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Vol. 31, No. 5
“I think there are fewer construction companies than there are brokers.” – Mark Rantala (below), former commercial real estate broker; now director of business development at JL Moore & Co.
Business groups to lead push on Third Frontier As tech initiative heads for May ballot, backers see passage as critical for state INSIDE: Ohio Gov. Ted Strickland stops in Highland Heights to push his advanced energy agenda. Page 5
JESSE KRAMER
By JAY MILLER jmiller@crain.com
CHANGE OF COURSE As commercial real estate bottoms out, some brokers seek greener pastures By STAN BULLARD sbullard@crain.com
A
fter 20 years in commercial real estate brokerage, Mark Rantala recently joined the JL Moore & Co. construction firm as director of business development. The reason: He sees little improvement in his bread-and-butter, retail-leasing arena for at least a year, and even then he expects the recovery to be spotty.
“I think there are fewer construction companies than there are brokers,” Mr. Rantala said from his new desk at JL Moore, which builds everything from churches to office and industrial buildings, but has a focus on restaurants, gas stations and retrofitting store interiors. Mr. Rantala is among a handful of commercial real estate agents joining residential brokers in exiting the commission-driven business during this harsh recession. See BROKERS Page 7
— Wendy Heiser-Higley, formerly of CB Richard Ellis’ Cleveland office and now a salesperson for an Orange County software company
Ohio-based businesses and colleges to develop and commercialize hightech products and processes. Senate Republicans, led by Senate President Bill Harris of Ashland, approved the lower bond limit partly because of worry that the public won’t support a larger issue, which would mean more interest payments from the state’s general revenue fund over the 10-year repayment period planned for the Third Frontier bonds. Business groups hope a compromise is reached closer to $950 million than $500 million, but they’re prepared to launch the campaign for whatever amount the legislature approves and are confident the issue will win voter approval. Joe Roman, president of the See THIRD Page 5
INSIDE PNC drops gloves in suing Huntington
WHAT OTHER FORMER BROKERS ARE SAYING “It was a really tough decision to leave because the earning potential in the long run is very high.”
With both houses of the Ohio Legislature agreeing in principle to put a Third Frontier bond issue on the May 4 ballot, business groups across the state are gearing up to mount what likely will be a $3 millionplus campaign to make sure the issue passes. The formal creation of a campaign committee is awaiting passage of HJR12, which would reconcile separate bills passed by the House and Senate. The House bill authorized the issuance of $950 million in research and development bonds, while the Senate bill pegged the bond limit at $500 million. The two chambers have until this Wednesday, Feb. 3, to reach a compromise on the dollar amount in time to put the issue on the May ballot. The Third Frontier program uses state money to finance efforts by
“Brokerage was my life. ... The problem came down to: the retailers were not doing anything.”
— Scott Smith, formerly of Beachwood brokerage Reisenfeld & Co.; now a national sales account rep for factoring concern TemPay Inc in Shaker Heights.
The owner of National City Bank charges Huntington National Bank and 10 former employees with breach of contract and misappropriation of trade secrets. Read Arielle Kass’ story on Page 3.
Banks say plenty of credit is available, but potential users aren’t biting Execs see use of borrowing lines decline as businesses pay down debt
Banks have money available, they say. It’s just that many businesses aren’t touching it. Executives at banks are reporting lower credit utilization — the amount of money unused that is available to businesses through their lines of credit — than they saw
a year ago. Throughout 2009, several banks said, they continued to see a decrease in the amount of available credit businesses were accessing. Paul Greig, president, chairman and CEO of FirstMerit Corp., said the credit utilization rate at the bank stood at 42% at the end of
05
By ARIELLE KASS akass@crain.com
2009. At Dec. 31, 2008, it was in the mid-50s. Mr. Greig said in large part the decline is because businesses have focused on paying down their existing credit, not accessing more of it. “Business customers are managing their balance sheet,” he said. “They
aren’t reinvesting in the business.” Their actions show a lack of confidence in economic improvement, he said, and it’s a trend seen at banks across the country, not just in Northeast Ohio. At U.S. Bank, regional chairman Kurt Treu said credit usage has fallen
to 30% from 38% a year ago across the bank’s 24-state footprint, mostly in the West and Midwest. He said while the bank continues to look for loans to make, businesses often aren’t biting. “It’s the best indicator of loan demand,” Mr. Treu said of the low credit-utilization numbers. “They have it, they have the ability to use See CREDIT Page 16
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MANUFACTURING Companies debate whether to hire top-notch employees now or risk the wait ■ Page 13 PLUS: MORE WITH LESS ■ SUPPLY CHAINS ■ & MORE
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LOTS OF HELPING HANDS
CORRECTIONS There were several errors in the Jan. 25, page 13 story, “Echecks, please.” In the late 1990s, one-quarter of consumer bank accounts had checks returned, not three-quarters as stated in the story. Nearly all paper checks processed by the Federal Reserve go through the Federal Reserve Bank of Cleveland; however, not all checks are processed through the Federal Reserve System. About 98% of the checks the Federal Reserve System now receives are electronic; the story indicated that the figure applied to the Cleveland Fed. The Federal Reserve System — not just the Cleveland Fed — processes 8.2 billion checks a year.
WWW.CRAINSCLEVELAND.COM
Come Feb. 27, paper-check processing performed by the Federal Reserve Bank of Atlanta will move to Cleveland; however, the Atlanta Fed will keep processing electronic checks. In 2003, when the Federal Reserve banks began making annual restructuring announcements, they had 4,600 check-processing employees. After the changes announced in November 2008 are fully implemented, the Federal Reserve banks anticipate having approximately 400 checkprocessing employees nationwide. And at no time were 50 billion paper checks processed a day; that figure is the number of paper checks that were written each year nationwide.
