FBI and DEA agents, border patrol agents, National Park Service employees and other federal workers are either being furloughed or given IOU’s on their paychecks.” The retired senator noted that the last time Congress was able to pass a budget resolution through normal process was April 2009, close to five years ago. Since then Congress has limped along on a series of “continuing resolutions” as a replacement for the usual budget. While he was still in office, Sen. Voinovich asked the General Accountability Office to determine the costs of managing the effects of such cobbled-together budget processes. The findings — from just a couple agencies but multiplied across the entire government — were startling. Under a one-month continuing resolution, the Veterans Affairs medical facilities lost $1 million in productivity. FBI staff wasted some 600 hours trying to manage the effects of things like short-term contracts. All that courtesy of our elected officials and their shameful, shortsighted love of their own political ideology. When will the madness end? ■
TALK ON THE WEB Re: Hotel at Ameritrust Tower ■ This is probably Cleveland’s most exciting hotel project and perfectly located to anchor the revitalization of downtown Cleveland. Having local ownership is an essential ingredient. — Leland Lewis
Re: Ben Venue’s planned closure ■ What’s missing in (coverage of the company’s troubles) is why so much time, money and talent were unable to fix whatever is wrong at Ben Venue. Were the FDA standards unreasonable? Were the operating costs uneconomical no matter what was done? Was the company’s quality assurance program totally ineffective? Employee and company comments have not been enlightening, either. — Robert Salmon ■ This is just another example of how
Reader responses to stories and blogs that appeared on: www.crainscleveland.com
big government can mess with people’s lives. Is the FDA really concerned about the sick people that need these drugs, or is it merely trying to justify its existence? Another local community is taking the hit thanks to Big Brother. — Alan Kuntz ■ Boehringer Ingelheim is most likely trying to avoid the bad rep for this drug and will change a few properties, rename the thing and put it out there under a new FDA filing. Odd, isn’t it, that they chose to do so when the U.S. government is out to lunch? — Michelle Matsko ■ This is a sad development for the employees, the city of Bedford and Boehringer Ingelheim of Germany. If the Germans can’t fix it, then maybe the FDA needs to be looked at. — Tim Kloos
POLL POSITIONS What's your view of the Opportunity Corridor transportation project aimed at connecting I-490 to University Circle? ■ It will be a helpful economic tool. 53.1% ■ It will be too disruptive to neighborhoods to justify the cost. 20.3% ■ I don’t know enough about it yet. 26.6% ■ Vote in the poll each week at CrainsCleveland.com.
Re: Case, Clinic part of alliance getting federal funds It is indeed always exciting to be a part of medical innovation. We have a great climate for that already; this will make it even better. — Donald Hamlin
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
LETTERS
11
Minshall Stewart
Stop using federal employees as pawns Properties is...
A
s the representatives of the employees of the NASA Glenn Research Center, the International Federation of Professional and Technical Engineers (IFPTE), Local 28, would like to express our concern with the present shutdown of the federal government. We are hugely sympathetic to the situation this presents to the poorest, most unfortunate and disenfranchised citizens, but are even more disturbed over the broken political process that has caused this to occur. While the IFPTE does not promote partisan viewpoints on political issues, in this case we note our dissatisfaction with the approach taken by the House of Representatives and their leadership. We are not taking a position here on the Affordable Health Care Act at the center of this spectacle. However, we note that it became law nearly four years ago. The House is entitled to engage the legislative process to pursue modifying, defunding, or retracting this law, but we agree that tying it to the shutdown of the government is inappropriate and irresponsible. It is horrifying that the House Speaker from our own state is clinging to a parliamentary excuse (the Hastert Rule) to avoid bringing to the floor a no-strings-attached continuing resolution, in full knowledge that it will pass with bipartisan support. While he has stated that he would allow a vote on the debt ceiling to proceed in this fashion, government workers and the services they provide are so unimportant that they can literally be used as sacrificial pawns in the ideological fight over a single law. Meanwhile, the House leadership disingenuously ballyhoos about what the majority of Americans want, while as a matter of record sufficient votes are available in their own body to correct this unfortunate situation. It is factually incorrect to state that the Senate is unwilling to compromise, when they have agreed to the House’s far more stringent budget numbers. Not all Americans agree with this compromise. While the IFPTE supported the Senate’s negotiation on this issue, the AFL-CIO did not. It is also horrifying to observe our
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Email: editor@crainscleveland.com
Ohio Republican House members largely sit on the sidelines while their leadership railroads the country down a path which it has clearly recorded it does not want. Even the seemingly more moderate Rep. Joyce cannot simply state his desire to get on with business in a more measured fashion. Rather, he must poke a stick in the eye of his Democratic colleagues by insisting that the country cannot be cleanly released without terms (in this case, eliminating the Medical Device Tax). For us as NASA employees, it is humiliating that what we do is viewed as so unimportant that it can take a back seat to political bickering. It is not only bad policy, it is bad for NASA Glenn and correspondingly bad for the citizens of our region. Consider as one example, our center’s recent decision to propose a research payload for the coming Mars 2020 lander mission. This activity, if awarded, would bring tens of millions of dollars to Northeast Ohio, but the timetable for assembling this proposal is breathtaking. While our competitors in industry and academia have sharpened their pencils, rolled up their sleeves and set to work, it is actually illegal for the scientists and engineers at NASA Glenn to be crafting our proposal. For these reasons, we, the members of IFPTE Local 28, urge our members of Congress to use the appropriate legislative tools to advance the nation’s interest. They should honor their responsibility as elected representatives to act in accordance with the desires of our citizens as a whole, and act immediately to reopen the government and restore services to those who both need and deserve them. Paul S. Greenberg Area Vice President Legislative Committee Member Local 28 International Federation of Professional and Technical Engineers
For us as NASA employees, it is humiliating that what we do is viewed as so unimportant that it can take a back seat to political bickering. It is not only bad policy, it is bad for NASA Glenn and correspondingly bad for the citizens and our region
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Death to Obamacare
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rian Tucker’s Oct. 7 commentary, “Life isn’t a party in Washington right now,� leads readers to believe he’s on board with the current administration as he wonders why conservatives are trying to eliminate Washington’s party time. Mr. Tucker exposes himself as a big government Progressive when he refers to former Republican moderate Steve LaTourette as a successful congressman. When Mr. LaTourette arrived in Washington, our nation’s debt was about $5 trillion. When he left Washington, it was about $17 trillion. What Mr. LaTourette and his moderate buddies allowed to happen was anything but successful. He fled Congress because he knew he was about to be thrown out. Mr. Tucker devotes much of his commentary defending Obamacare as a law already passed by Congress. Surely he remembers the corrupt backroom deals and lies that rammed this job-killing legislation through Congress without a single Republican vote. Why, Mr. Tucker, does this law not apply to all Americans equally? Why all the unconstitutional waivers and exemptions for the president’s big business friends, union donors and the Congress of the United States? What about average middle-class Americans? Why are we unable to get the same considerations? The conservative wing of the Republican Party was sent to Washington to kill Obamacare. We expect no less. Mr. Tucker’s angry rhetoric and contempt for the tea party is ramping up as their message of less spending and smaller government gains traction. Men and women are sent to Washington to serve the people. Somewhere that was forgotten and the people now serve big government. That needs to change, and it’s up to American conservatives to end Mr. Tucker’s “Washington Party� once and for all. Jeff Longo North Royalton
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Fuel efficiency push is driving some businesses Higher standards set by government can be good for those in auto lightweighting By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
Shiloh Industries Inc. in Valley City is no lightweight in lightweighting. Rather, Shiloh, steelmaker ArcelorMittal and other manufacturers are among a vanguard of local companies that want to capitalize on a big push by automakers to reduce the weight of their vehicles as they look to hit ambitious federal fuel-efficiency targets. Lightweighting is industry jargon for processes and innovations that bring down vehicle weight, which helps cars go further on less fuel. Glenn Daehn, a professor of materials science and engineering at Ohio State University, said automakers have worked toward fuel efficiency improvements for years, but they’ve hit the accelerator because of changes in federal Corporate Average Fuel Economy (CAFE) standards. The government updated the standards in August 2012, setting a goal for automakers to increase the average miles per gallon of their fleets to 54.5 by model year 2025. The previous CAFE standards had set a fleetwide goal of 35.5 miles per gallon by 2016. Shiloh president and CEO Ramzi Hermiz said the lightweighting push is a plus for his company, which provides metal die-casting, stamping and laser welding services to automotive customers. Shiloh’s technology always has transferred well to fuel efficiency, Mr. Hermiz said, but it wasn’t something management highlighted. Instead of touting how its methods make cars lighter, Shiloh focused on ways they reduce scrap and lower costs. In the past year, though, Shiloh has changed its website and has added a tagline — “Lightweighting without compromise” — to highlight its ability to deliver lighterweight parts and materials to customers. However, Shiloh’s emphasis on lightweighting is more than marketing. Within the past year, the company has made three acquisitions in aluminum stamping, casting and machining to expand its aluminum capabilities and is building new laser welding cells at plants in Ohio, Georgia and Michigan. Laser welding allows Shiloh to join together steel of varying thickness, which lets manufacturers use heavier steel only where it’s necessary, and to reduce the number of parts in products, Mr. Hermiz said. The acquisitions are important because aluminum is a lightweight material Mr. Hermiz sees as growing in popularity in the auto industry. He said Shiloh also is in the process of developing laser weld technology for aluminum, like it now offers for steel. Mr. Hermiz, who joined Shiloh in 2012, said the company will continue to grow. It has spent about $25
RACHEL ABBEY MCCAFFERTY
Robots move and weld steel blanks at one of Shiloh Industries Inc.’s Valley City plants. million on capital investments this year, up about 20% to 25% from prior years, and has been hiring for skilled trade and technical positions.
Stripping out the weight ArcelorMittal also is investing locally. The steelmaker has spent about $70 million on its Cleveland plant’s galvanizing line in last eight to 10 years, said Louis Schorsch, a member of the company’s group management board. ArcelorMittal is on track to approve another $25 million investment in new technology for the line, which would be used to make high-strength steel for the auto industry, Mr. Schorsch said during a recent City Club of Cleveland event. The harder, more ductile steel should allow manufacturers to make thinner parts with improved shapes, decreasing the weight of the parts, according to a company spokeswoman. The investment is scheduled for a review in late 2013 and, if approved, Cleveland will be the first ArcelorMittal plant with this technology, she said. Companies all along the supply chain will need to invest in new equipment and technology, said Dave Andrea, senior vice president of industry analysis and economics at the Original Equipment Suppliers Association. Companies will be working with new materials, and even processes that are considered relatively standard — such as stamping — will require manufacturers to replace or retool equipment, Mr. Andrea said. That’s the case at Stripmatic Products Inc. in Cuyahoga Heights, where the metal stamper has been reacting to the ongoing but intensified trend in reducing vehicle weight. President Bill Adler said Stripmatic has been trying to dedicate more time to research and development to address changing designs in vehicle components. The company’s business is about 70% automotive parts, Mr. Adler said. Stripmatic also has been looking into where it can make use of those higher-strength steels, which can be harder to form in traditional stamping applications. The capability of existing tools and dies will need to be improved, Mr. Adler said, and working with high-
strength steels may require Stripmatic to add steps to its stamping processes. That will add cost to the part, but it could help take weight off vehicles, he said.
Forging ahead Even the coatings used on vehicles aren’t exempt to the trend. Randy Solganik, president of City Plating in Cleveland, said his company has had more customers ask about its zinc-nickel alloy plating. The plating originally was developed in 2004 as a corrosion-resistant alternative to cadmium, which was being phased out. But City Plating realized the product also can be used to couple steel and aluminum — a tactic used to make vehicles lighter. The company started marketing the coating for fuel efficiency in 2008. Aluminum giant Alcoa is another company parlaying existing products into vehicle-weight solutions. Alcoa’s Cleveland plant at 1600 Harvard Ave. and its plant in Barberton make forged aluminum wheels primarily for the commercial transportation market, with some use by automakers. Forged aluminum wheels are more expensive than cast aluminum, so auto manufacturers need a particular reason to switch, said Tim Myers, president of Alcoa Wheel and Transportation Products. That reason is fuel efficiency. The forged wheels are more expensive, but they are stronger and lighter, Mr. Myers said. Two vehicles that focus on fuel efficiency — the Chevy Volt and the Chevy Cruze — are using the forged wheels, he said. With the Cruze, Alcoa was able to take out 15% of the weight of the wheel, he said. And with the Volt, the more weight that is removed, the further the hybrid car can go on its battery. Mr. Andrea of the Original Equipment Suppliers Association said fuel efficiency is “not an either/or” proposition for automakers and their suppliers. Design, utility and fuel efficiency are all tied together. From producing a lighter chassis to improving internal combustion engine technologies, all aspects of the vehicle are evolving. “Literally everything in the vehicle needs to change,” Mr. Andrea said. ■
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Dealer Tire says website will steer you in right direction Cleveland company is marketing RightTurn.com as easy way for customers to make correct choice in buying new wheels By TIRE BUSINESS
Dealer Tire LLC, a Clevelandbased tire wholesaler dedicated to serving new car dealers, is rolling out an online tire-buying service under the name RightTurn.com that directs users to nearby car dealers. Dealer Tire is launching RightTurn.com in Northeast Ohio in advance of rolling it out to more markets later this year and into 2014, a company spokesman said. Dealer Tire test-marketed the concept for several months last year in the Dallas-Fort Worth market. RightTurn.com uses a step-bystep menu to recommend tires based on a person’s vehicle make and model, along with his or her individual driving habits and lifestyle. The service’s proprietary “TireCoach” feature provides an all-inone price that includes everything — even installation — and schedules the appointment with customers’ local factory-certified installers. The service directs users to car dealers of the same make, which are customers of Dealer Tire, for their tires and affiliated services. Dealer Tire is advertising RightTurn.com through a “tire smart” campaign using local television and
radio throughout the targeted area, the spokesman said. Ads portray a “tire smart” version of a car owner — one who used RightTurn.com to get educated — coming to the aid of a clueless mirror-image version of the same car owner trying to come to grips with the tire-buying decision. Dealer Tire said RightTurn.com is different from other online tirebuying sites because it is directed more at the average tire buyer — one who isn’t particularly tire savvy. The price quoted online is the final, all-inclusive price, the company stressed, including: mounting, balancing, valve stem, disposal and tire pressure monitoring system (TPMS) reset fees as well as road-hazard protection. Dealer Tire said it manages retail tire programs for 19 automakers’ retail sales networks, covering thousands of installation locations. Dealer Tire worked with Cleveland-based agency Brokaw Inc. in developing the creative media to go with the launch. The companies so far have produced three tire-smart commercials: “Tire Smart Matt,” an average car owner already at a tire store and about to make a purchase; “Tire Smart Jill,” who’s shopping for tires online during her lunch break; and “Tire Smart Doug,” out shop-
Is your business ready for 2014?
ping with his wife. The company does not charge any fees to car dealers benefiting from the service, the spokesman said. Instead, Dealer Tire expects to benefit from increased business the site generates. Dealer Tire supplies tires to dealers affiliated with Audi, BMW, Chrysler, Dodge, Fiat, Ford, Hyundai, Infiniti, Jaguar, Jeep, Kia, Land Rover, Lexus, Mazda, Mercedes-Benz, MINI, Nissan, Ram, Scion, Tesla, Toyota, Volkswagen and Volvo, according to its website. Dealer Tire operates 20 warehouses around the country. The warehouses are in Atlanta; Baltimore; Boston; Charlotte; Chicago; Cleveland; Dallas; Denver; Elmsford, N.Y.; Hayward and Irwindale, Calif.; Houston; Kansas City, Mo.; Lyndhurst, N.J.; Miami; Minneapolis; Phoenix; Philadelphia; Seattle; and Tampa, Fla. RightTurn.com is not to be confused with RightTire.com, an online tire-buying service launched in 2011 by U.S. Venture Inc., the par-
CONTRIBUTED PHOTO
Dealer Tire’s ads for RightTurn.com portray a “tire smart” version of a car owner coming to the aid of a clueless mirror-image version of the same owner. Pictured is “Tire Smart Matt.” ent of U.S. AutoForce, a tire and auto parts wholesaler in Combined Locks, Wis., that covers the Upper Midwest and Great Plains regions. RightTire.com features brands that U.S. AutoForce carries, including Michelin, Goodyear, Cooper,
General, Continental, BF Goodrich, Uniroyal, Kelly, Kumho, Yokohama and Pirelli, according to the website. ■ (Tire Business is a sister publication of Crain’s Cleveland Business.)
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OCTOBER 14 - 20, 2013
WWW.CRAINSCLEVELAND.COM
GOING PLACES
CRAIN’S CLEVELAND BUSINESS
15
Attn: Manufacturers & Warehouses
JOB CHANGES
If you missed out on FirstEnergy’s Lighting Rebate
ARCHITECTURE
You can still get a rebate for upgrading your lighting
VOCON: Rita Amonett, Susan Base, Savannah Dugan and Dan Hughes to project designers; Nikki Bond to resource librarian; Lydia Jones and Erik Lund to architects; Michelle Merker to procurement coordinator; Molly Sweeney to interior designer.
CONSTRUCTION REGENCY CONSTRUCTION SERVICES: Luke Dautovic, Scott Wagner and Kevin Wise to associates. RUHLIN CO.: Dina Nixon to receptionist; Joe Huml to dispatcher; Greg Gadd to superintendent, Millwright Services; Ben Faris to business development manager.
EDUCATION NORTHEAST OHIO MEDICAL UNIVERSITY: Elliot Reed to program manager, Research, Entrepreneurship, Discovery and Innovation Zone.
ENGINEERING STANTEC: David McCallops to senior project manager.
FINANCE FIRST NATIONAL BANK OF PENNSYLVANIA: Boyd K. Pethel to market executive and president, Cleveland Region.
FINANCIAL SERVICE COHEN FUND AUDIT SERVICES: Jack Jones, Mark Danese, Tamara Portis and James Fleming to staff accountants.
• 50% Energy Savings • Utility Rebates McCallops
Faris
• Fast Payback • Tax Incentives
HEALTH CARE METROHEALTH SYSTEM: Elizabeth Heller Allen to vice president, marketing and communications.
MANUFACTURING GUARDIAN MANUFACTURING CO.: James R. Sabo to president.
MUNICIPAL CITY OF CLEVELAND: Cheng-Han Yu to international business development fellow, Department of Economic Development.
NONPROFIT BEACHWOOD CHAMBER OF COMMERCE: Cynthia Baker to executive director. CLEVELAND METROPARKS: Dan Veloski to chief ranger. LEGAL AID SOCIETY OF CLEVELAND: Jami Altum-McNair to staff attorney, AmeriCorps Veterans Legal Corp Fellow; Kacey Cummings to grants administrator; Danielle Gadomski Littleton to staff attorney, Equal Justice Works Fellow; Jasmine McCornell to receptionist; Paige Nofel and Tom Ott to paralegals.
Kleinhenz to sales consultants.
• Brighter lighting
SERVICE
• Replace HID high bays
HUMAN ARC: Stephen J. Mullin to vice president, marketing, planning and product development; Maria Goulet to assistant team leader, Best Benefits service line.
• Upgrade T-12 fixtures
BOARDS AMERICAN SHOULDER AND ELBOW SURGEONS SOCIETY: Dr. Robert H. Bell (Crystal Clinic Orthopaedic Center) to president.
KLEINHENZ JEWELERS: Brian K. Kleinhenz and Kenneth A.
Independence, Ohio Wed., Nov. 6, 9-11:30 a.m. Registration limited to first 40 $69.00/person
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AWARDS ARTHRITIS FOUNDATION, GREAT LAKES REGION, NORTHEASTERN OHIO: J. Patrick Flanagan, M.D., (Summa Health System), Avrum I. Froimson, M.D., (Mt. Sinai Medical Center), Victor M. Goldberg, M.D. and Kingsbury G. Heiple, M.D., (Case Western Reserve University, University Hospitals Case Medical Center), Kenneth E. Marks, M.D., (Cleveland Clinic), Clyde L. Nash Jr., M.D., (St. Luke’s Hospital, MetroHealth Medical Center), Buel S. Smith, M.D., (Akron General Health System) and Dennis S. Weiner, M.D., (Akron Children’s Hospital) received 2013 Community Leaders of the Year Awards.
