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STO sale could be next in TV’s wild west INSIDE: A look at how the value of local MLB television deals have skyrocketed in value recently. Page 19
Market for sports grows riper, and Dolans may be ready to deal By JAY MILLER jmiller@crain.com
The Dolan family may be close to selling all or part of its SportsTime Ohio cable channel to Fox Sports Media Group, as Fox builds its stable of regional sports networks and consolidates plans for a national
cable sports network to rival industry giant ESPN. A source familiar with the Cleveland sports cable market told Crain’s Cleveland Business the two organizations are in serious talks about a sale of STO. Rhode Island-based sports media reporter Ken Fang, who contributes to the online Sports
Media Journal and blogs at www .fangsbites.com, said he, too, is hearing that a deal is in the works. A sale could be a boon for the Dolan-owned Cleveland Indians baseball team. Not only would the Dolan family profit from the sale of the cable channel it built from the ground up beginning in 2006,
but the transaction could include a lucrative long-term deal for the Indians’ broadcast rights. Derek Baine, an analyst at SNL Kagan, a Monterey, Calif.-based media consultancy, estimated STO could be worth $350 million in a sale.
A long-term broadcast rights deal also could double the Indians’ television income, currently estimated at $30 million a year. Through a spokesperson, Fox Sports declined comment. It is not clear whether Fox Sports would consolidate operations of STO with its Fox Sports Ohio, which is based in Broadview Heights. It operates two channels in some markets. See STO Page 19
Ad buyers slowly see importance of daily PD wane Readers have rallied as assumed reduction in print schedule nears By JAY MILLER jmiller@crain.com
MARC GOLUB
Parker Aerospace’s Brandon Rollins fits a hose on a fuel nozzle used in an engine for the Boeing 787 Dreamliner.
AEROSPACE SUPPLIERS’ DREAMS COME TRUE 47
Area companies see robust activity from new Boeing plane’s popularity
By GINGER CHRIST gchrist@crain.com
W
hen it comes to Boeing Co.’s new 787 aircraft — the Dreamliner — manufacturers in Northeast Ohio are on board. Local manufacturers are responsible for parts ranging from engine fuel pumps to forgings on the plane. And, with 844 Dreamliners on order — and 38 already delivered — there’s a lot of work for companies in Northeast Ohio that help make those planes come together. Ohio doesn’t perform final assembly on the Dreamliner, which had its first U.S. flight in November. However, the state does provide Boeing with more suppliers for its commercial aircraft than any other in the country, with many of those
While editorial employees at The Plain Dealer are buoyed by the thousands of readers who have jumped on the bandwagon to save seven-day-a-week publication of Cleveland’s only general circulation newspaper, they should be concerned that one key segment of the community — advertisers and advertising agencies — are not enthusiastically on board. Though most of the ad business professionals contacted by Crain’s Cleveland Business personally would miss reading the PD over breakfast every morning, professionally they realize they don’t need a mass circulation print vehicle seven days a week to reach their key audiences. And that assessment, more than reader response, is what makes it increasingly likely that, sometime after Jan. 31 of next year, Advance Publications Inc., the privately held company that owns the daily paper, will trim up to four days from the PD’s weekly publishing schedule. See ADS Page 8
INSIDE MAC makes football progress But it’s expensive, making the prospect of Kent State keeping rising coach Darrell Hazell (right) a dicey proposition. PAGE 3 PLUS: ■ Timken Co. considers, but decides against, advice to sell off its steel business, but still could be forced to do so by a shareholder vote. PAGE 3
See DREAM Page 19
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PHILANTHROPY Especially at the holidays, companies struggle to decide to which nonprofits they’ll give ■ Page 13 PLUS: NONPROFITS WARM TO TECHNOLOGY ■ & MORE
Entire contents © 2012 by Crain Communications Inc. Vol. 33, No. 47
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CORRECTION In the Nov. 19, Forty Under 40 profile of Mary Marita, Margaret Wagner Apartments in Cleveland Heights should have been identified as housing for low-income seniors rather than as an assisted-living complex.
REGULAR FEATURES Big Issue ..................10 Classified ................21 Editorial ..................10 Going Places ............12 Letters ....................11 List: Largest office leases ..................18 What’s New ..............22
October 2012
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COMING NEXT WEEK Small business Some Northeast Ohio artists are making a business out of teaching others their crafts. We talk with a few to find out why they decided to get into the realm of education, whether those classes have benefited their businesses and whether interest is high in those offerings. Plus, our monthly Tax Tips column and more.
October 2012
DECEMBER 3 - 9, 2012
From 1979 to 2011, the earnings gap between women and men narrowed for most age groups — quite substantially in some cases, according to new federal data. For instance, the women’s-to-men’s earnings ratio among 25- to 34-yearolds hit more than 92% in 2011 from less than 68% in 1979, while the ratio for 45- to 54-year-olds increased to 76% from less than 57%. At each level of education, the U.S. Bureau of Labor Statistics notes, “women aged 25 years and older have fared better than men with respect to long-term earnings growth,” even though they still trail men in current earnings. A breakdown of the data: Women’s media weekly earnings as a percent of men’s, 1979-2011
Year
16 years 25-34 35-44 45-54 55-64 65-plus and older years years years years years
2011
82.2%
92.3%
78.5%
76.0%
75.1%
80.9%
2009
80.2
88.7
77.4
73.6
75.3
76.1
1999
76.5
81.5
71.7
70.0
67.9
78.7
1989
70.1
78.3
68.3
62.7
63.9
74.3
1979
62.3
67.5
58.3
56.8
60.6
77.6
October 2012
October 2012
September 2012
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Shareholders could overrule Timken’s desire to keep steel unit
INSIGHT
Activist: Firm is too diverse; analyst disagrees By DAN SHINGLER dshingler@crain.com
CHRIS SZAGOLA/CAL SPORT MEDIA
The man of the hour, Kent State football coach Darrell Hazell
KENT AS A CASE STUDY: CAN IT KEEP HAZELL? MAC’s ability to retain coaching talent may face another test ON THE FOOTBALL COACHING FIRING LINE
By JOEL HAMMOND jmhammond@crain.com
W
hen Kent State University athletic director Joel Nielsen was hired to replace the veteran Laing Kennedy in March 2010, the former made no bones about where he saw opportunities for the school’s athletic department: on the football field. Mr. Nielsen said a successful football team influences not only the department’s bottom line, but also “develops life and spirit on campus in the fall.” And Kent has accomplished that goal: After hiring Ohio State University assistant Darrell Hazell in December 2010, the Flashes have turned a once-dormant program into the nation’s darling, with — depending on last Friday night’s MidAmerican Conference championship game See HAZELL Page 9
A look at major-conference programs with football coach openings and that could be interested in Kent State coach Darrell Hazell, who is paid $300,000: Arkansas: fired John L. Smith on Nov. 24; he was paid $850,000 Auburn: fired Gene Chizik on Nov. 25; his salary of $3.5 million topped this group Boston College: fired Frank Spaziani, who made $1.09 million, on Nov. 25 Colorado: fired Jon Embree on Nov. 25; Mr. Embree was paid $725,000 Kentucky: dismissed Joker Phillips, who made $1.7 million, on Nov. 4 North Carolina State: fired Tom O’Brien on Nov. 25; NC State paid him $936,225 Purdue: fired Danny Hope on Nov. 25; he made $970,000 Tennessee: Derek Dooley, who was paid $2 million, was fired on Nov. 18
Canton-based Timken Co. has chosen to keep its bearings, and its steel, too. Whether it can continue to do so will be up to its shareholders. The company says it already has considered the request of an activist shareholder that it split itself in two by spinning off its steel business and remaining as a stand-alone bearings and industrial equipment company. Timken says it has decided against the move, but shareholders
likely will decide the matter next year in a contentious vote. Timken might prevail, though — and perhaps it should, says at least one prominent securities analyst. “I’m not particularly convinced that (split-up) would be the best move for Timken,” said Eli Lustgarten, senior research analyst with Longbow Research in Independence. “I’m not sure much will happen out of this current proposal.” Timken is in the sights of hedge fund manager Ralph Whitworth. The Californian owns or controls See TIMKEN Page 20
THE WEEK IN QUOTES “There is a rush to lock up sports rights for the long term. … It shows a level of almost panic that (a network fears it) will be stuck without a team.”
“Retailers are absolutely dying to get into outlet centers. Their strategy is to have a bricksand-mortar location in a mall, to sell over the Internet and to be in an outlet center.”
— Derek Baine, an analyst at SNL Kagan, a Monterey, Calif.-based media consultancy. Page One
— Richard Moore, a Solon-based realty expert at RBC Capital Markets. Page 6
“I don’t believe you can arbitrarily give to any organization that asks. You make the most impact with the ones you are passionate about.”
“If we don’t impact the educational attainment of kids in our urban environments, they don’t have a chance.”
— Marlene Herman, owner and president of Aamco Transmission & Total Car Care in Cleveland and Cleveland Heights. Page 13
— Rich Frank, CEO, Guidestone. Page 17
Good bacteria good to Ganeden as licensing revenues mount Mayfield Heights tech firm opens new lab to accommodate ‘lots and lots’ of products ready for market By CHUCK SODER csoder@crain.com
Like a hearty strain of bacteria in a huge Petri dish, Ganeden Biotech Inc.’s revenue rapidly is replicating. Every year since 2008, the Mayfield Heights company has roughly doubled the amount of revenue it brings in by licensing out “good bacteria” used as an additive in food and other products. Ganeden is taking steps to help that growth continue: Each month
through the end of this coming summer, the company’s customers are scheduled to launch two to three products that use its patented probiotic bacteria. By the end of 2013, Ganeden’s bacteria should be in more than 100 products, up from about 60 today, said Michael Bush, vice president of business development for Ganeden. The increase in licensing business is one reason Ganeden last month opened a microbiology laboratory at its headquarters on Landerbrook
Drive, Mr. Bush said. The scientist who ran the company’s former lab in Miami since has moved to Northeast Ohio. “We have lots and lots and lots of products ready to hit the market,” he said. Today, most of Ganeden’s revenue comes from food products that contain GanedenBC30, a bacteria strain designed to boost the immune system and to promote proper digestion by fighting unfriendly bacteria in the gastrointestinal
tract. The strain forms a spore that protects the bacteria until it arrives in the small intestine, where it begins replicating. Ganeden doesn’t limit itself to food products. It just sold to a livestock feed company the exclusive right to sell its Ganpro brand of bacteria in feed for cattle, swine and poultry, and two cosmetics companies have agreed to license a new anti-aging product called Bonicel. However, food is driving most of
Lefkowitz
Bush
the new growth. “We’re probably talking to literally every major food and beverage company in the United States,” president and CEO Andrew Lefkowitz said. See GANEDEN Page 20
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The lobby area of Britton Gallagher’s new One Cleveland Center offices
Britton Gallagher quickly outgrows new space at One Cleveland Center Insurance broker will lease another 6,000 square feet after adding 18 to staff By MICHELLE PARK mpark@crain.com
Six months after Britton Gallagher moved into its new digs in downtown Cleveland, it has outgrown the space. Now, the insurance brokerage is preparing to exercise the rights under its lease at One Cleveland Center to add and build out roughly 6,000 more square feet on the building’s top floor. The reason: Since early June, when the firm moved its offices to Cleve-
We are proud to congratulate our Partner, Rich Plewacki, on his appointment to the Board of Directors on the American Transport Research Institute’s (ATRI) Research Advisory Committee. ATRI, a well-known leader in transportation-related research, is the engine that drives trucking industry policy. Rich Plewacki, Partner (216) 363-4159 | rplewacki@beneschlaw.com Mr. Plewacki has been involved with the transportation and logistics industry, both as a businessman and an attorney for 40 years. His practice focuses on advising and defending motor carriers, leasing companies, third party logistics providers, and large private fleets.
land from Solon, it has added 18 people, said Wendy Kertesz, director of marketing. Those additions bring the firm’s total employees to 75, and leave not even an extra cubicle for the insurance representatives who at various times spend a day or two at Britton Gallagher, said Lee M. Stacey, CEO and president. In retrospect, he noted, it would have behooved the firm to build out all the space at once, not just its 20,000 square feet on the 30th floor. Mr. Stacey said he didn’t have an estimate last week for what build-out and furnishing of part of the 31st floor will cost. “We’ve had some opportunities that presented themselves in 2012 that we took advantage of, and it increased our requirements for office space faster than we anticipated,” Mr. Stacey said. “The kind of growth that we’re experiencing is a good problem to have.” Britton Gallagher since June has closed on two acquisitions and may close on a third before the year is over — an unparalleled pace for the firm, according to Mr. Stacey, who became its top executive in September 2011. It added three employees in acquiring Beckman Insurance Agency of Milwaukee, and it added Rob Previte, too, when it acquired Mr. Previte’s voluntary benefits brokerage, All Pro Benefits LLC, which was based in Solon. But it isn’t just acquisitions driving Britton Gallagher’s need for square footage. The firm also created 14 positions, including five to form a division that focuses on providing insurance to professional athletes and entertainers and five corporate positions as well, Ms. Kertesz said. It’s shaping up as a big 2012. First, a move that cost more than $2 million and now the need for more space, plus revenues that are projected to increase more than 9% year over year to $12 million from $11 million, Mr. Stacey said. Considering that the insurance industry has endured recent years where growth of 1% or 2% was considered “a triumph,” Mr. Stacey said, company officials are “thrilled”
with this year’s revenue growth. “This is a nice pace of growth for us,” he said.