This surely says something good about Americans: The volunteer rate rose during that 12-month period that ended in September 2009, a time that included the worst of the recession. The U.S. Bureau of Labor Statistics reports that 63.4 million people, or 26.8% of the population, volunteered through or for an organization at least once between September 2008 and September 2009. In 2008, the volunteer rate was 26.4%. Here’s how volunteerism breaks down by age:
Number of volunteers
% of population
16 to 19
Age range
4.4 million
26.0%
20 to 24
3.9
18.8
25 to 34
9.5
23.5
35 to 44
12.8
31.5
45 to 54
13.7
30.8
55 to 64
9.9
28.3
65 and older
9.2
23.9
SOURCE: U.S. BUREAU OF LABOR STATISTICS; WWW.BLS.GOV
700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Senior reporter: Stan Bullard (sbullard@crain.com) Reporters: Shannon Mortland (smortland@crain.com) Jay MIller (jmiller@crain.com) Chuck Soder (csoder@crain.com) Dan Shingler (dshingler@crain.com) Arielle Kass (akass@crain.com) Designers/reporters: Joel Hammond (jmhammond@crain.com) Kathy Carr (kcarr@crain.com) Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing coordinator: Laura Franks (lfranks@crain.com) Advertising sales director: Mike Malley (mmalley@crain.com) Account executives: Adam Mandell (amandell@crain.com) Dirk Kruger (dkruger@crain.com) Nicole Nolan (nnolan@crain.com) Dawn Donegan (ddonegan@crain.com) Business development manager & classified advertising: Genny Donley (gdonley@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Production manager: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Kristen Wilson (klwilson@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Circulation manager: Erin Miller (emiller@crain.com) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com)
Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing Kathy Henry: Corporate circulation/audience development director G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year, $59; 2 years, $102. Outside of Ohio: 1 year, $102; 2 years, $180. Single copy, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-888-909-9111 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 136 Audit Bureau of Circulation
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PNC sues former employees, Huntington Bank alleges that competitor misappropriated proprietary information, including trade secrets By ARIELLE KASS akass@crain.com
PNC Financial Services Group has sued 10 former employees and Huntington National Bank, their new employer, for alleged breach of contract and misappropriation of
THE WEEK IN QUOTES
trade secrets, among other reasons. The 10 employees, all of whom live in western Pennsylvania, worked in PNC’s wealth management division before leaving between June and October 2009, according to the lawsuit. Some of them appear to have worked for
National City Corp. in the past, but a PNC spokesman said he could not confirm if that was the case. In the lawsuit, filed Jan. 22 in Cuyahoga County Court of Common Pleas, PNC accused the employees of using “confidential and proprietary information” the bank had established for its wealthmanagement services once they moved to Huntington. The proprietary information includes plans for developing and marketing prod-
ucts and services, customer lists, customer investment information and fee arrangements, the lawsuit stated. Spokespeople with both Huntington and PNC declined to comment on the lawsuit, which has been placed on the court’s commercial docket. The first hearing is scheduled for Feb. 24. The lawsuit states that the former employees agreed in writing that they would not “solicit or divert
customers of PNC with whom (they) had contact during (their) employment for a period of one year thereafter.” The employees also agreed that they would not “solicit or induce employees of PNC to leave their employment,” the lawsuit states. PNC is claiming the employees are using the bank’s confidential information and that they have disclosed it to Huntington, saying it is “inevitable” See LAWSUIT Page 10
INSIGHT
“It takes a certain personality to get up every day and know they are not going to get a paycheck unless they make something happen. It creates anxiety, but a lot of people love it because you can make more than on a salary.” — Warren Morris, CEO, Ostendorf-Morris Colliers. Page One
“Business customers are managing their balance sheet. They aren’t reinvesting in the business.” — Paul Greig, president, chairman and CEO, FirstMerit Corp. Page One
TALIA FRENKEL/UPI VIA AMERICAN RED CROSS
Hundreds of Haiti earthquake victims wait in line to receive supplies distributed by the American Red Cross.
NONPROFITS ALSO IN NEED Local organizations struggle as deluge of aid to Haiti relief efforts jeopardizes fundraising closer to home
“As an employer, you have the cream of the crop to choose from now. … And they’re willing to work for very reasonable wages.”
By SHANNON MORTLAND smortland@crain.com
H
elp the Haitians — but don’t forget about us. That’s the delicate message from various nonprofits in Northeast Ohio that have felt the effects over the last year of job and salary cuts and stock market losses among their donors. Now, seemingly at every turn, there are appeals to help Haitians recover from the devastating, Jan. 12 earthquake in their country.
— Tina Haddad, owner, R-H Industries, Cleveland. Page 13
“If the economy really turns around rapidly there would be a problem meeting all the demand. ... And there would be upward pressure on prices because of the lower amount of product to sell.” — Ronald Ballou, professor of operations, Case Western Reserve University’s Weatherhead School of Management. Page 15
See NONPROFITS Page 18
“If the (Haiti) relief efforts continue to encourage donors to give, give, give ... we will really be in trouble.” – Natalie Leek-Nelson, president and CEO, Providence House
“The needs are going through the ceiling. ... I’m begging everywhere.” – K. Michael Benz, president and CEO, United Way of Greater Cleveland
Hobby Lobby weaves more local stores into its chain By STAN BULLARD sbullard@crain.com
Hobby Lobby, an arts and crafts superstore chain based in Oklahoma City, plans to double its Northern Ohio presence with new stores in Fairlawn and Macedonia. The openings would follow the 435-store chain’s entry into the region last year with stores in Medina and Stow. Scott Nelson, an assistant vice president in Hobby Lobby’s real estate department, said the retailer
plans to open the 55,000-squarefoot Fairlawn store in September. Mr. Nelson said the retailer also is looking for a site in the Macedonia area, but would not discuss specifics because it has not signed a lease there. Mr. Nelson said the retailer is looking for more locations in the region, and expects to operate as many as eight stores in Northeast Ohio. Though Mr. Nelson declined to be specific, the city of Macedonia is reviewing an application for a
building permit for a Hobby Lobby in a former Tops supermarket that would lead to a 55,000-square-foot store. The former Tops is in Macedonia Commons, owned by Beachwood-based Developers Diversified Realty Corp. Developers Diversified declined comment on the location. However, the Hobby Lobby in Stow is also in a Developers Diversified property. Mr. Nelson said the privately held chain employs a combination of full- and part-time staffers at each store, totaling 35 to 50 people.
Each store stocks as many as 60,000 craft items and features departments ranging from hobbies such as remote-controlled models to jewelry, needlework, scrapbooks and home accents. Macedonia Mayor Don Kuchta said he is excited about Hobby Lobby preparing to remove “an empty store that has been a black eye in my community.” The store has sat empty since Tops exited Northeast Ohio in 2006. Mayor Kuchta said he did not See HOBBY Page 16
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Medicaid sales tax windfall for state Managed care plan fee buoys government coffers By SHANNON MORTLAND smortland@crain.com
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A little-known sales tax on Medicaid managed care plans is propping up county and state coffers as sales tax on most other things lags behind predictions. In the state budget bill that was passed last summer, health insurers that offer Medicaid managed care plans in Ohio agreed to pay a sales tax on those plans, said Kelly McGivern, president and CEO of the Ohio Association of Health Plans. The sales tax went into effect Oct. 1, and the first payment was made Nov. 1. As a result, the state has exceeded its sales tax predictions in the first two months of the program. In November, non-auto sales tax revenue in Ohio reached $533.7 million, which was $9.1 million above estimates of $524.6 million. The surplus is due to the Medicaid managed care plan tax bringing in $36.5 million, which was $14 million more than expected, according to a Dec. 11 report from the Ohio Office of Budget and Management. “Without the performance of the managed care portion, tax receipts would have actually been $5.1 million short of the estimate,” according to the report by the Office of Management and Budget. December brought a similar story as non-auto sales tax statewide totaled $628.5 million, which was $9.3 million above the estimate of $619.2 million, according to a Jan. 11 report by the Office of Budget and Management. That month, the Medicaid managed
