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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
A
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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NEWSPAPER
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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
We Have EXCITING News to Share! Look inside for more details...
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‘WHO TO WATCH’ NOMINATIONS We’re looking for technology upand-comers for “Who to Watch: Technology,” slated for publication Jan. 16. If you think you know who will be among those leading the Northeast Ohio tech scene of the future, drop an email to sections editor Amy Ann Stoessel, astoessel@crain.com, or call 216-771-5155. Please send in your suggestions by Friday, Dec. 16. There are no hard and fast requirements for this section, other than the candidate needs to exhibit the kind of potential that makes him or her someone to watch in the field of technology. Mark your calendars for future sections: “Who to Watch: Finance” (April 23); “Who to Watch: Health Care” (July 16); and “Who to Watch: Law” (Nov. 26).
WWW.CRAINSCLEVELAND.COM
QUALITY IS JOB ONE
CORRECTIONS ■ A Dec. 5, Page One story on Ohio’s oil and gas business contained incorrect information with respect to the severance taxes imposed by the state on drillers. As stated in the story, drillers currently are taxed at a flat rate of 2.5 cents for every thousand cubic feet of gas that producers extract and sell. Expressions of that tax as a percent of revenues were off by a factor of 10 due to miscalculation. The effective severance tax rate is 0.75% when gas is sold for $3.30 per MCF. It would
decrease to 0.56% of revenues if the price of gas increases to $4.50 per MCF and to 0.31% at a price of $8 per MCF. ■ In a Dec. 5, Page 5 story, the name of a new joint venture between Akron General Health System and Signet Enterprises was misidentified. The correct name is Integrated Wellness Partners. Doug Ribley, Akron General’s vice president of health and wellness, also was misidentified as a doctor.
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You might think it would be easier to hire quality employees now than in years past due to the glut of unemployed workers. But according to Aon Hewitt, you’d be wrong. The consulting firm’s survey of 1,328 human resources executives found that “organizations are finding it difficult to find quality hires.” Here’s how respondents answered the following question: How effective is your organization at hiring more productive employees? Extremely effective
5%
Very effective
23
Effective
51
Somewhat effective
18
Not effective
3
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So, what’ll it take to keep United hub? Companies want details of airline’s thinking before they set policies favoring its flights By JAY MILLER jmiller@crain.com
Brian McKeighen is wondering what’s next, and he is not alone. Mr. McKeighen is among a group of corporate traveler planners who
have been champing at the bit as they wait to hear from the Greater Cleveland Partnership what their companies can do to retain at Cleveland Hopkins International Airport the hub operation of the merged United Continental airlines.
So, they have begun to take matters into their own hands. “Has there been any follow-up?” Brian McKeighen, group procurement, fleet and travel leader of Westfield Group of Westfield, asked a reporter in a Dec. 1 interview. “Has anyone said what it’s going to take to keep the hub?” Mr. McKeighen said the only things he knew about a planned marketing effort by GCP, which is
Cleveland’s chamber of commerce group, to build support for the United hub came from an Oct. 3 story he read in Crain’s. The story outlined GCP’s plans for a marketing campaign that would encourage businesses to set policies allowing traveling employees to choose United for air travel even if it means paying slightly higher airfares. Mr. McKeighen said a number of his travel manager peers at other
companies know the value of the hub and have been eager for specific information on what kind of response will be needed to convince United to keep the hub. That information would help the managers set their companies’ travel policies, he noted. Consequently, Mr. McKeighen set up a meeting for 17 of his cohorts with Todd Payne, chief of See UNITED Page 4
INSIGHT
WEB OF INVESTMENTS INTERSECTS IN MIDTOWN Redevelopment within health care and technology corridor spurred by creative financing among public, private entities RUGGERO FATICA PHOTOS
Midtown Tech Park, 6700 Euclid Ave: The first tenants earlier this year moved into this property redone by Hemingway Development, a partnership of James Doyle and the Geis brothers. The building is 70% leased, according to Hemingway.
By JAY MILLER jmiller@crain.com
C
an there be any surer sign that a neighborhood is attracting the interest of suburbanites than the potential arrival of a new restaurant with an outdoor patio? If that’s so, then Cleveland’s Midtown really may be on the rebound. Greg Frost, owner of Frost Building Maintenance Co. of Warrensville
Heights, said he believes a restaurant makes sense for the first floor of a building he bought earlier this year at the northwest corner of East 69th Street and Euclid Avenue. The Geauga County resident said he will put a new subsidiary of his business, which specializes in exterior rehabilitation of old buildings, on the upper floors. Mr. Frost’s work has taken him through Midtown over the years, and he has watched it change. See MIDTOWN Page 13
Agora, 5000 Euclid Ave.: Another Hemingway project, the former concert hall is being marketed as the Offices at Penn Square.
Northwest corner of East 69th Street and Euclid Ave.:
Former Warner & Swasey building, 5701 Carnegie Ave.: Hemingway is working with the city
Businessman Greg Frost said a restaurant makes sense for the ground level of his building at East 69th Street and Euclid Avenue; a new subsidiary of his Warrensville Heights-based Frost Building Maintenance Co. will comprise the upper floors.
of Cleveland on an environmental cleanup of this site, which once housed a thriving machine tool business.
Cavs drop season, single-game prices But with ‘variable’ method, just how much remains to be seen By JOEL HAMMOND jmhammond@crain.com
Feb. 19, 7:15 p.m. You’re sitting in the lower bowl for the Cleveland Cavaliers’ Sunday night game against the Sacramento Kings, a rare laugher for the good guys. You get to talking with the fellow season ticket holder in the row behind you, and agree that the team’s decision to “significantly” decrease prices — as Cavs spokesman Tad Carper put it in the Dec. 12 edition of Crain’s Cleveland Business — after the Cavs’ lost season of 2010-11 was a wise move.
But a funny thing happens: In the course of your conversation, you find out your neighbor is paying a couple dollars less than you every game, which for your two tickets adds up over the course of the season. The Cavs make no apologies for rewarding different customers differently, based on any number of variables. And because those variables vary so much from customer to customer, the team is hesitant to place a generic figure on the amount it has lowered season ticket prices for the 2011-12 season, which has been abbreviated to 66 games from 82 because of the protracted collective bargaining dispute between NBA owners and players. Mr. Carper said the decline in prices for season ticket holders ranges in percentage terms from the
“low single digits into the low double digits.” Price decreases for single-game tickets — which went on sale last Saturday, Dec. 10 — are in the same range. “It comes back to being marketdriven and maximizing revenue,” Mr. Carper said, noting that easier ways to track consumer buying patterns make the process smoother. “Combine those things and it makes smart business sense. Ultimately, the marketplace has the ability to impact the price. Dynamic pricing asks what (are tickets) worth today? Teams just needed to get smarter about it.” The variables in figuring prices are many, and as customers meet certain requirements, the price of their season tickets is lowered incrementally. Early renewal — a way for the See CAVS Page 14
THE WEEK IN QUOTES “If you’re going to waste your time watching what the government’s going to do, you’re wasting time you could have spent growing your business.” — Tom Hobson, president, Abanaki Corp. Page One
“Employees dice, chop and prepare the romaine lettuce, but what doesn’t go into the burrito goes into the (food scraps) containers.” — Ian Rosby, sales team manager, Rosby Resource Recycling Co. Page 7
“There are some interesting opportunities for winemakers to create something special.”
“We put a lot into our party every year, the best food ... wine — we go for seven hours.”
— Donniella Winchell, executive director, Ohio Wine Producers Association. Page 15
— Rob Falls, owner, Robert Falls Public Relations. Page 15
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United: Hub status key to vitality continued from PAGE 3
marketing and air service development with the Cleveland Airport System, which oversees Hopkins, to get more details on their own. That meeting was held last Wednesday, Dec. 7. After that meeting, Mr. McKeighen immediately sent a letter to United Airlines president Jeff Smisek asking for information on what it would take for United to retain the Cleveland hub. He got a phone call the next day from Greg Hart, a United senior vice president, who offered to set up a meeting for travel planners in the region with United officials. Mr. Payne said he was impressed that Mr. McKeighen could get that quick of a response from so senior a United executive. Rob Recker, GCP senior vice president for marketing communications and membership development, said last Thursday, Dec. 8, that GCP’s marketing campaign is on schedule and will move beyond its own members into the broader business community in the next few weeks. “Right now we’re crafting that total campaign message which will be unveiled in January; it’s kind of been the quiet phase of the campaign,� Mr. Recker said. “You’re going to see a robust community education campaign rolling out in the new year.�
Tick, tick, tick The clock is ticking on Cleveland’s efforts to convince United to retain the hub at Hopkins that has been operated for more than two decades by Continental Airlines, with which it reached a merger agreement in May 2010. Only nine months remain before
“You’re going to see a robust community education campaign rolling out in the new year.� – Rob Recker, senior vice president for marketing communications and membership development, Greater Cleveland Partnership the expiration of a short-term agreement struck in September 2010 by former Ohio Attorney General Richard Cordray with United to keep the hub at Cleveland Hopkins in exchange for dropping an antitrust investigation into the merger. Under the deal, the airlines agreed to maintain 90% of their flights at Cleveland Hopkins for two years, with maintenance of the flights beyond that time dependent on passenger levels and other benchmarks. The new United so far is living up to that agreement. When the airline last September announced systemwide service cuts of about 5%, Hopkins came through largely unscathed. The company also has agreed to maintain other operations, which include a maintenance operation, at Hopkins for five years. Hopkins was home to one of three hubs of Continental, along Newark and Houston. However, with the merger, the new United has eight domestic hubs, and Hopkins is the smallest. Some observers believe the Cleveland hub is redundant because of United hubs in Chicago and Washington, D.C. A consultant to the city of Cleveland, InterVistas Consulting Group of Bethesda, Md., estimated earlier this year that if United opted to eliminate the Hopkins hub operation, the number of nonstop destinations from Cleveland could be cut in half, to 35 from 70, and the airport could lose as many as 120 of its 350 daily flights. GCP sees the hub at Hopkins as a
critically important economic development tool because of the value of direct and frequent flights to busy business travelers. The lack of an airline hub at Cincinnati/Northern Kentucky International Airport, for instance, was a factor cited in Chiquita Brands International Inc.’s decision last month to move to Charlotte, N.C., from Cincinnati.
‘We’re going to get there’ The list of companies participating in GCP’s hub marketing program will be publicized when the campaign goes public in January, according to Mr. Recker, who said the campaign will include media advertising in business publications, digital business marketing and social media. He would not disclose the budget of the campaign until after it’s been approved by the GCP board this week. The plan GCP will roll out next month will ask companies to add a pricing guideline to company travel policies to allow their employees to buy a United ticket even though the price might be higher than a competing airline’s comparable ticket. GCP is suggesting that large corporations allow their employees to pay as much as $300 more for a United ticket. It is suggesting to small and midsize companies that they approve spending up to $200 more per ticket. The “United for Unitedâ€? campaign also suggests that companies favor Cleveland when they hold meetings and training sessions, thus spurring air traffic through Hopkins, where United is the dominant carrier and handles about 70% of all passenger traffic. “I think we’re going in the right direction,â€? Hopkins’ Mr. Payne said about the GCP plan. “Maybe we’re not as far along with regard to the hard policies the companies are making, but we’re going to get there.â€? â–
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Volume 32, Number 50 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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NE Ohio suits med tech startup well Entrepreneurial duo’s device for incisions could ‘change medicine’ By CHUCK SODER csoder@crain.com
Will and Patricia Moore have helped launch and sell several medical technology companies over the past 30 years. One grew to employ 750 people. Another employed about 1,000. Their newest company, Suturenetics Inc., has even more potential, according to Will Moore. “I personally believe that this one is bigger than both,” he said. Of course, it has a long way to go. The husband-and-wife team, who moved to Beachwood from California a few weeks ago, are the only two employees of Suturenetics. They expect that situation to change soon. Their first product — a handheld device designed to make the process of stitching up surgical incisions faster and easier — already has been tested on about 100 patients. Now, the duo plans to raise a few million dollars so they can start manufacturing the device and selling it in limited quantities in mid-2012. The company aims to begin a broader push to sell the product and variations of it by mid-2013. The device is shaped like a handgun with two barrels that alternately pump in and out as the surgeon squeezes and releases its handle. The clamp at the end of one barrel is used to grip the surgical needle as the surgeon guides it through the skin. Then the other barrel moves forward to grab the tip of the needle so the surgeon can pull it through. Finally, the first barrel emerges again to grab the needle and restart the process. The method is four or five times faster than stitching an incision by hand, according to early tests, and it frees the surgeon’s other hand, which could be used to hold the suture line steady. “This is going to change medicine,” Patricia Moore said.