RETAIL
Ohio fares poorly in national tax rankings Gov. John Kasich promised to get Ohio operating “at the speed of business,” but as the Tax Foundation sees it, the state is still a laggard. The nonpartisan organization based in Washington, D.C., which provides research and analysis on federal and state tax policy, last week issued its 2014 State Business Tax Climate Index, and Ohio ranked 39th of the 50 states. The state’s rank was unchanged from the 2013 index. The Tax Foundation says it collects “over a hundred tax provisions for each state and synthesizes them into a single, easy-to-use score” based on five components: corporate tax rate, individual income tax rate, sales tax rate, unemployment insurance tax rate and property tax rates. Ohio was in the top 10 in only one category — unemployment insurance tax rate. Its worst ranking was in individual income tax rates, where the state placed No. 44, according to the Tax Foundation. The top 10 states, in order, are Wyoming, South Dakota, Nevada, Alaska, Florida, Washington, Montana, New Hampshire, Utah and Indiana. According to the Tax Foundation, the “absence of a major tax is a dominant factor” in vaulting most of those states to the top of the rankings. For instance, Wyoming, Nevada and South Dakota have no
Mullin
Pethel
Send information for Going Places to dhillyer@crain.com.
YEAR-ROUND EXPOSURE TO AN INFLUENTIAL AUDIENCE ISSUE DATE: December 23 | CLOSE DATE: December 5 For advertising information contact Nicole Mastrangelo at 216-771-5158 or nmastrangelo@crain.com.
Taft Congratulates its Partners Selected as “Lawyer of the Year”
ON THE WEB Story from: www.crainscleveland.com
David H. Wallace corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax. The 10 lowest ranked states are Maryland (No. 41), Connecticut (No. 42), Wisconsin (No. 43), North Carolina (No. 44), Vermont (No. 45), Rhode Island (No. 46), Minnesota (No. 47), California (No. 48), New Jersey (No. 49) and New York (No. 50). Tax Foundation economist Scott Drenkard said in a statement that the index rewards states that “are moving closer to a tax code that collects revenue without unnecessarily distorting business decisions. Their tax codes became more neutral.” He said the goal of the ranking is “to start a conversation with policymakers about how their states fare against the rest of the country. With this report, we’re asking: ‘How well is your tax code structured? Are businesses in your state spending too much time complying with onerous tax provisions? Are you double taxing things you shouldn’t?’” ■
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OCTOBER 14 - 20, 2013
Tackk: Company has 10 employees, could add two or three more “We invest in companies where we think they can change the behavior of millions of people. I can see absolutely no reason why you can’t have millions of people using this.”
continued from PAGE 3
Mr. Frankel said ff Venture Capital’s portion of the $1.2 million invested in Tackk was “on the high end of our initial check size” for its investments. The firm’s typical first-round investments are in the $75,000 to $400,000 range, according to its website. “We invest in companies where we think they can change the behavior of millions of people,” Mr. Frankel said. “I can see absolutely no reason why you can’t have millions of people using this.” Tackk’s leaders have similar ambitions: They say the site one day could be as successful as Tumblr, a blogging platform that Yahoo! bought for about $1 billion in June. They’ve got a long way to go: Tumblr was attracting more than 38 million unique visitors per month as of July, according to the comScore digital analytics service. By comparison, Tackk.com has had a total of 800,000 unique visitors since it was launched in September 2012, according to figures from the company. By Tackk’s own yardstick, however, that’s pretty good: The company was shooting to have hit 100,000 unique visitors
– John Frankel, whose firm, ff Venture Capital, invested in Tackk
CONTRIBUTED PHOTO
Tackk’s website is designed to help companies and individuals create basic, but attractive, web pages. by now.
Finding their way Now Tackk aims to expand that user base, according to Eric Bockmuller, who founded the company
with Dan Klammer. Both men were designers at Findaway World, a Solon company that sells digital audio players. “We want to be the next Tumblr,” Mr. Bockmuller said. “Can we do
that in Cleveland? We think we can.” Among Tackk’s 10 employees are two other former “Findawayers,” president Kyle Stalzer and CEO Christopher Celeste. The recent $1.2 million investment included money from all of Tackk’s previous investors, including Drummond Road Capital, Hatch Partners and multiple individuals. Drummond Road is owned by Morris Wheeler, who was CEO of specialty coatings company Cohesant Inc. in Beachwood, and Hatch is owned by Mr. Celeste and Blake Squires, who started the company that became Findaway World. With the money, Tackk already has hired one employee and plans to add two or three more. Most of the cash will be used on product improvements; for instance, the company wants to build a smart phone app and to develop intelligence that makes it easier for visitors to find relevant Tackk pages on the site, which for now is used more for creating and distributing Tackks than browsing through them. The investment also should help the company try out different ways to attract users and make money through the site. Mr. Stalzer said Tackk doesn’t plan to add banner ads on the site because there “are better ways of monetizing that aren’t so obtrusive and can actually add value to the end user’s experience.” The company eventually may create premium features that would be available for a fee. It also could charge businesses to create templates that allow their own employees and customers to create branded Tackk pages.
Creative impulses Tackk already is helping companies do that for free. Before the 2013 NBA draft, the Cleveland Cavaliers worked with Tackk to create a branded template that fans could use to create Tackk pages highlighting which players the team should pick. Victoria’s Secret did something similar: The company created a template designed to help students who market its Pink product line on college campuses. In both cases, the templates included specialized backgrounds, colors and fonts. “These brands in a lot of cases are coming to us,” Mr. Stalzer said. Despite that progress, Tackk faces a big challenge: Following the success of companies such as Facebook and Twitter, the startup world is awash with companies creating new social media tools. Standing out will be difficult, but Messrs. Stalzer and Bockmuller said Tackk’s clean design and its simplicity will help it do so. For instance, a user doesn’t need to log in to create a Tackk page, though registration is required if you want to keep it for more than seven days. And visitors don’t need an artistic eye to create something that looks good. They simply can start typing and dragging photos into the basic template. Or, they can use a template designed for a specific purpose, whether they’re working on a class assignment, promoting a business or announcing that they just got engaged. “You can come to Tackk, and right away you’re creating,” Mr. Stalzer said. Mr. Frankel, of ff Venture Capital, suggested that the Tackk team move to New York City. The company said no. The founders wanted to build a company in Cleveland, even before they went through the statebacked 10X startup business accelerator in Columbus, Mr. Bockmuller said. No big deal, Mr. Frankel said. Most of his firm’s portfolio companies are based outside of Greater New York, he said, noting that it’s easier to stay in touch over long distances in today’s high-tech world. “We have a belief today that the world is pretty flat,” he said. ■
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RYAN FISHER +1 216 239 5069 ryan.fisher@colliers.com
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LIFETIME ACHIEVEMENT AWARD TERRY BICHSEL FirstMerit Corp. Cleveland
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C
rain’s Cleveland Business for the seventh year in a row is highlighting the area’s top fiscal officers with its CFO of the Year Awards. The finalists all have helped lead their organizations with sound fiscal management and guidance, and many have taken on additional roles within their organizations, whether it’s with technology upgrades or through human resources functions. An independent panel of judges reviewed the nominees, taking into account the following: candidate background, including unique qualities and accomplishments; leadership in such areas as strategic planning and vision, business challenges, risk management and succession planning; financial management, including monetary growth, market share gains, profitability, stability, strategic transaction and commitment to accounting standards; and external contributions (philanthropic, community, financial industry and board of directors service).
This year’s judges were: ■ Kate Asbeck, senior vice president and CFO, The Cleveland Foundation ■ Jim Boland, chair, JobsOhio audit committee; retired vice chairman, Ernst & Young; and former president and CEO, Cavaliers Operating Co. ■ Mike Gibbons, senior managing director, Brown Gibbons Lang & Co. ■ Yank Heisler, retired chairman, KeyBank; retired chairman, MacDonald Financial Group; retired dean, Kent State University School of Business Administration and Graduate School of Management ■ Jackie Woods, retired president ATT Ohio; and current board member, Timken Finalists, nominees and award recipients will be recognized at an event from 5:30 p.m. to 8 p.m. Oct. 22 at LaCentre Conference & Banquet Facility, Westlake. Tickets to the event can be purchased at www.CrainsCleveland.com/CFOTIX or by contacting Denise Donaldson at 216-771-5159 or ddonaldson@crain.com.
CFO OF THE YEAR FINALISTS ■ Charles Abraham, Hitchcock Fleming & Associates, Inc. Page C-4 ■ Mark Belgya, The J.M. Smucker Co. Page C-2 ■ Dianne Brehm, United Way of Greater Lorain County Page C-9 ■ Frank Cardinale, Benjamin Rose Institute on Aging Page C-10 ■ Susan Carlson, ASMGi Page C-4 ■ Loree W. Connors, Vitamix Corp. Page C-2 ■ Sue Cyncynatus, Lutheran Metropolitan Ministry Page C-11 ■ Joseph Fornal, Ganley Management Co. Page C-6 ■ Denise Griggs, The Burton D.
Morgan Foundation Page C-6 ■ Clark Lubaski, The Robbins Company Page C-8 ■ Richard T. Marabito, Olympic Steel, Inc. Page C-8 ■ Jane Marsh, Premier Bank & Trust Page C-15 ■ Julie McGraw, National Interstate Corp. Page C-15 ■ Cheryl McKenna, Community Foundation of Lorain County Page C-16 ■ Mary McMillan, Cleveland Zoological Society Page C-12 ■ Alan Siliko, ka Architecture Page C-10
■ Michael Stanek, Hunt Imaging LLC Page C-11 ■ Wade Steen, Cuyahoga County Page C-5 ■ Sam Steinhouse, OneCommunity Page C-13 ■ Marlene Tehi, Evolution Capital Partners Page C-9 ■ Michael Tokich, Steris Corp. Page C-12 ■ Philip Weihe, BlueBridge Networks Page C-13 ■ Brian Witherow, Cedar Fair Entertainment Co. Page C-14 ■ Jim Wojtila, Mar-Bal Inc. Page C-14
he son of a machinist, Terry Bichsel set out initially to tackle the next natural career step, engineering. But, when he enrolled in an engineering economics course, he found that the process of creating profitability and the technique of changing variables and calculating how they impact the value of something intrigued him. Having earned his degree in industrial engineering, Mr. Bichsel returned to the University of Dayton where he followed his interest in business and earned an MBA. Right after, he entered the banking industry and hasn’t left since. Roughly 25 years later, he joined Akron-based FirstMerit Corp. in 1999 as its chief financial officer. Today, his CFO career spans roughly three decades, and Mr. Bichsel leads a publicly traded bank with assets of approximately $23.5 billion. In the earliest days of Mr. Bichsel’s career, loan accounting still was done on ledger cards and electronic calculators were rare, he recalled. Understanding the economics of the industry’s changes — electronic payments, mobile device banking and more — and working within a management team that’s adapted to both innovation and economic environments to maintain the bank’s profitability and to grow are his proudest achievements, said Mr. Bichsel, who also is senior executive vice president. Since Mr. Bichsel became CFO, FirstMerit has posted a profit every quarter (57 to date), and since 2009, it has closed four acquisitions that have more than doubled the company’s size, according to the nomination. And that’s during “the worst recession in recent times.” When Paul G. Greig, chairman, president and CEO of FirstMerit, joined the bank in 2006, he said he immediately found Mr. Bichsel to be a valued partner. The company’s “extraordinarily long string of quarterly profits” is rooted, in part, in Mr. Bichsel’s deep involvement “in just about every area of the bank,” Mr. Greig said. “He really focuses on the company’s finances day in and day out,” he said. “He’s into the weeds and getting into the granular revenues and expenditures of the lines of business, appropriately challenging the line of business heads when he sees trends that he thinks could be improved or when he thinks that revenue enhancements could occur. “His analytical skills are nothing shy of superb,” Mr. Greig added.
Do your best, check your work A lesson learned at Mr. Bichsel’s first job as a banking analyst at Winters National Corp. in Dayton likely has much to do with his
“His analytical skills are nothing shy of superb.” – Paul G. Greig, chairman, president and CEO, First Merit Corp., on Terry Bichsel analytical skills: Early on, he’d rip through his work’s analytics very quickly and turn it in, only to be told by his boss to rewrite and describe the steps he took to reach his conclusions. “The lesson he was trying to teach me was … how to communicate and to bring people along with my conclusions so that I could gain support for them because they made sense to others as they heard them,” Mr. Bichsel said. “That helped me really significantly.” It also has helped the company’s directors, according to Clifford Isroff, lead director at FirstMerit, who said in the nomination that Mr. Bichsel’s delivery of “the most complex issues broken down in an explanation we understand” makes serving on the board “much easier.” When asked how the bank sustained profitability during years when so many did not, Mr. Bichsel cited its risk management, diversified marketplace and diversified revenue stream. And when the decision was made to initiate an expense reduction in 2011 to right-size FirstMerit for the low interest rate environment, Mr. Greig said Mr. Bichsel was instrumental in guiding how it would cut costs while maintaining certain things such as customer experience. The first leg of the initiative, which wrapped up in late 2012, reduced the bank’s overall expenses by 7%, the nomination said. Mr. Bichsel hails from a small manufacturing town in western Pennsylvania where, he recalls, the residents always looked to get ahead and worked hard to do it. “My mother said each day when I left for school: ‘Do your best,’ ” he said. “She also said to check your work, and those words still echo with me.” The encouragement Mr. Bichsel, 64, has received from his wife, Glady, has helped him to succeed, he said, noting the moves they’ve made for his career, some interrupted vacations and late nights. They have one son, Jason, who’s a litigator. In addition to his role at FirstMerit, Mr. Bichsel sits on the finance advisory board of The University of Akron’s College of Business Administration and has taught classes at the university, too. — Michelle Park Lazette
INSIDE ■ Past Crain’s Cleveland Business CFO of the Year recipients Page C-7 ■ A closer look at this year’s judges Page C-16 ■ Photos from the 2013 CFO of the Year VIP event Page C-17
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CFO OF THE YEAR
C-2 CRAIN’S CLEVELAND BUSINESS
MARK BELGYA The J.M. Smucker Co. Orrville
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ark Belgya has been an internal auditor, controller and treasurer during his 28-year career at The J.M. Smucker Company. In the last 10 years, the manufacturer of fruit spreads, ice cream and nationally recognized products such as Folgers, Jif and Crisco has grown from about $1 billion to $5.9 billion in annual net revenue. As a member of the executive leadership team, Mr. Belgya “provides significant value as part of our strategic planning process,” the nomination said. Mr. Belgya’s financial team at Smucker’s has evolved from fewer than 20 people “whose primary focus was solely accounting” to one with “more than 100 employees with a strategic financial mindset,” according to the nomination. “Above all, he leads by example,” which is “critical to the CFO role,” said Kathryn Dindo, chair of the audit committee of Smucker’s board of directors. “I have watched Mark grow into the leadership role. As the chair of the audit committee, I look at leadership of the financial function with a sharp eye. “With Mark, I know we can rely on a strong, ethical person, showing great judgment and demonstrating a clear understanding of how to manage risk and rewards,” Ms. Dindo continued. “He is a very unique individual. Behind his calm demeanor is strength, knowledge and expertise.” The internship program Mr. Belgya has developed at Smucker’s is known within the company for its strength, the nomination said. The program results in interns who “build long, rewarding careers” at Smucker’s. Mr. Belgya is recognized as a leader in the financial community. He has served on the finance and audit committee for GS1, an international nonprofit association, and is a member of the Grocery Manufacturers Association’s CFO group. Mr. Belgya also is a member of the board of directors for MOM Brands, a Minneapolis-based consumer packaged goods company, and recently was named to Institutional Investor magazine’s All-America executive team for CFOs.
“Smucker is known locally as a very different company from who they used to be. Mark (Belgya) has been a major part of significant events that have made them what they are today.” – Kathryn Dindo chair of the audit committee, Smucker’s board of directors With the help of Mr. Belgya, Smucker doubled its size with its 2008 acquisition of Folgers from Procter & Gamble. “Smucker is known locally as a very different company from who they used to be,” Ms. Dindo said. “Mark has been a major part of significant events that have made them what they are today.” Mr. Belgya’s “elegant, but simple approach,” according to the nomination, allows Smucker’s to invest its capital with two primary objectives — supporting its growth strategy and meeting the needs of its shareholders. Mr. Belgya is an active alumnus for the University of Akron. He is a member of the university’s College of Business Administration’s Advancement Council, for which he serves as a liaison between the university and the business community. He also is a member of the University of Akron Foundation’s board of directors and serves on its investment committee. Mr. Belgya is a founding member and current president of the Jackson Local Schools Foundation, a nonprofit that attempts to meet the needs of Jackson Township students and educators through funding. He is vice chair of the board for Friends of the Summit, a nonprofit organization that provides support to two radio stations that are affiliated with Akron and Struthers public schools. The busy Mr. Belgya also is a member of the Canton Museum of Art’s board of trustees and serves on the client advisory board for the Cleveland region of FM Global, a Rhode Island-based insurance company. Mr. Belgya and his wife of 30 years, Beverly, have two daughters, Kristi and Karli. The family is actively involved with the John Knox Presbyterian Church in North Canton. Mr. Belgya has served on the church’s long-range planning committee, and in 2012 led its successful capital campaign. — Kevin Kleps
Defining Cleveland’s skyline Thank you, Cliffs Natural Resources, for your commitment to the city of Cleveland and your ongoing confidence in Jones Lang LaSalle.
jll.com/cleveland For a copy of our Cleveland Skyline Review, email clevelandskyline@am.jll.com. Leasing – Sales – Management – Office – Industrial
LOREE W. CONNORS Vitamix Corp. Olmsted Township
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s Vitamix Corp. CEO Jodi Berg sees it, the company’s chief financial officer, Loree W. Connors, offers an ideal blend of big-picture vision and attention to detail that’s aiding the rapid growth at the Olmsted Township manufacturer. Ms. Berg said Ms. Connors “speaks to all aspects of financial decisions” at Vitamix, which makes high-end blenders for home and commercial markets. From sales and marketing to financing, risk assessment and even information technology, Ms. Connors “does it all, and does it extraordinarily well,” Ms. Berg said in an interview. Ms. Connors takes “a very holistic view” of operations at Vitamix, paying particular attention to risk mitigation for the family-owned company, Ms. Berg said. “Her mission is to keep (Vitamix) a financially viable enterprise for generations to come,” Ms. Berg said. “Loree gets this with every fiber of her being.” Indeed, under her financial stewardship, Vitamix “has achieved a strong balance sheet with consistent healthy profitability and upper-quartile return on equity results,” according to the nomination. Under Ms. Connors’ financial leadership, “total shareholder value has increased by four times (407 percent) over the past five years,” according to the nomination. Ms. Connors has held the CFO position during an era in which Vitamix has posted “cumulative average sales growth of 30 percent,” according to the nomination, and her skills have helped the company “maintain double-digit profit margins.” Vitamix, which has just over 500 employees, has seen sales double in the past two years.