“This is an idea that (insurance) plans really partnered with the state to develop.” – Janet Grant, executive vice president of external affairs, CareSource care plan sales tax ushered in $37.2 million, or $14.7 million more than projected, the state reported. The estimates have been surpassed because more Ohioans have enrolled in Medicaid managed care plans since the tax was created a year ago, Ms. McGivern said. About 1.4 million Ohioans now are enrolled in Medicaid managed care plans, compared with only 1.2 million a year ago, she said. Though taxes generally are viewed as bad, health insurers paying the sales tax on their Medicaid managed care plans don’t seem to mind because most of the money comes back to them from the state, which receives the money from the federal government. The tax replaces two fees previously paid by those insurers on their Medicaid managed care plans, said Frederick Church, deputy tax commissioner at the Ohio Department of Taxation. The federal government last year decided to stop reimbursing insurers for those fees because they were “uncomfortably close to being a mechanism where you’re just doing it to get federal money,” he said. As a result, several other states replaced similar fees or franchise taxes on Medicaid managed care plans in various ways, Mr. Church said. For example, California imposed an insurance tax, Pennsylvania created a tax on gross receipts and Michigan implemented a sales and use tax, he said. Realizing the loss of the franchise fee would leave a hole in the state budget, Ohio’s lawmakers and the insurers who offer Medicaid managed care plans in Ohio took a tip from Michigan and worked to create a replacement tax, Mr. Church said. “This is an idea that (insurance) plans really partnered with the state to develop and move forward,” said Janet Grant, executive vice president of external affairs with CareSource, a Dayton-based insurer that offers Medicaid managed care plans in Cuyahoga County. The insurers who provide Medicaid managed care plans pay the sales tax on those plans to the state, which then reimburses the insurers, Mr. Church said. The federal government then reimburses the state for those costs and provides additional money for Medicaid services, he said. So, essentially, each county and the state end up with additional money that is generated from the sales tax on the Medicaid managed care plans. Though the sales tax revenue in Cuyahoga County is still much lower than in previous years, the Medicaid managed care tax helped sales taxes collected in November and December rise slightly above sales tax revenues for the same time period a year ago, said Matt Rubino, interim director for budget management in Cuyahoga County. “Most of the entire increase is due to the expansion of the sales tax base,” he said. “If we didn’t have that in there, it would be flat or less.” ■
Foundation aids senior housing plans By SHANNON MORTLAND smortland@crain.com
Established as a reactive grant maker, the McGregor Foundation now is taking an active lead in helping local organizations create more affordable housing for seniors. The foundation, part of the A.M. McGregor Home nursing home in East Cleveland, last spring sponsored a design competition for low-income senior housing. The organization chose four designs and is helping to bring two of those housing projects to fruition, said R. Robertson Hilton, president and CEO of McGregor. One such project is the renovation and expansion of the former Amasa Stone House on East Boulevard in University Circle, which McGregor built in the 1930s as a nursing home. McGregor closed the nursing home in 2004 and donated it to the nowdefunct Northeast Neighborhood Development Corp. “It can no longer be used as a nursing home or for any kind of health care, but renovating it into senior housing is a very attractive opportunity,” Mr. Hilton said. That’s why the McGregor Foundation loaned $119,000 to the Famicos Foundation to redevelop the property. Famicos is the community development corporation in the University Circle area that recently bought the Amasa Stone property from Ozanne Construction Co. of Cleveland, which planned to redevelop the former nursing home into condominiums before the recession deepened, said David Fagerhaug, director of real estate development for Famicos. Under the Famicos plan, the 25,000-square-foot building would receive a 19,000-square-foot addition and would be redeveloped into 46 one-bedroom apartments. Mr. Fagerhaug said the $10 million project likely will be financed through grants and loans from local, state and federal governments. Famicos already has applied for a $6 million forgivable loan from the U.S. Department of Housing and Urban Development, but Mr. Fagerhaug said the foundation is unsure when it will find out if it will receive the loan because the federal government is tied up with managing the stimulus package. As long as the project adheres to HUD’s requirements, the loan does not have to be repaid, he said. This month, McGregor provided grants totaling $149,000 for three other senior housing initiatives, one of which is being developed by Burten, Bell, Carr Development Inc. The nonprofit community development group serves most of Cleveland’s Ward 5, which includes the Kinsman, Central and North Broadway neighborhoods. Burten Bell is working with architects to create a 45-apartment senior housing complex on an empty lot at East 79th Street and Central Avenue, said Timothy Tramble, Burten Bell’s executive director. The cost of the project is estimated at $5.5 million, which would be financed through grants, Mr. Tramble said. Burten Bell plans to apply for a HUD grant later this year. The other two senior housing projects that received grants from McGregor are on hold for now because they also would be developed by Famicos, Mr. Hilton said. ■
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Third: Business leaders tout investments’ positive impact continued from PAGE 1
Greater Cleveland Partnership business advocacy group, said he expects regional chambers of commerce statewide will reprise the leading roles they played in 2005 when the first Third Frontier bond issue was passed. He said the core of support for the campaign likely will come from money raised by the chambers of commerce in the “three C” cities of Cincinnati, Cleveland and Columbus. “But we’ll also need to raise money in Toledo, Akron and Appalachia,” Mr. Roman said. Other business groups, including the Ohio Business Roundtable, CincyTech and the Ohio Chamber of Commerce, also are expected to help raise money for the voter education campaign.
Money well spent Five years ago, the groups came together to create Jobs for Ohio 2005. They raised just under $3 million, mostly from businesses and business groups, to pass what then was Issue 1, according to campaign finance data compiled by the National Institute on Money in State Politics, a nonpartisan data-gathering organization based in Helena, Mont. Among the $100,000-plus donors were KeyBank and National City Corp. FirstEnergy Corp. kicked in $75,000, and the Cleveland Clinic contributed $50,000. Expect business muscle this time around, too, with various groups satisfied with the Third Frontier’s results. “We intend to be involved in supporting it,” said Richard F. Rebadow, senior vice president of economic development for the Greater Akron Chamber of Commerce. “I think it’s worked well.” While Mr. Roman said the Third Frontier can point to a strong record of success, he believes business groups need to spend money to get the message of its benefits across to recession-battered voters. “I think the merits of the program carry themselves,” Mr. Roman said. He said the cost of the campaign to continue the Third Frontier will range from $3 million to $3.5 million, “unless you see some organized opposition, and I don’t anticipate that.” The campaign likely will emphasize the findings of a recent study that found the Third Frontier has been successful at bringing significant new business investment and jobs to the state. The study, released last September by SRI International, an independent research institute in Menlo Park, Calif., found that $681 million in state Third Frontier money invested from 2003 to 2008 generated $6.6 billion of economic activity, 41,300 jobs and $2.4 billion in employee wages and benefits.