No strangers to success The device is exciting, but the Moores’ track record is even more impressive, said Bob Johnson, vice president of business development for BioEnterprise Corp., a nonprofit that assists health care companies in Northeast Ohio. The Moores in 1989 started Natus Medical Inc. to commercialize a device designed to simplify the testing process used to determine if small children have hearing problems. The company, based in the San Francisco Bay area, went public in 2001 and had sales of about $219 million in 2010, a figure that includes revenue from several companies Natus has acquired over the past 10 years. The Moores also played key roles in launching Nellcor Inc., which created a product that takes readings of oxygen levels in a patient’s blood without penetrating the skin. The company went public in 1986 and employed about 1,000 people in the late 1980s. Today Nellcor, which also was founded in the Bay Area, is owned by Covidien plc, an Irish medical products company. Will Moore, who specializes in business management and marketing, also was one of the first employees of blood pressure monitor developer AMR Inc., which was sold to Johnson & Johnson. Patricia Moore, who
“I personally believe that this one is bigger than both.” – Will Moore, founder, Suturenetics Inc. and two other tech companies focuses more on product development, patenting and regulatory issues, was part of the startup team at four other companies that were acquired. Mr. Johnson, of BioEnterprise, has kept in touch with Will Moore since they became sales representatives for Johnson & Johnson in the mid-1970s. When he saw on LinkedIn that Mr. Moore had started Suturenetics, Mr. Johnson called him to suggest he grow the company in Northeast Ohio. “I think maybe the bigger opportunity for us is that we get him,” Mr.
Johnson said. The Moores, who previously lived by Lake Tahoe, which straddles the California-Nevada border, said they were attracted to the region because of health care institutions such as the Cleveland Clinic and University Hospitals, the area’s low cost of living and state programs that provide financing to technology companies. They also said a big reason they moved was because they wanted to help create jobs in a region that badly needs them. “That was an exciting factor for us,” Ms. Moore said. ■
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Idles: No timetable for restart continued from PAGE 1
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said the company’s quality control unit failed to follow established procedures when investigating an unknown liquid found in a can in a storage area in the North plant. Lab tests indicated that the can contained urine. The FDA identified 48 other issues in a report it released last May. For instance, the agency said Ben Venue had failed both to figure out why metallic particles ended up in several batches of two drugs made at the plant and to fix the problem, which generated nine customer complaints between August 2006 and February 2010. Health Canada, which regulates drugs sold in that country, last August announced it had banned imports of 17 drugs made at Ben Venue’s Bedford plant because of quality control problems there. In an Aug. 17 letter addressed to Canadian health care providers, the agency said the ban could cause a supply shortage of those drugs. Both the European Medicines Agency and Health Canada continue to allow imports of essential drugs that are made only by Ben Venue. Ben Venue now is conducting a plant-wide assessment to “fully understand the potential impact” of the quality control issues and to fix them, according to an announcement the company made following the November inspection. In an email last Wednesday, Dec. 7, to Crain’s, Ben Venue spokesman Jason Kurtz said the company does “not have a timeframe for when
manufacturing will resume; however we are working to identify and implement any appropriate corrective actions as quickly as possible.” Ben Venue makes drugs marketed by companies such as Johnson & Johnson and Pfizer. However, one day after Health Canada announced its import ban, Ben Venue announced plans to exit the contract manufacturing business over the next several years. Instead, the company said, it plans to focus entirely on producing generic, injectable drugs sold by its Bedford Laboratories division. Mr. Kurtz said in a second email that the decision to exit contract manufacturing was made “to improve our compliance position and focus on our core Bedford Laboratories’ generic injectable business.” He also noted that no employees have been laid off because of the shutdown. Ben Venue recently hired George Doyle III to replace Tom Murphy as company president. Mr. Kurtz did not respond to an email asking whether regulatory issues drove the change in leadership. Ben Venue, a division of Boehringer Ingelheim GmbH of Germany, has expanded its Bedford plant significantly over the past several years. The company informed the city about the shutdown, said Michael Mallis, Bedford’s director of economic development. Conversations with the company left Mr. Mallis feeling assured that Ben Venue will fix the problems. “We have full confidence that they’re doing everything they need to do,” he said. ■
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Area recycler now a Chipotle partner Riverside acquires Chicago management consultant
Brooklyn Heights composting specialist helps popular chain with food scrap effort By KATHY AMES CARR kcarr@crain.com
Chipotle Mexican Grill is wasting no time in advancing its mission of serving “food with integrity” by expanding its nascent food scrap composting program, the largest rollout of which began last May in Northeast Ohio. Chipotle’s composting partnership with Rosby Resource Recycling Co. in Brooklyn Heights so far involves 28 regional eateries, and the Denver-based fast-casual restaurant chain is working to establish the program in all of its more than 60 stores in Northeast Ohio. “Even food scraps have a purpose, and Cleveland was a perfect place for us to expand our compost program,” said Caitlin Leibert, Chipotle’s sustainability coordinator. “We work tirelessly to procure the very best food from the very best sources. It only makes sense to continue treating our food with integrity after it has served its purpose.” Chipotle will begin this Thursday, Dec. 15, unveiling the composting initiative and partnering with neighboring recycling companies in Cincinnati and Columbus in Ohio and other markets nationwide that include Atlanta, Boston, New York, Portland, San Francisco and Seattle. Chipotle aims to slice its trash volume by 30%, said Amber Gallihar, account executive with Lief & Karson Communications in Beachwood, which is Chipotle’s public relations agency for Ohio and five other states. Three times a week, Rosby Resource Recycling picks up bins of food scraps, which include items ranging from bell pepper stems to avocado pits, at each of the participating Chipotle restaurants in Northeast Ohio. “Employees dice, chop and prepare the romaine lettuce, but what doesn’t go into the burrito goes into the containers,” said Ian Rosby, the recycling company’s sales team manager.
PHOTO PROVIDED
The Warrensville Heights Chipotle, from which Brooklyn Heights-based Rosby Resource Recycling helps haul away food scraps. “The participation at these restaurants has been great,” he noted. Rosby charges Chipotle a fee for food scrap bin removal. The material then is ground up and mixed into soil or other landscaping material that Rosby sells to landscapers, farmers or other businesses. Chipotle says its goal is to ensure the composted food scrap material is used by organizations located within a certain distance of each restaurant. “By diverting our food scraps from the landfill, and keeping them within 100 miles of the restaurant, we are able to further our mission of food with integrity,” Chipotle’s Ms. Leibert said.
Chew on this The investment is “cost neutral” for the restaurant chain, according to Ms. Leibert. Because Chipotle’s trash volume is lower, it can rebid its trash services at a reduced level and therefore a lower cost, which compensates for payments it makes to the recycling companies, Ms. Leibert said. “We see this as an investment,” she said. Chipotle’s regional composting program will benefit the efforts of Entrepreneurs for Sustainability (E4S) and Summer Sprout, a Cleveland-based community gardening program. Chipotle began the composting program years ago in Denver. About
Ursuline Announces New Executive MBA Program! u r su li n e’s n e w e x ecu t i v e m ba in Entrepreneurial and Ethical Leadership is an elite, one-year program in which students meet once every other Saturday for a total of 24 class sessions throughout the year. Students enrolled in the program receive an iPad furnished with e-books as well as a one-week study abroad trip to China. Ursuline’s accelerated MBA program is also offered in a one-year format through evening courses that meet once a week for five weeks and some that are entirely online. Learn more about these options at an MBA Information Session on January 4, 5:30 – 8:00 PM at the College’s Mullen Academic Building. RSVP at 440 646 8119.
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50 stores nationwide were composting food scraps by the time the program expanded in May. By the end of this year, about 250 Chipotle eateries will be composting, and the company says its goal is to more than double that amount by the end of 2012. “It is our ultimate goal to get every single Chipotle composting,” Ms. Leibert said. ■
The Riverside Co. private equity firm said it has bought HR Solutions International Inc., a Chicago management consulting firm, as an add-on to a portfolio company it acquired last fall. Terms of the purchase of HR Solutions were not disclosed. The company is an add-on to Avatar International LLC, a provider of patientsatisfaction surveys based in Lake Mary, Fla., that Riverside bought in September. Both HR Solutions and Avatar “use surveys as a mechanism to measure their customers’ performance in their respective areas of expertise,” according to Riverside. HR Solutions serves a wide range of industries, but derives about half its revenue from health care customers, Riverside said. It designs surveys and administers them primarily through email or other web-based delivery. Customers access the data through an online reporting tool that “provides detailed and customizable results as well as actionable recommendations,” Riverside said. Sarah Roth, a Riverside principal, said in a statement that the acquisition of HR Solutions “allows Avatar
RECENT ACTIVITY The Riverside Co. has made 25 acquisitions this year, including four in the last quarter so far. The others: ■ CPA Site Solutions, a Vermont-based provider of online marketing tools for certified public accounting firms ■ Keymile-Group, a telecommunications service provider based in Hannover, Germany ■ Ormond Beach, Fla.-based Emergency Communications Network Inc., which delivers messages to citizens or predetermined groups in specific geographic areas to communicate about weather, missing persons and other vital information. to build its employee engagement service offering. ... This acquisition will help Avatar develop solutions for customers that reflect its fundamental belief that engaged employees are a necessary component of delivering great patient care.” ■
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Hires: Sluggish economy may be more limiting than policies continued from PAGE 1
business owners’ plans to hire and to make capital expenditures during the period from 1986 to 2011. In the summer of 2011, the study says, the net percentage of small business owners planning to hire would have been six percentage points higher if it were not for policy uncertainty. The results for capital expenditures are similar, the researchers wrote. The study specifically cited the failure to resolve the U.S. debt ceiling dispute promptly and the associated unclear future course of federal expenditures and taxes for the uncertainty. The researchers’ measure of policy uncertainty — created by a trio of other economists — contains
three components: newspaper coverage of policy-related economic uncertainty, the number of federal tax code provisions set to expire in future years, and disagreement among economic forecasters. “In our view, policymakers should take seriously the widespread anecdotal reports that policy uncertainty is adversely affecting small business owners’ expansion plans,” the report sated. Tom Hobson doesn’t buy the report’s conclusions. Rather, he’s confident small businesses, which he regards as those with less than $20 million in annual sales, aren’t delaying expansion because of looming policy uncertainties. “Jeez, if I were to wait for policy
and what politicians are deciding, I’d be out of business by now,” said Mr. Hobson, president of Abanaki Corp., an Auburn Township manufacturer that recently broke ground on an expansion. “I got to be honest with you, I don’t know any small business owners who base their decisions on policy,” Mr. Hobson said. Abanaki, which makes pollution control equipment, is adding about 5,000 square feet to its existing 10,000square-foot operation, Mr. Hobson said. The privately held company, which does not disclose sales figures, employs between 25 and 30. Mr. Hobson, who’s also a member of the global board of the Entrepreneurs’ Organization, a nonprofit
dedicated to advancing the cause of entrepreneurship, said he looks strictly at how his sales and leads are doing to determine what course of action to take with his business. “If you’re going to waste your time watching what the government’s going to do, you’re wasting time you could have spent growing your business,” Mr. Hobson said.
‘Don’t think twice’ Aaron Grossman’s perspective is similar to Mr. Hobson’s. The president of Alliance Staffing Solutions, a staffing and recruitment firm in Independence, hasn’t seen economic policy uncertainty inhibit the growth of companies using his hiring services.
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Mr. Grossman also hasn’t allowed uncertainty to slow his own company’s growth: Alliance Staffing has nearly doubled its employees to 60 since late 2010, and its revenues have increased to $35 million this year from $25 million in 2010, he said. “We’re a small business here in Northeast Ohio, and we’re growing,” he said. “I don’t think twice about economy policy because I take the opportunity and I’m running.” It doesn’t surprise Philip Noftsinger that a number of small business owners dispute that economic policy uncertainty has a bearing on their growth. “Are they concerned about what they perceive to be a growing regulatory environment? Absolutely,” said Mr. Noftsinger, president of the CBiz Payroll Services unit of CBiz Inc., which produces a monthly index that tracks the employee counts of about 3,000 clients. “But is that regulatory environment what’s affecting them right now, today? Is that what’s affecting them next quarter? No.” While economic policy uncertainty can be a factor for why small businesses aren’t hiring, Mr. Noftsinger makes this point: “If we were in an environment of high consumer demand and there was a lot of economic activity out there, I don’t believe economic policy paralysis … would necessarily slow down hiring.”