Business gets a bounce Mr. Stacey said he couldn’t disclose much about the acquisition deal currently under negotiation, but noted Britton Gallagher has sought and will continue to seek acquisitions of other brokers. The addition last June of Beckman Insurance Agency, which specialized in insuring family entertainment centers — you know, the places with go-karts, driving ranges and batting cages — complemented Britton Gallagher’s Amusement Insurance Resources division, which he said is known as the “800-pound gorilla” in the insurance of inflatables, or bouncy houses. And last month’s completion of the deal for All Pro Benefits adds to the offerings of Britton Gallagher voluntary benefits, which include long- and short-term disability insurance that often is paid for in full or in part by employees, not employers. Mr. Stacey said he expects demand for such benefits to grow as the cost associated with health care reform leads more employers to seek to deliver value to their employees at little or no cost to the employer. Mergers and acquisitions among insurance agencies and brokerages in the United States totaled 351 in 2011, up 44% from 243 in 2010 and nearly double the 176 mergers in 2009, according to a study by Conning Research & Consulting, which provides insurance industry research. Year-to-date numbers for 2012 are not available, a firm director said. Britton Gallagher’s Mr. Stacey said he has seen a renewed interest in the marketplace for M&A discussions, largely because valuations have improved with the economy and because of the expectation that capital gains taxes will change dramatically in the new year. Asked if Britton Gallagher would continue to be acquisitive, Mr. Stacey replied, “Yes, we’ve got an appetite for this. We’ve found this is a very effective use of our capital.” ■
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Calif. outlet expert targets stalled Garfield Heights site Massive Bridgeview Crossing complex first must be untangled from multiple lawsuits By STAN BULLARD sbullard@crain.com
A new plan is afoot for an outlet shopping center on the huge Garfield Heights site of the stalled Bridgeview Crossing retail project. Craig Realty Group, the firm of nationally known outlet center pioneer Steven Craig, lists a proposal for what it calls the “Outlets at Cleveland” on its website, www.craig realty.com. The Newport Beach, Calif.-based developer even refers to the project in passing in news releases on other topics. A Craig Realty brochure on the website states that the proposed project would add brand-name stores and those “the current market is missing,” all within “a few minutes drive from affluent suburbs.” The brochure gives no clue to the potential center’s size but touts that 150,000 cars daily pass the site at the I-480 and Transportation Boulevard interchange. However, an outlet center there likely would be sub-
stantial. City-approved plans for Bridgeview proposed an 800,000square-foot center on the 90-acre site before prospective tenants pulled out, contractors exited the job and litigation engulfed the project in 2009. Reached by phone last Monday, Nov. 26, after failing to return two previous calls, Mr. Craig said he had to catch a plane and could not take time to discuss the project then or later in the week. He also did not return a subsequent email. Craig Realty owns 11 outlet centers across the nation and has seven more in the development stage, including “Outlets at Cleveland.” Mr. Craig is in position to gain control of the site as he leads an investor group called “Garfield Hope Acquisition LLC” that in February 2011 acquired Huntington Bank’s loan for the project. At that time, Mr. Craig downplayed prospects for an outlet center, telling Crain’s Cleveland Business that he frequently invested in discounted distressed mortgages in hopes of
The stalled Bridgeview Crossing development in Garfield Heights, as seen in 2009. A developer wants to turn the site into an outlet center. FILE PHOTO/ STAN BULLARD
reselling them at a profit. If nothing else, Mr. Craig in early 2011 said he would have to sit on the site awhile until its long-term value is realized. Since then, though, outlet shopping center proposals have sprung up across the nation at a frenetic pace thanks to retailer demand. Richard Moore, a Solon-based realty expert at RBC Capital Markets, said developers are proposing multiple potential outlet centers in
Charlotte, Phoenix and St. Louis, and three proposals in Houston recently dwindled to one. “Retailers are absolutely dying to get into outlet centers,” Mr. Moore said in a Nov. 28 interview. “Their strategy is to have a bricks-andmortar location in a mall, to sell over the Internet and to be in an outlet center. Demand for space is high.” In the weak economy, discount-oriented shopping has gained favor, particularly at outlet centers, he said. Garfield Heights Mayor Vincent Collova described resolution of the pending litigation as “close but not finalized,” but he hopes that happens in the next few months. The mayor said steps to restarting construction on the site, where work began in 2006, are under way as Mr. Craig and his lawyers try to untangle multiple lawsuits over the project. He noted principals of Garfield Heights-based SniderCannata Interests, who spent years preparing the Bridgeview Crossing project, still own the site although their ownership is contested in the Cuyahoga County Court of Common Pleas.
Getting past the past
METROHEALTH
The court-appointed receiver for Bridgeview, David Browning, said Mr. Craig’s lawyers and others are trying to resolve multiple issues to aid Craig Realty’s efforts to gain control of the land and to move forward. A $9 million lawsuit by Panzica Construction Co. of Mayfield
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Village to foreclose on Bridgeview in October 2009 for disputed construction bills also is pending, according to Mr. Browning and court records. “I don’t know what the future holds, but I believe strongly that is a good location,” said Mr. Browning, managing director of the Cleveland office of brokerage CBRE Group. “It has tremendous regional accessibility. Ultimately, there are a lot of tenants who would love to be there, but whether its best use is as an outlet center I don’t know.” For his part, Mayor Collova said he is excited about an outlet center concept as opposed to a typical bigbox shopping center. “It’s something different that would draw more shoppers to the area,” the mayor said. He said his staff plans soon to have a conference call with Mr. Craig to discuss potential financing issues and infrastructure improvements, such as realigning roads to the adjoining interchange. RBC’s Mr. Moore said he thinks Northeast Ohio could support another outlet center because of the size of the region. He said a highquality operation could work there due to the site’s proximity to nearby affluent suburbs, and distance to existing area outlet centers. The Garfield Heights site is 31 miles from Aurora Farms Premium Outlets in Aurora and 45 miles from the Lodi Station Outlets in Burbank, Ohio, according to Craig Realty’s brochure. ■
CBiz Inc. has auditing, and ON THE WEB Story from signed a definitive www.CrainsCleveland.com. audits of agreement to acquire Medicare for an undisclosed price the nonAdvantage and prescription drug attest assets of PHBV Partners program. With regional offices in LLP, which is the government health Richmond, Va.; Baltimore, Md.; care practice of CliftonLarsonAllen. Indianapolis, Ind.; Austin, Texas; Concurrent with this deal, Myers Cranford, N.J.; and Raleigh, N.C., and Stauffer LC announced it has PHBV is expected to add approxisigned a definitive agreement to mately 185 employees to CBiz. acquire the attest business of PHBV CBiz said the transaction is Partners. CBiz maintains an adminexpected to add about $30 million istrative service agreement with to its revenue and about four to five Myers and Stauffer. The two cents to its diluted earnings per companies are separate and indeshare in 2013. pendent legal entities that have In commenting on the deal, CBiz worked together since 1998 to chairman and CEO Steven L. Gerard serve clients’ business needs. said in a statement, “Very rarely do PHBV is a professional consulting you get an opportunity to merge and accounting service provider two world-class operations such as specializing in health care compliCBiz and PHBV Partners. We will ance on behalf of federal and state be able to expand our knowledge, government agencies. PHBV speresources and services in order to cializes in Medicare and Medicaid provide superior products and contract compliance, investigative services to our clients.” services, performance The deal should close by Dec. 31.
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By KEVIN OLSEN Pensions & Investments
The U.S. pension system is expected to become harder to keep adequately funded as the “workingage” population is expected to decline by 2020, according to a report from benefits consulting giant Mercer. The U.S. working-age population, defined in the report as ages 15-64, is expected to decrease to 64% by 2020 from 66% this year. It was at 67% in 2007. “It’s the proverbial pig going through the python,” said Arthur Noonan, senior partner in Mercer’s retirement business, about more money being paid out than going into pension funds. Mr. Noonan said plans are getting more expensive for a number of reasons, including an aging work
force, an increase in retirees, more people retiring early and longer life expectancy. The only ways for corporate plans to respond is through financial management of the pension fund and strategic management of the work force. Pension funds need to have a step-by-step derisking strategy, something that was lacking in the 1990s when pension funds were overfunded, Mr. Noonan said. Lump-sum offers also can help companies as they will reduce the size of their pension plans. In work force management, companies adequately must convey how they value long-tenured employees because plan participants retiring early or working too long could make the plan more expensive. As for reform of public pension
funds, Mr. Noonan said, “My sense is (legislators) are not willing to take it on in full at this point. Unless you do something dramatic, you’re not going to close that gap.” China, the United Kingdom and most of Europe also are expected to see two-percentage-point declines in the working-age population by 2020. Canada, Japan and Russia are projected to have a four-percentage-point decline, and Hong Kong will drop six percentage points. Brazil, India, Indonesia, Malaysia and Mexico are expected to see a twopercentage-point bump in 2020, while Pakistan is projected for a three-percentage-point increase. ■ Kevin Olsen is a reporter with Pensions & Investments, a sister publication of Crain’s Cleveland Business.
Ads: Funeral homes could suffer most continued from PAGE 1
Mark Bachmann, a partner at the Marcus Thomas LLC ad agency who heads its media planning and buying unit and admits to reading several newspapers daily, said he didn’t think a reduction in the number of days a week The Plain Dealer publishes directly would alter any clients’ ad buying plans. “I think the only way it would is if it would reduce the number of subscribers; then I’m losing audience,” Mr. Bachmann said. “But, otherwise, I’m not usually running five- or seven-day-a-week programs. It’s generally only couple-day-a-week programs, so, theoretically, (advertisers) wouldn’t be impacted by how many times a week the paper comes out.” Among Marcus Thomas’ clients are GE Lighting, the Ohio Lottery and Shearer’s Foods, which makes and sells potato chips and other snack foods. Bernie Moreno, president of Collection Auto Group, which has six auto dealerships in Northeast Ohio, said he didn’t anticipate much impact from a curtailment of distribution, because he only advertises in The Plain Dealer one day a week, on Saturdays. But he changed his tune a bit when told that Saturday might be one of the days the paper would not publish. “Yikes, that’s not good,” Mr. Moreno said. “We’d have to re-evaluate our whole strategy at that point.” However, once he absorbed the possibility of losing Saturday distribution of his ads, Mr. Moreno said the greater issue ultimately would be whether the newspaper can maintain its audience. Last month, Local 1 of The Newspaper Guild, which represents newsroom employees at The Plain Dealer, started a media blitz to get readers to express concern about the likelihood the newspaper will cut its publication schedule and will layoff of a large number of reporters and other editorial employees in the process. As of press time last Friday, Nov. 30, more than 5,600 people had signed the “Save The Plain Dealer” petition at www.change.org/ petitions/save-the-plain-dealer. The union has bought billboards, bus advertising and other media to promote its campaign, which can be
found at www.facebook.com/Save ThePlainDealer.
Staff cuts in the offing Harlan Spector, a Plain Dealer reporter and chairman of Local 1, said last Thursday, Nov. 29, that at a recent meeting with the paper’s managers he was told layoffs are likely after Jan. 31, when a contractual side agreement freezing the newsroom’s staff size expires. “The company made it clear there would be staff cuts,” he said. “After Jan. 31 the company has the right to decide the size and composition of the work force.” The likelihood of layoffs, to Mr. Spector and others, suggests a cutback from publishing seven days a week is imminent. Plain Dealer publisher Terry Egger and editor Debra Adams Simmons in a Page One letter to readers on Nov. 18 acknowledged that the loss of advertising to online media and other competitors “requires a significant reset of our business.” Asked last Thursday specifically about the potential response of advertisers to a change in The Plain Dealer’s print schedule, Andrea Hogben, the newspaper’s senior vice president for sales and marketing, said in an email, “It should be clear that we have not announced a reduction in the publication schedule. We’re still assessing the local model, and it’s premature to speculate on what changes may lie ahead.” However, Ms. Hogben added that the newspaper is talking to advertisers about how their needs will be met in the future. “Ultimately, our goal is to continue to develop more solutions to help our partners connect to their customers in new and innovative ways,” Ms. Hogben said. “We are deeply committed to our advertisers and will work closely with them as their businesses, as well as ours, evolve.”
Precedent-setters Advance Publications, which has owned the Plain Dealer since 1967, is committed to what the industry calls a “digital first” future, believing the future of daily news is online. In 2009, it ceased publishing as the Ann Arbor (Mich.) News and announced that the online AnnArbor.com would be the community’s “newspaper.” It actually still publishes twice a week, but under the banner
of “AnnArbor.com.” More recently, in October, Advance cut distribution of the TimesPicayune of New Orleans and three of its newspapers in Alabama to three days a week — Wednesday, Friday and Sunday. At the time, Steve Newhouse, president of Advance.net, and a descendent of Advance founder S.I. Newhouse, said changes in the industry, particularly the decline of print advertising, made it financially impossible to produce a seven-day-a-week newspaper in those cities. Last August, Advance announced similar strategies in Syracuse, N.Y., and Harrisburg, Pa. Since then, industry watchers have expected the company to make similar decisions about its other newspapers in its group of more than 25 dailies, which also includes the Star-Ledger in Newark, N.J., and The Oregonian in Portland, Ore. The Plain Dealer had a weekday circulation of 246,571 as of last March 31, according to the Audit Bureau of Circulations. If the newspaper cuts back from seven-day circulation, it would make Cleveland the largest city in the United States without a daily newspaper.