INSIDE THE NUMBERS Former Ohio Gov. Bob Taft passed the 10-year, $1.6 billion program in 2002, though final approval, in the form of a constitutional amendment, was secured in 2005. The effects: According to SRI International, a Menlo Park, Calif.-based research institute, $681 million in Third Frontier investments have created $6.6 billion of economic activity, 41,300 jobs and $2.4 billion in employee wages and benefits. 2002, but full financing for it wasn’t secured until a constitutional amendment in support of the Third Frontier passed in 2005 by 54%-46%. The amendment authorized the issuance of $500 million for supporting fledgling technology businesses through the Third Frontier Commission and $500 million to finance local infrastructure projects. That money is scheduled to run out in 2012, and the program will end unless a bond issue is passed. Chamber of commerce executives say this year’s campaign will need to act quickly to accommodate new realities of the election cycle. As more voters use absentee ballots and cast their votes nearly a month before the May 4 election, information about the issue will need to be in front of them by the end of March. Reaching both absentee and traditional voters could mean both an early and a later wave of campaign media ads and direct mail. And that strategy could make for an expensive campaign, said Rita McNeil Danish, vice president of government affairs for the Cincinnati USA Regional Chamber. “The good news is that (early) voters at home may have more information in front of them” than voters who get hit with the issue cold in the voting both, Ms. Danish said. ■
CRAIN’S CLEVELAND BUSINESS
Advanced energy agenda starts locally Strickland highlights local recipient of $1M Third Frontier grant By JAY MILLER jmiller@crain.com
Gov. Ted Strickland’s first stop last Wednesday in kicking off his campaign to fulfill a promise he made in Tuesday’s State of the State address was to a small production center in a nondescript office park in Highland Heights. There, Technology Management Inc. is developing a solid oxide fuel cell system that cheaply generates enough electricity to power an average-size house. The technology has caught the attention of defense contractor Lockheed Martin Corp., which has joined with Technology Management to adapt the technology for use by military units in the field. Clark Reed, chief engineer for Lockheed Martin MS2 in Akron, said his company hopes eventually to sell “thousands” of the units to the military. Mr. Reed said the fuel cell system produces electricity using 30% less fuel than existing military field generators. Gov. Strickland in his annual State of the State address told a joint session of the Ohio Legislature that one of his goals is to make Ohio a center for advanced energy industries, and he described several programs that he believes can help achieve that objective. He told the assembled legislators that he plans to create a $40 million Energy Gateway Fund to invest state money in new and expanding advanced energy companies. He also said he will ask the Legislature to end the state’s tangible personal property tax on wind and solar energy projects that break ground this year and begin producing energy by 2012. “It’s no accident I’m here today,” the governor told Technology Management workers and company president Benson Lee after his
tour of the facility. “This is a perfect example of what I was trying to convey yesterday.” Mr. Lee has spent more than 20 years developing fuel cell technology that was created by what had been Standard Oil Co. of Ohio, Sohio, and abandoned after that company was sold to British Petroleum plc. He describes it as an “anywhere energy” system because it is designed with the simplicity of a home appliance around off-the-shelf parts. Over the last decade, Technology Management has won a variety of state economic development grants and loans that have helped keep the 14 employees working. Among them is vice president of technology Robert Ruhl, who developed the technology while working for Sohio. In December, Technology Management and Lockheed Martin won a $1 million state Third Frontier
grant that will help the companies create a generator that meets Defense Department requirements. In 2007, the U.S. Department of Agriculture, the Ohio Soybean Council and the Third Frontier financed a demonstration at a farm in Wakeman of a fuel cell system devised by Technology Management that ran on soybean oil. About the size of an office water cooler, the basic system can be powered by a variety of common fuels, from military-grade diesel fuel to vegetable oil. In addition to its military uses, Mr. Lee is promoting the fuel cell system for use in homes and by makers of over-the-road trucks. In the trucks, a fuel cell could provide power to the sleeping compartment so that truckers wouldn’t need to keep their vehicles running to heat or cool their cabs while they sleep. ■
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Volume 31, Number 5 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 © 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. (888)909-9111. REPRINT INFORMATION: 800-290-5460 Ext. 136
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Leader Building issued foreclosure notice L.A.-based lender files action against downtown property owner after $4.25 million loan expires By STAN BULLARD sbullard@crain.com
Grand Pacific Finance Corp., a lender focused on real estate and small business, has filed a foreclosure action against Carlyle-Leader LLC, a company formed in 2004 by Carlyle Development Group of New York to buy downtown Cleveland’s Leader Building. The lawsuit was filed Jan. 8 in Cuyahoga County Court of Common Pleas. Los Angeles-based Grand
Pacific seeks to recoup the property at 526 Superior Ave. or to receive repayment of a $4.25 million loan it provided Carlyle to buy the 15-story Leader Building, which dates from 1912. Despite the court action, the Leader Building’s owner insists it is current on its monthly debt payments and its woes are due to larger banking industry issues. Abdi Mahemedi, Carlyle Development president, said the mortgage had matured but the bank
declined to renew it. He said Carlyle also was unable to find other financing to replace the loan, a common problem in the credit crunch. “We hope to obtain a loan extension. We are current on payments and even paid property taxes on the building after Grand Pacific filed the suit,” Mr. Mahemedi said. He added, “It’s our first foreclosure in 25 years in operation.” Grand Pacific holds notes on other Carlyle properties — many of them more valuable than its Cleveland venture — so Mr. Mahemedi said he hopes Carlyle can negotiate a settlement and retain the building, which it has undertaken costly efforts to update.
Since buying the building, Carlyle installed a conference center and made other significant investments to reposition it. Those expenditures were bearing fruit; Mr. Mahamedi said the 270,000-square-foot building went to 60% occupancy from 35% six years ago. Calls to Grand Pacific’s Flushing, N.Y., office, which handles this region, were not returned by Crain’s deadline last week, and its Cleveland attorney declined comment. Warren Morris, CEO of the Colliers Ostendorf-Morris brokerage, said the case reflects the problem of nominal due diligence in an acquisition. “What looks like a great deal from
STAN BULLARD
a desk in New York City that no one could lose money on may not be the case,” Mr. Morris said. “The Class B market in Cleveland has been pretty dormant,” he said, referring to older buildings downtown. Mr. Morris did note that the owner did a good job restoring sparkle to the building’s ornate lobby, a selling point sometimes overlooked. When Carlyle bought the structure for $4 million with plans to invest $2 million in it, the purchase looked like a swell deal. The price paid was 40% below its value for property tax purposes. However, the consensus now is that most buildings are losing value in the recession and lenders often demand more cash from the owner to refinance an existing loan. Mr. Mahamedi declined to say if that was the case in his dispute with Grand Pacific.
Distressed properties aplenty The case reflects the souring nature of the region’s and nation’s real estate as the credit crunch and recession continue. A new report from realty data provider Real Capital Analytics shows worsening commercial lending within Northeast Ohio. It put Cleveland on its national list of 53 areas that each have more than 50 properties worth upwards of $2.5 million in financial distress. In its “Distressed Property Radar,” Real Capital reported that as of Dec. 1, 50 properties ranging from office buildings to apartments in the Cleveland-Akron metropolitan statistical areas were classified as distressed. Those properties had a total loan value of $755 million. Last July, Real Capital calculated that the Cleveland-Akron MSA had 29 distressed properties with a total loan value of $712 million. Real Capital reported that as of Dec. 1, $160 billion in commercial properties nationwide were distressed, which it defines as the subject of foreclosures, defaults or bankruptcy. It also estimated lenders and borrowers are resolving only 10% of them. The report tracks only properties of $2.5 million or more in value. If misery loves company, the landmark Leader Building is part of a growing party downtown and elsewhere. The former Baker Building at 1900 East Sixth St., which adjoins the Leader Building, became the subject of a foreclosure Dec. 10 when PNC Bank sued for a $900,000 mortgage in Cuyahoga County court. Capua Properties LLC, which has a Fairview Park address, bought the 11-floor, 45,000-square-foot building, in 2006 for $1 million. Angelo Russo, an attorney that Ohio records list as the agent for the building, did not return a call by deadline. Meanwhile, the historic Arcade, which sits west of Leader, also is undergoing a foreclosure action. ■
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Brokers: Agents try new ways to earn cash continued from PAGE 1
Just three years ago, commercial brokers would not consider such a move. Now, many see their ranks thinning. Amid the worst economy in 50 years — particularly brutal for real estate and related businesses — much rides on whether commissions snap back from the sag caused by fewer and lower-priced property sales and leases. Bob Nosal, manager of the Cleveland office of Grubb & Ellis, said a group of his agents recently joked that they could not leave the business. “Where would you go? There are no jobs,” Mr. Nosal said. After Grubb & Ellis cut its staff of agents by five people in 2008, he said, all but one remained in the industry a year later. “People are working harder, longer and spending less,” Mr. Nosal said. George Pofok, a broker at the Cresco brokerage in Independence and chairman of Cleveland Area Board of Realtors, said membership in the Realtors group has fallen as much as 7% the past few years. However, Mr. Pofok said the 300-some commercial agents in the region are unlikely to exit the business in the numbers of residential agents, many of whom are part time.