BUS856_11
The study’s researchers tackled the topic because the Cleveland Fed had heard from a variety of business contacts that they were very concerned about policy uncertainty, Mr. Schweitzer said. Fady Chamoun, for one, says economic policy uncertainty is a reason for the deceleration in expansion of Aladdin’s Eatery Systems, a Lakewood-based restaurant chain of which he is president and CEO. The goal had been to grow to 50 Aladdin’s by 2014, but instead of doing it in roughly three years, it may take five or six, Mr. Chamoun said. “We don’t know what’s going to happen, so we’re being careful,” said Mr. Chamoun, whose company operates 30 Aladdin’s restaurants, plus others of a different name, at present. “It’s not clear what the next policies will be. When you see the government spending so much money, somebody’s going to pay for that. You don’t know how that’s going to play out.” Mr. Chamoun says he hears similar concerns from other small business owner brethren and the tenants in the Lakewood strip Aladdin’s owns. “We’ll wait until the next presidential election and see what happens,” Mr. Chamoun said. “Hopefully, things will loosen up a little bit, confidence will come back.” Roger Sustar straddles the fence. On the one hand, the owner of Fredon Corp. in Mentor says the study’s conclusion is a “realism.” “We’re scared … about everything that’s going on with these clowns,” he said of policymakers. “They have no idea what they’re doing.” But, on the other hand, the manufacturer of precision machining parts has hired nine people since this time last year, bringing its total to 87 employees. “We have hired a few people, and it scares the crap out of me when we do that because our payroll keeps growing,” he said. “There is uncertainty, but sometimes, you just have to do what you think is right.” ■
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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
Shop talk
T
he allure of 6,000 good-paying jobs is hard to pass up. However, we fear the state of Ohio could end up with a serious case of buyer’s remorse if it succeeds in its efforts to convince Sears Holdings Corp. to move its headquarters to the Buckeye State from Illinois. Gov. John Kasich acknowledges that Ohio has made a pitch for Sears, which isn’t happy about the tax climate in its home state. He and other state officials have declined to provide details of Ohio’s offer, though Illinois’ governor, Pat Quinn, has put the package of incentives at $400 million. A big push for Sears by Ohio wouldn’t be out of character for the Kasich team, which has been aggressive in its efforts to keep and attract jobs. Just last week, the Ohio Tax Credit Authority approved $60 million in tax breaks for what the governor said was a record 30 companies. The state said projects tied to those tax credits should create 3,501 jobs over the next few years and retain another 10,539. That’s cheery news on its face. But as Crain’s managing editor Scott Suttell highlighted Dec. 2 in his Editor’s Choice blog on our website, job-creation tax credits issued by Ohio and many other states often have failed to produce the levels of employment promised by the companies that received them. “In Ohio alone, the state Tax Credit Authority approved job-creation tax credits for 2,059 projects from 1993 to 2009,” according to an analysis by The Associated Press of nearly two decades of data. “Records show that some worked, but nearly half were terminated or canceled before completion.” The AP’s story on its findings quotes Jerry Good, deputy chief of Ohio’s Division of Strategic Business Investment, as saying, “It’s very difficult for anyone to make the call of how any company is going to perform.” That statement may be true in many cases. In the case of Sears Holdings, plenty of warning signs exist that the company that owns the Sears and Kmart retail chains may have seen its best days and could face significant trouble ahead. Just last Monday, Dec. 5, Moody’s Investors Service lowered its credit rating on various Sears debt from an already-lousy Ba3 to an even lower junk status of B1, and warned that the rating could be downgraded yet again. Moody’s said the negative rating outlook “primarily reflects uncertainties around the company’s ability to arrest recent sales weakness and negative trends in operating margins, noting the company has recorded year-over-year declines in EBITDA for the past seven fiscal quarters.” Sears is a shadow of the retail megaforce it was for the better part of the 20th century, before the rise of Walmart. The numbers show a company in decline, with its revenue falling 18% to $43.3 billion in 2010 from $53 billion in 2006, and its net income plunging 91% over that same five-year period, to $133 million from nearly $1.5 billion. What’s more, its operating cash flow dropped more than 90% in just one year, to $130 million in 2010 from $1.5 billion in 2009. Is Sears the caliber of company that the state should lavish with incentives, and are the odds good that the investment will pay off over the long haul if it does? If the state can’t respond with a hearty “yes” to both parts of the question, it shouldn’t do a deal.
FROM THE PUBLISHER
Rock Hall event will take center stage
A
support in exchange for a commitment s we dig out the winter coats that the ceremony be held in his city on and dust off the snow shovels, a regular basis. It’s fair to say that a lot of April might seem like a long way local Rock Hall fans still would be griping off. But for Terry Stewart and his about the event always being in New York team at the Rock and Roll Hall of Fame and City had Mayor Jackson not stepped in. Museum, it’s right around the corner. But the mayor and the other local In early April, rock music’s eyes will be supporters know how much this event focused on Cleveland for the induction means to Cleveland, and with of the 2012 class, among them all the work being done on big the Beastie Boys, Red Hot Chili BRIAN downtown projects such as the Peppers and Small Faces/The TUCKER medical mart and convention Faces. It again will be a grand center, the new casino and the week and a half for Cleveland, Flats East Bank office tower and and it’s going to be a whirlwind hotel, Cleveland and the region of activity, with the unveiling of will receive a ton of media the Rock Hall’s Walk of Fame, attention, which is great. dedication of the new Rock and Heck, it’s already begun. Roll Hall of Fame Library and Early this month the front page Archives on Tri-C’s downtown of the Sunday business section campus, the Grateful Dead of the New York Times carried a lengthy exhibit opening and the induction cerestory on the latest choices for the Rock mony. Hall, and the first paragraph was terrific. The staging of this ceremony, with It read: “Old rock ‘n’ rollers don’t fade away. its television coverage, is an expensive They just hope for a nod from Cleveland.” undertaking, and it wouldn’t be done The story went on to explain how here without the leadership of Cleveland many of the groups that have been Mayor Frank Jackson, who offered his
inducted saw great spikes in their record sales soon afterward. I know — isn’t that term “record sales” quaint, you might be thinking. Well, it’s how I think; old habits die hard, it seems. The story went on to note that the sales boost is immensely valuable, given the freefall that has hit the music recording industry. Total sales have dropped by a half, to less than $7 billion, in just 10 years. But get inducted in the Rock and Roll Hall of Fame, and your record sales jump by 40% to 60% in the weeks after the announcement. Now, that will get your attention, even if you are accustomed to fame and big bucks. And what’s fascinating is how these induction choices get debated by fans and critics alike, with many of the same gripes each year. Why not Rush? How can you ignore Kiss? What about Joan Jett and the Blackhearts? Bon Jovi? And on and on. But that’s terrific, because so many people care so much about this institution, and the music it represents. And its hall of fame is right here in our town. How much better can it get? ■
THE BIG ISSUE President Obama’s Social Security payroll tax cut is set to expire at the end of the year. Should Congress let it lapse?
PECOLA POINTER
KEVIN FOLEY
DAVID WILSON
BRIGITTE LOWE
Cleveland
Brunswick
Parma
Bedford
I think they should renew it. That was a great thing this year.
Keep it. Everybody needs it. It’s a little bit of extra money for everyone.
Absolutely — keep it in place. I don’t think that given our current economy people can stand to see their taxes go up at a loss from their pocketbook. I think Congress will renew it.
I think they should, given general economic conditions. It won’t benefit me that much. It’s a good short-term solution for the economy, although not a long-term one. At this point, short-term solutions are needed.
➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.
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GOING PLACES JOB CHANGES FINANCE FIFTH THIRD BANK, NORTHEASTERN OHIO: Richard Kretschman to business banking team lead.
FINANCIAL SERVICE FIRSTCREDIT INC.: William Lindala to collections training manager; Heather Gordon to client support and commercial insurance billing specialist; Brenda Johnson-Young, Jody Bailey, Eric Compan and Steve Hill to patient account managers. LEAGUE PARK ADVISORS: Rahul Madan Mohan and Daniel Son to analysts. SKYLIGHT FINANCIAL GROUP: Michelle Pryor to director of new planner development; Stephanie Taylor to marketing coordinator; Caitlin Rice to agency compliance coordinator; Elaine DeStephano to agency services representative. SS&G HEALTHCARE SERVICES LLC: Michelle Moon to practice manager; Sharree Bench, Christy Pelamati, Christy Wilson, Deanna Herman, Michele Riesen, Tina Howells, Michelle Simpson, Carol Kline and Jill Ulbricht to billing specialists. SS&G WEALTH MANAGEMENT LLC: Kimberly Nelson to administrative assistant.
president, senior art director; Ann Lentz to vice president, director of production services. SEGMINT INC.: Thomas C. Tyler to executive vice president. STERN: Randy DeMuesy to associate creative director.
Mohan
Son
Emerson
Gatti
Krol
Robbins
NONPROFIT CATHOLIC CHARITIES HEALTH & HUMAN SERVICES: Samantha Mealy to director, marketing and communications. CLEVELAND FOUNDATION: Kaye Ridolfi to senior vice president, gift planning and donor relations; Monica Brown to director, human resources; Danielle Hanna to human resources manager. INTERNATIONAL INSTITUTE OF AKRON: Jim Dudziak to director of finance and business. MANUFACTURING ADVOCACY & GROWTH NETWORK: Michael R. Morgenstern to chief development officer. PRESIDENTS’ COUNCIL LLC: Deborah E. Perkins to president.
REAL ESTATE TRANSACTION REALTY: Viktor Gavrylyuk to sales associate.
LAND: Bernadette Kerrigan (Center for Families and Children) to chair; Anita Miller to first vice chair; Nicole K. Wilson to second vice chair; Joshua L. Berman to secretary; John Zaranec to treasurer.
AWARDS ADOPTION NETWORK CLEVELAND: Danita Harris (NewsChannel 5), Terrell Howard and Kate Livingston received Triad Advocates of the Year Awards; Estes Turner received the Founder’s Award.
Send information for Going Places to dhillyer@crain.com.
RETAIL
LEGAL
FIT ONE: Chuck Herman to director of sales and distribution.
KASTNER WESTMAN & WILKINS LLC: Julie A. Trout to associate.
SERVICE
REMINGER CO. LPA: Julian Emerson, Amanda Gatti and Jonathan Krol to associates.
EXPERIENT: Marianne Schmidhofer to strategic sales executive, corporate markets.
MANUFACTURING
TECHNOLOGY
MID-WEST MATERIALS INC.: Bradley K. Robbins to vice president, commercial division.
SOCIUS: David Warren to director of business development.
MARKETING
BOARDS
DIX & EATON: Kris Dorsey to vice
ADOPTION NETWORK CLEVE-
THERE WERE THE LANDOWNERS, AND THE NEIGHBORS, AND THE ENVIRONMENTALISTS AND THE ZONING BOARD. THERE WERE THE HUNTERS, AND THE FARMERS, AND THE FEDERAL REGULATIONS AND THE LAND USE RESTRICTIONS. THERE WERE EXCAVATION AND RECLAMATION ISSUES. THERE WERE AESTHETIC ISSUES. AND THERE WERE THE BIRD LOVERS,
LETTER
Pragmatism needed in federal budget brouhaha ■ This letter is in response to Brian Tucker’s Nov. 28 commentary, “A pox on the cowards in Washington,” which upbraided members of Congress for failing to deal with the federal deficit. The vast majority of people in the United States and outside the country just scratch their heads and muse, “What in the world are these guys thinking?” The reality is there are two major issues in play: No. 1, the 2012 election, and No. 2, the ideological bent of a significant number of our elected officials in Congress who feel that it’s their mission to change the way the U.S. operates. As a consequence, neither party alone can muster enough votes to pass any meaningful legislation on the spending, revenue and debt issue. Progress will only come when the “pragmatists” in both parties come together and formulate a plan that the president can sign and that will satisfy neither the ideologues nor the extreme partisans in either party, but can generate enough support to pass. Only then can we expect to begin a process of reigning
in our debt through some combination of spending reductions and revenue increases. While the winding down of our involvement in Iraq and Afghanistan will help the budget, it will not be enough. We will need some fundamental changes in our entitlement programs to make them selfsustaining. How we deal with the needed revenue enhancements to fully balance the budget will become the next task, and there are several good proposals out there. While I share Mr. Tucker’s frustration and the disgust of the majority, I at the same time realize that only when Congress and the president accept the problem as an urgent national issue and not a partisan or ideological one will they come together and do what we have to do. They need to trust the vast majority of us will understand the need to do hard things and not punish them for doing the right thing.