Mourning a potential loss One large group of advertisers that likely would suffer from the cutbacks would be funeral directors, which collectively may be the largest seven-day-a-week advertisers in The Plain Dealer. Because of the nature of their advertising and the generally older, less computer-literate audience for their death notices announcing dates and locations of funerals, they could have a hard time adjusting. James Busch, president of Busch Funeral and Crematory Services, which operates six funeral homes in the region, said he has begun preparing for the possibility of a Plain Dealer distribution cutback by talking to funeral directors in communities such as New Orleans and Ann Arbor. Mr. Busch anticipates some funerals may not be scheduled until after a death notice can appear, but that some people still will miss opportunities to pay their respects. “If someone doesn’t have the new technology in their living room, they’re still relying on the daily newspaper,” he said. ■
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After strategy, culture shakeups, Broadvox dials in to growth By CHUCK SODER csoder@crain.com
board, the company has overhauled its management team and replaced about 40% of its 260 employees. Many left on their own, but some were forced out. Co-founder Eugene Blumin, who is Broadvox’s chief operating officer, estimated that five people were replaced in Cleveland, though some left by choice. Mr. Chatterley said Broadvox needed to shake things up, especially at its Atlanta office. Broadvox acquired the office with the purchase of Cypress Communications in January 2011. That company, which focused on selling data and phone service in buildings with multiple tenants, had long suffered from “a lack of investment,� he said. “The asset was a little bit fallow, and the culture was a little bit
negative,� he said. Broadvox’s management team looks different, too: Mr. Chatterley has hired new people to fill six roles on that team. Three of the positions are new, and one is a combination of two roles. All but one of the new hires are based in Seattle, including Mr. Chatterley himself. The company long has said that its corporate headquarters is in Dallas, though relatively few people work from that office. The new team already has started to make a few changes in the way Broadvox does business. The company — which sells digital phone service to businesses and also helps digital carriers tap into the public telephone network — is in the process of hiring inside sales people
to staff a new call center in Seattle that will employ about 20 people, Mr. Chatterley said. They are working to form partnerships with consultants who help businesses work through information technology issues; Broadvox offers the IT consultants financial incentives to sell the company’s products, he said. Broadvox also has simplified its lineup of product offerings, is planning to focus more on improving customer service and aims to spend more time measuring what works and what doesn’t, he said. Mr. Chatterley said he sees new opportunities at Broadvox “every time I turn over another rock.� He said some of those opportunities exist in the portion of Broadvox that sells wholesale access to the public
telephone network, which digital carriers use when their customers call people who don’t have digital phone service. The wholesale division, based in Broadvox’s downtown Cleveland office, accounts for about half the company’s revenue, which is close to $100 million, he said. Broadvox’s revenue has climbed from about $30 million in 2005. The company employed just 70 people at the time. Given its size, Broadvox needed a CEO with deep management experience in the telecommunications industry, said Eugene Blumin, who with Mr. Temnorod founded the company in Cleveland 11 years ago. He serves as Broadvox’s chief operating officer from its Cleveland office. â–
Hazell: MAC schools face many pressures
school’s roll of intercollegiate athletes also must reflect those percentages. That’s a goal made harder to achieve by the 100 or so football players it has each year. Fulfilling that requirement is not only based on participation, though; it also includes a financial component. So, if Kent State wants to add another $700,000 to Mr. Hazell’s salary each year, the effects on the
school’s ability to comply with Title IX are nothing to brush aside. “It’s a concern, because on the MAC level, a comprehensive (athletic) program is very important. We have balanced programs in the MAC that can compete nationally,â€? Mr. Kennedy said, noting Kent State’s baseball program, which advanced to its first College World Series this past summer. â–
Bruce Chatterley was hired to put Broadvox Inc. in gear. The digital phone service provider, which was founded in Cleveland and maintains a local office with 76 employees, has tripled its sales and the size of its employee base since 2005. Lately, though, it has been “stuck in neutral� because the company lacked a growth strategy, said Mr. Chatterley, who was hired as president and CEO of Broadvox last March. The telecommunications industry veteran replaced co-founder Andre Temnorod, who remains executive chairman of the company. Since Mr. Chatterley came on
continued from PAGE 3
— a possible Bowl Championship Series game and a significant cash influx in their future. Now comes the critical part for Kent and any MAC school: sustaining it. Mr. Hazell, at $300,000, is paid the lowest salary among 13 MAC football coaches, and with eight major-conference programs that already have fired their coaches, the sharks are circling. At those eight schools — Arkansas, Auburn, Boston College, Colorado, Kentucky, North Carolina State, Purdue and Tennessee — the average 2012 coaching salary was $1.47 million, according to data compiled by USA Today. Auburn’s Gene Chizik’s $3.5 million leads the way, with Colorado’s Jon Embree notching the lowest pay at $725,000. The average salary of 13 MAC football coaches, meanwhile, is $374,338, with Ohio University’s Frank Solich leading the pack at $500,000 annually and Mr. Hazell bringing up the rear. MAC commissioner Jon Steinbrecher said member schools’ ability to compete would depend on who’s doing the raiding. “If it’s the Mountain West or Conference USA, (the league could compete),� he said. “If it’s the Big Ten or SEC, that’s a whole different animal.�
Pressure from Athens Were Kent State not able to keep Mr. Hazell in the fold — and were Mr. Nielsen forced to search the assistant ranks for a coach at another bargain price — the school would take a far different tack than MAC rival Ohio University. OU nabbed Mr. Solich in a coup after he was let go from the University of Nebraska, and last March, hired former Kent basketball coach Jim Christian. Mr. Christian replaced John Groce, who was hired by the University of Illinois after leading OU to a 29-win season and two upsets in the NCAA Tournament, taking the Bobcats to the Sweet 16. Most surprising: OU paid Mr. Christian the same amount he was making at Texas Christian University — about $600,000, including incentives — which far outpaced what any MAC school had paid a basketball coach to that point. Upon the hire, OU president Roderick McDavis spoke of his desire to continue the momentum the Bobcats had built. “My feeling was, with the right
pieces in place — which we have in facilities and leadership — we wanted to keep this momentum in place,� Dr. McDavis said. “That’s what made coach Christian so attractive to us.� That feeling is echoed among other officials in the league, including outspoken University of Akron men’s basketball coach Keith Dambrot. Mr. Dambrot has talked with Duquesne University multiple times the last few years about a potential move; Mr. Dambrot each time has returned to the Zips. But he, too, is looking at what MAC schools will do to keep top coaches. “The more people invest in our league, everybody has to either put up or shut up,� he told The Akron Beacon Journal in April, upon Mr. Christian’s hiring. Those decisions are difficult, though. Ohio State spent $39.6 million in 2010-11 on football and men’s basketball, according to Department of Education data. The Buckeyes can afford those outlays, with an $18.7 million profit from athletics in that academic year. Kent State, by contrast, spent $6.4 million on those two sports in 201011, according to federal data, but just broke even, thanks to institutional support and a student fee. “It’s a challenge for conferences like the MAC, Sun Belt and WAC (Western Athletic Conference); we don’t have a football stadium that holds 100,000 or $100 million in revenue,� said Mr. Kennedy, the former Kent State athletic director. “But if you were to do an impact statement on the effect the football team’s success has had on the school, it’s very significant,� said Mr. Kennedy, who still teaches ethics in sports at Kent State and also consults for executive search firm Alden and Associates of Florence, Mass. “You could make a strong case that we need to up the ante to keep successful programs trucking along and keep coaches like Hazell. That’s the decision that’s facing us now: Can we do that? Or, if after we experience success, can we sustain it if major programs take our coaches?�
Title IX concerns The danger for schools in the MAC and other smaller conferences in the football “arms race,� as Mr. Kennedy termed it, goes beyond the gridiron. Title IX, the landmark 1972 legislation guaranteeing women equal access in higher education,
also forced colleges to offer athletic opportunities to women in direct proportion to enrollment figures. So, because Kent State’s fall 2012 enrollment across its eight cam-puses is 41% male and 59% female, according to university figures, the
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Making it
O
hio hasn’t been a hotbed of labor-management hostility for well over a decade, yet only now is the stigma of unions and manufacturers butting heads throughout the 20th century fading from the minds of the site selection experts who help companies choose where to expand or relocate their plants. It’s a credit to manufacturers and the men and women who work for them that the perception finally is catching up to the reality. The contentiousness that existed between unionized employees and their factory bosses in Northeast Ohio and the belief that labor costs here are higher than elsewhere because of the presence of organized labor haven’t made the jobs of local economic development officials easy. There’s no way of knowing how many manufacturers over the years didn’t bother to give this region even a sideways glance when putting together their short lists of where to grow their businesses. But it happens even now, said Tom Waltermire, president of regional business attraction group Team NEO. “The consultants tell you it goes on” when it comes to excluding Northeast Ohio and the state from site searches because of what Mr. Waltermire calls “the union issue.” “We continue to be left out of deals because of perception,” Mr. Waltermire said during a recent meeting with Crain’s reporters and editors. However, the tide definitely is turning, according to Mr. Waltermire. “Our business attraction people said one of the trends they are recognizing is that the union question is not coming up as often,” he said. Ohio is landing on the lists of more site selectors, Mr. Waltermire said, as manufacturing rebounds and finding skilled or trainable workers has become tough in many parts of the country. As a result, companies that have been wary of Ohio because of its union reputation are returning here and to other unionized states with pools of machinists, welders, electricians and other skilled manufacturing workers. But we also believe union workers and their employers have done much to put labor strife in the rear-view mirror of site selectors through greater collaboration as they both look to assure the futures of the manufacturing operations that provide their livelihoods. Prime examples of the benefits of labor-management cooperation are found at the Ford Motor engine plant in Brook Park and the General Motors assembly plant in Lordstown, which have become model operations for the respective automakers that run them. So, too, has the ArcelorMittal steel mill in Cleveland’s Flats, where the quality of the steel it makes is considered the best in the company. The positive vibe from these unionized plants helps dispel fears of other manufacturers that they’ll be stepping into labor quicksand if they grow in Northeast Ohio — and gives them one less reason to leave the region off their lists of potential sites. “When executives say, ‘Maybe we should consider Ohio,’ man, you’re now in a different league,” Mr. Waltermire said. And that change in thinking can only spell good things for the state.
FROM THE PUBLISHER
Shale covers oil and gas revolution
W
elcome to the wild and Mark West Energy is building in oncewonderful world of a sleepy Cadiz. “Early results indicate this boom state. (Utica shale) play is one of the most Yes, I know it’s strange to exciting new areas for natural gas and describe Ohio as a “boom state.” liquids production in the United States,” Well, look through our first issue of Mark West CEO Frank Semple told The Shale magazine that accompanied this (Youngstown) Business Journal. week’s edition of Crain’s Cleveland BusiAnd remember that Ohio first started ness and you’ll begin to get a real appreto feel the impact of these huge investciation of how far-reaching this ment announcements a couple whole shale gas/oil develop- BRIAN years back when a $700 million ment is in the Buckeye State. addition was built at a TUCKER Let me put it another, more Youngstown steel mill. Since rudimentary way: $636,000 a day. then, hundreds of millions of That’s right. Last week, Gulfdollars have been paid to Ohio port Energy Corp. announced landowners for mineral rights. that one of its wells in Belmont One could argue Ohio has County was producing nearly seen nothing of this magnitude 7,500 barrels of oil equivalent since the early days of the In(natural gas, oil and natural gas dustrial Revolution and the liquids) per day, and last week’s peropening of the Ohio Canal. It affects all barrel price was about $85. sorts of industries in our state. We knew That’s a big strike, and it’s Gulfport’s two years ago it would be a great story. best so far in the Utica shale. Following Our manufacturing reporter, Dan the announcement, the company’s Shingler, was on this story from its earliest shares jumped 16% to a 52-week high. stages because he was seeing its impact This happened as construction goes on the companies on his beat. He conon for a $500 million processing center vinced me that a magazine supplement
was worth trying, and I agreed. He became editor of this new venture, and we brainstormed the first issue, a nice 44-page package of interesting stories and graphic illustrations. Our supplement is also being distributed to energy-rich regions around the country, with the help of our sister publications Investment News, Plastics News and Pensions & Investments. It is being distributed to every one of their subscribers in shale-rich areas of Texas, Louisiana, North Dakota, West Virginia, Pennsylvania, Ohio, Michigan and New York. We soon will add distribution to their subscribers in America’s energy capitals such as Houston, Denver, Tulsa, Oklahoma City and Baton Rouge. We know that folks in the oil and gas industry want to know all they can about one of the country’s richest new sources of energy. And our advertisers want their message in front of them, which is why we also left open this first issue at the Shale Report area of our website. In 2013, you’ll need to be a Crain’s subscriber to access this rich information. There, you’ve been warned. ■
THE BIG ISSUE How do you plan to do the bulk of your holiday shopping — online or in person?
ROBERT MCCLELLAND
EDWARD OPETT
RON SMITH
SHERYL BENFORD
Shaker Heights
Rocky River
Shaker Heights
Online. I like the simplicity, doing it at home. Most of the retailers are providing free shipping. And I have a vested interest in L.L. Bean, since my son works for them.
In person, because I buy specialized gifts. I want to see them.
Collinsville, Ill. (visiting to see the Christmas Story House) Online, because I’m lazy. I can shop at a thousand places and never leave my chair.
A little bit of both. … About 30% online and 70% in person. For people here, I want to see (a gift) and touch it and take it to them.
➤➤ Watch more responses in our Big Issue video by visiting the Multimedia section at www.CrainsCleveland.com.
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Fox’s ‘fair and balanced’ fits network ■ David B. Hollister’s Nov. 26 letter about a self-delusional Fox News can be summed up in a few words — mindless and deceitful. Mr. Hollister wants to help the GOP with this brilliant suggestion, “Turn it off. The ‘it’ is Fox News.” He cites a study conducted by Farleigh Dickinson University that shows Fox News viewers are less informed than people who watch no news at all. Sounds like liberals trying to make the uninformed feel more relevant. I wonder if there were any taxpayer dollars wasted on this collection of trash. For those not familiar, Farleigh Dickinson is a university founded in 1942 by Dr. Peter Sammartino. Dr. Sammartino was a founding participant in a progressive experimental approach to global education at Columbia University. He also had close ties to the United Nations. I’m
LETTERS thinking if this progressive educator were still alive today, Fox News would not be his primary source of news. We have no idea what Mr. Hollinger’s agenda is, but clearly it’s not to aid the GOP. Prime-time news hours are 6 p.m. to 8 p.m. Crain’s readers should tune into Fox News and see for themselves. Fox News, as advertised, is “fair and balanced.” Jeff Longo North Royalton
If the name fits … ■ Regarding Brian Tucker’s Nov. 26 commentary about the Shena Hardin sentence to carry an “idiot” sign as punishment for driving around a school bus, I’m not so sure radio
personality Archie Berwick has such a great message. Mr. Berwick said people shouldn’t be called “an idiot” in public. After seeing how Ms. Hardin behaved while holding her sign, I had a few other names for her. Also, had Ms. Hardin’s actions caused a tragedy to any of the children on the bus, we would have been calling her a killer. I can’t help but wonder, would Mr. Berwick have objected to that?