New beginnings Many brokers privately weigh which of their older competitors will retire because commissions are so scarce and, when they are earned, are frequently smaller. Some, such as Mr. Rantala, are finding the elusive exit door. After four years with CB Richard Ellis’ Akron office — two of them “incredibly profitable years” — Wendy Heiser-Higley left last September with tears in her eyes for a job as a national salesperson for an Orange County, Calif., software company that allows her to work from her Akron home. “I stumbled into a company with a good base salary plus commission in a growing industry,” Mrs. HeiserHigley said. Before that offer, she said she was “like everyone else, going to ride the wave. “It was a really tough decision to leave the real estate industry because the earning potential in the long run is very high,” she said. For Scott Smith, timing put him in the job market at the worst possible time. After 19 years at the Reisenfeld & Co. retail brokerage in Beachwood, Mr. Smith in 2008 was less than a year into a job as leasing director for a regional real estate developer when he was let go after the credit crunch dried up the firm’s projects. He weighed offers from five brokerage firms but eschewed the business he loved. “The only way to go back was to
take a (financial) hit on what I was making years before,” Mr. Smith said. “Brokerage was my life. Sales is my life. The problem came down to: the retailers were not doing anything.” By chance, a friend needed a national sales account representative, so Mr. Smith joined TemPay Inc., a Shaker Heights concern in the factoring business, which buys the receivables of a business and lends it money until the accounts are paid. Mr. Smith said his new job is working out well. “I have no remorse about leaving real estate because nothing will happen for a while,” Mr. Smith said. “I stay in touch. I continue to hear it’s a rough go.” For Mr. Rantala’s part, he views his job in the construction business as an offshoot of his brokerage career. “The two Rolodexes go together,” he said of his new employer’s clients and his own 2,000-name database. He believes the new job will let him expand his activities beyond his narrow retail focus. Steven T. Moore, Mr. Rantala’s new boss, said from the outset he hoped to take advantage of woes in the brokerage business to fill the opening at JL Moore for a director of business development with a real estate developer/broker; doing so broadens the firm’s repeat business with new contacts in an industry that relies on relationships, he said. Still, Mr. Moore was surprised he had five brokers — as many construction applicants as he received — vie for the position at his firm in Columbia Township.
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Some factors will keep people in the brokerage business, including the excitement of deal making. Many agents hail from affluent families, so they have staying power or income from real estate investments. Brokers also tell each other to save in the good times to ride out the bad ones. Warren Morris, CEO of OstendorfMorris Colliers, said the brokerage mindset would keep down departures. “It takes a certain personality to get up every day and know they are not going to get a paycheck unless they make something happen,” Mr. Morris said. “It creates anxiety, but a lot of people love it because you can make more than on a salary.” Even with improved conditions, David Browning, managing director of CB Richard Ellis, expects more competition will weed out some beginning or middling brokers, though other people still will want in. “At some point it will come back,” Mr. Browning said. “There will always be an attraction to our industry from entrepreneurial zeal. Getting a real estate license is not that timeconsuming or expensive when it can put you on the way to a sixfigure income.” ■
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Gotta pay the bills Staying in brokerage until the clouds clear has some agents pursuing alternative ways to bring in cash. One retail realty agent, who declined to be identified because he was embarrassed by the steps he is taking, said that last year he started doing the landscaping at his listings rather than hiring landscapers. The do-it-yourself work brings in about $300 monthly. “That pays the cell phone, the parking garage and the dry cleaner,” he said. Alec Pacella, a vice president at NAI Daus in Beachwood, also is trying new things because his commission income from property sales last year was “zero.” So the investment property specialist last year arranged two small office leases. He also began charging about $200 for what are calls “broker estimates of value,” which size up a property’s worth based on recent sales and other factors. He used to do them for free in hopes of landing a commission. “It puts gas in the tank,” Mr. Pacella said. “But it does not float the boat.”
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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
Sales jobs
G
ov. Ted Strickland and President Barack Obama used their respective addresses last week to the state and the nation to sell their latest plans for reviving the job market. But what they are likely to discover in coming months is that political rhetoric and government programs are no match for the power of markets, which tend to correct themselves in their own good time. The notion that the government that governs best governs least has been thrown out the window during an economic downturn that is considered the worst since the Great Depression. Government leaders at both the state and national levels have felt compelled to do something in the face of a severe slump that has produced a jobs bloodbath. And so, we’ve seen the federal government allot hundreds of billions of dollars to so-called stimulus measures, with much of the money flowing down to the state level. Gov. Strickland last week took his own swing at creating stimulus programs with his proposed Energy Gateway Fund, which would offer capital to advanced energy companies, and the Small Business Growth Partnership, a lending clearinghouse that would direct small businesses to potential sources of capital. Gov. Strickland is running for re-election this year, and he knows a sustained, double-digit unemployment rate won’t play well with voters. So it was no surprise to hear him stand up to market forces in his State of the State address last Tuesday. Proclaiming that “we are going to fix this thing,” Gov. Strickland stated, “I will move heaven and earth to create jobs in Ohio and I will not rest until it’s done.” It’s likely, though, that the governor will find determination isn’t enough to spur a sudden spate of hiring. One problem politicians are running into is the delayed effect of stimulus programs. Even though tons of money have been directed to new spending efforts, it takes months, and sometimes years, for those dollars to work their way into the economy. Last May, for example, Eaton Corp. CEO Sandy Cutler told analysts the giant manufacturer expects to capture $1 billion in revenue related to stimulusinspired spending. However, the $1 billion figure represents what Eaton believes it will reap in 2010 and 2011 from stimulus bill activities. And 2010 is just getting started. A bigger obstacle to hiring, though, is the desire of companies to replenish their finances after a year that battered the bottom lines of most employers. Mr. Cutler said last week that Eaton won’t ask its employees to take multi-week furloughs this year like it did in 2009, but doesn’t expect to do much hiring, either. “It’s going to be hard to have a lot of net new jobs in the U.S. until the economy gets bigger than what it’s forecast to be this year,” he said. It’s a chicken-and-egg problem. Employers don’t want to hire until the economy picks up, but the economy won’t get going until more people have jobs and spend their earnings. Politicians moving heaven and earth may help speed the process a bit, but market forces indicate years will pass before employment levels are what they were.