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Med Mutual offers twist on ‘buy local’
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When asked how large his sales staff is, Medical Mutual of Ohio CEO Rick Chiricosta without hesitation says 2,600 — the size of the Cleveland-based insurer’s entire work force. And in hopes his army of employees around the country will continue to spread Medical Mutual’s good name, Mr. Chiricosta has encouraged his employees to shop as much as possible from the insurer’s clients.
with
If the “Mutual Appreciation” initiative goes as planned, Mr. Chiricosta expects it will boost customer loyalty and perhaps stir a little activity in the local economy. Consider it an “I’ll scratch your back, if you scratch mine” sort of arrangement. “It’s real simple,” said Mr. Chiricosta, who hatched the idea. “The one thing we bring to the table that our competition doesn’t is that we have 2,000 people who live (in Northeast Ohio). From a conceptual standpoint, we’re saying, ‘Let’s reward
P the resen crit ted ical in c ly a onju ccla nc ime tion d ex hibi
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the people who are choosing us.’” Late last month, Medical Mutual rolled out an interactive database on its companywide intranet that allows employees to search the insurer’s client list based on geography and service type. Employees are asked to keep receipts and log their purchases from those clients in order to win prizes. Medical Mutual employees as of late last week had logged $688,699 in purchases from the company’s clients. Clients, not surprisingly, approve. “I think that’s fantastic their CEO would come out to their employees and encourage them to do business with the partners,” said Chris Marhofer, operations manager at the Ron Marhofer Auto Family, one of the insurer’s clients. “If you can create relationships like that, it helps us all out. It creates a better business environment for both parties.” Mr. Chiricosta said the initiative
“From a conceptual standpoint, we’re saying, ‘Let’s reward the people who are choosing us.” – Rick Chiricosta, CEO, Medical Mutual of Ohio also presents his company with a distinct marketing advantage. For one, he has instructed his employees to remind the companies with which they’re doing business that they’re patrons largely because of their connection with Medical Mutual. “It’s a great concept, and executing it and keeping momentum is going to be the challenge, but I think it can make a big difference from a sales standpoint,” he said. “It could really play well when you’re sitting down with a significant customer.”
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Northeast Ohio business leaders said they were unaware of other companies with programs such as Medical Mutual’s. However, they noted there’s a recent influx of “buy local” campaigns by trade organizations and other nonprofit groups geared at spurring growth in the regional economy. The Council of Smaller Enterprises, for instance, runs a website armed with a searchable database of local businesses. Also, Cleveland Independents, a local nonprofit, runs a directory of independently owned restaurants in the area. Rosanna Miguel, an assistant professor of management at John Carroll University’s Boler School of Business, said she sees such programs as “more of a reaction to the fears people have about the economy, and the fact that it’s something we feel we don’t have control over. “We can’t do a lot whole lot to make things better other than support the local community and organizations,” she said. Joe Roman, president of the Greater Cleveland Partnership chamber of commerce group, said the advantage of “buy local” campaigns is that they foster relationships between consumers and businesses. But, in the end, he said, it’s up to each business to prove its value in the market — not just through a buy local marketing blitz — in order to cement their relationships with consumers. “If Medical Mutual’s program works and creates new relationships and the relationships are useful for both parties, that would be a win for everybody,” Mr. Roman said. ■
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Midtown: Collaborations paying off continued from PAGE 3
“I said to myself, if any place is going to develop positively, it’s going to be this strip in between” downtown and University Circle, he recalled. “This was the best place to buy a fixer-upper and have some kind of assurance that you’re going to be near some good activity.” The intersection that grabbed Mr. Frost’s interest is looking like it could become the heart of a bustling new business district in the years ahead. Right now, more than a half-dozen development deals are in progress or are on the horizon nearby, with a significant amount of the activity coming from companies usually focused on the greener pastures along suburban interstate highways. These developers are attracted to what’s called the Health-Tech Corridor, a stretch along Euclid Avenue from downtown to the medical complexes emanating from University Circle. And the activity is happening in spite of the reluctance of developers to get involved in older, urban neighborhoods, such as Midtown. Land there is expensive and putting a deal together can inflict “considerable brain damage,” as one developer put it, because of environmental and financing concerns related to innercity properties. Midtown even has grabbed the attention of one prominent developer who has spent 20 years mining fertile ground in the southern suburbs. “We’ve started to look but we haven’t done anything at this point,” said Neil Viny, a principal with the Dalad Group. “We’re looking but we have yet to grab something.” Catching Mr. Viny’s eye in particular is the work of Hemingway Development, a partnership of James Doyle and Greg and Fred Geis of Streetsboro-based Geis Cos. that has produced the first significant new construction in Midtown in more than a decade. Earlier this year, tenants began moving into their Midtown Tech Park, which has 128,000 square feet of office and lab space at 6700 Euclid Avenue. Mr. Geis said last week the building is 70% leased.
“We tried to do this in late 2008, 2009, when the market was flat,” Mr. Doyle told the group. “There was not a conventional loan to be had, much less a real estate loan. “That’s certainly what triggered the need to partner up with public capital,” he said. Mr. Doyle went on to list the layers that went into what he called “the capital stack” — a low-interest federal Housing and Urban Development loan, New Market Tax Credits awarded by the federal government, a Cleveland Core Cities loan, a state Jobs Ready Sites grant and county environmental cleanup grants and loans. Those publicly subsidized financial products comprised well more than half the $30
Coordinated efforts The high level of public financial support for Midtown Tech Park was possible because of several public sector efforts. In April 2010, local and state officials were beginning to execute their strategy for what formally was dubbed the Health-Tech Corridor. The city of Cleveland and Cuyahoga County pledged a variety of incentives for developers. Then, in June 2010, the state of Ohio got on board, designating the corridor an “Ohio Hub of Opportunity and Innovation,” which brought with it priority status for state development grants and loans.
Hemingway Development is pursuing additional projects in the district. It has begun marketing a redevelopment of the four-story building that housed the Agora night club at 5000 Euclid as the Offices at Penn Square and, a block south of Euclid, is working with the city of Cleveland on the environmental cleanup of the 160,000-square-foot Warner & Swasey Building, a former machine tool factory at 5701 Carnegie Ave. Cumberland Development is eyeing a property on the north side of Euclid now owned by RTA to take the overflow from its existing Baker Electric Building business incubator. Meanwhile, local architect and real estate investor Richard Bowen is planning a $35 million mixed-use project at 6600 Euclid that could include a medical office building, retailing and a senior living center. ■
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A stack of funds After years of planning and construction, this stretch of Euclid Avenue was rebuilt by the Greater Cleveland Regional Transit Authority to accommodate its HealthLine bus rapid transit line, which was billed as a tool that would help redevelop the area between downtown and University Circle. But to make that redevelopment happen in a recession is requiring an unprecedented effort by public officials from all levels of government. Part of the effort is clearing away the red tape to allow developers to proceed with as little extra effort as possible so projects progress nearly as smoothly as building on pristine — and lower-cost — farmland. The other important element is the high level of publicly subsidized financial assistance available for this neighborhood at a time when private capital for real estate development is hard to find. At a Nov. 30 meeting of a group of government agency and nonprofit officials, financial executives and developers at Midtown Tech Park, Hemingway’s Mr. Doyle described the layers of public financial assistance received to make possible the new building plus the renovation that has begun at an adjacent building at 7000 Euclid.
million in financing for the Hemingway projects.
And the last piece fell into place in July when Cleveland was named one of six cities in a pilot federal program called “Strong Cities, Strong Communities.” That program is designed to coordinate the development efforts of a number of federal agencies with local officials to further streamline the public regulatory and financing process. This rare government collaboration is beginning to pay off. Last February, a partnership led by Mr. Frost paid about $460,000 for three parcels on the north side of Euclid at East 69th for less than an acre. He said he plans to tear down a house on the north end of his property and restore the three-story brick building that will remain into a home for Frost Architectural Preservation Inc., a new subsidiary of Frost Building Maintenance, in addition to the restaurant.
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CONGRATULATIONS
continued from PAGE 3
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Cavaliers to create more certainty in their season ticket base — is more valuable for the Cavs than waiting until two weeks before the season to renew, thus resulting in a reward. Opting to receive tickets via Veritix and its FlashSeats website, which are owned by Cavaliers owner Dan Gilbert, allows the Cavs to better monitor sales and attendance trends and earns customers another notch. Want an even better discount? Pay your entire invoice up front, rather than through a payment plan. And, of course, the starting point for all these variables is longevity: The longer a customer has bought ticket plans, the better off he or she is.
‘Hard work ahead’ Before last season, the Cavaliers earned the highest season ticket renewal rate in franchise history, as fans were forced to renew before LeBron James left. Those commitments resulted in official average paid attendance of 20,112, or 97.8% of capacity. Based on Crain’s research — the Cavaliers cite league policy in not discussing publicly their renewal rates and raw season ticket numbers — the team last year likely started
of LIM Bu sin 3 ITE es F D s I RE TIM nt E er M E O ne O t o NT FFE r P HS R: ho ne Se rv ice .
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“It comes back to being market-driven and maximizing revenue. Ultimately, the marketplace has the ability to impact the price. � – Tad Carper, spokesman, Cleveland Cavaliers with a season ticket base of more than 13,000 full-season equivalent tickets. The Cavs will not meet that number this year, Mr. Carper acknowledged, though he declined to specify what percentage of the team’s season ticket base renewed. He said the Cavs’ season ticket business likely would rank in the middle of the pack in the NBA. “We realize we have a lot of hard work ahead of us,� Mr. Carper said. “We’re going to have to earn this.� If the Cavs don’t achieve their goals, it won’t be for lack of trying. In addition to the varied incentives listed above, the Cavaliers also offered a 2012-13 price freeze for season ticket holders who renewed before the NBA owners locked out players on July 1, the day the sides’ prior collective bargaining agreement expired. What’s more, the team offered incentives to fans who kept funds already paid for 2011-12 season tickets with the team during the lockout: 5% of whatever money they had in a Cavs account, whereas fans who asked for a refund of whatever they had paid received a 1% bonus.
Avoiding the scramble Mr. Carper said a “huge majority�
of customers who already made some payment on this season chose to keep their money with the team. That’s in keeping with a trend in pro sports, according to Barry Kahn, CEO of QCue, a ticket pricing specialist in Austin, Texas, that counts about 30 teams among its clients, including about half of Major League Baseball. Mr. Kahn said those payment retention efforts have helped teams combat the “negative impactâ€? of the lockout, and the Cavs in particular combat the departure of Mr. James. “That way, they’re not scrambling on the season ticket front,â€? Mr. Kahn said, noting the quick turnaround — about a month — between the end of the lockout and Christmas Day, when the season will start. Just how well all the Cavaliers’ efforts worked for this season will be evident early on. Ticket brokers often serve as a good barometer for how the arena might look when the season opens, and Scott Merk, owner of Merk’s Tickets in Brook Park, said many individuals and companies upon whom he calls when customers request tickets have scaled back their season ticket purchases. “That’s less access for me, and means that the Cavs will have more inventory to push,â€? Mr. Merk said. â–
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19 TAX TIPS: IRS HELPS WITH MISCLASSIFIED EMPLOYEES.
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SMALL BUSINESS Firms still find value in holiday parties PHOTOS PROVIDED
The wettest year on record made it difficult for Northeast Ohio winery owners to combat the effects of mildew, disease and rot on vineyard grapes. But winemakers have certain vineyard protection processes in place to mitigate damage. They say they aren’t overly concerned with how this year’s harvest will impact wine production and quality and even expect some pleasant surprises when their products are bottled.