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 e-mail: mdodosh@crain.com
Judge scolds Goodyear in liability case Tiremaker ignored, objected to plaintiff’s requests By MILES MOORE Tire Business
An Arizona federal judge has sanctioned Goodyear Tire & Rubber Co. and two attorneys representing the Akron-based tiremaker for allegedly withholding documents in a 7-year-old product liability case. In her Nov. 8 ruling, Chief Justice Roslyn O. Silver of the U.S. District Court in Phoenix gave Leroy Haeger, the litigant in the case, until Dec. 14 to file a motion for Goodyear and its attorneys, Graeme Hancock and Basil Musnuff, to reimburse him for attorneys’ fees incurred in his lengthy legal action against the company. Judge Silver also said Mr. Haeger was free both to renegotiate his settlement agreement with Goodyear and to pursue a separate action for fraud. “Litigation is not a game,” Judge Silver wrote in the first paragraph of her 66-page ruling. “It is the timehonored method of seeking the truth, finding the truth, and doing justice. “When a corporation and its counsel refuse to produce directly relevant information an opposing party is entitled to receive, they have abandoned these basic principles in favor of their own interests.” The case began in June 2003 when Mr. Haeger, his wife, Donna, and their children, Barry and Suzanne, went on vacation in their Gulf Stream motor home. The vehicle was equipped with Goodyear G159 tires. While on the highway, a front tire on the Haegers’ motor home failed, causing the vehicle to veer off the road and tip over. All four of the Haegers were seriously injured. Leroy Haeger and his insurance
carrier, Farmers Insurance Co., filed suit in 2005, claiming that G159 tires were defective if used on motor homes. They were designed only for use on pickup and delivery trucks, they said. According to Judge Silver, Goodyear and its attorneys spent years ignoring or objecting to the plaintiffs’ requests for production of documents. This included at one point denying the existence of the results of high-speed testing of G159 tires, she said. “Goodyear and its attorneys developed a strategy, implemented in this case to great effect, to resist all legitimate discovery, withhold obviously (Judge Silver’s italics) responsive documents, allow plaintiffs and their experts to operate under erroneous facts, disclose small subsets of documents as late as possible, and otherwise turn this case based on a motor vehicle accident into an Arizona version of Jarndyce and Jarndyce,” the judge wrote. Jarndyce v. Jarndyce was an endless court case created by Charles Dickens in his novel “Bleak House.” In apportioning sanctions, Judge Silver made Mr. Hancock responsible for 20% of fees and costs, and Goodyear and Mr. Musnuff jointly responsible for the remaining 80%. Spartan Motors Inc., manufacturer of the chassis on the Haegers’ motor home, also requested repayment of attorneys’ fees from Goodyear. Judge Silver denied Spartan’s claim, ruling the company did not show specifically how it was harmed by Goodyear’s withholding of documents. She added, however, that Spartan probably could present a viable case of fraud against Goodyear in a separate lawsuit.
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Susan L. Gundich Cleveland
“The actions of Judge Silver and her staff reflect an unwavering commitment to the pursuit of truth consistent with the highest standards of American jurisprudence,” said David L. Kurtz, attorney for Leroy Haeger, after the judge issued her ruling. In a statement, Goodyear said it was disappointed in Judge Silver’s ruling and was reviewing its avenues of appeal. “Goodyear takes its discovery obligations very seriously,” the company said. ■ Miles Moore is senior Washington reporter with Tire Business, a sister publication of Crain’s.
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BUCKLEY KING: Albert G. Hehr III to partner, Corporate and Transactions Group.
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DODD, L’HOMMEDIEU & MCGRIEVY LLC: Adam C. Watts and Scott R. Ebner to associates.
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SERVICE
GREATER CLEVELAND BETER BUSINESS BUREAU: Ingrid Halpert (Weiss Movers) to chairman; Moreen Bailey-Frater and Ella Fong to vice chairmen; James Lineweaver to secretary; Bill Mann to treasurer.
NONPROFITS JEWISH FAMILY SERVICE ASSOCIATION OF CLEVELAND: Amy Pincus to director, Know Abuse Prevention Program. LAKEWOOD HOSPITAL FOUNDATION: Emily Speer to assistant director.
REAL ESTATE
BOARDS
EXSCAPE DESIGNS LLC: John Peterson to design/sales manager.
SHIPPING GREAT LAKES SHIPYARD: Lisa A. Becton to senior buyer, purchasing; Kyle J. Fries to assistant vice president, ship repair.
SAINT JOSEPH ACADEMY: Rebecca Dessoffy Bennett (Frantz Ward LLP) to chair.
STAFFING
AWARDS
DIRECT RECRUITERS: Norman Volsky to project manager, health care IT practice.
COLLEGE OF LABOR AND EMPLOYMENT LAWYERS: Bruce Hearey (Ogletree, Deakins, Nash, Smoak & Stewart, P.C.) to fellow.
TECHNOLOGY HILEMAN ENTERPRISES: Jim Pollock to web developer.
Send information for Going Places to dhillyer@crain.com.
Miami-Dade high on Parker technology Parker Hannifin trucks ON THE WEB Story from Corp. said Miamiwww.CrainsCleveland.com. equipped with Dade County in south its RunWise Florida has placed a follow-on order technology commonly demonstrate for 29 Autocar E3 refuse trucks annual fuel savings in the range of featuring Parker’s fuel-saving Run35% to 50% for the automatic side Wise technology. loader by reusing as much as 71% Miami-Dade County used money of the vehicle’s braking energy. from the U.S. Environmental ProtecAdditional benefits include reduced tion Agency to buy 15 of the vehicles maintenance costs, less engine as part of the National Clean Diesel wear and tear, and extended brake Campaign’s Emerging Technologies life, Parker said. List. RunWise is the only drivetrain The RunWise version of the technology on the list, according to Autocar refuse trucks currently is Parker, which did not disclose the in operation in Miami-Dade County; price paid for the vehicles. Hialeah and Miami, Fla.; Seymour, Parker said the Autocar refuse Ind.; and Austin, Texas.
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INSIDE
15 ADVISER: FOUNDATION’S REBOOT SERVES AS ROAD MAP.
13
PHILANTHROPY Nonprofits adopting technology to keep up Tools help groups raise money, communicate By CHRISSY KADLECK clbfreelancer@crain.com
T
NEEDS OF NEEDY TIE DONORS IN KNOTS Companies struggle to decide how much they can afford to give to region’s many nonprofits By KATHY AMES CARR clbfreelancer@crain.com
J
eff Jarrett’s lineup of annual charity events is akin to a musician’s national tour schedule. The appearances are many, and although the chef would like to reach an even broader audience with his culinary talents, he must draw the line somewhere. While Mr. Jarrett is in tune with the mission and needs of each of his designated charities, the exertion associated with so many functions can take its toll. “I couldn’t even remember what dish I had planned to do for this fundraiser,” the executive chef of Cleveland Airport Marriott’s AMP 150 said in November during a March of Dimes event at Windows on the River. See GIVING Page 14
he Cleveland Museum of Art has doubled its membership since embracing an online giving portal. The Cleveland Clinic has implemented a text-to-pledge program at its HeartThrob Ball to raise funds for its Children’s Hospital. The Community Foundation of Lorain County has streamlined all of its board functions and now communicates with its 20 trustees through an online portal. And the United Way of Summit County now promotes the 200-some daily volunteer opportunities among its 125 agencies through a new online search tool on its website. Nonprofits might not boast the most tech-savvy legacy, but these Northeast Ohio organizations are among a growing number that are believers when it comes to the power of the portal, the cloud and other worldly sounding platforms used to interact with donors, volunteers and board members. “Everybody knows they should be using more technology to do the kinds of interactions with volunteers, and donors and board members, but it’s a tough position for many nonprofits,” said Robert Fischer, director of the master of nonprofit organizations degree at the Mandel School of Applied Social Sciences at Case Western Reserve University. The “generational nature of technology” coupled with the fact that most nonprofits communicate with a diverse population means they simply can’t abandon tried-andtrue practices, Dr. Fischer said. “We are dealing with four generations of individuals and each has a different tolerance and preference for technology, messaging format and how stories are told,” said Brian Frederick, president and CEO of the Community Foundation of Lorain County, which manages 530 funds. “Anybody in communications or marketing right now has a really challenging job of how you do that and with the marketing budgets most nonprofits have,” he said.
The secret sauce That said, two Cleveland companies — Big River and StreamLink Software — are making compelling cases for nonprofits to take the See TECH Page 16
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PHILANTHROPY
Giving: Businesses have to occasionally say ‘no’ continued from PAGE 13
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The Signature Chefs Auction is one of the approximately 40 benefits Mr. Jarrett juggles each year with his demanding career, and although each one sets him back “a couple hundred dollars� — along with time spent on logistics — Mr. Jarrett sees a payoff that goes beyond a dollar figure. “People support you when you support them,� he said. Philanthropic outreach is part of the culture at many Northeast Ohio operations, although benefactors, particularly small and midsize businesses, say limits must be defined to prevent a strain on resources. It’s a difficult balance to achieve when interests in different missions intersect agencies’ pressing need for aid and donations. “We’re getting hit up so much more frequently,� said Ben Bebenroth, whose Spice Kitchen + Bar also featured samples of its local fare at the March of Dimes fundraiser. The chef said he’s expanded the breadth of charities with which his restaurant and catering business have aligned, although the agencies must fit with his operation’s core philosophies, which revolve around local investment, education and environmental stewardship. “We’ve had to turn down certain events, but sometimes we’ll auction off gift certificates if we can’t participate,� Mr. Bebenroth said. “People don’t like to hear ‘no.’�
Appetite for giving Howard Lewis, founder, chairman and CEO of Broadview Heightsbased Family Heritage Life Insurance, has a hard time turning down requests from organizations that focus on human need, health and children.
Cleveland Foodbank,� said Anne Goodman, the nonprofit’s president and CEO. Mr. Lewis, who said his firm allocates “six figures� in annual charitable donations, said it’s difficult to carve out a budget for philanthropy, especially when natural disasters strike, and staff volunteers and supplies are needed. “There really can’t be a budget,� Mr. Lewis said. “You have to give everything you can give.� Employees not only are encouraged to donate their time to a charity of their choice but also are compensated for their time. “It’s so much more important than just showing up for work and making money,� Mr. Lewis said.
Time is money Marlene Herman made up for a 10% reduction in her philanthropic budget due to the economy with more volunteer work, divided among 10 to 12 area agencies. Whether it’s collecting coats for Hurricane Herman Sandy victims on behalf of Chagrin Highlands Rotary Club or engaging individuals with developmental disabilities in sports challenges, the owner and president of Aamco Transmission & Total Car Care in Cleveland and Cleveland Heights channels her humanitarian efforts with missions she is interested in, although she rotates her involvement. “I’ve come full circle with a lot of different things,� she said. “I don’t believe you can arbitrarily give to
“There really can’t be a budget. You have to give everything you can give. ... It’s so much more important than just showing up for work and making money.�
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– Howard Lewis, founder, chairman and CEO, Family Heritage Life Insurance Through a mix of corporate donations, his own involvement on various agency boards and staff outreach, the company aims to make a difference among about 13 entities, including the Leukemia & Lymphoma Society and the Cleveland Foodbank. The latter nonprofit in fiscal year 2012 received more than $31,000 from the company, which employs about 110 in its home office and about 5,200 brokers and sales staff nationwide. In the last 10 years the provider of life and supplemental health insurance products has donated more than $235,000 to the Cleveland Foodbank and is considered one of the nonprofit’s more generous smaller business contributors. “Family Heritage Life Insurance has a very long history of providing extraordinary support to the
any organization that asks. You make the most impact with the ones you are passionate about.â€? Carol Staiger, owner of Cleveland Heights-based Vantage Point Enterprises, a business coaching and consulting outfit, advises her clients to carefully manage the amount of charities with which they are involved, and to alternate involvement every five or six years. She applies the same principles toward her own advocacy efforts, which includes leadership roles for four organizations such as the Council of Smaller Enterprises and a Minority Business Development Agency business center. “Busy people get things done. But if someone keeps asking me for more and more, I will say ‘no’ if I can’t do it well,â€? Ms. Staiger said. “You need to maintain a hold on sanity.â€? â–
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Foundation uses tough times as opportunity to refocus
C
hange may prompt some organizations to regret, retrench or even retreat. For Saint Luke’s Foundation, it ignited a transformative process of “rethink, redesign and reinvent.” Since 1997, when it was established with the charitable assets of the former Saint Luke’s Medical Center, Saint Luke’s Foundation has awarded more than $92 million in grants. As our board and leaders looked back on the foundation’s first 14 years of grant making, we recognized our historical spending policy enabled us to award more grants when economic conditions were favorable, and fewer when the community most needed our support. Given persistent economic challenges since 2008, this dichotomy could have compromised our mission of improving the health and well-being of vulnerable populations in Greater Cleveland. We knew that our approach had to change, and we viewed this as an opportunity to reinvent our foundation from the ground up. The journey began in early 2011. Our goals: Identify strategies and initiatives that have gained traction; invest more in programs and services that can make the greatest impact; and leverage the capacity of nonprofits that demonstrate consistently strong outcomes. We turned to industry experts, colleagues and grantees for insights. We studied changing needs in our community and examined economic, societal and demographic shifts. We also asked ourselves fundamental questions: Are we making a difference? Do our processes truly
support our grantees? What can we be doing better? How can we give more and have greater impact? Ultimately, our answers sparked dramatic changes. In December 2011, our board adopted a new spending policy that increased our budget from an average of about $9 million in recent years to $12 million in 2012 in order to deepen the impact of work that advances our mission. This year, we changed our grant-making policies to tie awards directly to missiondriven criteria and outcomes. We also are pursuing a smaller number of larger and longer-duration grants with organizations that make positive impacts in three program areas: Healthy People, Strong Communities and Resilient Families. Our journey led us down avenues we did not foresee, raised tough issues we tried to face openly and honestly, and posed strategic and tactical challenges that required patience and cooperation from all involved. Yet from this effort, we embraced a new approach that offers a higher, more predictable level of support for organizations that demonstrate effective performance against short- and longer-term outcomes. Many challenges we faced during our journey are shared by other nonprofits. I often am asked whether the process of reinventing the foundation’s grant-making approach was worth the effort. My answer is a resounding yes, but our experience offers several lessons: ■ Build and nurture open lines of communication: The process of redefining our grant-making strategies and building an effective infrastructure was one of reinvention, so I am proud we maintained grant making
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ADVISER without interruption. Yet as we continued to award and manage grants, the criteria and framework by which grant requests were processed remained a work in progress. This made it confusing for some applicants to understand how they fit within our new framework — or if they fit at all. It proved challenging for us as well, and vitally important, therefore, to maintain open lines of communication with all grantees. We let them know what we knew — and in some cases, what we didn’t — as we gathered and processed information. We have now begun the process of articulating these changes so that or-
ganizations whose work we so value will better understand our strategies. ■ Remain mission-focused: Our board struggled with the difficult question of whether increasing our grant-making budget today would mean having less to spend tomorrow. Given that we exist to improve and transform health and well-being, they decided that making bigger investments in truly effective solutions will strengthen the ability of organizations to do the work that advances our mission. ■ Embrace learning: Our journey was transformed by the words of author and Cleveland native Mario Morino, who in his 2011 book “Leap of Reason,” synthesized the challenges and opportunities we faced: “We need to rethink, redesign, and reinvent the why, what, and how of our work in every arena. We need to reassess where we have the greatest needs so we can apply our limited resources to have the most meaningful impact. We need to be much clearer about our aspirations, more intentional in defining our approaches, more rigorous in gauging our progress, more willing to admit
mistakes, more capable of quickly adapting and improving — all with an unrelenting focus and passion for improving lives.” Mr. Morino’s words proved inspirational to us — so much so that we adopted many concepts from his book for our reinvention as a learning organization. When organizations and individuals adopt a spirit of learning, everyone wins. Learning can occur on many levels, from building nationally accepted learning concepts into an organizational framework as we did, to less formal approaches such as soliciting ideas and engaging others within your circle, identifying your strengths, and recognizing areas that need improvement. ■ Maintain transparency: Always be open and honest with stakeholders, and acknowledge that you may not have answers right away. They will respect you for your honesty, and it will forge stronger ties and more mutually beneficial relationships. ■ Denise San Antonio Zeman is president and CEO of Saint Luke’s Foundation of Cleveland.