FROM THE PUBLISHER
Rail line not the best use of $400M
A
were scheduled to announce late last ll right, I admit it: Inside me week that our state would get $400 million there’s a nostalgic dreamer who to construct a rail line that will connect wishes Ohio could return to a Cleveland, Columbus, Dayton and time before malls and freeways Cincinnati. exploded our cities and towns, and people Service would be at 79 miles per hour, led simpler lives. be reasonably priced and operated Simpler, like when business folks by Amtrak. The question is whether hopped on the train in small towns like anybody will use it. State Sen. Hudson for the trip to their Jon Husted, Ohio’s former office in downtown Cleveland. BRIAN House Speaker, doesn’t think Similar commutes happened in TUCKER so, and was quick to issue a and out of all of our major cities. news release with his opinion. No traffic snarls. Read the “I believe the construction morning paper without any and operation of this planned stress. rail line could serve as one of It still happens in some the biggest money pits in Ohio places in America, although the history,” the statement read. business model works only in Now, keep in mind that Sen. high-density population centers Husted, a Republican, is runsuch as New York, Boston and ning for secretary of state, and he wants Chicago — places where the automobile to keep his name in front of voters. commute is so awful that people are only That said, it’s hard not agree with this too happy to get on a train. part of his statement: “If the federal govGov. Ted Strickland and President ernment gave us $400 million for job creBarack Obama want us to think it will ation without any strings attached, this happen again here, sort of. The governor would be the last thing we would spend and an Obama administration official
it on.” But the lure of federal bailout money for “a penny wise, pound foolish venture,” Sen. Husted wrote, “will further burden the taxpayers of this state.” Sen. Husted’s message underscores the theme of a column in this space last fall by our editor, Mark Dodosh. Amtrak service on this proposed rail line will require continued taxpayer subsidies, and that’s based on estimates that some 1,300 people will ride this line each day. There will be jobs created, especially for those companies providing the rail cars and ancillary services, but are they sustainable? Better yet, will gasoline prices ever get to the high levels necessary to push drivers out of their cars for their commute to any of these cities? Many questions remain, but it’s unlikely the General Assembly or governor will back away from this money and the jobs it might create. After all, why not try to get these dollars when every other state is trying to grab them, too? Just once, I wish political leaders would spend money as if it’s coming out of their wallets, not ours. ■
PERSONAL VIEW
Algae overlooked as a clean energy option By JEROME RINGO and ROSS YOUNGS
I
n a state that has lost more than 200,000 jobs over the last 12 months, putting people back to work is paramount. As Ohio and the nation search for answers to our jobless economic recovery, no job creation solution can afford to be overlooked. Clean energy manufacturing’s potential to revive Ohio’s ailing work force may be just the solution we’ve been seeking in these turbulent economic times. When most people think about clean energy manufacturing, they picture the production of plug-in hybrid cars, solar panels and wind turbines. Algae, on the other hand, doesn’t usually come to mind. But algae’s potential as a renewable fuel and an alternative to plastic — and the possibility that it could create
Mr. Ringo is president of the Apollo Alliance, a national clean energy advocacy nonprofit based in San Francisco, and Mr. Youngs is the president and CEO of Univenture in Marysville. manufacturing jobs in Ohio — is just the kind of out-of-the-box idea that will give rise to a thriving clean energy economy in Ohio and across the nation. The story of how Univenture, a company in Marysville that designs, develops and manufactures packaging, got into the algae business is indicative of the kind of transformation manufacturers across the country are undergoing. As Univenture’s customers began seeking environmentally friendly packaging materials, the company started developing new products to meet their needs. Univenture’s search for eco-friendly feedstocks for packaging led it to algae,
which can be used as a feedstock to replace plastic as well as a fuel source to replace petroleum. Still, many barriers remain in the effort to develop the technology and systems that will turn algae into fuels and plastics, which is where Algaeventure Systems (AVS), which was created by Univenture’s development team, comes in. AVS has developed a system to harvest and de-water algae using 90% less energy than current technologies. Described as the solution to a major cost barrier, AVS’s dewatering technology enables algae to become viable as a biofuel. AVS manufactures these harvesters and is planning to build greenhouses where the algae will be grown, preferably leveraging Ohio’s agricultural infrastructure. What is happening at Univenture as it See VIEW Page 9
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AND COUNTING ... Who is the most memorable local politician of the last 30 years, and why?
Crain’s Cleveland Business is celebrating its 30th year as Northeast Ohio’s premier source for business news with a special May 24 double issue, which will feature profiles of 30 of the most influential Clevelanders. As part of the celebration, we also are reflecting on the most memorable events of the past three decades with weekly polls — some of which can be found in this space — trivia questions, online content and video interviews. You can get in on the fun by visiting www.CrainsCleveland .com/30thAnniversary.
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JEFFREY JOHNSON (CLEVELAND CITY COUNCILMAN) Cleveland Without a doubt (it is former Cleveland mayor and current U.S. Rep.) Dennis Kucinich. He has been able to lose his position, rise from the ashes and be a visible ... public servant.
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(Former Cleveland mayor and current U.S. Sen.) George Voinovich, because of his successes. The city was prospering when he was in office (as mayor). He did great for the state of Ohio and the city of Cleveland.
(Cleveland) Mayor Mike White. He did amazing things for the renaissance of our city — all of the development at East Ninth Street by Voinovich Park, including the Rock and Roll Hall of Fame.
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View: Manufacturers have chance to retool continued from PAGE 8
focuses on developing technologies outside of its core business and transitions from a traditional manufacturing company to a clean energy producer is a transformation that is being repeated at manufacturing facilities across Ohio. Facilities throughout the Midwest are being converted to produce lithium ion batteries for electric cars, electrical transformers and large-diameter bolts for wind turbines, and glass for solar panels and energy-efficient windows. These conversions are creating sorely needed jobs. AVS has created 11 jobs in just a few months. According to a recent analysis by the Pew Charitable Trusts, the number of clean energy jobs in the U.S. has grown nearly 2½ times faster than the rate of overall jobs over the last decade. As our policy makers debate national clean energy and climate legislation, these manufacturing jobs are often overlooked. Clean energy manufacturing offers an opportunity to strengthen and expand
America’s declining middle class, as manufacturing jobs pay an average of $25,000 more per year than service-sector jobs and often provide benefits. These are the jobs that will be created — and are already being created — as we transition from a fossil fuels-based economy to one that runs on clean energy. Fortunately, Ohio’s own U.S. Sen. Sherrod Brown has been a consistently strong voice in Congress on behalf of manufacturers. Last June, Sen. Brown introduced the Investments for Manufacturing Progress and Clean Technology (IMPACT) Act of 2009, a bill that would establish a $30 billion manufacturing revolving loan fund to assist small and medium-size manufacturers like Univenture and AVS as they retool to produce clean technologies and improve the energy efficiency of their operations. The legislation would also provide funding to the Hollings Manufacturing Extensions Partnership to help manufacturers access clean energy markets and adopt innovative,
LETTER
Legislators first must listen ■ I very much appreciated Brian Tucker’s Jan. 25 commentary, “Is state Dem chairman blind?” I am a firm believer that Mr. Tucker’s sentiment is one that is shared by many Ohio citizens. Cleveland was hit hard by the recent recession and will continue for years ahead to climb out of the black hole. Cleveland was beginning to start on the upswing prior to the recession, with numerous public projects and plans to revamp the downtown area. Unfortunately, in light of the economic conditions, most of these plans have been relegated to the back burner. In order for our economic situation to get better, we need politicians to get back in touch with the public. Mr. Tucker hit the nail on
the head in saying that Ohio Democratic Party chairman Chris Redfern is blatantly disregarding fact and ignoring widespread disapproval. How can we expect the state to get back on track if those that represent the public are not listening to the public? I believe what we are witnessing is a Republic that is not representative of the public. We need the major political parties and actors to put aside their political agenda and listen to the public and their needs. This can only happen after Democrats are conscious of the facts and are willing to listen to the calls of the middle class. Christopher Smolinski Parma
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: mdodosh@crain.com
energy-efficient manufacturing technologies. This is just the type of assistance that manufacturers need to keep creating jobs and navigate the difficult economic environment that is still facing Ohio and the nation. Ohio’s strong manufacturing base, outstanding educational institutions and welltrained work force put the state in position to play a leading role in the global clean energy economy. Legislation like Sen. Brown’s IMPACT Act will level the playing field for Ohio manufacturers and help us turn the corner quickly so we can put our citizens back to work in the next generation of green manufacturing jobs. ■
Achieve.