GRAPE EXPECTATIONS Record year of wet weather damaged some harvests, but hardy winemakers upbeat on taste, character of products made from this year’s fruit By KATHY AMES CARR kcarr@crain.com
N
ortheast Ohio’s vintners have weathered a particularly troubling growing season for grapes, with the wettest year on record damaging vineyards and threatening product quality. Mildew, disease and rot were tough to overcome. Waterlogged grapes had difficulty reaching maturity and therefore weren’t as ripe. Some grapes were unsalvageable. “This year caught us off guard. It was not a pleasant growing season,” said Lee Klingshirn, a winemaker at Klingshirn Tina Fowler, a vineyard crew member at Madison-based Chalet Debonne Vineyards, works to protect the vines from Winery in Avon Lake. “The weather rain and impending winter frost. ruined about 60% of my berries.” But winery owners are used to going with Mother Nature’s flow and say the weather anomaly won’t have a significant impact on wine production.
By DAN SHINGLER dshingler@crain.com
B
oth the weather and the economy might be frightful for some as 2011 comes to an end, but that doesn’t mean it’s not party time. Some professional party planners and businesses that hold holiday celebrations for their employees say their year-end events are too important to Scrooge them up. After all, they say, it’s often the only time during the year when everyone from an organization actually gets together in one place. That’s the case for the Cleveland law firm Calfee, Halter & Griswold, said Anne Cummings, head of client services and firm sponsorships and organizer of its big holiday event. “It’s just too important not to do,” Ms. Cummings said. Calfee has lawyers in Cleveland and Columbus (and it recently announced the opening of an office in Cincinnati), and many of them don’t see each other throughout the year, she said. Even in the individual offices, employees can work all year focused on different clients and not spend much time with one another.
“Less is more with everything. That’s what we’re discovering this year.” – Christine Krause director of marketing and development, Executive Caterers
See WINE Page 19
FAR LEFT: Nick Ferrante, a winemaker at Ferrante Winery in Geneva, says patrons likely won’t notice a change in the taste of wine made with this year’s grapes. FILE PHOTO/RUGGERO FATICA
Celebrations restrained, yet foster camaraderie
LEFT: Rain didn’t deter wine enthusiasts from sampling products from such wineries as Debonne.
“This is really our one time to get everyone together,” Ms. Cummings said. So, the firm has not curtailed its tradition. It watches expenses so they don’t get out of hand, but it still throws a festive event, usually at a fancy location. This year, Ms. Cummings said, the event was at The Union Club downtown in early December (so as not to conflict with school plays and family gatherings), though next year Calfee will use the party to show off its new downtown offices, which the firm will occupy in January 2012. After that, it likely will go back to another Cleveland venue. See HOLIDAY Page 16
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Holiday: Parties used to show employees appreciation continued from PAGE 15
“We like to use the event to help promote other local businesses, so we go to a different one every year,” Ms. Cummings said. The event always is nice, Ms. Cummings said, but its real value is in getting nearly all of the firm’s 300 employees together, where they not only can share camaraderie, but also can feel appreciated for their efforts throughout the year.
Deck the halls ERC, a Mayfield Village-based human resources organization, recently surveyed companies in Northeast Ohio regarding holiday parties and other seasonal practices with 152 employers responding. Here are some highlights: ■ 73% of organizations are planning a holiday party this year, with 67% budgeting the same amount or more as last year for the party. ■ 72% of employers say their holiday parties are catered. ■ 69% say only employees are invited.
‘Less is more’ But, perhaps not by choice, other businesses are cutting back. For example, an American Express poll of its business-owner customers found that only about 35% of small businesses will throw a party this year — the lowest percentage in the 10-year history of the survey. That number has been dropping, according to American Express, along with year-end bonus payouts, due to the economy. But some who make their living off the party business say holiday celebrations are starting to come back in Northeast Ohio, even if they do so with new budget constrictions. For example, Executive Caterers at Landerhaven is hosting about the same number of business holiday parties this year as in the years before the recession — and even a few more than it’s held in the past two years, said Christine Krause,
director of marketing and development for the gala party center in Mayfield Heights. But there are parties, and then there are parties, and while some clients still have the big, ritzy affairs they’ve always had, the trend is toward simplification mixed with some frugality, Ms. Krause said. “Less is more, with everything. That’s what we’re discovering this year,” she said. Ms. Krause said Executive Caterers even toned down the decorations a bit this year, noting that the move is a reflection of current styles
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■ 41% of employers indicated their holiday parties will be held on the company premises, with 52% saying their holiday parties will be at an external location. ■ The most common week employers cite for having a holiday party in 2011 is the third week of December. The second most common week was the second week of December. ■ 35% of employers are holding holiday parties on a Friday, and 32% are having the parties on
Thursday. Fewer employers are having their holiday parties on a weekday. ■ The majority of employers — 51% — are having their holiday parties during lunch. Evening parties were the second most common (39%). ■ Most employers reported that human resources is responsible for planning holiday parties. Some (19%) report that employee committees/task forces are involved in the planning. Top management and the CEO sometimes are involved. SOURCE: ERC
rather than cost cuts. The trick, she said, is to make sure that just because things are simple doesn’t mean they also aren’t elegant, tasteful and, in the case of food and beverages, delicious. For instance, she said, some clients might go for macaroni and cheese on the menu instead of truffle mashed potatoes. But, if the macaroni and cheese is the best anyone’s ever had, and the service and presentation are impeccable, no one cares whether it cost less to serve, she said. “Scaling down has become an art, not just for our customers, but for us,” she said. Like Ms. Cummings, Ms. Krause
said many of Executive Caterers’ clients see their year-end events as too important to give up. Even during the recession, she said, more clients by far cut back on their spending than canceled their events.
Fezziwig comes to life Some, however, refuse to budge at all — and when it comes to holiday parties, “scaling down” or “cutting back” are not in their vocabularies. Among them is Rob Falls, owner of Robert Falls Public Relations in Cleveland and affectionately known to some who have worked for him as “Fezziwig” because he
celebrates Christmas like the character from “A Christmas Carol,” right down to his generosity toward his employees. “We’re going in the opposite direction,” Mr. Falls said. “We’re not cutting back at all.” Mr. Falls also had his party early, and this year he took his 40 employees to the Table 45 restaurant, where they were treated to a full-blown dinner party complete with food, a live jazz trio and good wine personally picked out for the occasion by their wine-loving employer. Mr. Falls admittedly revels in the event, which generally includes a game in which there are no losers and which often results in $100 bills being flung by a laughing Mr. Falls at the game’s winners. One year, the game entailed a quiz show with such difficult questions as, “What is your favorite color?” Like others, Mr. Falls said he thoroughly believes the party is the best way not only for his staff to get a chance to fraternize, but for him to show his appreciation for a year’s worth of hard work. So, like his “Christmas Carol” model, Mr. Falls doesn’t skimp. “We put a lot into our party every year, the best food, the best wine — we go for seven hours,” he said. And, yes, Mr. Falls said, part of planning that party does involve hiring cabs and drivers. “You have to make sure everyone gets home safely,” he said. ■
IN BRIEF OPEN FOR BUSINESS: The Franchise Consultants, an affiliate of The Business Alliance Inc. of Seattle, has opened an office in Concord Township. The firm’s president is Glenn Heffner, who has more than 10 years’ franchise experience as the previous owner of ProForma Creative Communications, also of Lake County. The Franchise Consultants offers clients a wide selection of franchises
for sale, representing a variety of sizes, descriptions, styles, prices, full- and part-time opportunities and small and large investments. MAKE IT YOURSELF: Textile Republic, a venture founded by Cleveland-based siblings Kimberley Osborne-Milstein and
We Buy Luxury Timepieces and Large Diamonds for CASH! 11 Locations Serving the Cleveland Area
Brian Osborne, has launched an online platform that enables artists to have textile patterns used on custom merchandise. Textile Republic is a manufacturer and marketer of on-demand, fully customized products such as belts, picture frames, coasters, luggage tags and more. Artists submit designs to http://textilerepublic .com, and visitors to the site vote on their favorite patterns through a Facebook “Like” icon. The number of votes determines which patterns are used on merchandise, with artists receiving compensation of 7% to 10% of sales.
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The Sisters of Charity Health System lights the way for health and human services in Northeast Ohio through: Mercy Medical Center, St. Vincent Charity Medical Center, St. John Medical Center1, Sisters of Charity Foundation of Canton, Sisters of Charity Foundation of Cleveland, Early Childhood Resource Center, Joseph’s Home, Building Healthy Communities, Catholic Community Connection2, Light of Hearts Villa3, Regina Health Center, and Independent Physician Solutions. L E A RN MORE AT SIS T ERSOFCH A RI T Y HE A LT H.ORG
1
Owned jointly with University Hospitals, 2Shared sponsorship with Catholic senior living, education and charities, 3 Shared sponsorship with Sisters of Charity of Cincinnati
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Be cognizant of latest employment law standards
T
he employment law landscape continues to change, making it critical for employers to respond. Compliance with the numerous state and federal laws that impact the employment process has become much more complicated, and the consequences of failing to comply with those laws has become more severe. Employment litigation is a major part of federal and state court dockets, and it appears that the growth in that area will continue into the foreseeable future. And while there have been many changes, below are a few of the most prevalent of which employers should be aware. ■ Posters stating rights: Effective Jan. 31, the National Labor Relations Board will require employers to notify employees of their rights under the National Labor Relations Act. A poster must be placed in the office where it can be seen by employees and posted on an intranet or Internet site, if personnel policies
JAMESKUREK
ADVISER are posted there. This poster states that employees have the right to act together to improve wages and working conditions; form, join and assist a union; bargain collectively, also to refrain from these activities. It also provides examples of unlawful conduct. This rule applies to all private-sector employers subject to the National Labor Relations Act, excluding agriculture, railroad and airline employers. The posters, though, are only the beginning of the changes. ■ Communicating differently: Not long ago, the primary methods by which employees communicated
at work were either telephone or written memos. Now, virtually every employee has a computer and another form of electronic communication, such as an iPhone or BlackBerry, allowing them to always be connected to work and co-workers. Texting has replaced picking up the telephone for many people, and email and voice mail long have been the norm. These changes demonstrate the need for employers to keep up with new technologies in order to effectively manage all forms of communication. However, various legal questions have developed regarding the management of employee communication. For instance, the NLRB has challenged some employers’ efforts to limit such forms of communication. The NLRB recently found that certain types of electronic communication between employees can amount to “protected concerted activity,” which cannot be legally prohibited. For example, emails and voice mails have become increasingly
prevalent as evidence in various types of employment litigation, including sexual harassment and discrimination claims. Unfortunately, employees often feel comfortable with making inappropriate statements using media that preserve those statements for use in subsequent litigation. Hence, it is critical that an employer develops a policy that defines the types of communication considered inappropriate. ■ Communication not the only area that has changed: For many years, as long as an employer kept adequate records for the time nonexempt employees were performing their duties at the workplace and paid them at least minimum wage (plus overtime when appropriate), there was little exposure to a wage and hour claim. However, the rapid evolution of the workplace has resulted in duties often being blurred between exempt (ineligible for overtime) and nonexempt (entitled to overtime) positions. The pressure to improve customer service also has sometimes resulted in work being performed that is not properly recorded, such as working during unpaid breaks to respond to customer requests. Increasingly, employees are performing work that is compensable either from home or remote locations. These and other situations have resulted in the need to clearly
define exempt positions and monitor the circumstances under which compensable work is being performed. ■ Expanded definition of disabilities: Complexity also has developed in the area of accommodating people with disabilities. Although a disability was initially narrowly defined, and therefore generally recognizable to an employer, the definition of a disability has been greatly expanded through the Americans with Disabilities Act Amendments Act (ADAAA), which has broadened the definition to include many more medical conditions. As a consequence, requests for time off or other job accommodations require a more structured and complex evaluation to ensure compliance under existing disability laws. In addition, to support a claim that certain physical or mental requirements are essential to a particular position, job descriptions now need to be written to include the job’s physical and mental requirements. Ultimately, it is critical that any employer carefully review all of its employment policies and practices to make certain that it has made every reasonable effort to comply with existing employment laws. ■ Mr. Kurek is a partner in the Cleveland office of Fisher & Phillips. He represents employers in all aspects of labor and employment law.