Your legacy can truly make a difference. Your philanthropic support helps University Hospitals provide the highest quality of care for our patients, now and for future generations. It’s because of you that we can live our mission every day:
Jack Schron, president of locally owned and operated Jergens, Inc., will showcase Cleveland by bringing his company’s 2013 national meeting home. And, Positively Cleveland is here to help. Whether you’re a professional who has a hand in your organization’s meeting planning or you’re simply a resident full of civic pride, Positively Cleveland can support you – and even reward you – for bringing a meeting home to Cleveland. Visit ClevelandChampions.com.
“Why not Cleveland?” - Jack Schron, president of Cleveland-based Jergens, Inc.
s To Heal – enhancing patient care, experience and access s To Teach – training future generations of physicians and scientists s To Discover – accelerating medical innovations and clinical research And it’s with your support, that we’ll continue to provide the same high-quality care we’ve been providing for nearly 150 years. Join the many who are making a difference. To learn more about ways to leave your own legacy, contact our gift planning team at 216-983-2200 or visit UHgiving.org.
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Tech: Local firms help nonprofits reach out continued from PAGE 13
interactive leap. Ron Cass, founder and president of Big River, which last month received a $250,000 investment commitment from JumpStart Inc., said his online fundraising platform for nonprofit organizations focuses on building relationships. “That’s our secret sauce, so to speak,� said Mr. Cass, a perennial entrepreneur and volunteer board member for educational nonprofits over the years. “The closer an organization can get to connecting that donor emotionally and intellectually to what their dollar does will make them more successful,� he said. “What you are allowing a donor to do then is become a part of the mission. They are not giving money; they are taking action. That is an emotionally satisfying experience, and we enable organizations to add that ability to their online presence immediately.� Mr. Cass said Big River helps nonprofits increase online giving by delivering the most effective appeal to the potential donor at the right time. The software supports all donor transactions, including events, recurring giving, sponsorships and special campaigns. Offering a different type of support is BoardMax, an online board management portal from StreamLink Software. It’s an interactive tech favorite at the Community Foundation of Lorain County and nearly 200 other organizations throughout Northeast Ohio and
nationally. “BoardMax is a tool that helps the nonprofits communicate and collaborate more effectively with their board members and committee members,� said Kevin French, a product director for StreamLink Software, which also has developed a grant management platform called AmpliFund. Mr. French said the cost of BoardMax is based on the amount of a nonprofit’s operating budget. He said a subscription can range from $500 to $5,500 annually, but also can result in cost savings related to efficiencies. The Community Foundation was one of the first adopters of BoardMax in 2010. “About 40% of our members bring laptops or iPads to the board meetings to look at documentation instead of bringing a printed-out board packet,� said Mr. Frederick, the president and CEO. “It has fundamentally changed how we communicate with the board, and it has put a lot of responsibility back on the board members but it has done it in a very efficient way.�
Technology at work Since adopting the technologies of Big River and StreamLink, the Cleveland Museum of Art has been able to double its membership, increase online giving and reduce staff time and costs associated with communication with its board. “BoardMax enables us to keeps the communication lines open 24/7 with our board and keep our
trustees up to date with things that are going on here at the museum in real time,� said August Napoli, the museum’s deputy director and chief advancement officer, of the software the museum has been using since January. Big River’s web-based tool, meanwhile, allows museum staff to spend less time processing data. “Because (the Cleveland Museum of Art is) free and open to the public, membership is an act of philanthropy,� Mr. Napoli added. “The use of technology has really revolutionized our ability to quickly process these transactions and free up the fundraising professional to focus on relationship development.� At the United Way of Summit County, a website addition this March made all volunteer opportunities searchable in one location, said Michael Gaffney, vice president of marketing and communications for the organization. The virtual change has reduced the amount of time to connect an individual with an appropriate volunteer interest from a “week to two weeks down to what could be a couple of hours or a couple of days,� said Andrea Metzler, director of volunteer services. “Really the best part is that they are able to create a profile for themselves with their interests and their availability which is huge for most people that are trying to fit these opportunities into their daily lives,� she said. “Then the system will email them if a new opportunity becomes available that fits their profile.�
Convenience nothing to LOL at Ease of use, especially in terms of donor transactions, is critical for nonprofit relations, said Big River’s Mr. Cass. “The way I look at it, many organizations have not been benefiting from the last 17 years of e-commerce,â€? he said. “Best practices have emerged, tools have emerged and platforms emerged, and a lot of that is unavailable to the nonprofits.â€? It doesn’t get easier than texting a monetary gift. This year, the Cleveland Clinic raised more than $94,000 through its mobile fundraising text-to-pledge program during its Children’s Hospital HeartThrob Ball, said Bridget Andrews, director of annual and special giving. “It’s been so successful because during the event people hear all the great stories about the children ‌ and they are inspired to give,â€? she said. “Once they make that pledge at the event, we’re able to follow up ... through email and fulfill that pledge afterward.â€? That’s not the only high-tech, heartstring-pulling employed by the Clinic. Since June 2011, 61 patients have created online personal fundraising pages, raising nearly $200,000 for the institution. “Our patients are able to tell their story about their Cleveland Clinic experience, upload photos and invite family, friends and coworkers to join them in supporting their particular Cleveland Clinic cause,â€? she said. â–
IN BRIEF Sight Center adds to rolls of call contracts Have a question about teacher licensing? Or maybe you’re looking for information about bus routes? Soon, those and other questions placed to the Ohio Department of Education’s call center will be filtered by those working through the Cleveland Sight Center. The Sight Center, which started its overall call center training program five years ago, recently was awarded the two-year, $990,000 contract. A mix of part- and full-time workers with work-limiting disabilities will handle the calls beginning Dec. 14. Nine already have started to train, with plans in place to hire another eight. This is the second such contract awarded this year to the Sight Center, which since July has been the clearinghouse for inquiries to 1-800-BUCKEYE, the call center for the division of travel and tourism. That contract, worth a little more than $320,000 over two years, employs 11 people. “The unemployment rate for people with disabilities is just so high. ‌ These contracts really do represent a great pathway to employment,â€? said Jassen Tawil, director of assistive technology and retail services. Supportive services also are available to call center workers, who often are transitioning back into the work force. The Cleveland Sight Center within the past year earned preferred vendor status through the state’s office of procurement, which opened the possibilities to such contracts.
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PLACESOFNOTE A look at Northeast Ohio’s interesting spaces
Stepstone Academy By TIMOTHY MAGAW tmagaw@crain.com
R
ich Frank has big ideas about how to break the cycle of poverty that leads many of Northeast Ohio’s poorest residents to Guidestone — a local nonprofit that offers everything from assistance finding work, counseling for troubled youths to foster care services. The whole premise behind his bold vision for Guidestone, an agency that until earlier this year was known as Berea Children’s Home & Family Services, is rooted in the notion that without a solid education on which to build, the organization can do only so much to bring its clients out of the dire circumstances in which many of them were raised. So, Guidestone got into the education business. This fall, Guidestone opened a public charter school, Stepstone Academy, in Cleveland’s povertystricken Central neighborhood, which sits on the eastern outskirts of downtown and is just a short walk from Guidestone’s Cleveland campus on Carnegie Avenue. The school on East 32nd Street near Cedar Avenue is the first of what Mr. Frank envisions as several he
ON THE WEB: Check out more photos of Guidestone’s new charter school, Stepstone Academy, online at www.CrainsCleveland.com/Stepstone. would like to open in Cleveland’s urban neighborhoods. “If we don’t impact the educational attainment of kids in our urban environments, they don’t have a chance,” said Mr. Frank, the organization’s CEO. “It doesn’t matter how many benefits or services we offer them. It doesn’t matter if we don’t give them an opportunity.” The school, which serves about 150 kindergartners and firstgraders this year, was developed with the help of Perry White, who founded the Citizens Academy charter school in Cleveland in 1999. The plan is to add a grade each year until the school reaches eighth grade. Anticipating it would quickly outgrow its 10,000-square-foot space, Stepstone next fall plans to shift some of its students into a roughly 15,000-square-foot building on Carnegie it plans to renovate over the next three years at a cost of about $1 million. Longer-term plans call for the construction of a gymnasium.
The expansion would closely connect the Guidestone offices with Stepstone to create a campus of sorts. The intertwining relationship between Stepstone and Guidestone offers the burgeoning charter school the potential to stand out among its peers, Mr. Frank said. Many of the students and their parents already frequent Guidestone for its bevy of services, and Stepstone allows the organization to cover the whole spectrum. “There are a lot of synergies taking place when you’re strengthening the whole family,” he said. “I don’t mean that to sound cliché, but we’re giving them something to hang on to. At the end of the day, it’ll be good for their kids and probably good for them, too.” In the classrooms, students work in small groups with teachers and individualized lesson plans loaded onto an arsenal of laptops, which collect data and track their progress. “That immediate feedback of how the kids are doing, that whole data-driven piece is so important,” said Susan Hyland, Guidestone’s assistant vice president of early childhood and support services. “Between the children and their families, this is all driven for success. These kids will go to
JANET CENTURY
ABOVE: Social worker Kerry Copes (left) and teacher Molly Gorie work with students at Stepstone Academy. BELOW: Teacher Kelly Krupa gets a big hug. college and have the academic preparation to do that.” Mr. Frank admits he’s got a lofty vision to create a high-performing network of charter schools. If Stepstone is successful, he sees the potential to take over fledgling charter schools in the city. But at the moment, he’s satisfied to see this one up and running and with, at least so far, good results. The school’s success also will depend on how well Guidestone can raise
money to support the school, which receives about half the public funding the city’s public schools do. “I’m on cloud nine with the establishment of this, but my hope is we can build a strong charter community that works in concert with Cleveland public schools and together we bring back a quality education to the city of Cleveland,” Mr. Frank said. “We all have skin in this game.” ■
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NA
Guggenheim Commercial Real Estate Group
800 Superior Ave. Cleveland, 44114
133,917
GMAC Insurance
NA
Guggenheim Commercial Real Estate Group
29825 Fountain Parkway
Solon, 44139
100,000
MRI Software
CB Richard Ellis
NA
University Plaza
1836 Euclid Ave. Cleveland, 44115
85,000
Cleveland State University
NA
Liberty Development Co.
1100 Superior Ave.
Cleveland, 44114
54,066
First American Title Insurance Co.
CB Richard Ellis
NA
Rock Run North
5700 Lombardo Center Drive Seven Hills, 44131
51,343
Sedgwick Claims Management Services Inc.
CB Richard Ellis
CB Richard Ellis
Richmond Office Park
4781 Richmond Road Warrensville Heights, 44128
42,922
Marcus Thomas
Newmark Grubb Knight Frank Geis Cos.
S. Water St. and Erie St.
Kent, 44240
42,756
Ametek Inc.
CB Richard Ellis
NA
30455 Solon Road
Solon, 44139
42,000
Reimer, Arnovitz, Chernek & Jeffrey Co. LPA
Cresco Real Estate
Ostendorf-Morris Co.
1100 Superior Ave.
Cleveland, 44114
41,627
Brand Muscle Inc.
Jones Lang LaSalle
NA
3585 Ridge Park Drive
Akron, 44321
40,000
Health Care Financial Services Inc.