OCTOBER 14 - 20, 2013
Since joining Vitamix eight years ago, Ms. Connors “has had a profound positive influence on Vitamix, and the impact of her leadership can be seen throughout the organization,” the nomination stated. “She has helped guide the company through a period of rapid growth and to position it for continued global expansion. She has initiated and successfully implemented a wide range of projects that have led to significant, measurable improvements that have strengthened the company.” For instance, she led Vitamix in an initiative “to define a strategic framework linked to customer outcomes based on the company’s core capabilities,” according to the nomination. “This included an in-depth review of market segmentation, market differentiation, operational effectiveness and employee engagement.” Ms. Connors also conducted an assessment of Vitamix’s accounting and IT departments, “which led to a restructuring of both departments to support future growth,” the nomination said. She also led a project team to review compliance with U.S. export laws; formed a steering committee, governance structure and project team for international expansion into Germany; and implemented what Vitamix calls a “Balanced Scorecard,” which identifies the company’s Key Performance Indicators. Behind just technical proficiency, Ms. Berg said Ms. Connors brings to the CFO job “extraordinary empathy” and “a huge heart” in helping Vitamix employees move up in the company by offering career guidance, mentoring and access to leadership training. Ms. Connors also is a member of the board of trustees of the Cleveland Zoological Society and a co-founder of the Westside Professional Women’s Connection, a women’s networking organization comprised of “a diverse group of women who meet monthly to exchange experiences and information and to share fellowship,” according to the nomination. — Scott Suttell
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August 2013
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June 2013
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Initial Public Offering
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Left Bookrunner
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CFO OF THE YEAR
C-4 CRAIN’S CLEVELAND BUSINESS
CHARLES ABRAHAM Hitchcock Fleming & Associates Inc. Akron
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itchcock Fleming & Associates has exceeded many industry benchmarks in advertising, and Charles Abraham is a key reason why. Mr. Abraham has been with the Akron-based marketing and advertising agency for more than 24 years, and hfa has been profitable every year but one since 1990. According to numbers from the American Association of Advertising Agencies, hfa has outperformed the advertising industry median in liquidity (by 30% in 2012); debt to equity (by 300% last year); and return on assets (by 40% in 2012). In addition, hfa has “achieved its goal in keeping agency costs in line with industry standards,” the nomination said. “Chuck Abraham has been guiding hfa’s operations, client affairs, contractual relationships and fiscal management with an uncompromising dedication to integrity and creativity,” the nomination said. “His straightforward, frank approach to problem-solving helps bolster hfa’s ability to effectively provide the best possible service for his clients, colleagues
and business associates.” In 2012, Mr. Abraham guided hfa through an extensive building renovation through which all employees were brought under one roof. The headquarters now boasts more than 19,000 square feet, including 2,700 square feet of new space. “These positive financial results and the careful planning and execution of sound strategic initiatives have allowed the company to grow and achieve its goals, as evidenced by the numerous awards the agency has earned from various sources,” the nomination said. According to the nomination, hfa has earned a combined 180 international, national and regional awards. In April, the company was named to BtoB magazine’s 2013 list of top agencies. “During the past 24 years, Chuck’s successful fiscal leadership and compassionate work ethic have helped solidify the strong financial stability of our agency,” hfa president and CEO Jack S. DeLeo said. “He has worked diligently to maintain positive results for the agency’s growth initiative, which has helped garner Fortune 200 and Fortune 500 companies as our clients.” Mr. Abraham is the president of the Northern Ohio Golf Charities Foundation board, and he’s been
SUSAN CARLSON ASMGi Cleveland
S the co-chairman of the Bridgestone Invitational finance committee for 20 years. He is a past chairman of the board of directors at Walsh Jesuit High School and has worked on the American Association of Advertising Agencies finance committee for 15 years. Mr. Abraham is a past parish council member and the current finance committee chair at Our Lady of the Cedars in Fairlawn. In 2005, he was recognized with the Beta Alpha Psi Outstanding Alumnus Award from the University of Akron. “Chuck’s leadership, compassion, diligence, trust and loyalty to hfa are irreplaceable,” Mr. DeLeo said. “We are honored to have Chuck as our executive vice president and CFO, but even more honored to call him our friend.” — Kevin Kleps
Congratulations!
Richard T. Marabito Chief Financial Officer, Olympic Steel, Inc.
…for being named a Crain’s 2013 CFO of the year finalist! Your 20 years of distinguished financial management is genuinely appreciated. Olympic Steel’s enduring financial strength benefits its customers, employees, vendors, and the communities in which it operates.
usan Carlson likes to ask questions. One of her favorites: “How could we do this better?” That’s a good quality for a corporate executive to have, particularly one who carries the title of controller and works in the fastchanging information technology services business. Ms. Carlson six years ago joined ASMGi, a Cleveland company that provides connectivity, network infrastructure and data management services to large and small enterprises. She’s “addicted to continuous improvement” at the business, according to the nomination, and, as company founder and CEO Steven H. Roesing puts it, “to being all in” for the company. “She’s very detail-oriented and willing to do whatever’s needed to get the job done,” Mr. Roesing said of Ms. Carlson. ASMGi is a small company — it has 25 employees and annual revenue of less than $10 million, according to the nomination — so Ms. Carlson takes on many roles. The nomination said Ms. Carlson has brought several important innovations to ASMGi, including completing the design and implementation of operations software that encompasses a service desk; automating client billing, including paperless invoicing; developing a process for sales opportunity tracking and pipeline forecasting; and fine-tuning the flow of an audited change-management process. In Ms. Carlson’s tenure at ASMGi, “revenues have quadrupled, as has the staff,” according to the nomination. Her contribution has been “careful cost management, accurate and timely financial reporting, development of financial management reports for forecasting and budgeting, and business process development to meet the challenges of a growing company.” “She has really matured our financial processes,” Mr. Roesing said. Keeping with the “can we do this
OCTOBER 14 - 20, 2013
better?” ethos, ASMGi is in the process of becoming ISO-27001 certified, which the nomination described as “an all-encompassing effort to implement stringent IT security standards” across the company. Ms. Carlson has supported the effort “with in-depth involvement in the design and operation of controls related to (human resources) accounting/finance and physical security, as well as the setup and configuration of a secure file sharing platform to share sensitive information with clients and business partners,” the nomination said. In her HR duties, Ms. Carlson is leading an effort “to develop a more comprehensive employee benefit package” at ASMGi, paying particular attention to re-evaluating the company’s health insurance offerings in light of health care reform. Two other big changes have demanded Ms. Carlson’s attention. Mr. Roesing said ASMGi in July made its first acquisition, of computer systems designer Double Infinity, and Ms. Carlson is in charge of assimilating the new employees from an HR perspective as well as overseeing the accounting aspects of the transaction. She’s also planning ASMGi’s office relocation “from site selection through move-in, specifically involving canvassing the team for wish list and priority items, site tours, architect selection, furniture and decor selection, and planning the actual move,” according to the nomination. Mr. Roesing said the company is in the process of finalizing paperwork for the move, so he couldn’t disclose ASMGi’s new site. He said it will give the company more than twice as much space as it now has at 925 Euclid Ave. Away from the office, Ms. Carlson serves as a volunteer/consultant for both the Shore Cultural Center in Euclid and Kiddie City, a nonprofit day care center in the eastern suburb. Ms. Carlson is a member of the Chagrin Valley Ski Club — she set up the club’s accounting system and trained the treasurer in its use — and is an elder in The Living Truth Fellowship International, a Christian ministry. — Scott Suttell
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CFO OF THE YEAR
OCTOBER 14 - 20, 2013
WADE STEEN Cuyahoga County Cleveland
I
t didn’t bother Wade Steen that he was the only Republican in the cabinet of Democrat Cuyahoga County Executive Ed FitzGerald. What’s been important, he told a reporter shortly before he left county government and returned to his hometown of Columbus in September, was that he could leave proud of the foundation he set as the county’s first chief fiscal officer. He wasn’t the only one. “Wade’s background and experience was a major asset to our reform efforts in Cuyahoga County,” Mr. FitzGerald said. “As the first fiscal officer under the new Cuyahoga County government, Wade really championed operational efficiencies, process improvements, and improved customer service. “He understood the importance of restoring public trust in county government and under his leadership,” he said. Now he is returning to Columbus, where he will serve as president of the public funds division of the Meeder Investment Management firm. He left his job in Cleveland at the end of September. Mr. Steen became chief fiscal officer in May 2011, joining the FitzGerald administration after the new county government came into office that January. The new government consolidated the depart-
ments under three former elected county officials — the auditor, recorder and treasurer — under a single county fiscal officer appointed by the county executive. Two of the departments merged under Mr. Steen’s fiscal office, auditor and recorder, had been riddled by scandal. He gathered those three offices, as well as the county budget, purchasing and payroll departments under a single roof, trimming 150 jobs and saving $8 million annually. “The most noticeable thing Wade has done, while maybe not quantifiable, is restore trust in the county fiscal office,” said Jeff Mowry, the county’s chief information officer, in nominating Mr. Steen for a CFO award. “With Wade’s leadership, there is a new sense of professionalism within the fiscal office.” The costs associated with the 2012 reappraisal were less than half the amount expended by the former county auditor in his last reappraisal. Mr. Steen also won praise from housing advocates for reforming a controversial program for selling tax liens. Counties sell tax liens to recover unpaid taxes. But in the past, the lien sales often led to further housing abandonment and deterioration. Mr. Steen devised a program that avoided those problems. Mr. Steen, a former Franklin County treasurer and Upper Arlington city councilman, is a graduate of Ohio State University. He has been a board member of the Ohio Government Finance Officers Association and an instructor for the Ohio Treasurer of State’s Center for Public Investment Management. — Jay Miller
CRAIN’S CLEVELAND BUSINESS C-5
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CFO OF THE YEAR
C-6 CRAIN’S CLEVELAND BUSINESS
JOSEPH FORNAL Ganley Management Co. Brecksville
T
he leadership of CFO Joseph Fornal has seen the Ganley Auto Group through some of the lowest points in the automotive industry. “During 2008 and 2009, the auto industry saw some of the worst times in history,� the nomination said. “But, even when we lost three Chrysler stores during its bankruptcy, we still found opportunity.� The opportunity came in 2009 in the form of two pivotal acquisitions. Mr. Fornal’s involvement in the structure, financing and closing was critical in getting the deals done. During his seven years with Ganley, Mr. Fornal has been a key player in five acquisitions that have provided more than $134 million in additional revenue. Additional acquisitions still are in the works. “2011 was a record year for our group, and I fully expect 2013 will be our best year ever,� said the nomination.
Mr. Fornal also has overseen 19 major renovations or newly constructed facilities, including a 51,000-square- foot Chevrolet store on Brookpark Road that is expected to open later this year, and a new 41,000-square-foot BMW facility in Westlake that is scheduled to open in summer 2014. “What intrigued me about him when I hired him was he not only had an accounting background, but an automotive background,� said Ganley CEO Ken Ganley. Mr. Fornal has experience in public accounting as a partner at Cohen & Co., and also as a CFO for Jack Matia Chevrolet and Honda. In addition to being responsible for acquisitions at Ganley, Mr. Fornal addresses insurance, risk mitigation, financing and technology. “Joe oversees all insurance needs, which is not easy by the way,� Mr. Ganley said. “That alone should be a full-time job.� He also works closely with Ganley general legal counsel. “Their offices are side by side,� Mr. Ganley said. The close proximity makes it easy for the two to consult on corporate policies in consumer sales, practices, human resources and compliance. Mr. Fornal also was recently involved with the transition of lenders, with the goal of finding one that could provide lower cost
financing and bank charges in floor plan inventory financing, real estate mortgages, working capital and term debt and treasury management services. The projected annual savings for the switch is $2.2 million. In addition to Mr. Fornal’s other CFO duties, he oversaw the transition from a local-server based data management system to a remoteserver based system. His efforts have been recognized by many professional societies. Mr. Fornal is a member of the American Institute of Certified Public Accountants and the Ohio Society of Certified Public Accountants where he served as president of the Cleveland chapter and as a member of the state executive board. In 2004, he received the Outstanding Member in Industry Award from the state organization. “He is a tireless worker and puts in tons and tons of hours,� Mr. Ganley said. Although Mr. Fornal does not shy away from long work days, he is heavily involved in other organizations. From St. John Cantius church and the Cleveland Society of Poles to Cleveland Touchdown Club Charities and the Village of Marymount, Mr. Fornal has served in a number of leadership positions. — Laura Straub
OneCommunity congratulates Sam 6WHLQKRXVH &KLHI )LQDQFLDO 2IÂżFHU RQ KLV UHFRJQLWLRQ DV D ÂżQDOLVW DV D Crainâ&#x20AC;&#x2122;s Cleveland Business CFO of WKH <HDU 1RQ 3URÂżW 7KDQN \RX 6DP IRU \RXU ÂżQDQFLDO expertise and guidance throughRXW WKH \HDUV <RXU GHGLFDWLRQ DQG leadership have been an essential component of the continued success of OneCommunity, the areaâ&#x20AC;&#x2122;s largest SXEOLF EHQHÂżW EURDGEDQG SURYLGHU We extend additional congratulations WR DOO &)2 RI WKH <HDU QRPLQHHV
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OCTOBER 14 - 20, 2013
DENISE GRIGGS The Burton D. Morgan Foundation Hudson
D
enise Griggs takes on much more than finance and investment management in her role as CFO for The Burton D. Morgan Foundation. As part of her CFO responsibilities, Ms. Griggs serves as secretary and assistant treasurer, and she utilizes her wide breadth of skills and talents to provide technical assistance to grant seekers and to analyze financial aspects of grant proposals. Her dedication proved crucial to the success of the foundation during the recession, according to the nomination, and thanks to her meticulous planning the foundationâ&#x20AC;&#x2122;s current assets total about $140 million with a grants budget of about $5 million. Before coming to The Burton D. Morgan Foundation in 2007, Ms. Griggs served as senior auditor, audit manager and finally president of Brott Mardis & Co. â&#x20AC;&#x153;She was a leader in helping the firm to build its niche nonprofit practice,â&#x20AC;? said the nomination. She continued to hold herself to a high standard of achievement and professionalism in her career move to CFO of The Burton D. Morgan Foundation. â&#x20AC;&#x153;Denise came to the Foundation at a time of transition and was required to research and implement a number of new aspects of our operation, including expanded insurance coverage, a full benefits program, our landlord role and inhouse 990-PF completion,â&#x20AC;? said the nomination. She now coordinates intricate relationships among banking institutions, investment managers, custodian and investment consultants as well as prepares for the foundationâ&#x20AC;&#x2122;s annual audit. In addition to the annual audit, Ms. Griggs is responsible for the internal auditing process, ensuring all legal requirements are fulfilled with accuracy and timeliness. Technology and human resource issues also fall on Ms. Griggsâ&#x20AC;&#x2122; shoulders. She combines her technological prowess with her ability to manage grants though the foundationâ&#x20AC;&#x2122;s grant management software and system, â&#x20AC;&#x153;She was instrumental in de-
signing a dashboard of foundation metrics that we produce each quarter to track progress against goals,â&#x20AC;? said the nomination. Thanks to Ms. Griggsâ&#x20AC;&#x2122; financial perspectives and skill in synthesizing data, the foundation has been able to grow its emphasis on evaluation, data collection and analysis. Ms. Griggsâ&#x20AC;&#x2122; efforts within the office have translated to community service outside of the office, in the form of a successfully managed five-year, $6.6 million grant program with the Ewing Marion Kauffman Foundation. The programâ&#x20AC;&#x2122;s goal is introducing entrepreneurship on liberal arts campuses. As a result of the program, the foundation was able to forge a $3.2 million strategic partnership with the Blackstone Charitable Foundation, which established the Blackstone LaunchPad programs on four Northeast Ohio campuses. Ms. Griggs not only was an integral part of the program implementation, but she also serves as a member of the regional team of Blackstone LaunchPad venture coaches. â&#x20AC;&#x153;She volunteers her time to mentor collegiate-level entrepreneurs on financial management as they build their ventures,â&#x20AC;? the nomination said. She also spends her remaining free time outside the office working with the adult literacy organization, Project Learn in Akron. She has served as a trustee, vice president and president of the organization. In addition, she uses the talents and skills acquired throughout her years as a CFO to serve on the finance committee of Philanthropy Ohio. â&#x20AC;&#x201D; Laura Straub
Congratulations to the 2013 CFO of the Year Finalists and Award Recipients
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CFO OF THE YEAR
OCTOBER 14 - 20, 2013
CRAIN’S CLEVELAND BUSINESS C-7
PAST AWARD RECIPIENTS 2012 ■ Brian Gorris, Stripmatic Products Inc. ■ Russell Schabel, The Philpott Rubber Co. ■ Dave Hamrick, InfoCision Management Corp. ■ Michael Biehl, Chart Industries ■ Richard Fearon, Eaton Corp. ■ Darren Wells, The Goodyear Tire & Rubber Co. ■ Hilary Beatrez, The Cleveland Hearing and Speech Center ■ David Kuntz, Cleveland Metroparks ■ John Harvan, Hospice of the Western Reserve ■ David Adante, The Davey Tree Expert Co.
2011
■ Craig Foltin, Cuyahoga Community College (Medium nonprofit) ■ Brian S. Kenyon, The Rock and Roll Hall of Fame and Museum Inc. (Small nonprofit)
2009 ■ Richard C. Ebner, Liberty Bank (Small private company) ■ Rick Coan, Garick LLC (Medium private company) ■ Steven C. Glass, Cleveland Clinic (Nonprofit global hospital) ■ John D. Grampa, Brush Engineered Materials Inc. (Medium public company) ■ Yvette M. Ittu, Greater Cleveland Partnership (Nonprofit civic and community) ■ Fredric “Fritz” Kohmann,
Shearer’s Foods Inc. (Large private company) ■ Julie McGraw, National Interstate Corp. (Small public company) ■ C. Michael Rutherford, Summa Health System (Nonprofit regional hospital) ■ John P. Sesek, Positive Education Program (Nonprofit human services) ■ Stephen J. Smith, American Greetings Corp. (Large public company)
2008 ■ Bonnie Barrett, Cleveland Foodbank (Nonprofit, human services) ■ Tom Browne, Bellefaire/ Wingspan Care Group (Nonprofit, health care) ■ Jenniffer Deckard, Fairmount Minerals (Large private company) ■ Mark Eisele, Applied Industrial
■ Mary Ann Freas, Southwest Community Health System ■ Richard “Duke” Jankura, JumpStart Inc. ■ Michael E. Mayher, Lakeland Community College ■ Bill Chorba, NineSigma Inc. ■ Cameron C. Rubino, OrthoHelix Surgical Designs Inc. ■ Susan Suvak, Majestic Steel USA Inc. ■ Robert Trabucco, Sterling Jewelers Inc. ■ Vincent Petrella, The Lincoln Electric Co. ■ Mark Clark, First Energy Corp.