GRANDOPENINGS E.NOPI ENRICHMENT CENTER 23600 Mercantile Road, Suite F Beachwood 44122 www.enopicleveland.com Mary Beth Golombek, a public school educator with more than 35 years’ experience, has opened the first E.nopi Enrichment Center in Ohio. E.nopi is an established supplemental education program in mathematics, reading and writing that is targeted to children ages 4 to 16. Working with certified teachers, children attend at least one 45-minute session each week for each subject. The student/teacher ratio is 4-to-1. “The Enopi program finds the level at which a child can work competently and confidently and builds from strengths into new skill areas,” explains Mrs. Golombek, who will direct the operation of the Beachwood E.nopi Enrichment Center with her husband, Joe. Phone 216-292-3667 Fax 216-292-5665 contact@enopicleveland.com
ANNA MIA 19059 Lake Road Rocky River 44116 Diana E. Maiola, a native Clevelander and graduate of John Carroll University, has opened a boutique in Rocky River. The location gives Ms. Maiola a venue to showcase her jewelry collection — pieces from Italy as well as those she designs. In addition, the Rocky River location will give Ms. Maiola a place
from which to manage tours to Italy, an additional business venture — Italian Tours & Travel by Diana — that she started in 2001 as an offshoot of her jewelry business. In business since 1996, Ms. Maiola also is changing the name of her business from Goldmax to Anna Mia, which is the name of her jewelry line that’s inspired by her mother. The boutique will be open 11 a.m. to 5 p.m. Monday through Friday; 10 a.m. to 3 p.m. Saturday; and by appointment. It will offer full jewelry services, and hostess parties can be held at the boutique for those unable to host in their homes. 440-409-0011 info@italiantoursbydiana.com www.goldmaxbydiana.com
PINK LOTUS YOGA 18103 Detroit Ave. Lakewood 44107 www.pinklotusyoga.com Marcia Camino is founder and director of Pink Lotus Yoga. She has practiced yoga for nine years and has taught more than 1,200 hours of yoga classes and workshops since becoming certified in 2005. The studio offers lunchtime, evening and weekend classes as well as weekend workshops. 216-632-0816 To submit a new business, email sections editor Amy Ann Stoessel at astoessel@crain.com or call 216-771-5155.
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IRS program offers relief Wine: Artisans will exercise creativity to firms that may have misclassified employees continued from PAGE 15
Companies can escape penalties for past years
T
he IRS has unveiled a new voluntary compliance program to offer relief from exposure to federal employment taxes to businesses that have improperly classified their workers as independent contractors. Under this program, employers who voluntarily change the classification of their workers from independent contractors to employees essentially will not be penalized and will not be subject to audits for prior years. The terms of this new program are extremely favorable and should be considered by any business using independent contractors whose status as such is questionable. Some businesses may characterize their workers as independent contractors in order to avoid paying employment taxes. If those workers should be classified as employees under the tax law, this creates a significant tax risk to the business. There has been significant focus by the IRS and other governmental agencies over the last few years on whether businesses are appropriately characterizing workers as employees or independent contractors. The IRS and other governmental agencies have recognized that part of the misclassification problem is caused by employers who believe that they may have misclassified a worker, but who are reluctant to change the classification due to the exposure to additional taxes for prior years (and in many cases for multiple employees). Partially in response to these concerns, the IRS announced a program under which employers will not have to worry about past federal tax issues caused by the misclassification as long as they are willing to treat the workers as employees on a go-forward basis. In order to qualify for this program, the business must: ■ Be presently treating the workers as nonemployees. ■ Have satisfied the Form 1099 reporting requirements for these workers for the three years preceding the year that a request for participation in the program is filed. ■ Not have any current dispute with the IRS as to classification issues, nor be under examination by the IRS, Department of Labor or any state agency relating to classification issues. ■ Have complied with the results of any prior examination by the IRS, Department of Labor or state agency that addressed worker classification issues. The firm must agree to pay 10% of the employment tax liability that would have been due on compensation paid to the workers for the most recent tax year and agree to an extension of the statute of limitations. The business will not be liable for any penalties or interest on this amount, and the business will not be subject to an employment tax audit with respect to the classification of the workers for prior years. In order to apply for this program,
CARLGRASSI
TAX TIPS a business should complete and file Form 8952 — Application for Voluntary Classification Settlement Program. While there are a number of requirements for qualification, the terms of this offer are very favorable. For instance, if an employer changes the classification of one employee, the status of all employees with the same duties must be reclassified. Unlike other “safe harbor” provisions providing relief for employers who have misclassified workers, this program does not require that the business have a “reasonable basis” for treating the worker as an independent contractor. Many advisers appropriately advise their clients to exercise caution with their decision to participate in this program. A business considering relief under this program must realize that it is not binding on any state or other governmental agency. Misclassification of workers can lead to a number of issues not involving the IRS, including issues relating to employment laws, workers’ compensation and the Employee Retirement Income Security Act (ERISA). Employers still will be required to address any issues created in these areas by the misclassification of the worker. In addition, the business will have a significantly higher employment tax burden going forward for those reclassified employees. Despite these concerns, given that misclassification can create a significant tax exposure, employers should carefully evaluate whether to take advantage of this program. ■ Mr. Grassi is president of McDonald Hopkins LLC.
“There’s always wine in the pipeline,” said Donniella Winchell, executive director of the Ohio Wine Producers Association. “Wine takes a couple years to mature, and most wineries have a partially full cellar.” Wine made from this year’s grapes likely will not be bottled until, at the earliest, next spring; in other cases, it could be years, winemakers said. The grapes from this year’s harvest likely will materialize in the form of lighter red blends or sweeter wines, but the Rieslings and chardonnays will reflect a more classic, cold-weather climate, being lighter in flavor and character. “There are some interesting opportunities for winemakers to create something special,” Ms. Winchell said. “They’ll need to work with what they have in the cellar and blend it. Being in the cellar of a winemaker is a continuous journey of exploration. Wine is part science and part art.”
When it rains, they pour Total precipitation levels this year have far exceeded the average annual snow and rainfall for the region, according to the National Weather Service. As of Dec. 4, Cleveland Hopkins International Airport reported 60.63 inches of rain and snow for the year; normal precipitation levels as of that date are about 36 inches. Akron-Canton Airport reported 53.70 inches as of Dec. 4, about 17 inches above the norm. The lower precipitation levels in Northeast Ohio’s southern region have helped buoy wine production at both the Winery at Wolf Creek in Norton and Troutman Vineyards in Wooster, said owner Andy Troutman, who measures precipitation levels at each of his vineyards. “The grapes harvested in Wooster were actually very good,” he said. “We had half the amount of rainfall that we did 30 miles to the north. The longer the sun’s out, the more ripe the grapes are.” Mr. Troutman also gets grapes from six other Ohio growers as well as some from out of state to supplement production. He said the volume of wine produced this year actually is up over previous years. “We planted some vineyards three or four years ago, and (the grapes) came into production this year, which was kind of deceiving,” Mr. Troutman said.
Still, there were grapes on his vineyards that either went bad or didn’t reach the level of ideal ripeness, which will affect the wine’s flavor profile. “We’ll have to supplement the sugar somehow,” he said. Tony Debevc, owner of Chalet Debonne Vineyards, said the Madison operation’s red wines produced with this year’s grapes likely will be sweeter, like a rosé, and end up as a blended product to be sold at a lower price. Hot, dry weather like the conditions in 2010 is ideal for producing the flavor-intense, full-bodied red wines, he said. “We’re saving our 2010 red wines for 2012,” said Mr. Debevc, whose operation is one of the largest growers in the state, with 172 acres of vineyards. “They’re some of the best we’ve produced.” Despite the monsoon’s degradation of some of the 20 acres at Klingshirn Winery’s vineyards, Mr. Klingshirn said to his surprise the quality of some grapes was optimal. “I think we may run a little low on Riesling next year, but any of the grapes (harvested) could be ready to bottle by next spring,” he said. Nick Ferrante, a winemaker at Geneva-based Ferrante Winery, said patrons likely won’t notice a change in taste in his wines, whose varieties made with this year’s grapes will be supplemented with sugar. “We do that routinely,” he said.
Arnie Esterer, owner of Markko Vineyard in Conneaut, said he grows and sources all his own grapes, which are spread out over 15 acres. “We don’t modify our product. We let the grapes do their own thing,” he said. “The grapes picked this year will be bottled and sold in 2013 or 2014. It just depends on how the wine turns out.”
Loss prevention Local winemakers said they are able to combat the moisture penetration to a certain point with nets, sprays and field drain systems. However, the consecutive days of soggy spring weather made it difficult to spray the vineyards regularly to prevent disease and mildew from damaging the grapes, Mr. Klingshirn said. Mr. Debevc said about two-thirds of Debonne’s vineyards incorporate a subterranean tile system that drains excess moisture from the soil. Those vineyards fared much better than the one-third acre that is minimally or not tiled, with the tiled crop yielding some of the operation’s best varieties of cabernet sauvignon, cabernet franc, merlots, chardonnays and Rieslings, he said. Still, the wet weather didn’t dampen the spirits of wine enthusiasts, the Ohio Wine Producers Association’s Ms. Winchell said. “I’m guessing traffic to local wineries was up 7% or 8% over 2010,” she said. “The wine business is thriving.” ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
DECEMBER 12 - 18, 2011
BANKS IN NORTHEAST OHIO RANKED BY DEPOSITS(1)
Name Address Rank Phone/Website
Northeast Ohio deposits (millions) 6-30-2011
6-30-2010
% change
Offices in NE Ohio
Employees (companywide) 6-30-2011
Holding company
Top local executive
1
KeyBank NA 127 Public Square, Cleveland 44114 (216) 689-3000/www.keybank.com
$13,396.2
$13,395.3
0.0%
124
15,351
KeyCorp Cleveland
Beth E. Mooney chairman, CEO, KeyCorp
2
PNC Bank 1900 E. Ninth St., Cleveland 44114 (216) 222-2000/www.pnc.com
$9,184.6
$8,767.3
4.8%
158
49,372
PNC Financial Services Group Inc. Pittsburgh
Paul Clark regional president
3
Huntington National Bank 917 Euclid Ave., Cleveland 44115 (800) 480-2265/www.huntington.com
$8,422.1
$8,171.1
3.1%
152
10,356
Huntington Bancshares Inc. Columbus
Daniel P. Walsh Jr. president, Greater Cleveland region
4
FirstMerit Bank NA 106 S. Main St., Akron 44308 (888) 384-6388/www.firstmerit.com
$7,560.5
$7,136.0
5.9%
128
3,028
FirstMerit Corp. Akron
Paul G. Greig chairman, CEO
5
Charter One 1215 Superior Ave., Cleveland 44114 (216) 566-5300/www.charterone.com
$6,124.0
$6,941.5
-11.8%
111
15,914
Royal Bank of Scotland Group PLC Edinburgh, Scotland
Kenneth E. Marblestone president, Ohio region
6
JPMorgan Chase & Co. 1300 E. Ninth St., Cleveland 44114 (877) 302-4273 /www.chase.com
$5,326.6
$4,791.4
11.2%
96
191,202
JPMorgan Chase & Co. New York
James M. Malz, president, CEO, Ohio market; head, Middle Market commercial banking
7
Fifth Third Bank 600 Superior Ave. E, Cleveland 44114 (216) 274-5300/www.53.com
$4,216.5
$4,402.7
-4.2%
88
20,953
Fifth Third Bancorp Cincinnati
Jerry Kelsheimer president, CEO, Fifth Third Bank, Northeastern Ohio
8
U.S. Bank NA 1350 Euclid Ave., Cleveland 44115 (216) 623-9300/www.usbank.com
$2,299.7
$2,057.0
11.8%
111
59,768
U.S. Bancorp Minneapolis
Alan Zang president, Northeast Ohio market
9
Lorain National Bank 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com
$983.6
$975.4
0.8%
20
260
LNB Bancorp Inc. Lorain
Daniel E. Klimas president, CEO
10
The Farmers National Bank of Canfield 20 S. Broad St., Canfield 44406 (330) 533-3341/www.fnbcanfield.com
$652.8
$635.8
2.7%
13
281
Farmers National Banc Corp. Canfield
John S. Gulas president, CEO
11
Citizens Banking Co. 100 E. Water St., Sandusky 44870 (419) 625-4121/www.citizensbankco.com
$521.7
$529.7
-1.5%
12
295
First Citizens Banc Corp. Sandusky
James O. Miller president, CEO
12
Middlefield Banking Co. 15985 E. High St., Middlefield 44062 (440) 632-1666/www.middlefieldbank.com
$515.3
$475.8
8.3%
8
102
Middlefield Banc Corp. Middlefield
Thomas G. Caldwell president, CEO
13
Cortland Savings and Banking Co. 194 W. Main St., Cortland 44410 (330) 637-8040/www.cortland-banks.com
$391.4
$371.2
5.4%
14
149
Cortland Bancorp Cortland
James M. Gasior president, CEO
14
Citizens Bank One Citizens Banking Center, Flint, Mich. 48502 (800) 676-6276/www.citizensbanking.com
$348.5
$375.7
-7.2%
14
1,957
Citizens Republic Bancorp Inc. Flint, Mich.
