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NEXT WEEK: IN TIME FOR THE HOLIDAYS, THE PERFECT GIFT — CRAIN’S ANNUAL BOOK OF LISTS. $2.00/DECEMBER 12 - 18, 2011
VOL. 32, NO. 50
Ben Venue idles Bedford plant temporarily Drug maker, which employs 1,300, cited by regulators for quality control failures By CHUCK SODER csoder@crain.com MARC GOLUB
Fady Chamoun, the president and CEO of Aladdin’s Eatery Systems, says policy uncertainty has caused him to exercise more caution in his expansion plans.
HOLD THE HIRES? Report: Policy uncertainty deters small businesses; locally, opinions split By MICHELLE PARK mpark@crain.com
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recently released study by local researchers that indicates economic policy uncertainty is a drag on the expansion plans of small businesses isn’t universally affirmed by small business owners in Northeast Ohio, who seem split on the real impact of such uncertainty. The study from Federal Reserve Bank of Cleveland research director Mark Schweitzer and Case Western Reserve University professor Scott Shane, released Nov. 29, found that policy uncertainty at the federal level had statistically negative effects on small See HIRES Page 8
INSIDE THE REPORT A Federal Reserve Bank of Cleveland report from Nov. 29 posits that economic uncertainty is limiting small business hiring. A portion of the report (a full version of which can be found at http://tinyurl.com/748leag): “While the downturn and weak recovery certainly had a large negative effect on small business hiring plans, policy uncertainty has exacerbated this effect. In the summer of 2011, the net percentage of small business owners planning to hire would be 6 percentage points higher if it were not for policy uncertainty. “That is, either 6% more small business owners would be planning to hire (or 6% more small business owners would not be planning to lay off workers), were policy uncertainty not currently an issue.”
Rogue metal particles. Unsterilized gloves. A can that most likely contained urine. Dozens of quality control issues raised by regulators have pushed Ben Venue Laboratories Inc. to shut down temporarily all manufacturing and distribution operations at its headquarters in Bedford. The pharmaceutical manufacturer, which employs about 1,300, made the decision to stop producing and distributing drugs during an inspection conducted last month by regulatory agencies from the United States, the United Kingdom and France. The November inspection highlighted several quality control issues
related mainly to a sterile filling process Ben Venue uses to make injectable drugs in the North complex of its operation at 300 Northfield Road. After the inspection, the European Medicines Agency issued a recall for three drugs that were made at the plant and shipped to countries in the European Union. It also recommended that no new patients in the EU begin using a fourth drug made in Bedford. The U.S. Food & Drug Administration, which participated in the inspection, over the past year has issued two reports that identified a total of 59 quality control concerns at the plant. One of the 11 issues documented in an FDA report released last week See IDLES Page 6
INSIDE Combating the wet weather Northeast Ohio winemakers were forced to deal with a record amount of rain, but are confident their production levels won’t be affected. Read that story and more in our monthly Small Business section. PAGE 15 ALSO INSIDE: ■ In Cleveland’s Midtown neighborhood, a resurgence in commercial activity. PAGE 3
Ohio Savings reprimanded by regulator for insufficient lending By MICHELLE PARK mpark@crain.com
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Ohio Savings Bank has been informed by its regulator that its lending in Northeast Ohio is insufficient and needs to improve — a fix that the head of its parent com-
pany expects to come “relatively quickly” as the bank ramps up a new marketing strategy that’s already under way. The Federal Deposit Insurance Corp.’s evaluation of Ohio Savings, a division of New York Community Bank, hasn’t been made public.
However, a copy of the 130-page report obtained by Crain’s from the bank reveals the institution received “needs to improve” ratings in two of its five markets: Ohio and Florida. The rating is one step above the lowest rating of “substantial noncompliance.”
“The fact that this happened was a bit of a surprise,” said Joseph Ficalora, president and CEO of New York Community Bancorp. “The fact is, it’s unacceptable,” he said. “People are being delegated to fix the problem.” At issue is the bank’s performance
as it pertains to the Community Reinvestment Act, which requires that banks meet the credit needs of their entire communities, including low- and moderate-income neighborhoods, consistent with safe and sound operation. See LENDING Page 21
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