Technologies (Medium public company) ■ John Flanagan, Howley Bread (Small private company) ■ Patricia Gaul, PlayhouseSquare Foundation (Nonprofit, arts and culture) ■ Ware H. Grove, CBiz (Small public company) ■ Michael Headen, United Way of Greater Cleveland (Nonprofit, community service) ■ Karen D. Melton, Kaufman Container Co. (Medium private company) ■ Tim Pistell, Parker Hannifin Corp. (Large public company)
2007 ■ David K. Creamer, Kent State University (Nonprofit, educational)
■ Glenn A. Eisenberg, The Timken Co. (Medium public company) ■ Richard H. Fearon, Eaton Corp. (Large public company) ■ Richard L. Garcia, Wastequip Inc. (Medium private company) ■ Craig Kaiser, YMCA of Greater Cleveland (Nonprofit, social services) ■ J.T. Mullen, The Cleveland Foundation (Nonprofit, charitable) ■ Frank Roddy, Swagelok Co. (Large private company) ■ Kevin V. Roberts, University Hospitals Health System (Nonprofit, medical) ■ Carole Sanderson, Herschman Architects Inc. (Small private company) ■ Thomas G. Smith, Forest City Enterprises Inc. (Small public company)
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2010 ■ Laurie Brlas, Cliffs Natural Resources Inc. (Large public company) ■ Robert G. O’Brien, Forest City Enterprises Inc. (Medium public company) ■ Mark R. Widmar, GrafTech International Ltd. (Small public company) ■ Gregory Robinson, Safeguard Properties LLC (Large private company) ■ Andrew Tanner, The NRP Group (Medium private company) ■ Frank Mercuri, Vocon (Small private company) ■ Michael A. Szubski, University Hospitals (Large nonprofit)
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CFO OF THE YEAR
C-8 CRAIN’S CLEVELAND BUSINESS
CLARK LUBASKI The Robbins Co. Solon
S
ince 2007 when Clark Lubaski came to The Robbins Co. as the controller, he has been an instrumental factor in the company’s global expansion, culminating in the establishment of six international subsidiaries and two joint ventures. Up to 80% of the underground construction projects for which The Robbins Co. manufactures and supplies construction equipment are outside of the United States. “He is a big-time international player,” said Lok Home, president and CEO of The Robbins Co. “He steps up and travels around the world.” Through his travels, Mr. Lubaski has become well-versed in the contractual nuances of the diverse set of countries where The Robbins Co. has recently pursued projects, including China, Laos, Iceland and Russia. In addition to performing international strategic financial guidance that has increased The Robbins Co.’s sales revenue three-fold, he also learned about the engineering aspects of making tunnels under megacities such as New
York, Singapore, Mexico City and San Francisco. Mr. Lubaski is responsible for bringing The Robbins Co. from a mid-$100 million turnover businesses to one that is approaching $350 million. “He has been an essential player in the company’s growth,” said the nomination. He managed this growth through the negotiation of a new credit facility in 2010, and alternative funding in 2013. He transitioned the company to a long-term contract method of accounting, negotiated two financing agreements and provided unparalleled management support, according to the nomination. “Clark has a deep understanding of the accounting treatment and reporting requirements associated with these contracts, and has been able to anticipate tax issues and mitigate risk for the company,” said the nomination. With The Robbins Co.’s worldwide project management team, Mr. Lubaski created policies and procedures to ensure accurate project cost estimates. In 2010, Mr. Lubaski also walked the company through a migration into a new enterprise resource planning system, a process described by Mr. Home as typically painful and unpleasant. The new system allows the com-
OCTOBER 14 - 20, 2013
RICHARD T. MARABITO Olympic Steel Inc. Bedford Heights
A
pany to generate valuable data to be analyzed in strategic business decisions and improved the ability to integrate information across departments, in turn improving supply chain management and customer service. Mr. Lubaski has superseded traditional CFO responsibilities by stepping into the manager of accounting and human resource roles as well. “He is 100%, all the time, an easy-to-work-with guy,” Mr. Home said. Outside of the office, Mr. Lubaski is a certified CPA and a member of both the Ohio Society of CPAs and the American Institute of CPAs. When he is not crunching numbers, Mr. Lubaski enjoys spending time with his wife, adult children and twin grandsons. — Laura Straub
lot of people can do the job of a chief financial officer, said Michael Siegal, chairman and CEO of Olympic Steel Inc. “But Rick does it with a positive attitude such that he’s probably the most likable executive in the company,” Mr. Siegal said of the company’s chief financial officer, Richard T. Marabito. Mr. Marabito is “approachable,” a good mentor and a “go-to guy” for people in the financial industry, Mr. Siegal said. He comes to work every day with a sense of balance, a plus in the cyclical business of steel that comes replete with great and notso-great years. The former college football player is competitive, Mr. Siegal said, but no one would know it from the smile that’s always on his face. In the 19 years Mr. Marabito has been with the operator of metals service centers, he has helped grow Olympic Steel’s annual revenue from $400 million to almost $1.4 billion. He started at Olympic Steel in 1994 as the company’s corporate controller and was named CFO in March 2000. Mr. Marabito also served as the company’s treasurer from 1994 through 2002 and from 2010 through 2012. During his time at Olympic, the nomination said, he has been a “key player” in a host of major financial milestones for the company: “One IPO, five acquisitions, one follow-on offering, two shelf registrations and numerous capital projects/strategic initiatives.” He was critical in initiatives to reduce costs and debt for the company during the recession and will continue to help it grow in the future, according to the nomination. “Mr. Marabito’s efforts have positioned Olympic to capitalize on higher returns on investments in the next several years for several reasons,” the nomination said. “First, the company’s recent acquisitions and capital projects have doubled normalized earnings capacity and also expanded its presence in higher margin, less cyclical sectors. “Second, while Olympic has announced plans for several smaller capital projects in 2013, it antici-
“Mr. Marabito’s efforts have positioned Olympic to capitalize on higher returns on investments in the next several years for several reasons.” – From the nomination pates capital expenditures will be less than depreciation, which will drive higher free cash flow and allow the company to reduce its debt/EBITDA ratio by 50%. Third, the company’s low-cost (<3%) and flexible asset-based credit facility will allow it to finance its future and in-process growth initiatives in a cost-efficient manner.” The nomination also highlighted Mr. Marabito’s involvement in capital projects. “In 2012, Mr. Marabito managed a $23 million capital spend as Olympic finalized its $287 million, four-year strategic investment plan — both on time and on budget,” the nomination said. “2012 projects included a new facility in Streetsboro, a new temper mill and cut-to-length line in Gary, Ind., and additional processing equipment at the company’s existing facilities. These investments have allowed the company to successfully expand into value-added processing, diversified product categories and new geographic regions.” Outside of work, Mr. Marabito is a board member for the Metals Service Center Institute and is involved in the Make-A-Wish Foundation’s Ohio, Kentucky and Indiana chapter. He is currently a member of the chapter’s governing board member and its treasurer. Olympic has an annual “Working for Wishes” program for employees and has granted more than 65 wishes since 2004. — Rachel Abbey McCafferty
CFO Frank Cardinale (left) and COO Mary Marita on the construction site of the new headquarters of the Benjamin Rose Institute on Aging (at right)
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CFO OF THE YEAR
OCTOBER 14 - 20, 2013
MARLENE TEHI
DIANNE BREHM
Evolution Capital Partners Beachwood
United Way of Greater Lorain County Lorain
I
t takes a lot of skill and financial acumen to be the CFO of any company, and even more to serve in that role for an investment firm. Now try keeping track of the finances for a private equity investment company, its clients, its coinvestors and a half-dozen or more companies receiving investments on top of it. No problem for Marlene Tehi, says her boss, Evolution Capital Partners managing partner Brendan Anderson. “Not only does she have to deal with the fact that the fund might have a new investor, she has to deal with the co-investor and our portfolio companies,” Mr. Anderson said. Evolution, a Beachwood-based private equity firm, invests millions of dollars on behalf of itself and its clients, putting the money into a diverse group of companies involved in activities ranging from software development to mortgage lending and even paper manufacturing. Founded in 1995, the firm has raised about $80 million to date and made investments in eight companies. Evolution invests in small to midsize companies that need investments of between $2 million and $10 million to facilitate further growth. The companies tend to be in a phase between being a small start-up and becoming a large firm — what Evolution terms “no man’s land.” That might be a more apt term than Evolution executives ever imagined, given Ms. Tehi’s role in things. Her job requires not only the ability to thoroughly understand the finances of diverse companies, but to also be able to evaluate them as potential investments and then, if an investment has been made, to keep track of their finances and advise on how they can be improved. That involves more than just getting a copy of the company’s books and analyzing them. Because the companies in which Evolution invests are often small, they rarely have sophisticated dashboards and other financial tools in place — sometimes including the right people — but they’ll need them to take the next steps in their growth. “Marlene’s efforts require the implementation of all financial systems, including hiring divisional CFOs, monitoring performance and ultimately ‘no surprise’ reporting … not only has Marlene successfully installed these controls in Evolution’s eight controlled investments, but has implemented them
U “Dealing with an entrepreneur that’s been doing things their own way the last five years, or 10 years, you have to be accommodating but also get things done. Marlene (Tehi) can do that.” – Brendan Anderson, managing partner, Evolution Capital Partners at more than 12 Evolution operating and investment partnerships,” Mr. Anderson said. But that might be the easy part. She also has to deal with a large number of personalities and egos, ranging from the owners and CEOs of Evolution’s target companies to those of its investors and the other entities that co-invest with the firm, Mr. Anderson said. “Dealing with an entrepreneur that’s been doing things their own way the last five years, or 10 years, you have to be accommodating but also get things done. Marlene can do that,” Mr. Anderson said. And, of course, Ms. Tehi also has to deal with her firm’s principals and co-founders, Mr. Anderson and fellow managing partner Jeff Kadlic. That includes, at times, reining in their exuberance over new investment opportunities and keeping the firm focused on the fundamentals. “Jeff and I are pretty good at some of that stuff, but she’s a very good ‘hey guys, come back to earth’ person,” Mr. Anderson said. But, more than anything, Mr. Anderson credits Ms. Tehi with doing for his firm the same thing that Evolution does for the companies in which it invests money. She took Evolution from being “an owner-managed business looking to establish the foundation for growth” when she joined the firm in 2010, to a sophisticated operation with detailed processes for both its operations and its transactions. “Marlene was the single driver to the financial diligence, reporting and monitoring,” Mr. Anderson said. — Dan Shingler
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nsinkable. Committed. A team player. Those are the words that William P. Harper, executive director of United Way of Greater Lorain County, uses to describe Dianne Brehm, the nonprofit’s finance director. “She’s a great example for all of our staff to do whatever it takes to fulfill our mission” he said. Mr. Harper, who has known Ms. Brehm for a little over three years, said she not only is totally committed to the organization, but she also is a good strategic thinker and very customer-oriented. A Lorain County native, Ms. Brehm has led a number of initiatives in her 11 years with the organization. For one, she is credited with leading the integration of the organization’s enterprise-wide customer relationship and donor management system, working it into all aspects of the nonprofit’s work. As a result, United Way of Greater Lorain County has been able to amass a functional, up-to-date database. Just this past year, under Ms.
CRAIN’S CLEVELAND BUSINESS C-9
Brehm’s leadership, the organization moved to a VOIP telephone system and cloud-based computing, saving thousands of dollars while providing improvements in technology tools. While the recession proved to be a challenging time for all nonprofits, Mr. Harper said it was during those times that Ms. Brehm’s work became even more essential in building trust and credibility with donors. “Our staff was frustrated, but Dianne never lost her resolve and vision for our eventual success,” the nomination said. “Her integrity puts our donors at ease when considering what charity will best use their investments, and her customer service orientation toward donor companies differentiates our nonprofit from others seeking donations.” United Way of Greater Lorain County has been recognized as a four-star charity by Charity Navigator under Ms. Brehm’s fiscal leadership. It also is in the midst of a shift in its business model, the nomination said. Once seen primarily as a fundraising organization, its focus now is on impacting the education, income stability, health and basic needs systems through community
collaboratives. “Dianne has adapted our financial management systems to reflect this new business model, assisting our board to meet their governance responsibilities and maintaining a high level of transparency for our stakeholders,” the nomination said. In addition to her work and commitment to United Way, Ms. Brehm is involved in other community projects and organizations. She serves as a Eucharistic minister at St. Peter Catholic Church in Lorain, and she is an active Rotarian, serving as secretary to the Lorain Rotary Club and more recently to Rotary District 6600. Ms. Brehm also took on the responsibility of managing the finances for Gathering Hope House, a nonprofit mental health recovery center, setting up fiscal practices and controls that assisted the agency in assuring financial supporters of its viability and surviving a difficult transition in leadership. Until recently, she also served as treasurer and as a board member of Leadership Lorain County. “Dianne is always the first to volunteer for any opportunity to improve our organization and serve our community,” the nomination said. “She has a big heart and infectious optimism for our future and the future of Greater Lorain County.” — Amy Ann Stoessel
Congratulations Cedar Fair Entertainment Company is proud to congratulate its Chief Financial Officer,
Brian Witherow, and all the finalists on their nominations for the 2013 CFO of the Year Awards!
Member
,*I)
One Cedar Point Drive Sandusky, OH 44870-5259 (419) 627-2233 cedarfair.com
Cedar Fair is traded on the NYSE under the ticker symbol “FUN”
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CFO OF THE YEAR
C-10 CRAIN’S CLEVELAND BUSINESS
FRANK CARDINALE Benjamin Rose Institute on Aging Cleveland
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good CFO is part cop and part cheerleader, according to Richard Browdie, president and CEO of the Benjamin Rose Institute on Aging. And lucky for Mr. Browdie, that’s exactly what he sees in his organization’s CFO, Frank Cardinale. “Frank embodies that balance,” he said. Mr. Cardinale has been with Benjamin Rose for more than 10 years, a time period during which there have been a number of major changes, including the construction of a new headquarters. Additionally, in 2005-2006, Benjamin Rose decided to end its nursing home operation, which resulted in a significant overhaul for the organization. “It remade the organization’s financial picture,” Mr. Browdie said. “Frank had to be the orchestrator for all of that.” The new headquarters, meanwhile, opened last spring on Fairhill Road on the city’s East Side. The total cost for the 31,214square-foot building was $11.4 million. “He’s got a real strategic sense,” Mr. Browdie said. As for the planning and completion of the group’s new headquarters: “He was intimately involved in every step of the way.”
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ALAN W. SILIKO ka, Inc. Architecture Cleveland
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espite being a numbers and finance person amid a group of architects who prize vision and drawing skills, Alan W. Siliko has made himself part of the team and put on his own mark at one of Northeast Ohio’s largest architecture firms. He was named one of the firm’s five shareholders earlier this year and has served as its CFO since April 2000. John Burk, ka’s president and chief operating officer, credits Mr. Siliko with introducing multiple modern accounting and financial processes it had not had in its prior 40 years. Moreover, Mr. Siliko not only helped the commercially oriented architecture firm known for shopping malls, casinos and corporate headquarters survive the 2008 financial downturn that was deadly for many architecture firms, but it survived as a stronger firm than before the Great Recession began. “Not only had he established cash reserves to protect the company from the 2008 recession, he had made the company stronger operationally,” Mr. Burk said. For example, in the prior gut-wrenching recession for architecture and other construction-related concerns in 1989, the company survived by piling up what the nomination described as “an enormous debt” that took 10 years to pay off. In 2012, the firm had stronger cash reserves than it did before the recession. Among his first steps at the firm,
OCTOBER 14 - 20, 2013
According to Mr. Browdie, Mr. Cardinale has an excellent grasp of the intricacies involved with Benjamin Rose’s finances, which include assets under management, trust proceeds and income from grants. Last January, Mr. Cardinale even established an Investment Advisory Committee comprised of local financial experts to conduct periodic reviews of Benjamin Rose Institute on Aging’s assets. “Annually, we have as clean an audit record as there is in Cleveland,” he said. Beyond the numbers and finances, Mr. Browdie describes Mr. Cardinale as having great humility and as someone who has helped lead to the longevity of the organization. “He understands the purposes of the various programs,” he said. “He has an appreciation for what needs to be accomplished.” Outside of Benjamin Rose, Mr. Cardinale is an active alumnus of Cathedral Latin high school and assists the school in fundraising efforts. He acts as a mentor and adviser to finance staff of other nonprofit organizations, assisting them with audit preparation and accountability principles. “Thanks to Frank Cardinale’s exemplary stewardship of the organization’s trusts, the Benjamin Rose Institute on Aging has continued to thrive in an environment in which other nonprofit organizations have struggled,” the nomination said. — Amy Ann Stoessel
Mr. Siliko attended to handling accounts receivable issues with modern processes that ended a challenge meeting payroll. Ka had a staff of 45 in 2012 and gross revenue of $9.8 million, according to the nomination. Mr. Siliko also provides leadership within the company in several ways, including what Mr. Burk considers one of the most important ones for an architecture concern: He understands “that our business is successful because of our staff.” To that end, Mr. Siliko works for ways to reward the architecture firm’s employees for their efforts as well as holding the staff accountable for following established procedures. As a member of the firm’s board, he actively participates in drafting its strategic plans and holds the shareholders of the company accountable for following the plan’s goals. At the same time, Mr. Siliko plays the typical role of the CFO: making sure the firm gets the most benefits for its money from its vendors, the nomination said. Mr. Siliko brought a corporate and accounting background to his job that also helped the certified public accountant put his own stamp on the firm. He worked as an internal auditor for both Scott Fetzer Co. and Avery Dennison Corp. and as the controller for TransCon Builders Inc. of Bedford. He earned his bachelor of science in accounting at Cleveland State University. Outside the office, Mr. Siliko served on the transition team for the Cuyahoga County executive as the county launched its new council form of government in 2011. — Stan Bullard
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CFO OF THE YEAR
OCTOBER 14 - 20, 2013
MICHAEL STANEK Hunt Imaging LLC Berea
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ichael Stanek’s fingerprints are all over Hunt Imaging. Mr. Stanek has served as chief financial officer of the Berea company, which makes electrostatic toners and developers for the printing industry, since 1996, when it spun off from Olin Corp. of Clayton, Mo. Thus, he ended up building “the entire financial end of the organization, from the establishment of accounting structure to the selection and installation of software and hardware packages,” the nomination said. In building that infrastructure, Mr. Stanek fell back on his guiding principle that the company’s systems should be able to account for all transactions to the penny in the simplest way possible. He must’ve done a good job: Today, Hunt Imaging has a strong balance sheet, according to the nomination. Mr. Stanek continues to build on the infrastructure he put in place years ago. He helps the company conduct due diligence whenever it is thinking about buying other businesses. When Hunt Imaging has made acquisitions, he’s helped the company make sure the new businesses are brought into the fold seamlessly, according to the nomination. Mr. Stanek also has led an effort to make sure the company remains financially stable, the nomination said. For instance, he helped the company establish a thorough inventory control system, and he makes sure Hunt Imaging has “regular and cordial contact with customers” that haven’t yet paid their bills, according to the nomination. He also “maintains contact with many local bankers and has always put a strong focus on the sharing of both detailed financial as well as strategic information with Hunt’s banking partners in order to avoid any ‘surprises’ as actual results come in,” the nomination said. In addition to finance, he heads up Hunt Imaging’s human
resources and information technology functions. Hunt Imaging president Jeff Johnson said he trusts Mr. Stanek “in everything he does.” He noted that Mr. Stanek will do anything he can to make Hunt Imaging a better company. For instance, Mr. Johnson described how his colleague negotiated with Hunt Imaging’s electric provider to install a new transformer to lower the company’s utility bills. “We’re reaping the benefits now,” Mr. Johnson said. But he’ll look for smaller ways to save money, too. “If we can save a hundred dollars a month by washing uniforms three times a month instead of four, he’ll do it,” Mr. Johnson said. Mr. Stanek has an entrepreneurial side, too. Last year, he founded Cleveland Cycle Tours, which gives tours to groups of people who cruise around town on a pedalpowered machine known as “The Ultimate Party Bike.” “Mike’s experience in finance, coupled with his passion and knack for entrepreneurial ventures, makes him a unique and valued asset to the small business world and Northeast Ohio,” the nomination said. The list of the civic activities with which Mr. Stanek has been involved over the years is pretty long. Mr. Stanek — who has a bachelor’s in accounting from Cleveland State University and an executive MBA from what is now called Baldwin Wallace University — previously served on the city councils for both Fairview Park and Avon Lake, in each case chairing their finance committees. Today, he sits on the finance committee and chairs the advocacy committee for the Council of Smaller Enterprises. The list keeps going: He’s on the board of the National Small Business Administration. He sits on the Greater Cleveland Partnership’s Government Affairs Council. He coaches youth basketball. He’s president of the St. Edward High School Alumni Association (where he earned a diploma in 1977). “The list goes on and on and on,” Mr. Johnson said. “I don’t know how he fits it all into his day.” — Chuck Soder
SUE CYNCYNATUS Lutheran Metropolitan Ministry Cleveland
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ue Cyncynatus’s job is to ensure that the Lutheran Metropolitan Ministry maintains its financial health and organizational integrity. But, its recently retired president and CEO concedes that the nonprofit’s mission — to help struggling men, women and youth — makes Ms. Cyncynatus’s work harder. “Sue is a full believer in the agency’s mission and philosophy in spite of the inherent contradiction those philosophies present from a financial and risk-protection perspective,” the nomination from former CEO Carol Fredrich stated. “The agency’s dedication to hiring people who were (homeless or incarcerated) presents challenges to operating a financially solid and risk-protected organization.” The Lutheran Metropolitan Ministry employs 192 people and assists thousands annually with life-changing aid. It helps the
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homeless, ex-offenders, the disabled, at-risk youth and others with long-term care needs. It gives many a second chance, providing jobs, housing and counseling. The ministry runs a homeless shelter on Lakeside Avenue that is the largest in Ohio, serving 4,300 men a year, and it has begun operating nonprofit businesses that provides employment to some of the people it serves. Ms. Cyncynatus has been invaluable to the organization’s new CEO, Andrew Genszler, who joined the organization four months ago. “I don’t think she knows it, but Sue is a pretty good teacher in acclimating someone new to the organization,” Mr. Genszler said. “I have come to rely on Sue for a whole lot of things.” When Ms. Cyncynatus joined the organization 18 years ago, it was a small, grassroots nonprofit. Since she took responsibility for the organization’s accounting department a few years after she was hired, the Lutheran ministry’s budget has more than doubled to more than $11 million, its assets more than tripled and the financing has become more complicated. It now has to track 28 government contracts worth $6.2 million and grants worth $2.5 million from 48 private foundations.