Jamie Lynch community president; president, commercial banking
15
First National Bank 112 W. Market St., Orrville 44667 (330) 682-1010/www.fnborrville.com
$337.4
$311.7
8.3%
14
112
National Bancshares Corp. Orrville
David C. Vernon president, CEO
16
First National Bank of Pennsylvania 166 Main St., Greenville 16125 (800) 494-2265/www.fnb-online.com
$302.4
$283.5
6.7%
11
2,183
F.N.B. Corp. Hermitage, Pa.
Stephen J. Gurgovits CEO
17
Andover Bank 19 Public Square, Andover 44003 (440) 293-7605/www.andoverbankohio.com
$271.8
$253.9
7.0%
8
93
Andover Bancorp Inc. Andover
Martin R. Cole president, CEO
18
Portage Community Bank 1311 E. Main St., Ravenna 44266 (330) 296-8090/www.pcbbank.com
$223.2
$194.8
14.6%
2
53
Portage Bancshares Inc. Ravenna
Richard J. Coe CEO
19
Farmers Savings Bank 111 W. Main St., Spencer 44275 (330) 648-2441/www.fsb-spencer.com
$205.2
$186.6
10.0%
2
27
NA
Thomas W. Lee president, CEO
20
Liberty Bank NA 2351 Edison Blvd., Twinsburg 44087 (330) 425-3033/www.libertybankna.com
$193.0
$223.0
-13.5%
3
44
NA
William A. Valerian chairman, president, CEO
21
Western Reserve Bank 4015 Medina Road, Medina 44258 (330) 764-3131/www.westernreservebank.com
$171.1
$185.7
-7.9%
3
36
Western Reserve Bancorp Inc. Medina
Edward J. McKeon president, CEO
22
Premier Bank and Trust 6141 Whipple Ave. NW, North Canton 44720 (330) 478-1000/www.mypremierbankandtrust.com
$154.0
$139.2
10.6%
4
59
Excel Bancorp LLC Saint Clairsville
Rick L. Hull president, CEO
23
Independence Bank 4401 Rockside Road, Independence 44131 (216) 447-1444
$143.7
$144.8
-0.8%
1
24
Independence Banccorp Independence
Christopher Mack president
24
Consumers National Bank 614 E. Lincoln Way, Minerva 44657 (330) 868-7701/www.consumersbank.com
$132.9
$116.6
14.1%
6
110
Consumers Bancorp Inc. Minerva
Ralph J. Lober II president, CEO
25
Buckeye Community Bank 105 Sheffield Center, Lorain 44055 (440) 233-8800/www.buckeyebank.com
$126.1
$133.6
-5.6%
1
26
Buckeye Bancshares Inc. Lorain
Bruce E. Stevens president, CEO
26
Sutton Bank 3 S. Main St., Attica 44807 (419) 426-3641/www.suttonbank.com
$120.0
$112.6
6.6%
5
92
Sutton Bancshares Inc. Attica, Ohio
Eric A. Gillett vice chairman, CEO
27
Lake National Bank 7402 Center St., Mentor 44060 (440) 205-8100/www.lakenationalbank.com
$106.3
$82.4
29.0%
1
23
NA
Andrew L. Meinhold president, CEO
28
Croghan Colonial Bank 323 Croghan St., Fremont 43420 (419) 332-7301/www.croghan.com
$99.3
$83.0
19.5%
3
146
Croghan Bancshares Inc. Fremont, Ohio
Rick M. Robertson president, CEO
29
Ohio Commerce Bank 24400 Chagrin Blvd., Beachwood 44122 (216) 910-0550/www.ohiocommercebank.com
$82.5
$63.5
30.0%
1
21
NA
Dell R. Duncan president, CEO
30
The First National Bank of Bellevue 120 North St., Bellevue 44811 (419) 483-7340/www.fnblifetime.com
$78.9
$71.7
10.0%
2
40
First Bancshares Inc. Bellevue
Dean J. Miller president, CEO
Source: Federal Deposit Insurance Corp., www.fdic.gov, Summary of Deposits reports. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Banks with deposits in Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull and Wayne counties are included in this list. Only deposits from those counties are used for the NE Ohio deposit numbers.
RESEARCHED BY Deborah W. Hillyer
20111212-NEWS--21-NAT-CCI-CL_--
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1:45 PM
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DECEMBER 12 - 18, 2011
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Lending: Bank making more serious marketing push continued from PAGE 1
According to the performance evaluation, “The bank’s lending activity in the Ohio assessment area is low when compared to the branching network and deposit share in Ohio. Specifically, while 11.7% of the bank’s total deposits are from within the Ohio assessment area, only 1.4% of the loans were from the same area.� However, the report also noted that when it comes to residential mortgages, “the bank is extending a good portion of loans to low- and moderate-income borrowers.� In addition, the FDIC found a “poor level� of qualified community development investments and grants in the bank’s Ohio assessment area, and called its performance in retail banking poor as well. The report specifically makes note of the much-opposed closure of a branch near Shaker Heights. Bankwide, New York Community’s rating dropped to satisfactory in the latest FDIC evaluation from the outstanding mark it received in 2008, bank officials said. Its ratings in New York, New Jersey and Arizona were satisfactory, though the newest report calls its performance in Arizona “marginally adequate.� The vast majority of banks receive either satisfactory or outstanding CRA ratings, FDIC spokesman David Barr said. Mr. Ficalora expects the fix for Ohio Savings Bank to come “relatively quickly� and certainly by the time of the next exam, which historically has taken place about every
three years.
End of the ‘de-risking’ phase In what executives say is a move unrelated to the CRA ratings, New York Community Bank is deploying a new marketing strategy. Its goal is to gain greater visibility and to issue more loans in the more than 270 bank branches it operates in five states. The bank’s new strategy will deliver “more of a bold statement than we’ve made in the past,� said Cindy Flynn, executive vice president and chief administrative officer of New York Community Bancorp. “This is the first time in this marketplace where we’ve gone out� and done marketing and promotions, Ms. Flynn said. “Our goal is to grow our deposits in all our markets.� New York Community, which has completed 10 acquisitions in the past 10 years, has focused historically on growth by acquisition. As such, it has had little use for marketing and campaigns, Ms. Flynn said. Its new strategy so far has spawned a Switch & Save marketing campaign intended to acquire the deposits of new households. The bank is promoting its free checking account and is offering a 10-day CD that’s tied to the six-month CD rate and allows deposits and withdrawals every 10 days. The product’s minimum balance of $1,000, Ms. Flynn said, is lower than is typically required. Also, during the holidays, each branch is holding four weekly drawings for free Nook e-readers for people who simply walk into any branch and fill out a sweepstakes
Scott Halloran & Ryan Jeffers are proud to have represented
entry form. New York Community officials say the lower CRA ratings in Ohio and Florida are the result of a transition period that occurred after New York Community in December 2009 acquired failed AmTrust Bank, which in Ohio it renamed Ohio Savings Bank — the name by which it was known for most of its existence. It entered Ohio, Florida and Arizona via the acquisition. “There is definitely a transition period where you are just trying to stabilize yourself,� Ms. Flynn said. From mid-2008 to the present, the bank was “de-risking� its balance sheet, according to Ms. Flynn. Ohio Savings no longer was originating loans and putting them on its balance sheet, though it was originating loans and selling them, she said. Now that the bank is at a point where it believes it has achieved stability, it’s focused on increasing its single-family and multifamily mortgage lending in this market. It has not done multifamily lending previously in Ohio but will expand it here next year, Ms. Flynn said.
Change brings challenges Though he said it’d be unfair for him to comment directly on New
York Community’s ratings, Sal Maiorana, a former Federal Reserve Bank examiner who has examined banks for CRA compliance, said it isn’t farfetched to blame worsened ratings on a transition like the one New York Community has undergone. “A lot of times when change occurs and institutions are kind of operating new business strategies, things fall through the cracks,â€? said Mr. Maiorana, chief risk officer and a senior vice president for Geauga Savings Bank. “When you’re in a state of transition, it’s very easy to not cross a ‘t’ or dot an ‘i.’â€? CRA ratings can affect a bank’s ability to open new branches or expand operations, said FDIC spokesman Greg Hernandez. A lower CRA rating also can impact an institution’s reputation in a market, Mr. Maiorana said. “People read that and they say, ‘Oh, you’re not lending to blacks or Hispanics’ ‌ it does create a problem,â€? he said. “Right or wrong, that’s what happens.â€? The Ohio Fair Lending Coalition has been a vocal critic of Ohio Savings’ lack of lending in this region and its closure of the branch in Cleveland’s Larchmere neighborhood in December of last year.
In a recent news release, Alanna Ferguson, a leader of the Ohio Savings Neighborhood Alliance of the coalition, was quoted as saying, “Just because Ohio Savings is now owned by an out-of-state bank does not allow New York Community to put a red line through our community, and not reinvest our deposits back into the community.â€? The fair lending coalition is planning a protest at Ohio Savings’ Cleveland headquarters after Jan. 5, when the FDIC is scheduled to release publicly the bank’s CRA rating. The group wants the bank to offer, among other things, a loan product marketed to the community and locally processed and administered. “I think the goal here is ‌ to make sure they improve their lending here in Greater Cleveland,â€? coalition director Chip Bromley said. He said he hopes to see the bank “truly take its place at the table and work on credit issues in our community.â€? For its part, the city of Cleveland’s Department of Finance and Department of Community Development recently recommended to Cleveland City Council that it not use New York Community as a depository for the city’s active deposits during 2012-13. A Nov. 4 report cited both the closure of the Larchmere branch, which the city had opposed, and the bank’s loan-to-deposit ratio for not recommending New York Community. â–
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TRANSCAPITAL FINANCIAL CORPORATION F/K/A TRANSOHIO FINANCIAL CORPORATION (“TFCâ€?) IMMEDIATE RESPONSE REQUIRED. CERTIFICATION RIGHTS EXPIRE AT 5:00 P.M. NEW YORK TIME, ON February 1, 2012 NOTICE IS GIVEN by Jeffrey H. Beck, Liquidating Agent for the TFC estate, of the following: TFC is a debtor in the Chapter 11 Case No. 06-12644-BHCAJC, pending before the United States Bankruptcy Court for the Southern District of Florida. In 2007, TFC received litigation proceeds in connection with an action against the United States of America known as the “Goodwill Litigation.â€? Pursuant to TFC’s FRQĂ€UPHG SODQ RI OLTXLGDWLRQ (&) 1R WKH ´3ODQÂľ WKH Liquidating Agent has used the Goodwill Litigation proceeds to satisfy the allowed claims of TFC creditors. By order of the BankUXSWF\ &RXUW (&) 1R WKH ´2UGHUÂľ WKH /LTXLGDWLQJ $JHQW shall distribute the remaining proceeds, subject to administrative expenses and a Court approved reserve, to TFC’s shareholders. 2YHU PLOOLRQ 7)& VKDUHV EHORQJ WR 7)& VKDUHKROGHUV ´%HQHĂ€cial 2ZQHUVÂľ WKDW RZQ D EHQHĂ€FLDO LQWHUHVW LQ VKDUHV KHOG E\ QRPLQHH EURNHUDJH Ă€UPV EDQNV WUXVW FRPSDQLHV DQG RWKHU Ă€QDQFLDO LQVWLWXWLRQV ´1RPLQHHVÂľ ,I \RX DUH D %HQHĂ€FLDO 2ZQHU FRQWDFW \RXU 1RPLQHH LPPHGLDWHO\ WR FRQĂ€UP \RXU EHQHĂ€FLDO LQWHUHVW LQ 7)& VKDUHV 7)& VKDUHKROGHUV WKDW KROG 7)& VWRFN FHUWLĂ€FDWHV ´5HJLVWHUHG +ROGHUVÂľ PD\ DOVR SDUWLFLSDWH LQ WKH GLVWULEXWLRQ RI WKH UHPDLQLQJ Goodwill Litigation proceeds. ,I \RX DUH D 5HJLVWHUHG +ROGHU DQG \RX KDYH QRW SUHYLRXVO\ FHUWLĂ€HG \RXU LQWHUHVW LQ 7)& VKDUHV FRQWDFW WKH /LTXLGDWLQJ $JHQW¡V FRXQVHO LPPHGLDWHO\ DW WKH IROORZLQJ DGGUHVV WR REWDLQ LQVWUXFWLRQV RQ KRZ WR FHUWLI\ \RXU LQWHUHVW LQ 7)& $VJKDU $ 6\HG (VT Smith Hulsey & Busey,225 Water Street, Suite 1800, -DFNVRQYLOOH )/ (PDLO DV\HG#VPLWKKXOVH\ FRP 7HOHSKRQH ‡)DFVLPLOH ,I DQ\ 5HJLVWHUHG +ROGHU RU 1RPLQHH RQ EHKDOI RI %HQHĂ€FLDO Owners, or other TFC shareholder fails to certify an interest in TFC shares before 5:00 p.m. on February 1, 2012, such TFC Shareholder will waive his or her interest in the TFC shares, the shares will be cancelled, the TFC shareholder will not receive a distribution, and Goodwill Litigation proceeds related to the shareholder’s interest in TFC shares will be distributed on a proUDWD EDVLV WR 7)& VKDUHKROGHUV WKDW WLPHO\ FHUWLĂ€HG WKHLU LQWHUHVW After the Goodwill Litigation proceeds are distributed, TFC and the Liquidating Agent shall have no further obligation to any TFC shareholder and all shareholders will be barred from asserting any claim against the Liquidating Agent or TFC.