NA
CB Richard Ellis
Midtown Technology Park
6700 Euclid Ave. Cleveland, 44103
35,000
DeVry University, Chamberlain School of Nursing
Cresco Real Estate
Ostendorf-Morris Co.
Spectrum Building
6060 Rockside Woods Blvd. Independence, 44131
34,315
Honeywell International
Ostendorf-Morris Co.
Dalad Group
6200 Oak Tree Blvd.
Independence, 44131
34,221
Dental One Inc.
CB Richard Ellis
Newmark Grubb Knight Frank
Reserve Square
1701 E. 12th St. Cleveland, 44114
33,025
Cuyahoga County Central Services
NA
Ostendorf-Morris Co.
16
Bainbridge Park Phase II
31500 Bainbridge Road Solon, 44139
31,200
Sagequest
Newmark Grubb Knight Frank Newmark Grubb Knight Frank
17
Park Center Plaza II
6150 Oak Tree Blvd. Independence, 44131
30,127
GSA
Jones Lang LaSalle
CB Richard Ellis
Park Center Plaza I
6101 Oak Tree Blvd. Independence, 44134
28,684
GSA
Jones Lang LaSalle
CB Richard Ellis
150-200 Euclid Ave.
Cleveland, 44114
28,000
21st Century Computers Inc.
CB Richard Ellis
CB Richard Ellis
Southport
8333 Rockside Road Valley View, 44125
27,816
NAS Recruitment Communications LLC
Newmark Grubb Knight Frank NA
1100 Superior Ave.
Cleveland, 44114
27,033
Osborn Engineering
CB Richard Ellis
Kowit & Passov
3000 Aerospace Parkway
Brook Park, 44142
26,892
Vantage Systems Inc.
Jones Lang LaSalle
NA
Summit Office Park
4 Summit Park Drive Independence, 44131
26,600
Nation's Lending Corp.
Ostendorf-Morris Co.
CB Richard Ellis
6070 Parkland Blvd.
Mayfield Heights, 44124
25,370
Materion Corp.
NA
Davis Development Group Inc.
Reserve Square
1701 E. 12th St. Cleveland, 44114
25,083
Cuyahoga County Central Services
NA
Ostendorf-Morris Co.
26
Commerce Park 4
23240 Chagrin Boulevard Beachwood, 44122
24,881
Howard, Wershbale & Co.
NA
Munsell Realty Advisors Inc.
27
Promenade at Belden
4080 Belden Village St. Canton, 44718
24,675
Fin, Feather & Fur Outfitters
NA
EMMCO Corp.
Landerbrook Corporate Center II
5910 Landerbrook Drive Mayfield Heights, 44124
23,464
On X USA LLC
CB Richard Ellis
King Group
201 W. Erie Ave.
Lorain, 44052
22,500
Mosaic School
NA
United Property Management
3737 Embassy Parkway
Akron, 44333
21,826
Hanna Campbell Powell
Jones Lang LaSalle
NA
Highland Business Park
4520 Richmond Road Cleveland, 44128
21,751
ITT Educational Services Inc.
Jones Lang LaSalle
Newmark Grubb Knight Frank
32
Keith Building
1621 Euclid Ave. Cleveland, 44115
21,536
Renner, Otto, Boiselle & Sklar LLP
PlayhouseSquare Real Estate Ostendorf-Morris Co.
33
Dressler Plaza
4746 Dressler Road North Canton, 44718
21,497
National College
Newmark Grubb Knight Frank Kowit Passov
34
Frost Road Business Center II
525 Frost Road Streetsboro, 44241
20,250
Federal Reserve Bank of Cleveland
Ostendorf-Morris Co.
Geis Cos.
35
Landerbrook Place
5915 Landerbrook Drive Mayfield Heights, 44124
20,170
State Industrial Products Corp.
NA
NA
36
One Cleveland Center
1375 E. Ninth St. Cleveland, 44115
19,855
Britton Gallagher
Newmark Grubb Knight Frank 1375 Optima LLC
37
One Cleveland Center
1375 E. Ninth St. Cleveland, 44114
19,200
Grant Thornton
Allegro Realty Advisors Ltd.
NA
38
Akron Centre Plaza
50 S. Main St. Akron, 44308
19,000
YMCA
NA
Jones Lang LaSalle
38
Plaza South
7261 Engle Road Middleburg Heights, 44130
19,000
NA
Newmark Grubb Knight Frank Plaza South Consolidated
Westlake Centre
24650 Center Ridge Road Westlake, 44145
18,500
AmeriGas
Jones Lang LaSalle
5531 Canal Road
Valley View, 44125
17,843
Support Care Inc.
Newmark Grubb Knight Frank NA
3700 Park East Drive
Beachwood, 44122
17,578
Radisphere National Technology Group
Newmark Grubb Knight Frank Ostendorf-Morris Co.
334 Euclid Ave.
Cleveland, 44114
17,500
Convention & Visitors Bureau of Greater Cleveland Newmark Grubb Knight Frank NA DBA Positively Cleveland
Najm Square II
3120-22 Euclid Ave. Cleveland, 44115
15,000
Newpoint Education/Invictus High School
NA
1317 Euclid Ave.
Cleveland, 44115
14,858
Dwellworks LLC
CB Richard Ellis
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
18 19 20 21 22 23 24 25
28 29 30 31
40 41 42 43 44 45
KeyBank Center
800 Superior Ave. Cleveland, 44114
KeyBank Center
Square feet
Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Source: Information provided by CoStar Group Inc. www.costar.com and the tenant and landlord representatives. Information is for Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull and Wayne counties for Oct. 1, 2011, through Sept. 30, 2012 and includes new leases.
NAI Daus
Najm Real Estate Inc. Playhouse Square Realty
RESEARCHED BY Deborah W. Hillyer
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
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Dream: Many Ohio firms STO: Networks value team content supplying aerospace field TV COSTS GOING UP continued from PAGE 1
continued from PAGE 1
suppliers working on the new 787, according to Michael Heil, president and CEO of the Ohio Aerospace Institute. “Ohio has played a big role in helping create the Dreamliner,” he said. “It should mean more jobs and more revenue for the Ohio companies that are supplying Boeing.” Parker Hannifin Corp., a Mayfield Heights-based producer of motion and control technology, has been on the front lines of the Dreamliner’s development. The company, a legacy tier 1 supplier for Boeing, has assumed a greater role with the 787 than with planes in the past. Apart from the other work Parker does for Boeing, the company now completes assembly of the aft strut fairing module, which is a hydraulic system subassembly, then ships them to Boeing for installation. As Boeing has moved to a leaner operation, it has tasked supplier companies such as Parker with taking on parts sourcing and assembly functions, giving Parker more responsibility — and influence — over the plane, according to Jeff Rolf, vice president for business development of commercial airframes for Parker Aerospace. It’s a role Parker relishes, according to Sergio Von Borries, vice president of Boeing business for Parker Aerospace. “We want to be integrators,” he said. “We want to be aggregators.”
Links in the chain Parker’s greater role also holds the potential of more opportunity for Ohio manufacturers to be part of the Dreamliner supply chain. “It’s natural to work with folks in the area,” Mr. Rolf said. “A lot of our facilities will have next-tier suppliers in the same communities.” For example, Parker Aerospace’s Elyria plant contracts out machining, anodizing and heat treatment processes for its fuel, hydraulic and water pumps to companies in Elyria and elsewhere in Ohio, Mr. Rolf said. Across the state, a number of companies have staked their claims in the supply chain.
GE Aviation in Evendale, near Cincinnati, since 2004 has been involved in designing and development testing of the GEnx engine for the Dreamliner. Deb Case, a media relations representative for GE Aviation, said it makes ducts and tubes for the engine at a plant in Dayton and performs final assembly and production in Peebles, which also is near Cincinnati. Cleveland-based Eaton Corp. produces the main engine fuel pumps used in the GEnx engines at its Euclid plant as well as a number of other components for the plane, said Eaton spokesman Scott Schroeder. And aluminum producer Alcoa Inc. makes forgings for the plane at its forgings and extrusions plant in Cleveland, said Kevin Lowery, director of communications of global rolled products for Alcoa.
Steady ascent Ohio is particularly well positioned to serve the Dreamliner, Mr. Heil said, because the plane is 50% comprised of composites rather than largely constructed with metals. And Ohio is known for its high concentration of polymer companies, he said. Boeing’s move to composites marks a greater commercialization of the technology and means more aircraft manufacturers likely will follow, Mr. Heil said. Boeing currently is delivering four to five planes a month, but plans to boost that number to seven a month by the end of 2012, Mr. Von Borries said. Boeing expects to deliver 10 planes a month by the end of 2013, according to a news release the company issued Nov. 12. Andrew R. Thomas, associate professor of international business at the University of Akron and author of “Soft Landing: Airline Industry Strategy, Service, and Safety,” said the moves toward efficiency at Boeing — and at other aircraft manufacturers — are positive developments for Ohio and the aerospace industry. “This notion of efficiency that’s been sweeping the industry is really pushing the manufacturers and their suppliers to provide efficiencies at all levels in that process,” Dr. Thomas said. ■
RYAN C. JEFFERS & STEVEN G. VOINOVICH
STO president Jim Liberatore, in an email, said, “We have had various parties interested in purchasing STO almost since the day we launched in 2006 and those parties remain interested. I cannot comment on any projected timing or outcomes of any of those conversations.” A phone call to Indians president Paul Dolan was not returned by Crain’s deadline last week.
Big money? YES, it is Now might be a good time for the Dolans to sell. Fox Sports’ parent, News Corp., has been opening its wallet to expand its sports cable reach. Late last month it acquired for $1.5 billion a 49% interest in the YES Network, which is owned in part by the Steinbrenner family that owns the New York Yankees baseball team. News Corp. can acquire an 80% controlling interest in three years. The purchase puts a value on YES of $3 billion. With that deal, Fox Sports grew its roster of regional sports networks to 20. At the same time, it is expected to roll out a national sports cable network to rival the dominant ESPN. Mr. Fang said it will be called Fox Sports 1. Sports networks remain highly profitable. At the same time, the price of sports programming has soared in recent months as networks seek to lock in long-term deals. Last month, Fox Sports West and the Los Angeles Dodgers agreed to a 25year broadcast rights deal that will pay the team at least $240 million a year. Even the San Diego Padres, which operate in a market that is comparable to the Indians’ market
in size, last year signed a 20-year deal with Fox Sports San Diego worth $60 million a year. “There is a rush to lock up sports rights for the long term because the prices have been escalating dramatically,” SNL Kagan’s Mr. Baine said. “That’s all happened in the last several months. It shows a level of almost panic that (a network fears it) will be stuck without a team.”
DVR-resistant viewers Mr. Baine said as viewers increasingly use digital recorders and online options to choose when they’ll watch, most television programming is losing its value to advertisers, who want to know their ads are seen in a timely fashion. But that’s not the case with sporting events, which have retained — and are expected to retain — live viewers. Mr. Liberatore would not comment on the broadcast rights deal between the Indians and STO. However, fangraphs.com, a sports website, estimates the agreement to be on a year-to-year basis, and puts the current price at $30 million a year. Part of the allure of the deal for the Dolans could be the opportunity to use some money to acquire players to build the baseball team. “It will be tough to turn that money down, especially with the Dolans trying to get some free agents,” Mr. Fang said. In addition to the Indians, SportsTime Ohio is the cable home of the baseball team’s minor league affiliate the Columbus Clippers and a variety of college sports events, including Mid-American Conference college football and baseball and Horizon League basketball. It fills out a 24/7 broadcasting schedule
A look at some of the most recent local television deals signed by Major League Baseball teams, as the Dolan family appears to be on the verge of a sale of their regional sports network, SportsTime Ohio: Los Angeles Dodgers: Team reportedly will sign a deal to stay with Fox for between $240 million and $280 million per season. San Diego Padres: Before the 2012 season, signed with Fox Sports San Diego for $1.2 billion over 20 years. Los Angeles Angels: Signed new deal last December with Fox Sports West for $2.5 billion over 17 years. Houston Astros: Agreed with Comcast SportsNet Houston, which launched in October, on a $3.2 billion deal over 20 years. Texas Rangers: Re-upped with Fox Sports Southwest late in 2010 for $1.7 billion over 20 years. SOURCE: FANGRAPHS.COM; CRAIN’S RESEARCH
with a variety of live action, taped and studio sports programs. STO reaches 2.8 million households in northern and central Ohio and in Pennsylvania border communities, with another 4 million homes receiving everything but the Indians games. Fox Sports Ohio has more than 5 million households in Ohio, Kentucky, Indiana, western Pennsylvania, western New York and West Virginia. Cleveland Cavaliers basketball and Cincinnati Reds baseball games top FSO’s live-action roster. ■
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20121203-NEWS--20-NAT-CCI-CL_--
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
DECEMBER 3 - 9, 2012
Timken: Various factors make for a tough go in steel business continued from PAGE 3
Diverse or divergent?
nearly 5.4 million shares of Timken stock — about 5.7% of the company’s shares outstanding, according to his Nov. 19 filing with the Securities and Exchange Commission. He wants Timken to spin off its steel business, leaving it as a bearings and industrial gear and equipment maker and creating a stand-alone steel company. Mr. Whitworth is the muscle behind a proposal, put forth by one of his home state’s largest institutional investors, the California State Teachers Retirement System (CalSTRS), asking Timken shareholders to recommend the divestiture to the company’s board and management. But CalSTRS brings only 0.4% of Timken’s stock to the table. Mr. Whitworth alone already controls more Timken stock than even the founding family’s Timken Foundation, which owns about 5.3% of the company’s shares outstanding. Both Mr. Whitworth and CalSTRS say in their SEC filings that they may buy more Timken stock as part of their effort to bring about the change in structure. In that regard, CalSTRS is no small friend to have as backup, since it has nearly $155 billion in assets.