In addition, Ms. Cyncynatus led the ministry through its first major capital project. It purchased and renovated a 40,000-square-foot headquarters building on Superior Avenue on Cleveland’s East Side, and Ms. Cyncynatus led the agency through the planning and financial processes of the $8 million project, called the Rev. Richard Sering Center after the agency’s founding executive director. “She skillfully navigated the legal and financial complexity, while assisting board and staff in understanding the complex process and its ramifications for the organization,” the nomination said. The move from rented space on West 25th Street to the new building was completed in August. The new building includes space for the ministry’s social enterprises — a central kitchen and a shop that makes bike racks for the Cleveland Clinic, Cuyahoga County and others. “Without significant resources to staff her department, she has taught and mentored her employees, increasingly delegating accounting and other functions so that she can address the organization’s needs for CFO leadership in its strategic direction,” Ms. Fredrich wrote. — Jay Miller
Fifth Third Bank Congratulates CFO of the Year 2013 Finalists: • Mark Belgya from The J.M. Smucker Company • Loree W. Connors from Vita-Mix Corporation • Joseph Fornal from The Ganley Management Co. • Julie McGraw from National Interstate • Mary McMillan from The Cleveland Zoological Society • Sam Steinhouse from OneCommunity • Marlene Tehi from Evolution Capital Partners LLC • Brian Witherow from Cedar Fair Entertainment Company
Fifth Third Bank. Member FDIC.
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MARY MCMILLAN Cleveland Zoological Society Cleveland
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ary McMillan’s often greeted in the morning by a roaring lion. Not an angry boss, mind you, but an actual lion. In her opinion, that’s one of the many perks of working for the Cleveland Zoological Society, the zoo’s fundraising arm, as its director of finance and operations. But for Ms. McMillan, she’s not just the organization’s bean counter. She’s a trusted manager and knowledgeable about both the big picture and the nitty-gritty details associated with raising money for the zoo. She even serves as the editor for the organization’s newsletter and award-winning magazine, Z. “It all comes back to connecting people with wildlife,” Ms. McMillan said in a recent interview. “There are so many different ways to do that.” Her achievements in 2012 included updating the organization’s operating agreement with the Cleveland Metroparks, which
underpins all of the zoological society’s work to support the zoo. She also worked with executive director, Liz Fowler, to shift the organization’s fundraising model. Because of her work, the group’s financial reporting metrics are simpler and stronger and therefore far easier to communicate to donors and other stakeholders, according to her nomination. They also satisfy the scrutiny of both nonprofit and government accounting and audit requirements. Over the last 10 years, Ms. McMillan’s budgeting has ensured that the zoological society’s financial results have landed within 2% of budget of each year. “I can state that Mary is the consummate financial professional,” said Gregory Friedman, a life trustee for the zoological society and president of GDF Consulting LLC, in the nomination. “She acts as a catalyst for the Cleveland Zoological Society.” In a letter of support for her nomination, David Kuntz, the Cleveland Metroparks’ CFO, noted, “Every single time that I have called Mary with any questions,
CFO OF THE YEAR special requests or even issues, she has exceeded my expectations.” Under Ms. McMillan’s watch, the zoological society embarked on its largest fundraising campaign to date — a $12.5 million effort to help finance a new elephant exhibit at the zoo. The $25 million exhibit sits on five acres, and at 260,000 square feet quadruples the size of the former indoor and outdoor space for the elephants. The new complex, built around the shell of a 1950sera building near the zoo’s entrance, was the organization’s first major capital investment since it opened the $32 million RainForest exhibit in late 1992. Although the exhibit’s groundbreaking took place at the height of the recession, the zoological society was able to raise the needed cash. “It became clear early on we would be successful,” Ms. McMillan said about the campaign. “The final push is always a bit of a struggle, but we knew we would make it.” Beyond the zoological society, Ms. McMillan has served on the board for the Therapeutic Riding Center in Chagrin Falls. She also serves as a deacon for her church, Forest Hill Presbyterian, in Cleveland Heights. — Timothy Magaw
OCTOBER 14 - 20, 2013
MICHAEL TOKICH Steris Corp. Mentor
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ichael Tokich is the perfect CFO for Steris Corp. — but then they knew that before they gave him the job, says his CEO, Walt Rosebrough. CEOs and CFOs are, by definition, closely intertwined in their jobs — and having a good match between the two can do a lot for a company’s strategic direction. In most cases, a CEO either inherits the CFO that is there when he takes the helm, or he has to go out and find a new one elsewhere. Mr. Rosebrough, however, was in the unusual position of becoming CEO of a company that had no chief financial officer when Mr. Rosebrough joined the company as chief executive in 2007. “When I came, Mike was the controller. He and the treasurer were splitting roles and the CFO position was open,” Mr. Rosebrough recalls. So he conducted a search, interviewing several external candidates, while he also watched the people already working internally on the company’s financial functions. “I came to the conclusion Mike would make a good CFO,” Mr. Rosebrough said. “I thought it would be better to take the inside guy than the outside guy, and I’m very pleased with the way things worked out.” It’s no small job and requires an expansive skill set. Not only is Steris a large company, with 2012 revenues of about $1.5 billion to track and manage, but it’s a public company. That means it must meet a slew of reporting requirements, both to regulators and shareholders, and follow a voluminous set of rules in doing so. On top of that, Steris is a medical device company, which comes with its own set of additional rules and regulators. Mr. Tokich has all of the skills required to keep ahead of the game on all of those fronts, says his boss. Perhaps just as importantly, he fits well with his CEO. “I think we match up closely, which is important, in that we’re both, relatively speaking, conservative in our approach to doing things,” Mr. Rosebrough said. “We
are likely to be conservative about our finance, conservative about our forecasting and conservative about our earnings — we don’t try to squeeze every last cent into our numbers.” Conservative, but still open to new ideas. That’s another quality Mr. Rosebrough said he values and, Mr. Tokich, he noted, is never one to shy away from new ideas. Even when they involve tough decisions, like cutting costs in his own department, he’s always on board, Mr. Rosebrough said. But a good CFO doesn’t run a company or even one of its businesses — he or she is providing the information, systems and supports that enable other executives to do those jobs effectively, and Mr. Tokich excels in that role, Mr. Rosebrough said. That includes supporting the company’s financial communications, and Steris’ director of investor relations, Julie Winter, sings Mr. Tokich’s praises in that regard. She, in fact, nominated him to be CFO of the year. “Mike is an exceptional combination of financial and business acumen and extremely strong interpersonal skills. His lively sense of humor, positive outlook and an innate ability to connect with people produce an atmosphere of loyalty, trust and motivation,” she said. Not to mention, she says, that Mr. Tokich was able to help guide Steris through a major recession, health care reform and challenging conditions. In part because of Mr. Tokich’s help and leadership, Steris has not only weathered those events, but grown its earnings by 15% per year for the last five years, she said. “He’s definitely my CFO of the year,” Mr. Rosebrough said. — Dan Shingler
The Trustees and Staff of The Burton D. Morgan Foundation congratulate Denise Griggs, Crain’s 2013 CFO of the Year finalist!
We thank you for your dedication and careful stewardship!
A Legacy of Entrepreneurship
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CFO OF THE YEAR
OCTOBER 14 - 20, 2013
SAM STEINHOUSE OneCommunity Cleveland
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neCommunity didn’t have a CFO before Sam Steinhouse came on board. And it showed. In 2009, the chairman of OneCommunity’s finance board “was on the verge of replacing the finance department staff” because the nonprofit Internet service provider had a lack of financial reporting expertise. The organization’s primary lender also had become “very uncomfortable with both the quality of financial reporting and management of (OneCommunity’s) credit facility.” In June of that year, OneCommunity brought on Mr. Steinhouse as an unpaid consultant. He “quickly overhauled the financial reporting process and stabilized the staff’s relationship with both the Board and (the) organization’s primary lender,” the nomination said.
PHILIP WEIHE BlueBridge Networks Cleveland
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t makes sense that a CFO would be logical and practical. Number crunchers tend to have those qualities. But Philip Weihe has many more talents, according to Kevin Goodman, managing director and partner at BlueBridge Networks. Having spent 10 years working to ensure that the Cleveland-based data center company makes prudent decisions, Mr. Weihe also has proven to be a good communicator and mediator, according to Mr. Goodman. Though BlueBridge is run by three people — Mr. Goodman, Mr. Weihe and Petar Bojovic director of operations — Mr. Weihe controls the checkbook. So he often has to make the final decision. He’s often tasked with “wading through the enthusiasm and the passion” of his colleagues in an effort to figure out whether a new idea makes financial sense, Mr. Goodman said. But Mr. Goodman said that even when one of his own ideas fails to win Mr. Weihe’s approval, it’s probably for the best. “Most times the process works,” Mr. Goodman said. BlueBridge was founded in January 2004, and Mr. Weihe joined the company that October. Since then “he has been a key player in all areas of the business,” the nomination said. Though Mr. Weihe serves as BlueBridge’s CFO, he also is able to embrace the creative side of the company, according to the nomination. Plus, over the past 10 years he’s learned a lot about the data center technology that BlueBridge uses, Mr. Goodman said. “He’s not siloed from the floor,” Mr. Goodman added. Mr. Weihe also demonstrates strong communication skills, his colleague added. Mr. Weihe does-
He was named interim CFO within a few months and took on the permanent title in January 2010. Mr. Steinhouse helped soothe “a general frustration that was brewing” at the time, according to Brett Lindsey, OneCommunity’s chief operating officer, who was hired shortly after that period. Back then, OneCommunity was making the transition from a nonprofit that resembled a startup company to one that looked more like a growing business, complete with its own revenue stream. And businesses in that stage often need more management expertise. “There was a need to have a senior financial leader in the organization,” Mr. Lindsey said. Mr. Steinhouse also helped OneCommunity show banks that, even though the group is a nonprofit, the organization could realistically project what its revenues would be in the same way that businesses do, Mr. Lindsey said. In addition to stabilizing OneCommunity’s relationship with its primary lender, Mr. Steinhouse also led an effort to develop a relationship with a second bank,
which helped the nonprofit increase its working capital by 50%. The discipline and processes he brought to OneCommunity’s financial staff helped OneCommunity win roughly $50 million in grant funding from the economic stimulus programs that the federal government enacted in early 2009, according to the nomination. Winning those grants allowed OneCommunity to vastly expand its fiber optic network, which the organization in the past has described as “a broadband superhighway” that any Internet service provider is able to use. Mr. Steinhouse “has an appetite for taking on the hard stuff and making it work,” the nomination said. Mr. Lindsey described him as a “very pragmatic” person who doesn’t let people simply tell him what he wants to hear. “He understands whether he is being placated,” he said. Though his background is in finance — Mr. Steinhouse earned a bachelor’s in finance and accounting from the University of Michigan in 1978 — his experience is much broader. For instance, from 1993 to 2004, he served as chief operating offi-
n’t listen only to other BlueBridge executives; he seeks input from all of the company’s employees, according to the nomination. The company employs about a dozen people, as well as up to 30 contractors on any given day. “Mr. Weihe actively encourages employee participation with an open door policy and meetings where all opinions and input are welcome and appreciated,” the nomination said. He’s particularly good at figuring out ways to fix problems, even if the solution isn’t immediately apparent, Mr. Goodman said. “He has shown me that there are five or six ways we can all win,” Mr. Goodman said. Mr. Weihe uses both his head and his heart when making decisions: Mr. Goodman noted that he’s often surprised when he goes to Mr. Weihe seeking advice and gets an emotionally connected answer, as opposed to a more calculated response. Mr. Weihe also gives BlueBridge a wide berth to help charities. For instance, the company co-sponsors American Red Cross blood drives held in its building and elsewhere in Northeast Ohio, and it encourages its employees to volunteer in the community, the nomination said. BlueBridge provides services to nonprofits at reduced rates as well. “If it wasn’t supported by him … it wouldn’t happen,” Mr. Goodman said. Though Mr. Weihe wasn’t one of BlueBridge’s founders, he has been an entrepreneur: He started a wholesale auto parts distribution business called Great Lakes Imported Auto Supply in 1983, right after earning an MBA from the College of William and Mary. The company was run by a former partner of his until about six years ago. Most of his professional career has been focused on finance and accounting. Mr. Weihe — who earned his bachelor’s from the University of Michigan — held several finance-related positions at Premier-Farnell PLC from 1986 to 1998. The British company
acquired Cleveland industrial distributor Premier Industrial Corp. in 1996. Afterward, he served as accounting director at a telecommunications company called CoreComm until 2002. From 2002 to 2003, he served as a consultant for Resources Global Professionals, a professional services firm based in Irvine, Calif. Next, he served as controller for Clinical Research Management Inc., a contract research organization based in Hinckley, before joining BlueBridge in 2004. — Chuck Soder
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cer at B.P. Products Inc., a distribution company serving the fast food industry. Plus, he and two other partners started a local real estate investment company called SPS Partners in 2006, “at what some may say was exactly the wrong time,” the nomination said. They’re in the process of winding down the company “due to the instability of residential real estate prices,” Mr. Steinhouse told Crain’s. But the bad economy helped guide him to OneCommunity: It was while he was waiting for the real estate market to recover that he started consulting for the organization, the nomination said. Mr. Steinhouse also was a founding shareholder in DMI
Manufacturing, a Mentor company that sells parts and supplies to restaurants. He sold his stake in that company in 2006. Outside of work, Mr. Steinhouse also is president of the Orange City Schools Board of Education. Mr. Steinhouse also serves on the boards the Council of Smaller Enterprises and the Greater Cleveland Partnership, where he is a member of the finance and audit committees. He’s a graduate of the Leadership Cleveland Class of 2009 and is helping support the Cleveland Metropolitan School District’s transformation plan through the Cleveland Leadership Center’s LC2 Fellows program. — Chuck Soder
Your great work merits recognition. Congratulations to all CFO of the Year finalists and Terry Bichsel, Senior Executive Vice President, Chief Financial and Administrative Officer at FirstMerit Corporation. Your outstanding financial leadership and commitment to Northeastern Ohio deserves this great recognition.
Member FDIC 2168_FM13
888-554-4362 · firstmerit.com
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CFO OF THE YEAR
C-14 CRAIN’S CLEVELAND BUSINESS
BRIAN WITHEROW
“He’s fundamentally one of the key reasons we’ve done as well as we have.”
Cedar Fair Entertainment Company Sandusky
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rian Witherow has been the executive vice president and chief financial officer for Cedar Fair Entertainment Company for less than two years, but he’s already made a big impact at the company. “He’s fundamentally one of the key reasons we’ve done as well as we have,” CEO Matt Ouimet said. In the short time since he’s taken on the position of chief financial officer, Mr. Witherow has been part of a number of critical projects for the amusement park operator. “During this time, he helped to develop and communicate our ‘FUNforward’ longterm growth strategy (which doubled the company’s expected growth rate); achieved a third consecutive year of record net revenues and Adjusted EBITDA; oversaw the successful exit of an activist investor (quicker than anyone on Wall Street had anticipated); and led a successful refinancing of our $1.4 billion senior secured credit facility – extending maturities and locking in historically low rates,” the nomination said. Mr. Witherow has been with Cedar Fair Entertainment for about 18 years and has seen the company grow from three properties with about $200 million in net revenue to 15 with more than $1 billion in annual net revenue. He has been part of the Paramount Parks acquisition, a sale of a standalone water park and multiple refinancings. When Mr. Ouimet joined Cedar Fair En-
OCTOBER 14 - 20, 2013
– Matt Ouimet CEO, Cedar Fair Entertainment Company, on Brian Witherow
tertainment about two-and-a-half years ago, he found Mr. Witherow to be a “highly effective partner.” It can be difficult for a new CEO to understand a company’s legacy, he said, and Mr. Witherow filled that role while still considering changes. When Mr. Ouimet was looking for a new CFO, both externally and internally, he said it was clear that Mr. Witherow was the best fit. The nomination highlighted Mr. Witherow’s “open door” management style and credited him for the lack of turnover during the company’s leadership changes.