SHIRLEY SMITH STATE SENATOR R // CLASS OF ‘86
Learn how ourr alumni engage at: edu/alumni www.csuohio.edu/alumni
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Wellness now comes with a catch More companies ask employees to meet programs’ targets By SHANNON MORTLAND smortland@crain.com
Wellness programs have been popular among employers for several years, but they’re coming with more strings attached as companies look for ways to trim their health care costs even more. Many companies are looking for results — and, in some cases, rewarding employees for them — rather than giving employees incentives for just participating in initiatives such as walking 10,000 steps a day or completing a health risk assessment. “You have to actually achieve a goal, not just take a test,” said Jim Pshock, president of Bravo Wellness LLC of Avon, which creates incentive-based wellness programs for 51 employers across the country. Among those employers is Southwest General Medical Center, which signed up with Bravo Wellness this year and has given its employees one year to reach certain wellness goals or face higher health insurance premiums, said Judy Murphy, director of human resources at Southwest. “The program focuses on employee health with regard to smoking, body mass index, cholesterol and blood pressure,” Ms. Murphy said. “Employees are being charged with being within a certain number within those health indicators.” Southwest employees are participating in health screenings that will be followed by a detailed report of their current health condition so
they will know how far they need to go to reach their goals, Ms. Murphy said. Though the hospital already had a popular wellness plan in place, its health care expenses still were rising, she said. “Certain health conditions which can be avoided or controlled by lifestyle changes are the most expensive to a health plan,” Ms. Murphy said. Steve Millard, president and CEO of the Council of Smaller Enterprises advocacy group, said he’s seeing more small companies get involved in wellness and education initiatives, such as providing health screenings, exercise and diet programs, and lunch-and-learn sessions to teach employees how to live healthier. Though annual increases in health insurance premiums have moderated to between 9% and 15%, after hitting 20% in previous years, Mr. Millard said the hikes are still high. “It’s got everybody’s attention,” Mr. Millard said. “People are getting much more active because they can’t afford it anymore.”
Forget the television Last year, COSE gave 70 wellness grants to local companies, Mr. Millard said. Under that program, COSE provides grants of up to $1,500 for wellness expenditures, such as repairing treadmills at the workplace. However, the use of the money does have limits. “We’ve gotten a lot of requests for TVs in the workout room, but we haven’t approved those yet,” Mr. Millard said. Pat Perry, president of the Employers Resource Council human resources group, said some midsize businesses responded irrationally to the economy last year by reducing
benefits and increasing deductibles and co-pays for employees, both of which are only short-term fixes. “They jumped off a really sound strategy and chased the dollar,” he said. “These cutbacks could have been made up elsewhere easily.” However, not all midsize companies panicked, including Sawyer Technical Materials LLC in Willoughby. The company continues to try to change the behaviors of its employees through incentives, said Kim Coleman, controller at Sawyer.
‘People are getting skinny …’ The crystal quartz manufacturer has installed a walking track around the building and offers monthly incentives for participating in wellness programs, Ms. Coleman said. For example, the Fall Into Fitness eight-week program encouraged people to reach certain fitness benchmarks through cardiovascular workouts. Those who did more vigorous workouts received more points. The team with the highest point total got $25 gift cards to Subway restaurants, she said. By participating in such wellness activities, employees can reduce their premiums by $50 each month, Ms. Coleman said. Smokers can reduce their monthly premiums by another $30 for not smoking. But, if they choose not to participate one month, their premiums rise by those same amounts, she said. The incentives are working, as almost all of the company’s 35 employees participate in the wellness program. “People are getting skinny, and they’re just trying to monitor their blood pressure,” Ms. Coleman said. “I’m looking forward to spring to see how challenging I can make it.” ■
Lawsuit: PNC also asking for Malpractice punitive damages, repayment rates down, but may not stay “Huntington has used continued from PAGE 3
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given the nature of their work. Some of the employees also are accused of soliciting their former co-workers to join Huntington, encouraging them to leave PNC and violate the terms of their employment agreements. PNC also claims that Huntington was aware of the employees’ obligations when it hired them away from the bank and that three employees encouraged the other seven to come to Huntington at that bank’s behest. In the suit, PNC said it does not know the full extent of monetary damage caused by the employees, but that it would be established in a trial. Unless the court enjoins the workers from continuing at Huntington, “PNC will be irreparably harmed,” the lawsuit states. All 10 employees are accused of breach of contract, breach of fiduciary duty and misappropriation of trade secrets. Huntington is accused of tortious interference with contract — encouraging a breach of contract — as well as misappropriation of trade secrets, unfair competition and tortious interference with prospective business relations. “Huntington has used improper means to misappropriate and
improper means to misappropriate and exploit PNC’s confidential and proprietary information for its own advantage.” – PNC, in lawsuit filed against its former employees and Huntington exploit PNC’s confidential and proprietary information for its own advantage,” the lawsuit states. “Huntington’s acts of unfair competition have been willful, deliberate and malicious.” PNC is asking the court to stop the employees from disclosing or using PNC’s proprietary information and from directly or indirectly inducing other employees and customers to leave PNC. The bank also asks that any confidential information, including customer lists and contacts, be returned to PNC and that the former employees detail what information was provided to Huntington. PNC is requesting punitive damages, including double damages and attorneys’ fees, and that it be reimbursed for all costs and fees related to the case. ■
By JOE CARLSON Modern Healthcare
Medical malpractice insurance rates have fallen in many states in recent years because of tort reform laws, and the American Academy of Actuaries is worried that federal health care legislation could reverse that trend by hindering informationsharing among insurers. Kevin Bingham, chairman of the academy’s medical professional liability subcommittee, sent a Jan. 21 letter to the Democratic and Republican leaders of the U.S. Senate and House urging the lawmakers to restore legislative language that encourages sharing of data. Without such language, fewer insurers are likely to provide their market information, which could lead to fewer insurers willing to write medical malpractice policies, thereby potentially causing rates to rise because of a lack of competition, Mr. Bingham wrote. However, a rate increase for medical malpractice insurance would contradict the cost-saving intent of health care legislation, according to Mr. Bingham. ■
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GOING PLACES JOB CHANGES ENGINEERING MS CONSULTANTS INC.: David Hartman to business development manager, Cleveland/Akron region.
commercial and business banking manager; Bonny Carroll to cash management and public funds officer.