Mr. Whitworth and CalSTRS argue that Timken’s steel and other businesses are too diverse. That diversity, they say, is causing the market to discount the company’s stock price, is leaving it with fewer analysts than might otherwise follow two separate companies, and is denying investors a pure play. The two investors “believe that the market significantly undervalues the company due to its combination of two incongruent core businesses. ‌ We believe that a spinoff of the steel business would fundamentally and positively change the way the market values the overall business,â€? Mr. Whitworth and CalSTRS said in SEC documents. Mr. Whitworth contends the two new companies both could have “Timkenâ€? in their name, and both would be headquartered in Canton. Timken thinks it’s a bad idea. In public comments the company issued last Wednesday, Nov. 28, Timken said it met with representatives of Mr. Whitworth’s Relational Investors fund, considered the proposal and decided against selling the steel operations. “As a market leader in high-quality
engineered steel products, our steel business leverages the same expertise and know-how that we apply across our businesses,� Timken CEO James Griffith said in a statement. “We have significant technology, cost and revenue synergies between our bearing and steel business as well as diversification benefits in continuing to operate under our current structure.� Ultimately, it looks as though shareholders will decide the matter. They’re set to vote on the proposal put forth by CalSTRS at the company’s annual meeting next year, which has not yet been scheduled. Mr. Lustgarten said there are a few reasons why it might not make sense for Timken to split itself in two. “You’d lose all the synergies you get in the (combined business units) and you’d then have two separate corporate structures,� Mr. Lustgarten said, noting that a split would mean supporting two management teams, accounting departments and other administrative functions. Timken reported revenues of $3.9 billon for the first nine months of this year. About $1.4 billion of that came from its steel business, and the rest was generated by sales of bearings, gears and other engi-
SHALE Magazine is here A nationwide audience of executives and business owners are reading the inaugural issue of SHALE Magazine... are they seeing your company’s ad? $2.00/MAY 21 - JUNE 3, 2012
MMPI: Med mart MIDSTREAM INFRASTRUCTURE—THE INDUSTRY’S TOP PRIORITY IN 2013 identity could be reimagined
Forest City overdue on Terminal Tower loan
Emphasis will be placed on convention center, where project’s greatest economic impact lies
Developer houses 500 workers in city icon
By JAY MILLER jmiller@crain.com
By STAN BULLARD sbullard@crain.com
A $38 million loan secured by Terminal Tower, the Public Square skyscraper the Guide to Cleveland Architecture calls “the landmark of the city,� is overdue. How that debt will be resolved by the building’s owner, real estate giant Forest City Enterprises Inc. — which has its headquarters and more than 500 employees in the 52-story structure — remains to be seen. The loan matured April 1 and was assigned April 20 to so-called “special servicing� with CIII Special Servicing of Irving, Texas, Cuyahoga County land records show. Companies such as CIII work to maximize recoveries from distressed loans on behalf of debt holders. Jeff Linton, spokesman for Forest City, said the company is “working with the special servicer to come to an acceptable resolution on it.� He declined to outline what Forest City hopes to obtain in the talks with CIII. Land records show Terminal Tower SPE LLC, the corporation Forest City uses to own the tower, received the loan in 2005; the loan subsequently See TERMINAL Page 34
Construction workers are bringing into focus the look of the Cleveland Medical Mart & Convention Center rising on the city’s Mall. Less clear, though, is whether the meeting and trade show complex will go by that name by the time it’s ready to open in 16 months. Jim Bennett, a former McKinsey & Co. consultant hired last month by developer MMPI Inc. to oversee the complex, has been soliciting the thoughts of community and medical industry leaders as he works on a strategy to achieve the greatest bang for the buck from the county’s $465 million investment in the project. And what he’s hearing is that “medical mart� may not be the right name to
put over the building’s entrance for promoting what will go on inside. “I think the convention center is really going to be a winner,� Mr. Bennett said during a meeting with Crain’s editorial board last Monday, May 14. “That’s three-quarters of the square footage, and that’s where the economic impact is.� At the same time, Mr. Bennett said MMPI is rethinking the status of the medical mart in its marketing of the complex and the med mart name itself. The reconsideration is based on feedback he’s receiving as he meets with various constituencies interested in the project, which is moving away from an early focus on single-vendor showrooms. Picking up a brochure headed “Cleveland Medical Mart & Conven-
Here comes the... Brookfield
Youngstown
Crain’s will not publish a print edition on Monday, May 28, due to the Memorial Day holiday. Throughout our hiatus, though, be sure to check www.CrainsCleveland.com for the latest business news and blogs.
East Liverpool
2
6
3
Massilon
4
Carrolton
Canton officials roll out red carpet for shale industry players ‘Utica Capital’ already seeing influx of businesses By DAN SHINGLER dshingler@crain.com
Cleveland can have its Rock and Roll Hall of Fame and Museum. Canton aims to be the capital of a whole different kind of rock — the energy-rich Utica shale — and the city south of Akron that for decades has been economically off key suddenly is pickin’ and grinnin’.
Even those leading the charge can’t keep up. Although they can list quite a few newly arrived businesses, officials at the city and the Canton Regional Chamber of Commerce don’t know exactly how many shale gas-related companies already have set up shop in and around Canton. Businesses sometimes pop up before city and chamber representatives even know they’re looking for space,
INSIDE: A new database is aimed at providing easier access to the region’s shale gas supply chain. Page 3
8
Zanesville
officials say. But no one is complaining, because the businesses still are coming, and there is plenty of prospecting left to do among other companies looking for a place to land atop the Utica shale. “From an economic development
Chesapeake began drilling at its first horizontal rig in Stark County in early
May and should Marietta
complete its well by early to midJune, company officials say.
5
See CANTON Page 30
Get ready — Eastern Ohio will spend 2013 engulfed in a massive build-out to support a shale gas industry that many folks hope will forever change its economic landscape. From the development of midstream infrastructure like gas pipelines and processing plants, to the construction of giant steel mills, PDQXIDFWXULQJ SODQWV DQG RLO¿HOG VHUYLFH operations to keep drillers supplied, nearly every town in the region is boasting of new investments. At the epicenter of much of this activity is Youngstown, the site of V&M Star’s highly publicized $700 million investment in a new steel mill and related processing facilities – and that’s not the whole story there, just the biggest so far.
1
Brookfield: TMK-IPSCO / $10 million / 50-120 jobs / Oilfield services facility
2
Canton: Chesapeake’s headquarters in Louisville (just east of Canton)
3
Carrolton: Current capital of drilling in Ohio. Approximately 150 drilling permits issued for the county since the beginning of 2011
4
East Liverpool: U.S. Silica / Sand transport facility
5
Marietta: Marietta College, enrollment in petroleum engineering rises from 250 to 400 students in 2012
STEPHEN HERRON
SPECIAL SECTION NEWSPAPER
NEXT? By Tim Francisco
7
Canton
No print edition May 28
STAN BULLARD
1
See IDENTITY Page 31
NOTICE TO READERS
A special servicer has been assigned to the loan on Cleveland’s iconic Terminal Tower.
What’s
Waste Water?
An update to our 2010 list â– Pages W1-W15
Fight for Rights
Entire contents Š 2012 by Crain Communications Inc. Vol. 33, No. 21
The end6-game for mineral Massilon: Baker-Hughes / 700 jobs / Oilfield services rights leasing? Youngstown: Exterran / $13 million plant / 100 jobs / Oil
Will recycling efforts slake drillers insatiable thirst?
7
Regulator Recruitment
8
Ohio begins its search for well inspectors to keep up with drilling
and gas drilling services :: V&M Star / $700 million / 350+ jobs / Steel mill
Lead Advertiser Zanesville: Halliburton / $35 million to $50 million (estimated) / 300+ jobs / Transportation hub
Don’t miss your chance (again) to reach a powerful audience of businesses that are leading the growth of shale drilling, in the Utica and nationwide. attractive to these companies,â€? Mr. DeHoff said. Mr. DeHoff said Stark County’s residential rental market is DOVR JHWWLQJ D ERRVW IURP RLOÂżHOG ZRUNHUV PRYLQJ LQ ZKLOH VKDOH JDV company executives are purchasing homes in the area. In Louisville, just east of Canton, Chesapeake is building its QHZ 2KLR ÂżHOG KHDGTXDUWHUV RQ D DFUH VLWH DW WKH %HFN ,QGXVWULDO Park. In October, Keith Fuller, senior director of government affairs for Chesapeake, told Louisville City Council that the site likely ZLOO LQFOXGH D ÂżYH VWRU\ DGPLQLVWUDWLRQ EXLOGLQJ D VHFRQG EXLOGLQJ IRU &KHVDSHDNH 2LOÂżHOG 6HUYLFHV &R DQG D YHKLFOH VWRUDJH DQG maintenance facility. 6WHYH 3DTXHWWH FKLHI H[HFXWLYH RIÂżFHU IRU WKH 6WDUN 'HYHORSPHQW Board, said the Chesapeake project, as well as the construction of Baker-Hughes’ headquarters in Massillon, are the biggest developments slated for Stark County in 2013. +RXVWRQ EDVHG %DNHU +XJKHV ,QF D ELOOLRQ RLOÂżHOG VHUYLFHV Stark’s reality company, plans to build Canton’s been a regional facility in the Ohio home of Massillon that will Chesapeake Energy employ 700 to service so far, and the Hall shale gas exploration of Fame city will still companies in the Utica be close to the Utica’s and Marcellus plays. biggest driller when Baker-Hughes’ plan Chesapeake moves for the Massillon site to new digs in nearby includes a bulk cement Louisville in 2013. plant, a wireline But as the selfoperation to provide proclaimed “Utica drillers with down-hole Capital,â€? Canton is tools and controls, truck KRSLQJ IRU DQ LQĂ€X[ bays and possibly a plant of new companies to make specialized in 2013, especially mud for drillers, said RLOÂżHOG VHUYLFHUV spokeswoman Pam drawn there to serve Easton. The company Chesapeake and other plans to complete the drillers, says David project by late 2013. Kaminski, director of A lone, old pumpjack guards the site of Chesapeake’s planned Ohio headquarters. All told, about $40 energy and public affairs million will be spent to for the Canton Regional construct the Chesapeake and Baker-Hughes facilities, said Mr. Chamber of Commerce. Canton City Council, he noted, has approved incentives to help Paquette, who added that after studying the industry for more than bring a $5 million, 24,000-square-foot General Electric oil and gas two years, he still can’t fully predict its impact on the region. “I don’t think we can even imagine what it will do for us,â€? Mr. facility to the city’s Mills Business Park *( LV D PDMRU SURYLGHU RI RLOÂżHOG HTXLSPHQW DQG VHUYLFHV DQG LV Paquette said.
Houston-based Exterran, which in 2011 reported selling $1.2 billion worth of gas processing and handling equipment, says it will soon begin hiring about 100 people to staff a 65,000-square-foot manufacturing plant in Youngstown. The company’s head of global manufacturing, Sean Clawges, says he’ll be moving back from 7H[DV WR RYHUVHH WKH VWDUW XS +HÂśOO SUREDEO\ ÂżW ULJKW LQ WRR EHLQJ D native of nearby Warren. Mr. Clawges predicts the Exterran facility will double in size in the coming years and do business with other local companies, from VWHHOPDNHUV WR RIÂżFH FOHDQHUV DORQJ WKH ZD\ “We are currently in the process of setting up partnerships with local companies for these services and commodities,â€? said Mr. Clawges at a recent shale gas event, noting that he was happy to come home, especially with the new regional investments in tow.
expected to initially employ about 30 people to serve Utica drillers. $W OHDVW RQH RWKHU RLOÂżHOG VHUYLFH FRPSDQ\ LV DOVR FRQVLGHULQJ D facility in the park, according to Mr. Kaminski. “These are examples of the activity we anticipate,â€? Mr. Kaminski said. “Other opportunities are in the works and some will come to bear fruit.â€? Bob DeHoff, chairman of development for North Canton-based DeHoff Realtors, the developers of the 140-acre Mills Park, says four companies, all related to shale servicing, are expected to inhabit the park by the end of 2013. His company has also leased about 50,000 square feet of space this year to smaller companies related to VKDOH JDV VXFK DV HQJLQHHULQJ ÂżUPV KH VDLG Âł:HÂśUH ÂżQGLQJ WKDW &DQWRQ VHHPV WR EH WKH ÂżUVW ODUJH PHWURSROLWDQ area on Interstate 77 (in terms of proximity to drilling) and this is
A strong midstream current Some of the biggest investments announced for the Utica region so far don’t involve steel mills, service companies or even drillers’ headquarters. A handful of companies have already announced hundreds of millions of dollars worth of midstream development, which includes the pipelines, processing facilities and other infrastructure drillers will need to get their gas to market. While plants DQG IDFWRULHV DUH VLWH VSHFL¿F PXFK RI WKH PLGVWUHDP GHYHORSPHQW will be scattered across the region, but equally important to the shale industry’s success. NiSource Midstream Services of Texas has teamed up with Houston-based Hilcorp Energy, one of the nation’s largest privately held exploration companies, to invest $300 million in Utica continued on page 41
www.SHALEmagazine.com
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December 2012
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neered products. Revenues were about the same as in the first three quarters of 2011, but the company cut costs and increased its overall earnings by nearly 22%, to $420.2 million, in the latest ninemonth period. Mr. Lustgarten said he’s been happy with the performance of Timken’s management in recent years, as it has worked to improve the company’s profitability. He says the market has been slow to recognize or reward that progress — but not just at Timken. “The renaissance that’s going on among American manufacturing companies has largely gone unrewarded� by investors, he said, even as companies such as Timken, Eaton Corp. and others have seen their fortunes improve in recent years. Mr. Lustgarten said fundamental performance eventually will win the day, but longtime market perceptions of underperforming companies or entire industries take time to change.