“There are many nights where he is working later than most, because he took advantage of opportunities to either further develop his team or serve as a strategic thought partner to others. He listens to ideas presented by others, challenges those ideas and encourages others to participate in all aspects of the business,” the nomination said. “It is because of his leadership and ability to work with others, that the company did not see any additional turnover of employees after the exiting of its COO and CFO; retirement of a long-tenured CEO; and a
complete turnover of the company’s board of directors,” according to the nomination. “During this time of change, the company continued to produce record results.” A new initiative that Mr. Witherow has been involved in is the business planning and analysis department, which will assess the company’s opportunities to grow and set priorities for spending on new rides and attractions, Mr. Ouimet said. The department will work with the corporate marketing department to create a customer relationship management platform. “This new platform will allow us to gain a better understanding of our customers, ultimately providing them with a better guest experience and allowing us to become more dynamic in our pricing initiatives,” the nomination said. “These are concepts that have been utilized in other industries but are new to seasonal amusement parks,” it continued. “Brian’s understanding of all aspects of the business allows him to be a key participant in the development of these new concepts, resulting in increased guest visitation and in-park guest per capita spending.” — Rachel Abbey McCafferty
JIM WOJTILA Mar-Bal Inc. Chagrin Falls
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A Legacy of Innovation
Vitamix congratulates Loree Connors: leader, visionary, and 2013 CFO of the Year award finalist. To learn more about our high-performance blending products for home or business, visit vitamix.com. © 2013 Vita-Mix® Corporation
im Wojtila makes use of data of all kinds to help Mar-Bal Inc. reduce costs and improve employee performance. Mr. Wojtila joined the thermoset composite parts and compound maker about two years ago and immediately began addressing costs and introducing new ways to track both spending and earning. He started giving quarterly risk and opportunity reports to the executive committee, a program that did not exist before, said Scott Balogh, president and CEO of MarBal. The analysis compares forecasts and actual results, and it bridges that analysis to the previous quarter and the previous year. Mr. Balogh said it helps the company see where they are underperforming and forecast out each quarter. “His forecasting skills are outstanding,” Mr. Balogh said. Since starting at Mar-Bal, Mr. Wojtila has “overhauled” the capital budget process and helped streamline the company’s benefit offerings in its different factories, the nomination said. He has been part of geographic expansions, including the opening of a new sales office in China, and product line and asset acquisitions. The private company posted about $58 million in gross revenue in 2012. He also worked to organize a new tracking tool to help the company identify potential cost reductions in its projects and processes. The company expects these identified cost reductions to lead to more than $1 million in savings in 2013. Mr. Balogh said it can be hard to get a good sense of all the costs involved in large projects or new lines, situations Mar-Bal has recently experienced. The new tracking tool highlighted a lot of
areas for improvement where the company thought they were doing well. Mr. Wojtila also began and implemented a “Management by Objectives” program for employees. Overall goals are set by the company, Mr. Balogh said, but each individual identifies their own objectives with managers. The employees and managers get together and assess those every six to 10 weeks, he said. Overall, Mr. Wojtila is a good manager who is upbeat, supportive and focused, Mr. Balogh said. “People love working for him,” he said. Mr. Balogh said that Mr. Wojtila really understands the human resources component of the company, not just the financials. The nomination also highlighted the “organizational vision” he possesses, saying it is necessary for leading a growing business and called him both an “ideal team player” and a “great manager.” “Jim gives overwhelming support to his people,” the nomination said. “He has a unique ability to manage people and lead a team to achieve their highest potential. He will actively challenge his people and coach when required. As an accountant and CFO, he can juggle the analytics as well as the people effectively. When he started with Mar-Bal, it was clear that he understood how important “the people” truly are, and he works to bring out the best qualities in each of his reports, allowing them to be greater assets to the company.” Outside of work, Mr. Wojtila gives back to the community. He is active at his church, Holy Angels, and has plans to begin mentoring at John Carroll University, where he is an alumnus. “Jim excels in all things he pursues and his enthusiasm is contagious,” the nomination said. “He shows great empathy and compassion for those around him and strives to make a difference in the lives of others.” — Rachel Abbey McCafferty
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CFO OF THE YEAR
OCTOBER 14 - 20, 2013
JANE MARSH Premier Bank & Trust North Canton
W
hen Jane Marsh joined two other bank executives in 2010 in acquiring a controlling interest in a bank that was critically undercapitalized, under a consent order with its regulator and generally going through a “very dark time,” she had a lot of work to do and really embraced it, Rick L. Hull recalls. But then, Ms. Marsh had been here before. Having helped another bank turn around previously, she grasped the issues at hand, said Mr. Hull, president and CEO of the North Canton-based bank that now is Premier Bank & Trust but was Ohio Legacy Bank. “That gave her some credibility with the regulators,” Mr. Hull said. “She understood the gravity of the situation. “Jane is definitely someone who sees the big picture,” he added. “She does not get caught up in the minutia. She is not someone who panics in any fashion. She’s methodical in her approach to things.” Ms. Marsh, who has been Premier Bank & Trust’s senior vice president and chief financial officer for more than three years, played an integral role in the turnaround of the organization and the bank’s return to profitability, according to the nomination for her. She helped form the institution’s strategic plan and rewrote every accounting and investment policy, and after almost two years of “slogging through some deep mud,” the bank was free of the regulatory order, according to Mr. Hull. Since then, the bank has en-
joyed five consecutive profitable quarters, and this September compared with September 2012, the institution grew its net loans by 31%, Mr. Hull said. As of June 30 this year, it employed 61 full-time equivalent employees and counted $213.3 million in total assets. The finance division built by Ms. Marsh is innovative, and Ms. Marsh also built an enterprise risk management program that provides for bank-wide risk management. “She searches for innovation that results in revenue rather than just cost savings,” the nomination said. “The position of CFO is evolving within the banking industry to be much more strategy and reporting,” it also said. “It takes someone like Jane to evolve with the position.” Though her title reads chief financial officer, Ms. Marsh extends her reach into the marketing and product sides of the house, probing what Premier Bank & Trust can do to better reach its target market and helping to develop products that might help the bank retain clients whose assets, such as CDs and money market accounts, are maturing, Mr. Hull noted. “That’s really unusual,” he said. “I’ve worked with plenty of CFOs and they were not proactive in the least about that.” Ms. Marsh, the nomination said, is “part of the strategy rather than simply being part of the numbers. She is often the ‘catalyst for change’ in that she looks for ways to better the organization, not just within finance but in all areas of the bank.” Ms. Marsh is very involved outside of the bank — as a deacon for her church, First Presbyterian Church in Moundsville, W.Va., for which she helps manage the finances. She is treasurer, too, of the John Marshall High School band parents, helping to manage band funds as well as develop fundraising opportunities. — Michelle Park Lazette
Congratulations Frank Cardinale, Benjamin Rose Institute on Aging Mary McMillan, Cleveland Zoological Society Wade Steen, Cuyahoga County Government Jim Wojtila, Mar-Bal, Inc. and all the CFO of the Year Finalists
“Expect More”® 216.831.7171 www.cp-advisors.com
JULIE MCGRAW National Interstate Corp. Richfield
J
ulie McGraw’s domain is finance and accounting at the specialty insurer, but her fingerprints are on many aspects of National Interstate. She serves on a management executive board, has played a role negotiating a major acquisition and serves as a mentor to company employees within and outside her department. Of course, that is in addition to handling the myriad details of a public company’s finances in the post Sarbanes-Oxley environment. National Interstate has 550 employees, and its 2012 gross revenue was $430 million. David Michelson, National Interstate CEO, said in an interview, “I can go to sleep knowing that she has done all the right things for us as a public company. When she says, ‘This is what we ought to do. It’s the right thing.’ It’s hard to run a company, but when it comes to her doing the right things, I have no second thoughts.” That perspective is ratified from the outside because National
CRAIN’S CLEVELAND BUSINESS C-15
Interstate has been named the last four years to the Forbes magazine list of 100 most trustworthy companies in the small-cap category. Such a ranking is something Ms. McGraw worked to create. According to the nomination, she joined National Interstate in January 2006, “to right the ship.” That is because a material weakness in the company’s financial reporting controls was noted in 2005, the year it went public. She worked with the company’s audit committee and external and internal auditors and motivated her staff to organize and standardize its financial process. “Now it’s a well-oiled machine,” the nomination said, and the finance department has shortened reporting cycles to give critical information to the company’s leadership on a faster basis. She also negotiated in 2007 the company’s first revolving credit facility. In 2012, Ms. McGraw negotiated more favorable terms than were typically available in the marketplace as the company arranged a new $100 million senior unsecured five-year revolving credit facility, which increased its borrowing capacity, financial flexibility and provided additional funds for strategic purposes. While she has been overseeing the financial side of the house, National Interstate’s revenues have
grown 111% to $502 million in 2012 from $238 million in 2006, and it has generated consistent positive returns. National Interstate’s Mr. Michelson said Ms. McGraw was part of a group of executives who negotiated the company’s $120 million purchase of Vanliner Group from UniGroup Inc. of St. Louis that put National Interstate into the moving and storage insurance marketplace and broadened its role as a niche insurer. “She was there on the late nights and back at the office early the next day,” Mr. Michelson said, as the executives worked the deal and continued their regular jobs running the company. One of the financial terms of that deal allowed National Interstate to minimize its risk in the transaction, for the company obtained a 4½-year balance sheet guaranty. Moreover, Ms. McGraw also has a personal life besides her professional one, serving as the volunteer “official” photographer for her son’s football, basketball and baseball teams; and four years as the treasurer of Assumption Academy in Broadview Heights. Before joining National Interstate, Ms. McGraw worked for Strongsville-based HMI Industries Inc., North Olmsted-based Moen Inc. and PricewaterhouseCoopers in Cleveland. — Stan Bullard
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C-16 CRAIN’S CLEVELAND BUSINESS
CHERYL MCKENNA Community Foundation of Lorain County Elyria
T
he way Cheryl McKenna sees it, she’s “sandwiched between good.” As the chief financial officer for the Community Foundation of Lorain County, she likes being an intermediary of sorts between wellmeaning donors and the nonprofits the foundation supports. That’s why she hasn’t abandoned the nonprofit world for a cushier gig in the private sector, even if it means carrying a workload far heavier than her title suggests. In addition to her role as the foundation’s top number cruncher, she serves as its human resources director, facilities manager, investment officer and, as her nomination characterized it, “head cheerleader and backup for almost every position.” “Even when it’s crazy, I do it because of the great people at the foundation who always believe in what we do,” Ms. McKenna said in a recent interview. “This is not just about me. This is about everyone else around me.”
According to her nomination, Ms. McKenna offers help to anyone in the foundation’s office — no matter how much is on her plate. When finances were tight, Ms. McKenna voluntarily offered to forego a raise in order to give raises to the rest of the foundation’s employees. “She walks the talk and is the first to model the best of fiscal prudence and frugality in a public charity,” the nomination said. “She is always smiling, giving praise, celebrating accomplishments. She embodies the foundation’s values of integrity, excellence and community.” Every year in her decade-long tenure as the foundation’s CFO, the organization’s expenses have come under-budget and revenue has exceeded predictions, according to the nomination. Moreover, she orchestrated the purchase, expansion and renovation of a new office for the foundation — a move that is saving the foundation $10,000 annually in occupancy costs. Ms. McKenna’s hard work has earned her the trust and respect of the foundation’s staff. Her nomination noted that she tirelessly looks for opportunities to celebrate, congratulate and thank every employee. “As a nonprofit, we can’t always compensate as much as people might want or deserve, but Cheryl
CFO OF THE YEAR orchestrates a workplace that people want to be part of,” the nomination said. Ms. McKenna’s commitment to the community goes far beyond her work at the foundation. Prior to work at the foundation, she was one of the founding members of Cleveland’s 20/30 Club, a young professionals networking group. She’s involved in her church and several events around the community, though she never makes a big deal out of her volunteer work. She’s finishing her tenure on the board for the United Way of Greater Lorain County, although local United Way and community foundations often see each other as competitors vying for the same philanthropic dollars. Ms. McKenna felt her work with the United Way would help strengthen the bridge between the two organizations. She even volunteered to help manage a community initiative to coordinate health and wellness programming for under- and uninsured residents of Lorain County. “While clearly outside of her job description, Cheryl wanted the experience of facilitating a difficult community convening project,” the nomination said. “She undertook this year-long responsibility in addition to her other duties and gave the project her all as she does in her regular job.” — Timothy Magaw
OCTOBER 14 - 20, 2013
JUDGES ■ Jim Boland is chairman of the JobsOhio audit committee, previously having served with the Cavaliers Operating Co. as president and CEO and as vice chairman. A native of Cleveland, he had spent the previous 34 years with Ernst & Young, joining the company after two years as an officer in the U.S. Army. He became a partner in 1976 and served as a member of the firm’s management committee from 1988 to 1997. He also had operating responsibility as vice chairman and regional managing partner of Ernst & Young’s Central region from 1988 to 1996. ■ Yank Heisler is the retired chairman of KeyBank; retired CEO of McDonald Financial Group; and recently retired as the dean of the Kent State University College of Business Administration and Graduate School of Management. Mr. Heisler went into banking with the former Goodyear Bank in Akron. His 37-year career in banking culminated as chairman of KeyBank. His second career at Kent State included serving as special adviser to president Lester Lefton, interim CFO for the university and three years as the dean of Kent State’s business school. ■ Michael Gibbons is founder of Brown Gibbons Lang & Co. Mr. Gibbons provides an active senior role to client engagements and business development opportunities. Immediately prior to forming BGL, Mr. Gibbons most recently was president and CEO of Underwood, Neuhaus & Company, a regional securities and investment banking firm in Houston. He also was senior vice president and served on the operating management committee of McDonald & Co. Securities Inc. in Cleveland. ■ Katherine A. Asbeck joined The Cleveland Foundation as senior vice
Asbeck
Boland
Gibbons
Heisler
president and chief financial officer in April 2010. Ms. Asbeck has responsibility for the foundation’s $1.8 billion endowment Woods and its internal finance operations, information technology and human resources teams. She previously was senior vice president - finance at Corning Inc., in Corning, N.Y. Additionally, she worked at PricewaterhouseCoopers in Cincinnati for 10 years, progressing to senior manager; and at Champion International in Hamilton, Ohio. ■ Jacqueline F. Woods is the retired president of AT&T Ohio and a member of the board of directors at the Timken Co. Ms. Woods also served in finance, operations, marketing, sales and government affairs capacities before her retirement in 2000. In 1998, she was inducted into the Ohio Women’s Hall of Fame. ■
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CFO OF THE YEAR
OCTOBER 14 - 20, 2013
CRAIN’S CLEVELAND BUSINESS C-17
Who should we be watching in this area?
C
rain’s Cleveland Business in 2013 is continuing its series of “Who to Watch” sections. The next section, slated for publication Nov. 25, will highlight up-and-comers in Northeast Ohio’s sustainability efforts. If you think you know who will be among those leading Northeast Ohio’s green initiatives of the future, drop an email to sections editor Amy Ann Stoessel,
astoessel@crain.com, or call 216-771-5155. Send in suggestions no later than noon on Monday, Oct. 21. An event scheduled for 7 to 10 a.m. Dec. 11 at the Cleveland State University’s Student Center will help highlight those included in the section. For more information, go to www.CrainsCleveland.com/ WhotoWatch. ■
Nesco Resource is the largest national staffing firm headquartered in North East Ohio. Call today to see how we can help you improve your staffing experience. ARIANE ADAMIC PHOTOS
The Crain’s Cleveland Business CFO of the Year VIP event was held Sept. 10 at the Union Club.
CFOs are VIPs, too
C
rain’s Cleveland Business hosted a VIP reception for the CFO of the Year finalists on Sept. 10 at the Union Club. Award recipients will be announced at a gala on Oct. 22 at LaCentre Conference & Banquet Facility in Westlake.
Nesco has been awarded Inavero’s Best of Staffing for both Client and Talent for 2013. This is the second year in a row that Nesco has received this award and it is a testament to our quality driven processes.
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Success Depends on a Collaborative Approach
Jim Hopkins, CEO of CPI-HR in Solon, speaks at the Crain’s CFO of the Year VIP event on Sept. 10 at the Union Club.
Our attorneys collaborate with clients to develop creative and practical financial solutions.
200 Public Square / Suite 3500 / Cleveland, OH 44114 (216) 241-2838 / www.taftlaw.com CFO of the Year finalist Susan Carlson is shown with her husband, David.
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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
OCTOBER 14 - 20, 2013
LARGEST COLLEGES & UNIVERSITIES RANKED BY FALL 2013 FULL-TIME EQUIVALENT ENROLLMENT
Name of college or university Address Rank Phone/Website
Full-time equivalent enrollment
Student/ faculty ratio
Annual tuition Room & board
% of enrollment undergraduate graduate
Type of Operating budget institution (millions) Affiliation Year founded
Fall 2013
Fall 2012
% change
Endowment ($ millions)
1
Kent State University P.O. Box 5190, Kent 44242 (330) 672-3000/www.kent.edu
30,710
31,073
-1.2%
21:1
$9,816.0 $9,536.0
84.0% 16.0%
4 year public
$638.2 1910
94.6
Lester A. Lefton
2
University of Akron 302 Buchtel Common, Akron 44325 (330) 972-7111/www.uakron.edu
21,842
22,430
-2.6%
21:1
$10,056.0 $10,382.0
84.0% 16.0%
4 year public
$394.2 1870
199.1
Luis M. Proenza
3
Cleveland State University 2121 Euclid Ave., Cleveland 44115 (216) 687-2000/www.csuohio.edu
17,738
17,563
1.0%
17:1
$9,450.0 $11,858.0
70.0% 30.0%
4 year public
NA 1964
NA
4
Cuyahoga Community College 700 Carnegie Ave., Cleveland 44115 (800) 954-8742/www.tri-c.edu
16,279
17,687
-8.0%
17:1
$3,643.6 $0.0
100.0% 0.0%
2 year public
$356.3 1963
36.0
Alex Johnson
5
Youngstown State University One University Plaza, Youngstown 44555 (330) 941-3000/www.ysu.edu
10,819
11,171
-3.2%
18:1
$7,899.4 $8,675.0
91.0% 9.0%
4 year public
$177.2 1908
NA
Randy J. Dunn
6
Case Western Reserve University 10900 Euclid Ave., Cleveland 44106 (216) 368-2000/www.case.edu
9,622
9,259
3.9%
10:1
$41,420.0 $12,898.0
45.0% 55.0%
4 year private
$1,014.6 1826
1,693.8
7
Lorain County Community College 1005 N. Abbe Road, Elyria 44035 (800) 995-5222/www.lorainccc.edu
7,150
7,551
-5.3%
20:1
$2,977.0 NA
100.0% 0.0%
2 year public
$65.9 1963
23.6
8
Lakeland Community College 7700 Clocktower Drive, Kirtland 44094 (440) 525-7000/www.lakelandcc.edu
5,288
5,582
-5.3%
18:1
$3,217.0 NA
100.0% 0.0%
2 year public
$60.3 1967
NA
9
Ashland University 401 College Ave., Ashland 44805 (419) 289-4142/www.ashland.edu
4,302
4,381
-1.8%
12:1
$29,836.0 $9,502.0
54.0% 46.0%
4 year private
$128.3 1878
36.0
Frederick Finks
10
Stark State College 6200 Frank Ave. NW, Canton 44720 (330) 494-6170/www.starkstate.edu
4,066
4,447
-8.6%
23:1
$2,736.0 NA
100.0% 0.0%
2 year public
$70.1 1960
NA
Para M. Jones
11
John Carroll University 1 John Carroll Boulevard, University Heights 44118 (216) 397-1886/www.jcu.edu
3,635
3,265
11.3%
14:1
$33,330.0 $10,040.0
82.0% 18.0%
4 year private
$92.0 1886
181.0
Rev. Robert L. Niehoff, S.J.
12
Baldwin Wallace University 275 Eastland Road, Berea 44017 (440) 826-2900/www.bw.edu
3,616
3,719
-2.8%
15:1
$27,840.0 $7,740.0
85.0% 15.0%
4 year private
$117.0 1845
124.8
Robert C. Helmer
13
Oberlin College 101 N. Professor St., Oberlin 44074 (440) 775-8400/www.oberlin.edu
2,875
2,915
-1.4%
9:1
$46,250.0 $12,604.0
99.4% 99.6%
4 year private
NA 1833
710.3
Marvin Krislov
14
Walsh University 2020 E. Maple St. NW, North Canton 44720 (330) 490-7090/www.walsh.edu
2,666
2,620
1.8%
15:1
$24,610.0 $10,490.0
70.0% 30.0%
4 year private
$70.4 1960
12.2
Richard Jusseaume
15
University of Mount Union 1972 Clark Ave., Alliance 44601 (800) 992-6682/www.mountunion.edu
2,141
2,235
-4.2%
13:1
$27,380.0 $8,780.0
97.0% 3.0%
4 year private
$51.2 1846
138.4
Richard Giese
President
Ronald M. Berkman
Barbara R. Snyder
Roy A. Church
Morris W. Beverage
SOUND SOLUTIONS FOR HIGHER EDUCATION Contact Chris Anderson + canderson@maloneynovotny.com + 216.363.0100
16
The College of Wooster 1189 Beall Ave., Wooster 44691 (330) 263-2000/www.wooster.edu
2,087
2,051
1.8%
11.5:1
$41,300.0 $9,920.0
100.0% 0.0%
4 year private
NA 1866
247.0
Grant H. Cornwell
17
Malone University 2600 Cleveland Ave. NW, Canton 44709-3897 (330) 471-8100/www.malone.edu
1,880
2,143
-12.3%
13:1
$24,934.0 $8,656.0
79.0% 21.0%
4 year private
$36.6 1892
16.3
David A. King
18
Notre Dame College 4545 College Road, South Euclid 44121 (216) 381-1680/http://notredamecollege.edu
1,800
1,807
-0.4%
14:1
$25,694.0 $8,598.0
88.0% 12.0%
4 year private
$29.0 1922
7.0
Andrew P. Roth
19
Ohio Technical College 1324 E. 51st St., Cleveland 44103 (216) 881-1700/www.ohiotech.edu
1,441
1,478
-2.5%
13:1
NA NA
100.0% 0.0%
2 year private
NA 1969
NA
Marc Brenner
20
Bryant and Stratton College 3121 Euclid Ave., Cleveland 44114 (216) 771-1700/www.bryantstratton.edu
1,315
1,522
-13.6%
12.5:1
$16,530.0 NA
100.0% 0.0%
2 year private
NA 1854
NA
John Staschak
21
Hiram College P.O. Box 67, Hiram 44234 (330) 569-3211/www.hiram.edu
1,283
1,295
-0.9%
12:1
$29,065.0 $9,860.0
98.0% 2.0%
4 year private
$0.0 1850
0.0
Thomas V. Chema
22
Lake Erie College 391 W. Washington St., Painesville 44077 (440) 296-1856/www.lec.edu
1,089
1,202
-9.4%
16:1
$27,368.0 $8,586.0
84.0% 15.0%
4 year private
$19.5 1856
NA
Michael T. Victor
23
Northeast Ohio Medical University 4209 state Route 44, Rootstown 44272 (330) 325-2511/www.neomed.edu
832
791
5.2%
NA
$35,615.0 $10,910.0
0.0% 100.0%
4 year public
$46.0 1973
12.0
Jay Alan Gershen
24
The Ohio State University Agricultural Technical Institute 1328 Dover Road, Wooster 44691 (330) 287-1331/www.ati.osu.edu
599
611
-2.0%
16:1
$7,140.0 $6,640.0
100.0% 0.0%
2 year public
NA 1969
NA
James E. Kinder
25
The Cleveland Institute of Art 11141 East Blvd., Cleveland 44106 (216) 421-7000/www.cia.edu
568
546
4.0%
8:1
$34,270.0 $12,132.0
100.0% 0.0%
4 year private
$16.0 1882
25.6
Grafton J. Nunes
26
Remington College-Cleveland Campus 14445 Broadway Ave., Cleveland 44125 (216) 475-7520/www.remingtoncollege.edu
512
794
-35.5%
15:1
NA NA
NA NA
2 year private
NA 1986
NA
27
Cleveland Institute of Music 11021 East Blvd., Cleveland 44106 (216) 791-5000/www.cim.edu
460
460
0.0%
4:1
$42,250.0 $12,000.0
58.0% 42.0%
4 year private
$27.0 1920
37.4
Joel Smirnoff
28
Indiana Wesleyan University - Cleveland Campuses 4100 Rockside Road, Independence 44131 (216) 525-6160/http://cleveland.indwes.edu
300
400
-25.0%
10:1
NA NA
78.0% 22.0%
4 year private
NA 2002
NA
David Wright
29
DeVry University(1) 4141 Rockside Road, Suite 110, Seven Hills 44131-2537 (216) 328-8754/www.devry.edu
292
336
-13.1%
26:1
$16,076.0 $10,312.0
66.0% 34.0%
4 year private
NA 1931
NA
Joe Onorio
30
Virginia Marti College 11724 Detroit Ave., Lakewood 44107 (216) 221-8584/www.vmcad.edu
220
212
3.8%
12:1
$14,040.0 NA
100.0% 0.0%
2 year private
NA 1966
NA
Virginia Marti Veith
Source: 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) Enrollment numbers are for 2012 and 2011. DeVry's fall semester starts in late October.