December 28 at 3:00 p.m..
BUSINESS SERVICES
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Crain’s Executive Recruiter An eastside Country Club is seeking an Executive Chef Must have a Culinary Arts degree and a minimum of 4 years Club experience is preferred. Send resumes to: Crain’s Cleveland Business Box #1128 700 W. St. Clair, Suite 310 Cleveland, OH 44113-1230
JOB SEEKERS: We now post
POSITIONS WANTED in the Classified section of CrainsCleveland.com at
NO CHARGE (Up to 150 words)
E-Mail info to cmackey@crain.com
EMPLOYERS: Reach the most qualified workforce. Advertise your open positions here.
SPECIAL RATES AVAILABLE. Call Toni Coleman at 216-522-1383 tcoleman@crain.com
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DECEMBER 12 - 18, 2011
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
23
THEINSIDER
THEWEEK DECEMBER 5 - 11 The big story:
AmTrust Financial Services Inc., a property and casualty insurer based in New York that already has an operation in Seven Hills with 245 employees, is planning to establish a big office in downtown Cleveland that eventually could house as many as 1,000 workers. Subject to various approvals, AmTrust intends to set up offices inside the building at 800 Superior Ave. (left) that once housed the former McDonald Investments brokerage firm. An affiliate of AmTrust bought the largely vacant 23-story building earlier this year for $7.5 million at an online auction and has committed to spending at least $20 million to upgrade the property, which includes a parking garage.
Raising the stakes: As expected, the RitzCarlton hotel in Cleveland is changing hands. Forest City Enterprises Inc. agreed to sell the 206-room Ritz-Carlton at Tower City Center to a subsidiary of Rock Ohio Caesars LLC for a total of $36.5 million, which includes a $2.5 million payment by Rock Ohio under a previous option agreement between the two companies. Rock Ohio Caesars is the joint venture of Caesars Entertainment Corp. and Rock Gaming LLC, which is owned by Cleveland Cavaliers majority owner Dan Gilbert, that is creating the Horseshoe Casino Cleveland in the former Higbee Building that’s part of the Tower City complex.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Price gets right to the point
And now, a bit of sports talk talk
■ K&D Group CEO Doug Price gave a plea — or perhaps a hard sell — as he spoke to the Greater Cleveland Mortgage Bankers Association last Tuesday, Dec. 6, at The Union Club of Cleveland. Most of Mr. Price’s remarks recounted the Willoughby apartment company’s growth from eight units to more than 9,000. He noted that K&D’s growth came first from Price loans with savings and loans, then via federal-backed financing. The latter is now iffy because of concerns over the future of government-sponsored entities such as the Federal National Mortgage Association and Government National Mortgage Association, better known as Freddie Mac and Ginnie Mae, respectively. Now, Mr. Price said, local banks need to step forward to fund additional downtown apartments like those that K&D wants to do — and that the market apparently needs — due to record-high occupancy levels. “You can’t go to New York City to get financing for these projects,” he said. “It’s up to the people in this room to do it.” He closed simply: “Lend money.” As he thanked Mr. Price for speaking at the session’s end, Jack Branden, a Guardian Title agent and association’s president, said, “Message delivered. Whether it’s heard, only time will tell.” — Stan Bullard
■ A month after a 19% jump in market share, ratings at established all-sports radio station WKNR-AM, 850, fell in October, to 4.0 from 4.4. That figure represents a 9% drop in the listening audience tuned in to the station, according to data provided by Baltimorebased Arbitron Inc. And it appears WKNR, better known as ESPN Cleveland, is getting a stiffer challenge from its new competitor, CBS Radio’s new sports talk station, WKRK-FM, though WKNR still owns the genre as CBS attempts to establish itself in Cleveland. CBS’s station, better known as Sports Radio 92.3 The Fan, saw its share climb to 1.2 in October from 0.8 in September. That rise seems to reflect what Tom Herschel, CBS Radio’s senior vice president and market manager in Cleveland, told Crain’s last month, when WKNR experienced a bump in WKRK’s first full month measured by Arbitron. “(September was) the first full rating month we’ve had, and people still are discovering the station,” Mr. Herschel said then. “The feedback we’re getting from listeners and advertisers is all positive.” — Joel Hammond
WHAT’S NEW
BEST OF THE BLOGS
Shape your message around this app ■ A local startup is encouraging companies to shy away from giving their employees or customers the
traditional box of chocolates or company calendar over the holidays and instead give the gift of wellness with a yoga app. The Mobile Yogi, a Cleveland company that has developed a line of smart phone applications offering yoga tips, is opening a line of business aimed at allowing companies and other organizations to put their marks on its mobile yoga apps. With Mobile Yogi’s how-to yoga videos at the heart of the apps, companies and groups easily can add their own logos, links or whatever other content they wish before shipping them off as holiday gifts. “It allows the company to deliver the applications with their brand and their messaging,” said Sebastian Holst, who developed the apps along with wife, Dawn. “There seems to be a lot of interest.” Mobile Yogi also is pitching its services to local yoga studios that don’t have the resources to develop their own apps but would like to offer such services to their customers. The company launched consumer versions of the apps last May. Though the apps have reached more than 20,000 users around the globe, the idea was to refine and validate the content for users. The core business model, Mr. Holst said, is the business-to-business services the company started pitching this month. “This is a business we’ll scale,” Mr. Holst said. “There are literally thousands of yoga studios and companies around the world who might be interested.” — Timothy Magaw
Bargain buy: An investor and hotel operator based in Canada acquired the Old Arcade and downtown Cleveland Hyatt Hotel for the minimum bid of $7.7 million at a Cuyahoga County Sheriff’s foreclosure auction. Skyline Cleveland Acquisition LLC, formed by Skyline Acquisition International Inc. of Toronto, was the winning bidder for the 1890-vintage Cleveland landmark. The Arcade property was redeveloped a decade ago at a cost of $60 million to accommodate the hotel, but a recent appraisal for the sheriff’s office valued it at $11 million, which triggered the minimum selling price at $7.7 million under state law.
Afoul of the feds: Invacare Corp. said the U.S. Food and Drug Administration requested the company negotiate and agree to a consent decree related to what Invacare described as “previously disclosed inspectional observations” at the company’s corporate facility and its wheelchair manufacturing plant in Elyria. Invacare said the FDA proposed a consent decree that would require suspension of certain operations at the facilities until they are determined by the FDA to be in compliance. Group effort: In its new role as the regional office in Northeast Ohio for the state’s JobsOhio business development program, Team NEO announced that six proposals to stimulate job growth and economic development in the region have received preliminary approval for financing from its board of trustees. Pending final documentation and approval, grants totaling nearly $3 million will be issued by Team NEO. The largest grant, for $2 million, would go to a joint regional retention and expansion program involving five groups.
Young, man in charge: William A. Young Jr., a former Cleveland Clinic administrator, was named president and CEO of St. John Medical Center in Westlake. Mr. Young, who most recently served for more than five years as chief operating officer at the Clinic’s South Pointe and Marymount Hospitals, will replace Cliff Coker, who announced in April he would retire at the end of the year.
Excerpts from recent blog entries on CrainsCleveland.com.
kid-friendly, wristwatch-style pedometer called the MOVband. “The MOVband uses the same technology that most more-expensive pedometers do: a 3D accelerometer in a solid state chipset,” Forbes.com reported. “But its slimmeddown features (the only data you can input ■ Northeast Ohio is home to two of the 100 are age and the time) mean that the businesses on Forbes.com’s list of America’s MOVband, priced at $20, sells for about a most promising companies. third of what it costs for the competing The privately held up-and-comers “have Nike+ Sportband.” compelling business models, strong manageMr. Squires said, “Pedometers are expenment teams, marquee customers, strategic sive and complicated. We said there’s an partners and precious investment capital,” opportunity to create a better, simpler peForbes.com said. dometer at an inexpensive price point.” At No. 50 on the list is Mesocoat Inc. of Nearly 2,000 students and faculty in ChaEuclid, which provides metal coating and grin Falls walked a combined cladding to protect pipes, plates 187,000 miles in three weeks in Ocand bars from corrosion and wear in tober as part of a program extreme environments. begun by the school district two Forbes.com said Mesocoat, years ago to improve children’s founded in 2008, has raised $13.5 fitness. The MOVband “helped get million in private equity and students excited about taking grants. CEO Andrew Sherman, 47, 10,000 steps a day.” was appointed to the U.S. DepartMr. Squires said he has been ment of Energy’s Hydrogen Safety approached by a financial services Panel. Mr. Sherman also has been company that wanted MOVbands involved in 11 startups, founding ABSMaterials’ for its 100 employees. He’s also in three of them. Steve talks with a Coca-Cola distributor. Coming in at No. 67 is ABSMate- Spoonamore rials of Wooster, a maker of “reactive glass” that separates pollutants and other molecules from water and air. ABSMaterials has raised $11 million in venture ■ A Wall Street Journal roundup of new capital. CEO Steve Spoonamore, 46, has fiction included kind words for a story founded or co-founded 14 companies. collection from a former Clevelander — and the best story, apparently, turns Cleveland into a zombie wasteland. The book is “After the Apocalypse,” by Maureen F. McHugh. The Journal called it ■ Chagrin Falls serial entrepreneur Blake “superb” and said the collection’s finest Squires has joined the fight against obesity story is “The Naturalist.” in a big way. The story features Gerrold Cahill, a conForbes.com profiled Mr. Squires, who vict who, like other prisoners, “has been left previously co-founded Findaway, a company to die in the sealed-off Cleveland Zombie that makes a digital audio book player Preserve.” called the Playaway. His new product is a
Let’s hear it for the 2%
COMPANY: Akhia, Hudson THE OCCASION: Its 15th anniversary The public relations and marketing communications agency was founded in November 1996 by its president, Jan Gusich (above), at her dining room table. She says her goal from the start was to serve clients’ needs “beyond their expectations,” and that remains the agency’s operating philosophy. Akhia started with two employees and three clients. It now has 29 employees and more than 30 clients. For information, visit www.Akhia.com.
COMPANY: National Mortuary Shipping, Cleveland THE OCCASION: Its 30th anniversary The company, founded in 1981 by Robert P. Smith, works with hometown funeral directors to aid families dealing with a difficult situation — death away from home. National Mortuary offers removal services, domestic shipping, international shipping, removal and embalming, livery, direct cremation, disinterment and graveside services, among other services a funeral director might need. For information about the company, visit www.NatlMortuaryShipping.com.
Be glad these aren’t your (flesh-eating) neighbors
MOVband pedometer is a step in the right direction
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The only high price you’ll pay is the one for procrastination.
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