Steel is tough The steel business, in particular, has seen choppy seas of late as U.S. companies have had to deal with waves of competition from China, an ebb in European sales, and varied and sometimes unpredictable end markets in the United States. Even companies in the same regions are contending with different challenges, depending upon the kind of steel they make and the markets to which they sell. For instance, Timken last month laid off 160 steelworkers in Canton and
probably will put between 300 and 400 more workers on part-time furlough, said Bob Harper, vice president of United Steelworkers Local 1123, which has 2,200 members and represents workers at Timken. “The industry took a dive this summer,â€? Mr. Harper said. “The European economies aren’t building bridges — they aren’t building nothing. ‌ And the Chinese are dumping steel into the market, so the whole industry is feeling it.â€? The whole industry, perhaps, but not every mill. In Cleveland, ArcelorMittal steel workers are not expecting any layoffs, even though there is often a slowdown at the end of the year, said USW Local 979 president Mark Granakis. While other ArcelorMittal plants might be slowing a bit, the Cleveland Works is busy pumping out coiled steel to automotive stampers, appliance manufacturers and other healthy end markets, Mr. Granakis said. Further investments and new products expected to be rolled out at the mill should increase activity there, he added. “Although the company obviously is not doing terrific as far as shipments go — business is slow overall — our plant itself is doing fine,â€? Mr. Granakis said. Timken is experiencing the same slowdown as the steel industry generally, but demand for products such as seamless steel tubing used by oil and gas drillers, as well as for its other steel products, will cycle back upward and the company should be in a position to capitalize when that happens, Mr. Lustgarten said. â–
Ganeden: Consumers warm to probiotic product benefits continued from PAGE 3
Granted, the company’s revenue took a huge hit in mid-2011, when it sold its two biggest BC30 product lines to Schiff Nutrition International Inc. of Salt Lake City for $40 million in cash. Those products, dietary supplements marketed under the Sustenex and Digestive Advantage brands, accounted for about twothirds of the company’s revenue, which Ganeden does not disclose. However, Ganeden is moving quickly to replace that revenue with what company officials say is a more profitable licensing business. Selling off its dietary supplement brands relieved Ganeden of a big advertising burden, Mr. Lefkowitz said. The company was spending 20% to 30% of its supplement sales on advertising for those brands, which it was selling and marketing on its own, he said. Ganeden now spends less than 5% of its revenue on advertising, he added. “The value of a licensing dollar is superior to the value of a retail dollar,� Mr. Lefkowitz said. The new strategy does require more product testing, which has made it all the more important for Ganeden executives to have convenient access to the microbiology lab in Northeast Ohio. Mr. Bush noted that he flew to Miami 16 times in 2011. “Developing a food is far more complicated than putting some bacteria into a capsule,� he said. Ganeden, which employs 17 peo-
ple, has no immediate plans to add staff to run the new microbiology lab, which contains a lot of automated equipment.
Healthy preoccupation Worldwide, people buy about $32 billion of probiotic products every year, said Mr. Bush, who also is vice president of the International Probiotics Association of Zurich, Switzerland. Today, yogurt products account for a large majority of those sales. In the United States, the popularity of probiotics has grown substantially over the last two years, according to a report from Spins LLC, a Schaumburg, Ill., company that tracks sales and trends in the natural products business. U.S. sales of probiotic products totaled $2.25 billion in the 12-month period that ended July 7, 2012, up 33% from $1.69 billion during the like period a year earlier and up 79% from $1.26 billion the year before that. The popularity of supplements is helping drive some of that growth, but overall awareness about probiotics — in food and other products — is increasing, said Kerry Watson, a Spins natural products specialist who wrote the report. Plus, people generally are becoming more interested in being healthy these days, Ms. Watson said. “There’s a mass movement of people ‌ taking their health into their own hands,â€? she said. â–
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Crain’s Executive Recruiter Assistant editor Crain’s Cleveland Business Crain’s Cleveland Business seeks an assistant editor who will have primary responsibility for the print publication’s page design functions using the Quark pagemaking system. Strength in design and Quark skills are a must. This editor also is the paper’s primary headline writer, so a strong news sense is critical. The position also involves writing stories for both our print and online publications, and could include beat coverage, so successful candidates should possess solid reporting skills. And the person in this position also is involved in producing our morning email that is an aggregation of business news statewide. Experience with the Saxotech content management system is a plus. Please send page design and writing samples to editor Mark Dodosh via email at mdodosh@crain.com, or by regular mail to 700 W. St. Clair Ave., suite 310, Cleveland 44113.
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Partying like it’s 1999 — well, almost
We hardly knew you: Dr. John Brennan won’t be coming to Cleveland, after all, to serve as president and CEO of the MetroHealth System. Dr. Brennan, who today is CEO at Newark Beth Israel Medical Center in New Jersey, decided to remain in the Garden State after he was offered expanded job responsibilities at Barnabas Health, Beth Israel’s parent health system. “The biggest impact is on our timetable, because Brennan we spent several months working out the details of his contract,” said Tom McDonald, a MetroHealth trustee and chairman of the search committee. Dr. Brennan was poised to earn an annual salary of $685,000 — $135,000 more than his would-be predecessor, Mark Moran.
■ Northeast Ohio’s companies like to party. Even at the recession’s peak, the region’s workplaces didn’t altogether banish their holiday parties. But as the recession’s grip loosened, these same companies appear to be spending more on their end-of-the-year blowouts, according to research published this month by the Employers Resource Council, a human resources organization in Mayfield Village. According to the study, 73% of surveyed organizations are planning a holiday party for 2012, with the bulk of them — about 66% — budgeting the same amount of money or more as last year for the bashes. In 2009, only about 38% of organizations had budgeted the same amount of money or more than they spent on 2008’s revelry. “Even when budgets are tight, making the extra effort to host a holiday gathering or give employees a small gift can really boost morale,” said Margaret Brinich, ERC’s manager of surveys and research. — Timothy Magaw
Let’s pause:
American Greetings Corp. is taking a timeout on its plans to develop a new corporate headquarters in an expansion of Crocker Park in Westlake. The company said its board of directors believes it’s advisable to delay the project temporarily in light of the proposed go-private offer from Zev and Jeffrey Weiss, its CEO and chief operating officer, respectively, and other members of the Weiss family. The company said it “still intends to develop its new world headquarters” at Crocker Park. American Greetings expects the delay will be short and will have no material adverse impact on the company.
Filling up: University Hospitals and Philips Healthcare will participate as tenants in the under-construction medical mart in downtown Cleveland. The two organizations’ joint presence at the medical mart, which is slated to open next July, will be an extension of a $38.5 million partnership launched in 2010 where Philips’ latest health care imaging equipment was brought to UH Case Medical Center for further development. The space occupied by the health system and Philips will anchor the third floor of the medical mart. The two organizations will work together to highlight innovative imaging technology in use and under development by Philips.
■ Prefabricated housing in the United States widely is regarded as the low-budget way to build because of the efficiencies of working inside a factory rather than facing the elements outdoors. However, Alexander
Kolbe thinks Americans need to move to a more European model for such dwellings as high-end offerings. So, Mr. Kolbe and his wife, Michelle, recently formed Evodomus, a builder of prefab homes for the upscale set. Mr. Kolbe, an immigrant from Germany who trained in Berlin, practiced in England and now teaches sustainable design as an adjunct professor at Kent State University’s School of Architecture, knows the manufactured home business in Europe well. He sold more than 200 such homes for German prefab home makers Huff Haus and Baufritz over a 20-year period. In Europe, high energy efficiency and quality workmanship from building homes in a factory make these properties prized by the wealthy. The European models are sleek glass boxes. To adapt to the U.S. market, Mrs. Kolbe, a co-founder and chief creative officer of Evodomus, which is in Cleveland Heights, said its designs maintain a modernist approach while using hip roofs and a variety of materials besides glass to add warmth for American buyers. The Kolbes have three prospective purchasers of Evodomus homes, but no sales yet. To produce the homes, Evodomus has partnered with Bensonwood, a Walpole, N.H.-based producer of timber and highefficiency homes made from prefabricated panels. A 2,000-square-foot home will cost about $500,000, not including the site cost. — Stan Bullard
WHAT’S NEW
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Adding the ‘fab’ factor to pre-fabricated homes
Excerpts from recent blog entries on CrainsCleveland.com.
Feds set to take in the sites of Cleveland
In control: FirstEnergy Corp. plans to spend $45 million to build an environmentally friendly transmission control center in Akron. The electric company said the control center will be built at its West Akron Complex, an existing 150-acre site that already houses an Ohio Edison service center, a FirstEnergy call center and a large office building where several company subsidiaries are based. Groundbreaking for the 70,000-square-foot Akron Control Center, as it will be known, is expected in spring 2013.
Seeing the light: GE Lighting, the unit of General Electric Co. based at Nela Park in East Cleveland, agreed to acquire Albeo Technologies Inc., a privately held maker of LED fixtures based in Boulder, Colo. GE Lighting did not say what it will pay for Albeo, which was established in 2004. Albeo’s LED systems include high-bay, low-bay, linear, surface mount and under cabinet fixtures that are used in commercial, industrial and institutional settings. End of a long run:
After eight years of leading First Federal Lakewood and nearly three decades altogether with the bank, president and CEO Gary R. Fix will retire Dec. 31 and will be succeeded by Thomas J. Fraser, who’s currently executive vice president and chief operating officer. Mr. Fix, CEO since 2005, will continue to serve on First Federal’s board of directors. Mr. Fraser, who joined the company in 2007 and was appointed to the board last June, becomes president and CEO on Jan. 1.
THE COMPANY: Polycase, Avon THE PRODUCT: WH Series of hinged NEMA 4X electrical enclosures Polycase says its new WH Series is made to meet various specifications and requirements of the National Electrical Manufacturers Association. “The hinged cover allows for hassle-free access to internal components and the gasketed design makes the enclosures ideal for use in a wide range of adverse conditions such as wet, dirty and/or corrosive environments,” the company says. There are five sizes of the enclosures, ranging from 5.11 x 3.93 x 2.75 inches to 11.81 x 7.87 x 6.29 inches. There are three versions offered for each size: a gray plastic enclosure for indoor use; a gray blended plastic enclosure for outdoor use; and a gray blended plastic base with a clear cover for outdoor use. The enclosures are priced as low as $5.94 each. Polycase has provided packaging products to the electronics industry since 1951. The company says it has more than 2,100 variations of enclosures, from simple potting boxes to heavy-duty industrial electronic enclosures. For information, visit www.Polycase.com. Send details about new products to managing editor Scott Suttell at ssuttell@crain.com.
■ The U.S. Environmental Protection Agency is re-examining more than 460 former lead factory sites across the country — including some in Cleveland — for health hazards left by toxic fallout onto soil in nearby neighborhoods, according to USA Today. The effort, a result of a USA Today investigation earlier this year, “involves locations in dozens of states and has already identified several sites needing further investigation and some so dangerous that cleanups are being scheduled, according to records and interviews with state regulators,” the newspaper reported. In Cleveland, “three sites are being looked at for possible cleanups and ‘several’ more have risks needing deeper investigation,” according to USA Today.
Looking for a house? Plenty of options available ■ Cleveland’s housing market is showing some signs of improvement, but it remains vexed by an unflattering distinction: It’s among the country’s top 10 markets for vacant homes. Website 247WallSt.com noted the Cleveland market ranks No. 8 nationwide, with 6.2% vacancy. Here’s the description of Cleveland’s situation: “Unlike metropolitan areas in Florida and Nevada, the housing-market crash was not that bad in Ohio. In Cleveland, the price drop from peak to trough was 17.6%, a far more modest decline than that of such
Liabilities aplenty, assets few in this Chapter 11 case ■ Cleveland Corporate Services Inc., which states on its website that it has served clients such as Progressive Corp. and SherwinWilliams Co., has filed for Chapter 11 bankruptcy protection. The Cleveland company estimated in court documents filed Nov. 26, that it has more than 200 creditors and liabilities ranging from $10 million to $50 million. It listed its assets as less than $50,000. The company designs conference rooms and sells and maintains audio/visual equipment, including interactive white boards from Smart Technologies, for clients’ use. Huntington National Bank, a secured creditor, objected to Cleveland Corporate Services’ use of Phoenix Management Services of Chadds Ford, Pa., as its financial adviser during the bankruptcy process. According to the bank’s objection, Huntington lent $8 million to the company on or about Dec. 23, 2011, and within three months, Cleveland Corporate Services had breached various covenants of the loans. Phoenix Management has provided “woefully inadequate financial projections,” Huntington asserted. It is disagreements with Huntington that have led to the Chapter 11 filing, said Harry W. Greenfield of Buckley King LPA, Cleveland Corporate Services’ attorney. “This is definitely a restructure,” Mr. Greenfield said. “We believe in the long run it is going to be a successful company and case.” — Michelle Park
cities as Las Vegas. Despite faring better than many markets, Cleveland is not yet showing many signs of turning a corner. On top of high vacancy rates, the average price per square foot is unchanged from a year ago, while the number of sales has dropped by nearly 20%. “Further, while 1,754 resales and new homes are for sale in Cleveland, per Trulia’s site, another 5,451 homes are in some phase of the foreclosure process.” To put things in perspective, though, the city with the worst vacancy problem — Detroit — has a rate nearly twice that of Cleveland, at 12.3%. Other Ohio cities on the list are Toledo (No. 7, 6.5%) and Dayton (No. 6, 6.6%).
Cleveland museum has an artful achievement ■ A book based on an exhibition at the Cleveland Museum of Art landed on a New York Times list of the best art books of 2012. “Wari: Lords of the Ancient Andes” was produced in conjunction with a show of the same title running through Jan. 6 at the Cleveland museum. (The exhibition will travel next year to the Museum of Art/Fort Lauderdale in Florida and the Kimbell Art Museum in Fort Worth.) “Overseen by Susan E. Bergh, organizer of the exhibition and a curator at the Cleveland museum, this lavishly illustrated, often breathtakingly beautiful book pulls together essays by more than a dozen scholars,” The Times said. “Historical and geographical contexts are detailed, and there are essays covering architecture, religious deities and rituals, textiles and feather work, sculpture, and inlaid and metal ornaments.”
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