Gary A. Azotea
RESEARCHED BY Deborah W. Hillyer
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OCTOBER 14 - 20, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
35
Zombies: Many firms continue to keep fundraising efforts low-key continued from PAGE 1
“If you’re an LP, you’re frustrated because you would like to get your money out, even if you’re going to lose part of it,” said Greg Gale, who co-chairs the private equity practice at the Squire Sanders law firm. “You’d like to be done with it and move on. But you can’t,” Mr. Gale said. “Unless there’s certain trigger events, you can’t force a fund to buy you out.” Private equity zombies usually don’t identify themselves as such. They tend to lurk instead. However, some private equity firms do come right out and say they aren’t investing, said Kevin Sargent, a director in the Cleveland office of investment banking firm Brown Gibbons Lang & Co. Others don’t respond at all when potential deals are sent their way. Regardless of how he finds out about them, Mr. Sargent said he believes the number of what he calls “dormant” firms is high — maybe even historically high. Preqin, a source of data and intelligence for the alternative assets business, estimates there are 432 private equity funds in the United States and about 1,200 worldwide that can be called zombies; the latter group is estimated to be sitting on $116 billion of assets. Preqin’s estimates include fund managers that have raised a fund since 2001, but have not raised a successor fund since 2006. Though Preqin couldn’t offer a historical comparison, many who work in private equity say the number of inactive funds is high and predict closures among them. In a recent example, Crain’s Chicago Business reported last month that CHS Capital LLC — founded as Code Hennessy & Simmons LLC and once one of the four leading private equity firms in Chicago — is calling it quits after it failed to raise money for a new fund. The firm’s generalist approach and “mediocre returns” were cited as reasons. Cleveland’s private equity firms won’t be immune to closures, said Jeffrey Kadlic, co-founder and managing partner of Evolution Capital Partners, a Beachwood private equity firm that last raised a fund in 2011. “I’m certainly not anxious for any of my peers out there to fold up their tent and go home, but it’s going to happen,” predicted Mr. Kadlic, whose firm specializes in second-stage entrepreneurial growth businesses. “The private equity model is under a tremendous amount of pressure.”
Blood supply cut off Capital is the lifeblood of private equity, and many firms that raised funds during the boom years of 2005, 2006 and 2007 now face the question: Can they raise a next fund? Howard Bobrow, a partner with Taft Stettinius & Hollister LLP in Cleveland, thinks the answer for some will be no. “I am seeing funds that … are the walking dead,” said Mr. Bobrow, who counsels private equity investors and the funds themselves. “For one or more reasons … they are unable to go out and raise their next fund. “I think their number will increase over the next couple of years,” he said. “Then I think there
“I’m certainly not anxious for any of my peers out there to fold up their tent and go home, but it’s going to happen.” – Jeffrey Kadlic, co-founder and managing partner, Evolution Capital Partners will be a new normal.” Underwhelming returns to investors are a big reason zombies are multiplying, Mr. Bobrow and others say. Because of stagnant economic conditions in North America and worldwide, “a lot of investments are taking much longer to ripen,” Mr. Bobrow said. Private equity firms struggle to exit investments in portfolio companies that don’t grow as expected, so their returns to investors suffer. Such unimpressive results make it hard to raise money for a next fund. But so-so performance is only one reason for the zombies’ spread. Key senior executives at some private equity firms are retiring, and it can be challenging for their firms to raise money without them. And fundraising in general is challenging because returns of these firms as a whole aren’t what they once were. Also, there are more private equity hands reaching for investors’ money. “The private equity industry, it’s much more competitive than it was 15 years ago,” said Tom Littman, senior managing partner for Kirtland Capital Partners, a private equity firm in Beachwood. “There are many more firms.” Kirtland last raised a fund in 2004. The firm does not comment publicly on its fundraising plans, though Mr. Littman said it still is investing the $165 million raised nine years ago — a longer investment period than typical due to the recession.
Welcome to ‘zombieland’ Contributing to the fundraising challenges are regulations imposed since the financial meltdown — specifically, the Volcker Rule of the Dodd–Frank Wall Street Reform and Consumer Protection Act — that prohibit banking entities from investing in private equity funds. Plus, some investors are cutting their ties with private equity firms — or general partners, as they also are called — of their own accord. “I hear from investors that there are GPs (general partners) that they are not going to back this goaround,” said Christine Croissant, managing director of fundraising and investor relations for The Riverside Co., this region’s most prolific private equity firm. “It’s a fact of life today,” Ms. Croissant said. “LPs (limited partners) are culling their managers.” “As long as there’s been private equity firms, there’ve probably been firms that didn’t perform well,” Ms. Croissant added. “But I think you saw probably a pretty large swelling of the zombie population as the outcome of the great financial crisis. “There was this generation of funds that were not successful on the fundraising trail (that) could be entering zombie status and living in zombieland now,” she said. “Others can’t put off fundraising anymore. They need the capital. If they can’t
raise it, it’s creating a whole new generation of zombies.”
Firms go ‘fundless’ Not all who appear inactive are among the walking dead. It’s hard to identify zombies, even if it has been long enough since a firm raised a fund that an outsider could presume it has invested every dollar. For one, even though private equity firms since Sept. 23 have been allowed by the Securities and Exchange Commission to advertise their fundraising efforts, many continue to keep such efforts private. Plus, there’s a growing trend toward going “fundless” — that is, raising money as needed deal by deal, rather than lining up pools of committed capital for future investment. “We’ve seen many private equity firms that have not raised a new fund transfer into a fundless scenario,” Brown Gibbons’ Mr. Sargent said. “They continue to actively seek transactions and instead of financing the equity portions of those transactions with their committed funds, they reach out to other pools of capital to complete the transaction.”
Motivated by “pending and recent legislation,” MCM Capital Partners in Beachwood has chosen to pursue acquisitions outside of a fund structure for now, Mark Mansour, senior managing partner, wrote in an email to Crain’s. The private equity firm’s purchase in late 2011 of Zinkan Enterprises Inc., a specialty water treatment business in Twinsburg, was financed by a group of investors, not an official MCM fund. MCM last raised a fund in 2004. Also doing a fundless deal in 2011 was Austin Capital Partners, a Cleveland private equity firm that last raised a fund in 2003. In partnership with company founders and a group of private investors, Austin Capital closed its acquisition of OmegaSea Inc., a premium fish food manufacturer, in March 2011. Going fundless affords his firm more flexibility when it invests, said Darrell Austin, general partner. The way traditional funds are structured, he explained, there’s an investment period of typically five years wherein the fund is expected to deploy capital. “The reality is, it does put pressure on the general partners to get the money out over the five years,
notwithstanding what the market conditions are,” Mr. Austin said. He cited how the years following the recession were a “very bad time to be putting money out into the market.” One business that has grown “dramatically” in recent years as more investors take action to exit their private equity investments is secondary funds that buy out investors’ stakes, said Bart Shirley, a partner in Cleveland with Richmond, Va.-based Private Advisors, which has four secondary funds. Mr. Shirley said he has seen a “fair amount of zombies out there,” but that doesn’t mean his firm isn’t biting. “If we suspect a firm is a zombie fund, it makes us more cautious,” Mr. Shirley said. “At the end of the day, as a secondary buyer, we are buying the assets. Just because something’s a zombie fund or a suspected zombie fund doesn’t mean it has no value anymore. It just means you have to assess the situation. What’s their commitment to a successful realization? Where are they spending their time? At the end of the day, is somebody going to be there, steering the ship until it gets to port?” ■
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Hospitals: Uncertainty surrounding health care reform looms large continued from PAGE 1
â&#x20AC;&#x153;Hospitals are scrambling to reorganize themselves very quickly,â&#x20AC;? said Meredith Bond, dean of Cleveland State Universityâ&#x20AC;&#x2122;s College of Sciences and Health Professions. She likened the shift to the challenge of turning a large ship. That said, itâ&#x20AC;&#x2122;s not all doom and gloom. Hospitals â&#x20AC;&#x201D; even ones cutting staff such as Summa and the Clinic â&#x20AC;&#x201D; stress theyâ&#x20AC;&#x2122;re on the prowl for qualified workers, although not as aggressively as in past years. In some cases, they say they canâ&#x20AC;&#x2122;t find the folks they need. In addition, educators and human resources professionals say health care is still a good place to find work. â&#x20AC;&#x153;If you want to live in Cleveland, then health care is the place to be,â&#x20AC;? said Judith Murphy, vice president of human resources at Southwest General Health Center in Middleburg Heights. â&#x20AC;&#x153;Things are a little rocky right now, but we know for sure this industry is going be here in one form or another forever.â&#x20AC;?
The belt tightening Northeast Ohioâ&#x20AC;&#x2122;s hospitals arenâ&#x20AC;&#x2122;t the only growing at a slower pace. Last year, hospitals nationwide added about 6,800 new jobs per
â&#x20AC;&#x153;Things are a little rocky right now, but we know for sure this industry is going to be here in one form or another forever.â&#x20AC;? â&#x20AC;&#x201C; Judith Murphy, vice president of human resources, Southwest General Health Center month, according to a recent report from Modern Healthcare, a sister publication of Crainâ&#x20AC;&#x2122;s Cleveland Business. So far this year, that number has fizzled to about 875 monthly. â&#x20AC;&#x153;Just because itâ&#x20AC;&#x2122;s happening across the country doesnâ&#x20AC;&#x2122;t make it any less painful for anyone involved,â&#x20AC;? said Jennifer Stewart, a managing director for The Advisory Board, a Washington, D.C.-based consultancy that tracks health care work force issues. â&#x20AC;&#x153;There are a lot of good institutions that are belt tightening,â&#x20AC;? Ms. Stewart said. â&#x20AC;&#x153;If you look at a hospitalâ&#x20AC;&#x2122;s cost structure, labor costs are a huge part of it.â&#x20AC;? Still, the sting of layoffs may be more pronounced in Northeast Ohio, given its reputation as a health care powerhouse. Eileen Sheil, a spokeswoman for
the Clinic, noted that health care was one of the few sectors, particularly in Northeast Ohio, that added staff throughout the recession. Even as the economy has improved and other industries have rebounded, Ms. Sheil said, hospitals have begun to slow their hiring because of the unknowns swirling around health reform. â&#x20AC;&#x153;There is still a lot of uncertainty about whatâ&#x20AC;&#x2122;s going to happen over the long term and how itâ&#x20AC;&#x2122;s all going to shake out at the end,â&#x20AC;? Ms. Sheil said. â&#x20AC;&#x153;Hospitals, especially the Cleveland Clinic, are looking to make our health care delivery system more efficient.â&#x20AC;? However, even the Clinicâ&#x20AC;&#x2122;s reductions represent only a slice of the systemâ&#x20AC;&#x2122;s considerable work force. According to Crainâ&#x20AC;&#x2122;s research, the Clinic employs 33,514 full-time-equivalent employees in a 15-county area in Northeast Ohio, making it by far the regionâ&#x20AC;&#x2122;s largest employer. By comparison, the regionâ&#x20AC;&#x2122;s second-largest employer, University Hospitals, reported 15,668 full-time equivalents. While layoffs by the Clinic and others no doubt have made headlines, they shouldnâ&#x20AC;&#x2122;t be viewed as a sign that the regionâ&#x20AC;&#x2122;s economy is
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headed for the pits, according to Ned Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State. As he sees it, the bigger threat to the local economy is the rapidly rising cost of health care â&#x20AC;&#x201D; something the Clinic, for one, said it is trying to slow with its staff reductions. â&#x20AC;&#x153;The best thing that can happen for the Northeast Ohio economy is to have slowdown in the cost of health care,â&#x20AC;? Dr. Hill said. â&#x20AC;&#x153;If you have a never-ending acceleration of health care costs, those who pay for it â&#x20AC;&#x201D; employers â&#x20AC;&#x201D; are going to be hurt.â&#x20AC;?
Hiring who? The MetroHealth System, which is subsidized by Cuyahoga County, has seen its finances ravaged in recent years. In late 2011, the health system laid off 104 employees and eliminated 151 vacation positions. Despite all that, MetroHealth hasnâ&#x20AC;&#x2122;t stopped hiring. However, hospital officials contend theyâ&#x20AC;&#x2122;ve been more targeted in whom they hire given their financial realities. â&#x20AC;&#x153;We never really stopped recruiting for those positions that have a direct impact on patient care,â&#x20AC;? said Cheryl VanHorn,a 25-year veteran of MetroHealth and its director of talent acquisition. University Hospitals, which hasnâ&#x20AC;&#x2122;t announced any layoffs, is on a
hiring tear. The health system has about a thousand job openings and is particularly in the hunt for experienced nurses. In the past, UH hired more nurses fresh out of college. However, the health system has preferred in recent years to hire nurses with at least two years of experience given the costs of training those right out of school. â&#x20AC;&#x153;It has become much more challenging because in health care we are all dealing with health care reform and having to cut expenses and do more with less,â&#x20AC;? said Kim Skelnick, UHâ&#x20AC;&#x2122;s vice president of recruitment and staffing. â&#x20AC;&#x153;Because of that, we have to figure out ways of having that nice balance of experienced nurses and new graduates.â&#x20AC;? Cleveland Stateâ&#x20AC;&#x2122;s Dr. Bond maintains health care is a viable career path, and students shouldnâ&#x20AC;&#x2122;t let the cutbacks at hospitals deflate their ambitions. Instead, she said they should be open to a variety of career paths related to health care. Not everyone has to be a doctor or a nurse. Also, health care experts say a pending wave of baby boomer retirements could loosen the vise on hiring. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s probably one of the best careers,â&#x20AC;? Dr. Bond said. â&#x20AC;&#x153;If anything, itâ&#x20AC;&#x2122;s even better now. You just need to think about health care careers in a different light.â&#x20AC;? â&#x2013;
STATEMENT OF OWNERSHIP MANAGEMENT AND CIRCULATION 1. Publication title: Crainâ&#x20AC;&#x2122;s Cleveland Business 2. Publication No.: 532-210 3. Filing Date: 9/27/13 4. Issue Frequency: Weekly, except combined issues on fourth & fifth week of December. 5. No. of Issues Published Annually: 51 6. Annual Subscription Price: $64.00 7. Complete Mailing Address of Known Office of Publication: Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland, Cuyahoga County, OH 44113-1230. Contact Person: Jim Cantley (313) 446-1615 8. Complete Mailing Address of Headquarters or General Business Office of Publisher: Crain Communications, Inc., 700 W. St. Clair, Suite 310, Cleveland, OH 44113-1230. 9. Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor: publisher: Brian Tucker, Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland OH 44113-1230; editor: Mark Dodosh, Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland OH 44113-1230; managing editor: Scott Suttell, Crain Communications Inc., 700 W. St. Clair, Suite 310, Cleveland OH 44113-1230 10. Owner (If the publication is owned by a corporation, give the name and address of the corporation immediately followed by the names and addresses of all stockholders owning or holding 1 percent or more of total amount of stock. If not owned by a corporation, give the names and addresses of the individual owners. If owned by a partnership or other unincorporated firm, give its name and address, as well as those of each individual owner. If the publication is published by a nonprofit organization, give its name and address.) Crain Communications Inc., 1155 Gratiot Avenue, Detroit, MI 48207-2997; K.E. Crain, 1155 Gratiot Avenue, Detroit, MI 48207-2997; R.E. Crain, 711 Third Avenue, New York, NY 10017-4036. 11. Known Bondholders, Mortgagees and other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages, or Other Securities: None. 12. Tax Status: (For completion by nonprofit organizations authorized to mail at nonprofit rates.) The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes: (Check One) â?&#x2018; Has Not Changed During Preceding 12 Months â?&#x2018; Has changed During Preceding 12 Months (Publisher must submit explanation of change with this statement) 13. Publication Title: Crainâ&#x20AC;&#x2122;s Cleveland Business 14. Issue Date for Circulation Data Below: September 30, 2013 15. Extent and Nature of Circulation No. Copies Average no. of copies of single issue each issue during published nearest preceding 12 months to filing date A. Total No. Copies (Net Press Run) 19,786 18,326 B. Paid Circulation (by mail and outside the mail) (1) Mailed Outside-County Mail Subscriptions Stated on PS Form 3541 (Include paid distribution above nominal rate, advertiserâ&#x20AC;&#x2122;s proof copies and exchange copies) 6,338 6,196 (2) Mailed In-County Paid Subscriptions stated on PS Form 3541 (Include paid distribution above nominal rate, advertiserâ&#x20AC;&#x2122;s proof copies and exchange copies) 11,378 10,836 (3) Paid distribution Outside the Mails including Sales through dealers and carriers, street vendors, counter sales, and other paid distribution outside USPS 75 77 (4) Paid distribution by other classes of mail through the USPS 0 0 C. Total Paid and/or Requested Circulation (Sum of 15B(1), (2), (3) and (4)) 17,791 17,109 D. Free or Nominal Rate Distribution (by mail and outside the mail) (1) Free or Nominal Rate Outside-County Copies included on PS form 3541 503 39 (2) Free or Nominal Rate In-County Copies included on PS form 3541 253 99 (3) Free or Nominal Rate Copies mailed at other classes through the USPS 0 0 (4) Free or Nominal Rate Distribution outside the mail (Carriers or other means) 239 101 E. Total Free or Nominal Rate Distribution (Sun of 15D (1), (2), (3) and (4)) 995 239 F. Total Distribution (Sum of 15C and 15E) 18,786 17,348 G. Copies not distributed 1000 978 H. Total (Sum of 15F and G) 19,786 18,326 I.Percent Paid and/or Requested Circulation (15C/15F x 100) 94.70% 98.62% 16. Publication of Statement of Ownership printed in the 10/14/13 issue of this publication. 17. I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties). Brian Tucker, Publisher 9-23-13
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Shutdown: As delay lingers, problems will increase continued from PAGE 3
That’s about 3,000 workers, split roughly evenly between NASA employees and its contractors. OAI, which receives federal money, also could be affected by the shutdown; Mr. Heil estimates he’ll only be able to keep about 20 of his 60 full-time staffers working beyond the end of October if it continues. Beyond NASA, Mr. Heil said defense contractors statewide are holding their breath to see if the shutdown continues. A couple weeks more probably won’t have a catastrophic effect, Mr. Heil said, but if it goes beyond that the pain could be severe.
Not a ‘non-event’ for all Some defense contractors already are reacting, while others say they are not yet seeing any effects. In Akron, for example, about 100 of Lockheed Martin’s 440 local employees were furloughed as of last Monday, Oct. 7, as the company sidelined about 3,000 workers nationwide due to the shutdown. Others have been more fortunate. In Cleveland, Voss Industries president Daniel Sedor said he’d seen no effects from the shutdown as of last Tuesday, Oct. 8. Voss produces a variety of specialized clamps and couplings that it sells to aerospace and defense contractors, as well as to other sectors. “We have seen absolutely no pushouts on current orders, and our incoming requirements show no shift either,” Mr. Sedor said. “It’s been a non-event thus far.” But if the shutdown continues long enough, the entire defense-related supply chain eventually will feel its effects, OAI’s Mr. Heil predicted. And so will other industries, executives say. Jeremy Flack, president of steel service center Flack Steel Ltd. in Cleveland, said government shutdowns and impasses make purchasing executives reluctant to make commitments. That applies to the weeks leading up to situations such as the shutdown, the fiscal cliff and sequestration, he said — and it takes time to gear back up after it’s all over. Flack Steel has seen its earnings and volume drop off after these
types of events, Mr. Flack said. Just two weeks into the government shutdown, Flack Steel’s order book is soft, he said. The third quarter had been getting better, but now the company is burning through its order backlog, and there aren’t a lot of new orders to replenish it. The company’s annual revenue is about $150 million. Dennis Meaney, business manager for the International Brotherhood of Electrical Workers Local 38, said about 60 of his union members already are out of work due to the shutdown. “It’s not a good situation right now,” Mr. Meaney said. Some of the affected union members had been working on the air traffic control tower at Cleveland Hopkins International Airport, a project that is on hold because the Federal Aviation Administration inspectors aren’t on site, he said. Others were working at NASA.
Banking on a restart Even businesses that only have a tangential relationship with the government are feeling at least frustrated with the shutdown. Those calling the U.S. Small Business Administration’s Cleveland district office in recent days have heard a brief voicemail that concluded: “Due to a lapse in appropriations that began on Oct. 1, 2013, the office is closed.” The closure’s impact is minimal at present, according to Craig Street, director of SBA lending for Columbus-based Huntington Bank. The “handful” of customers that are impacted are those that have completed the “closing laundry list” for an SBA loan and now must wait for the office to reopen in order to receive final SBA authorization, Mr. Street said. Both Huntington and KeyBank have continued to originate and underwrite loans, their executives say. “Every day that goes by is another day of waiting for businesses that are trying to obtain capital using these programs,” said John Moshier, senior vice president and national SBA manager for KeyBank. “This may deter people from even coming to the bank and trying to borrow. I hear from people: ‘Are you guys
shut down, too?’” The answer is no, but the bank is in a holding pattern as it relates to closing SBA loans, Mr. Moshier said. But, like OAI’s Mr. Heil, Mr. Moshier said if the shutdown continues, the problems will become worse. “You start getting into a month down the road, then the backlog really becomes bigger,” he said. “Maybe you have a business that goes without much-needed working capital. That can be a lot to a small business.” Huntington Bank actually accelerated obtaining authorization numbers in September, knowing the potential for a shutdown existed, Mr. Street said. “That’s how we tried to mitigate the potential impact,” he said.
Healthy, but concerned One important segment of Northeast Ohio’s economy that so far has gone unscathed is the health care sector. But that’s not to say those in the field are not concerned. Medicare and Medicaid payments have not been affected, but a prolonged standoff between congressional Republicans and the White House could hamper the development of medical break-
throughs. Philip Cola, vice president for research and technology at University Hospitals Case Medical Center, said an extended shutdown eventually could cut the flow of critical grant dollars for research efforts. “I really can’t tell you what the tipping point is and when we’re going to feel that for the first time,” Mr. Cola said. Oct. 1 was a critical grant deadline, and Mr. Cola is aware of many physician-scientists who haven’t received confirmations that their applications — many of which take a year or more to complete — were accepted. Mr. Cola stressed that it already takes a long time — decades even — for research to be translated into therapies that ultimately are commercialized for widespread use. “A shutdown like this is only going to make that worse,” Mr. Cola said. “The effects may not be in the first eight days or so of this, but a year from now, there could be some impacts.” ■ (Crain’s reporters Michelle Park Lazette, Timothy Magaw, Rachel Abbey McCafferty and Dan Shingler contributed to this article.)
Precision Polymers has a new home Portage Precision Polymers Inc. has opened a compounding plant and headquarters in Mogadore to move into the custom silicone mixing business. The custom rubber compounder’s new building gives the company 20 million pounds of custom silicone compounding capacity. The site also houses a research laboratory for silicone testing and development, president and CEO Doug Hartley said at the International Elastomer Conference and Exposition, held Oct. 7-10 at the I-X Center in Cleveland. The research operation is staffed with silicone technical specialists to provide silicone compound development and manufacturing for customers, Mr. Hartley said. Portage Precision Polymers “has enjoyed strong market share in the custom compounding extrusion market in the U.S. for more than a decade,” Mr. Hartley said. He said the company is leveraging that market position, “along with our vast compounding experience and R&D capabilities, to expand into the silicone elastomer custom mixing markets in North America.” — Mike McNulty, Rubber & Plastics News
Congratulations to all of our finalists! Sheryl King Benford, Amanda Kitzberger, GOJO Industries Greater Cleveland Regional Transit Authority Douglas Kordel, Proforma Kim F. Bixenstine, University Hospitals Scott Lewis, Meyers Roman Friedberg and Lewis Kevin M. Brokaw, Geis Companies Chris Mason, Clinical Research Management A. Steven Dever, Ganley Management Co. Duffield E. Milkie, Cedar Fair LP Matthew Donnelly, Cleveland Clinic John Charles Orlando Jr., Orlando Baking Company Steve Eisenberg, AssuraMed Geri Presti, Forest City Enterprises Inc. Elizabeth Evans, Republic Steel Emily Smayda Kelly, Visiting Nurse Association of Ohio Nadine Ezzie, Broadvox Frederick G. Stueber, Lincoln Electric Company Shannon Fogarty Jerse, Marilyn Tobocman, Saint Vincent Charity Hospital Office of Ohio Attorney General Mike DeWine Patricia A. Gaul, Playhouse Square Foundation Willis Walker, Kent State University Jennifer M. Griveas, Eliza Jennings John Warren, University Hospitals Health System, Inc. Matthew Heinle, Mercy Medical Center Ashlee Webster, Climax Metal Products Company
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Brews: Cleveland BeerWeek kicks off on Oct. 18 continued from PAGE 3
Boston Beer Co.â&#x20AC;&#x2122;s production plant in Cincinnati helps juice Ohioâ&#x20AC;&#x2122;s figures, though they also reflect a sizable gain among the number of craft breweries in Ohio, which since 1995 have surged to 86 today from 14. Eleven licenses are pending with the stateâ&#x20AC;&#x2122;s liquor board. Aside from Cincinnatiâ&#x20AC;&#x2122;s Sam Adams operation, Great Lakes Brewing Co. in Cleveland commands the stateâ&#x20AC;&#x2122;s craft beer production, at about 145,000 barrels. The concentration of craft breweries in Northeast Ohio â&#x20AC;&#x201D; which at 37 represent nearly half the stateâ&#x20AC;&#x2122;s market â&#x20AC;&#x201D; underscore the regionâ&#x20AC;&#x2122;s influence in the national specialty beer market, said John Najeway, vice president of Ohio Craft Brewers Association. â&#x20AC;&#x153;This isnâ&#x20AC;&#x2122;t an overnight success story; this is a decade in the mak-
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WHATâ&#x20AC;&#x2122;S ON TAP The U.S. craft beer industry â&#x20AC;&#x201D; composed of brewpubs, microbreweries, regional craft breweries and contract brewing companies â&#x20AC;&#x201D; has exploded since the late 1970s, from 89 craft breweries to an estimated 2,538 at present. About 2,400 breweries operated for some or all of 2012, the highest total since the 1880s, according to the Brewers Association. â&#x20AC;&#x201D; Kathy Ames Carr ing,â&#x20AC;? said Mr. Najeway, owner of Akron-based Thirsty Dog Brewing Co., a 17-year-old operation that is the regionâ&#x20AC;&#x2122;s second-largest brewery, with annual production of about 15,000 to 20,000 barrels. Some local industry observers and brewers have expressed concern about whether Ohioâ&#x20AC;&#x2122;s craft beer market is becoming oversaturated. Mr. Najeway dismisses that
Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com
perspective. â&#x20AC;&#x153;Restaurants continue to open, and some close, but few breweries close even as more come online,â&#x20AC;? he said. â&#x20AC;&#x153;People like selection, and thatâ&#x20AC;&#x2122;s what will keep quality, consistent craft brewers growing.â&#x20AC;?
Whatâ&#x20AC;&#x2122;s on tap Meanwhile, the Cleveland-Akron area craft beer market continues to flex its muscle as a destination for beer lovers, with the momentum surrounding this yearâ&#x20AC;&#x2122;s fifth annual Cleveland Beer Week as an example, said event director Christine Montague. Cleveland Beer Week, which runs Oct. 18-26, features 205 domestic and international craft producers that distribute their brew in Cuyahoga County. Itâ&#x20AC;&#x2122;s a participation level that is up from 185 last year. The annual celebration of craft beer includes 350-plus tastings,
dinners, educational programs and other activities at bars, restaurants and grocers in Cuyahoga County. A Sept. 27 Yahoo news story listed Cleveland Beer Week as one of the nationâ&#x20AC;&#x2122;s top 10 beer festivals. Its capstone event, Brewzilla, which is set for Oct. 26 at the Galleria at Erieview in downtown Cleveland, annually sells out with 2,000 patrons. This year, 80 local and international breweries will descend upon the beer- tasting extravaganza, with participation from Ohio breweries growing from about a dozen in 2009 to 22 this year. â&#x20AC;&#x153;Clevelandâ&#x20AC;&#x2122;s a very attractive market for craft brewers in terms of production and consumption,â&#x20AC;? Ms. Montague said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re often one of the very first roll-out locations for out-of-state brewers who are looking to expand their markets. We have a lot of influence in the industry.â&#x20AC;? â&#x2013;
REAL ESTATE AUCTIONS
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OCTOBER 14 - 20, 2013
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THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
OCTOBER 7 - 13
The Cash Mobs guy lands a new gig
tunity to do what I do naturally in my spare time, and focus on and get paid for it.” — Michelle Park Lazette
The big story: Hilton Worldwide was pegged
■ He has worked for a couple years spurring “cash mobs.” As of next week, Andrew Samtoy will be responsible for sparking conversations. Effective Monday, Oct. 21, Mr. Samtoy joins the Samtoy Civic Commons, which recently became a program of public broadcasting organization ideastream, as its host and producer. The position is new. Mr. Samtoy, who will wrap up his time as a litigation associate with the law firm Dworken & Bernstein Co. LPA this Friday, Oct. 18, is well known for co-founding Cash Mobs, a movement focused on bringing influxes of people to small, local businesses to drive revenue and awareness of the businesses. The Civic Commons is a Cleveland nonprofit geared toward fostering constructive dialogue around issues facing Northeast Ohio. Mr. Samtoy will be responsible for convening and facilitating civic conversations via multiple media and public meetings. Mr. Samtoy said his goal is to increase the number and quality of conversations in the community, using technology and face-toface interaction. The job with ideastream attracted Mr. Samtoy because of its community focus, he said. “My focus outside of the law has been on the community,” he said. “This is an oppor-
Cleveland’s bearded IT guru heads west
WHAT’S NEW
BEST OF THE BLOGS
as the potential gunnery crew to command the next big cannon — a roughly $260 million, publicly financed hotel — in Cuyahoga County’s drive to gain ground in the convention and medical meeting business. Cuyahoga County Executive Ed FitzGerald said the county selected Hilton as the strongest proposal from six offers by hotel operators to manage the planned, 600- to 650room hotel on the site of the Cuyahoga County Administration Building, 1219 Ontario St. The hotel is expected to open in 2016.
Market test: Federal regulators gave Neuros Medical Inc. permission to test its technology on 130 patients suffering from chronic amputation pain. The Willoughby company received an Investigational Device Exemption from the U.S. Food and Drug Administration that will allow it to implant those patients with its Altius System, which is designed to block nerves that cause chronic pain. If the study suggests the Altius System is safe and effective, it could help Neuros receive FDA permission to market the technology. Howdy, partner: Forest City Enterprises Inc. is forming a joint venture with Greenland Group Co., a mammoth Chinese construction and real estate company, for its Atlantic Yards project in Brooklyn, N.Y. The proposed joint venture between Greenland Group and the Forest City Ratner Cos. unit of Forest City Enterprises excludes the first housing tower in the 22-acre Atlantic Yards project and the completed Barclays Center arena. The agreement includes infrastructure required for the project, such as utility lines, as well as residential units. Zoom zoom: Sales of new cars and trucks in
Out of the bag: Hilex Poly, a South Carolina-based maker and recycler of plastic bags and films, will close a plant in Elyria and let 48 employees go. In a letter to the Ohio Department of Job and Family Services, Hilex Poly said it began laying off employees on Oct. 1. Employees would be placed on administrative leave and receive wages, benefits and holidays until Nov. 29. True to his school: John Carroll University alumnus Daniel J. Frate and his wife, Laura, donated $382,500 to the school’s Forever Carroll Campaign. Mr. Frate, a 1983 graduate of John Carroll, is an executive vice president at payment systems provider ACI Worldwide of Naples, Fla. … Productive Capital Management Inc. in Rocky River, which has provided investment management services to Ohio’s public sector since 1990, and Meeder Investment Management Inc. of Dublin, Ohio, an investment management firm that serves public and private sector clients, merged effective Oct. 1.
America Makes makes less of a mouthful ■ Youngstown’s National Additive Manufacturing Innovation Institute has undergone a rebranding to better market its purpose and to be more inclusive of everyone in
Excerpts from recent blog entries on CrainsCleveland.com.
northern Ohio rose 18.5% in September from the like month of 2012, according to the Greater Cleveland Automobile Dealers’ Association. For the year to date, sales of new cars and trucks in the region are up 10.6%, to 177,439, compared with 160,425 in the January-through-September period last year. Franchised new car and truck dealerships from the 21 counties served by the association reported sales of 20,341 vehicles last month, compared with 17,159 sold in September 2012.
Dual purpose: BioMotiv LLC of Shaker Heights and the Icahn School of Medicine at Mount Sinai in New York created a cancer drug development company called Dual Therapeutics. The spinoff will use intellectual property licensed from the medical school to develop treatments for prostate cancer, lung cancer and acute lymphoblastic leukemia.
■ The godfather of Northeast Ohio’s tech community is now part of another community entirely. Jim Cookinham has moved to the Denver area to be closer to his new granddaughter, Anabelle, and her parents (his son and daughter-in-law). Mr. Cookinham founded the Northeast Ohio Software Association and often is credited with help bring together members of the region’s information technology community. Even though he used to work on a nuclear submarine in Hawaii, the U.S. Naval Academy graduate said via email that working with local tech companies in Cleveland was “without a doubt … the most fun and rewarding” part of his career. Mr. Cookinham said it makes him proud to read about the progress those IT companies are making (for instance, the local software business is far bigger today than it was before the recession). And, if you know him, reach out next time you’re in the Denver area “so we can have a beer and talk about old times,” he said. — Chuck Soder
The missing Gate 13
COMPANY: Zinkan Enterprises, Cleveland PRODUCT: MineReady Zinkan, a manufacturing services firm that focuses on water-related markets, says MineReady was developed to mitigate silica and quartz dust in underground mines. The company’s patented dust-suppression chemicals have been used in underground mines worldwide since 1987. MineReady lets users to capture “ultra-small dust particles, additional dust and maintain mine readiness,” according to Zinkan. Federal regulators are finalizing revised safety regulations proposed by the Mine Safety and Health Administration to reduce miners’ exposure to coal dust. “Once the MSHA regulations are finalized, mining companies will need to make their mine sites ready to be compliant to ensure the limit on coal mine dust is met,” says Tim Drake, Zinkan’s vice president of marketing and product development. The company says MineReady “can provide a 30% cost savings over foam systems.” It can “easily be added to existing water spray systems, and it is formulated from FDAapproved safe materials to further ensure the safety of the miners while they work,” Zinkan says. For details, visit zinkan.com/MineReady.
■ They don’t make sense, but superstitions still have a hold on the U.S. travel industry, The Wall Street Journal said in an amusing piece from Scott McCartney, who writes the paper’s “The Middle Seat” column. “Travel is chock full of little superstitions, fluky talismans and fateful traditions, such as retiring the flight numbers of crashed planes,” he wrote. For instance, of 102 airlines tracked by SeatGuru.com, 25 around the world have no Row 13s on their planes. And Cleveland Hopkins International Airport is one of several airports without a Gate 13. A Hopkins spokeswoman told The Journal that she polled airport employees and could not determine how that came to be. “It’s all before any of us were probably born,” she said
Time will tell ■ Cleveland Clinic CEO Toby Cosgrove appeared in a short segment on Bloomberg Television’s “In the Loop” to discuss the rollout of the Obama administration’s health care reform law, and he has some early reservations. “We’re not going to understand how many people are going to get coverage until January, and we’re not going to understand what kind of coverage they have until January,” Dr. Cosgrove said in the interview. “It could well be that they pick the cheapest thing, which doesn’t give them very much coverage — only 60% of their health care bills.” Looking ahead, Dr. Cosgrove said, “I’m concerned that we’re going to see the total cost of health care across the country go up.
the 3-D printing business. The institute now is known as America Makes. The organization said in a news release that leadership thought the institute’s former acronym, NAMII, didn’t convey its intent or mission. The mission has not changed, the organization noted, but has been clarified. “With America Makes, the goal of the National Additive Manufacturing Innovation Institute is to broaden our voice to be more indicative and inclusive of all of the innovative people in our country — whether they are hobbyists or entrepreneurs or they work in industry, academia, and government,” director Ed Morris said in a news release. — Rachel Abbey McCafferty
Passing the hat for entrepreneurs ■ A tip of the hat to David Akers, Seth Briskin and Dick Clough. The three — a serial entrepreneur, a lawyer and a marketing consultant — have created the Fedora Network with over 25 friends and colleagues to encourage local folks to pursue their ideas for businesses and other community-based projects . They’ve started by tossing a small amount of money into the hat — $20,000 at the moment — to help those ideas get off the ground. They stand ready to provide startups with organization building and finding other resources. The program also includes a boot camp to expose civic and business entrepreneurs to ways to improve their skills and refine their ideas. Applications can be found at fedoranetwork.org. — Jay Miller
I think also the health care providers are not going to be as well reimbursed as they were, both from the prospect of the private insurers and Medicare.”
Room to improve ■ Oct. 4 was National Diversity Day in the United States, but as BusinessInsider.com pointed out, it wasn’t a big deal in Ohio. The site looked at census data for 1,900 U.S. cities to determine which have the most equal distribution of residents across four common ethnic groups: Hispanic/Latino, White, Black, and Asian/Pacific Islander. The more equal the percentages, the higher their diversity score. Ohio had no cities on the list of the 20 most diverse places, which was dominated by California. But it cornered the market on the least-diverse list, with seven of the 20 least-diverse cities in America. The Ohio cities on that list: Lancaster, No. 3 (96.3% white); Rocky River, No. 4 (95.9% white); Green, No. 8 (94.9% white); Mentor (94.8% white); Ashland, No. 13 (94.3% white); Brunswick, No. 17 (93.9% white); and Cuyahoga Falls, No. 19 (93.9% white).
He’s a fan ■ Things you might not have know before reading a New York Times Q&A with “Harry Potter” star Daniel Radcliffe: ■ He schedules his fall Sundays around watching NFL games. ■ He plays fantasy football, and he picked the Cleveland Browns as his fantasy defense in one league. ■ He is so taken with the Browns that he has named one of his fantasy teams “Barkevious Mingo’s Mum.” He told The Times, “I just think Barkevious Mingo is the greatest name I’ve ever heard, and the fact that his mum invented that name is also amazing.”
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