FINANCIAL SERVICE
FINANCE
ADP NATIONAL ACCOUNT SERVICES: Scott Hersh to national accounts district sales manager.
CHARTER ONE: Brent Donnell to division executive, Ohio health care and nonprofit banking.
ANGLE, ZAEBST & ASSOCIATES CPAS: Lori Harris to staff accountant; Barb Warner to payroll specialist.
CHASE: Jeffrey Papa to senior vice president, retail market manager, eastern Ohio.
COHEN & CO.: Dave Sobochan to principal; Jen Tapia to senior manager.
FEDERAL RESERVE BANK OF CLEVELAND: Dale Roskom to first vice president, chief operating officer. FIRST FEDERAL OF LAKEWOOD: Lynda Nowak to vice president and
ELEK & NOSS LLC: Cassandra O’Brien to manager, tax and assurance compliance. HHL GROUP INC.: Jennifer Hagele and Stacy Bonitz to senior consultants. SS&G: Deborah A. Sabo, Becky
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Kaminchak and W. Edward Decker to directors; Cynthia F. Ambrozic, Douglas L. Klein, Michelle L. D’Amico and Thomas Kotick to associate directors.
FEBRUARY 1-7, 2010
TUCKER ELLIS & WEST LLP: William H. Berglund, Frank O. Garritano and Rennie C. Rutman to counsel.
MANUFACTURING
HEALTH CARE
THE CHILCOTE CO.: J. Anthony Hyland to president, CEO.
ROBINSON MEMORIAL HOSPITAL: Dr. Stephen Francis to vice president, medical affairs.
MAIN STREET GOURMET: Nathan Searles to director of national accounts.
SISTERS OF CHARITY HEALTH SYSTEM: Nick Bagnolo to vice president, construction management.
LEGAL CURATOLO SIDOTI CO. LPA: Vincent A. Cortese to associate; Daniel E. Moderick to technical specialist. SUTTER, O’CONNELL & FARCHIONE: Brian M. Dodez and Ryan J. Melewski to associates.
Hartman
Hersh
Sobochan
Tapia
Francis
Costello
Williams
Aquino
Lawrence
SPECTRUM SURGICAL INSTRUMENTS CORP.: Rick Costello to chief operating officer.
MARKETING ROSENBERG ADVERTISING: Austin Rosenberg to new business development associate.
MEDIA CLEVELAND JEWISH NEWS: Randolph G. Loeser to senior director of sales and custom marketing.
NONPROFIT ELIZA JENNINGS SENIOR CARE NETWORK: Sharon L. Williams to vice president of development.
REAL ESTATE LEVEY & CO.: Frank Licata to senior vice president.
BOARDS THE CHILCOTE CO.: David B. Chilcote to chairman; David L. Hein to vice chairman, treasurer, assistant secretary; Dennis J. Lee to assistant treasurer. LAKE ERIE NATURE & SCIENCE CENTER: Charles Aquino (Western Reserve Partners LLC) to president; Colleen Lowmiller to first vice president; Deb DeCarlo to second vice president, treasurer; Corryn Firis to secretary. NORTHERN OHIO AREA CHAMBERS OF COMMERCE: Wayne Lawrence (Beachwood Chamber) to chairman; Jessica Forsythe and Steve Petti to vice chairmen; Rea Cantwell to treasurer; Virginia Haynes to secretary. THE NORTHERN OHIO REGIONAL MULTIPLE LISTING SERVICE: John Lynch (Keller Williams Greater Cleveland Realty West) to chairman; Barbara Reynolds to vice chairman; Karen O’Donnell to treasurer. SHOES AND CLOTHES FOR KIDS: Terence J. Uhl (Landau Public Relations) to chair; Allan C. Krulak to chair emeritus; vic gelb and Rockette L. Richardson to life directors; William R. Joseph to vice chair; Stephanie McHenry to secretary; A. Lamont Mackley to treasurer. YOUTH CHALLENGE: David L. Lowery (Key Corp.) to president.
AWARDS HANDS ON NORTHEAST OHIO: Jennifer Arnold (The Education Service Center of Lorain County) received the 2009 Volunteer of the Year Award; Vi Huynh (Cleveland Clinic), Monica Gibson and Mike Ferkovic (Deloitte and Touche LLP) received the Kate Madden Leadership in Service Award. ORT AMERICA CLEVELAND REGION: Janet Miller (University Hospitals Health Systems) and Jose C. Feliciano (Baker & Hostetler LLP) received the 2009 ORT America Jurisprudence Award.
Send information for Going Places to dhillyer@crain.com.
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INSIDE
15 THE SUPPLY CHAIN FACES LOGISTICAL CHALLENGES.
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MANUFACTURING THEINTERVIEW SUSAN HELPER Chair of economics and AT&T professor of economics Case Western Reserve University Weatherhead School of Management
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n addition to her duties at Case Western Reserve University’s Weatherhead School of Management, Susan Helper also is a research associate of the National Bureau of Economic Research, and she has researched the impacts of collaborative relationships, between suppliers and customers and management and labor. Dr. Helper recently answered Helper questions from Crain’s Cleveland Business related to the state of manufacturing in Northeast Ohio. Q: What does Northeast Ohio need to do to strengthen — and expand — its manufacturing sector?
EMPLOYMENT CONUNDRUM Manufacturers mull benefits, drawbacks of hiring available talent now or waiting until business climate turns around EMPLOYMENT AT A GLANCE
By DAN SHINGLER dshingler@crain.com
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ith business improving, but the pickup in activity still as spotty as a stage after Hamlet, the greatest question facing some manufacturers today is to hire or not to hire. Hiring now likely means getting the best of the best in terms of people. Plenty of skilled workers, who were tough to find during better times, are on the street and available for immediate hire, say those in the industry. See WORK Page 14
INSIDE: Manufacturers find different ways to do more work with less. Page 14
■ In December, employment in manufacturing nationwide decreased by 27,000. ■ The average monthly decline in manufacturing jobs nationwide for the last six months of 2009 was 41,000 — much lower than the average monthly decline for the first half of the year, which was 171,000 jobs. ■ Since the recession began, manufacturing employment has fallen by 2.1 million; 75% of this drop occurred in the durable goods component (-1.6 million). ■ In Ohio, monthly statistics released last week actually showed an increase in durable goods employment (+3,400), which exceeded a loss in nondurable goods (-2,000) to add 1,400 jobs to manufacturing. ■ Over the past 12 months, manufacturing was down 89,200 jobs statewide due to losses in both durable goods (-73,600) and nondurable goods (-15,600). ■ According to figures from economist George Zeller, the number of manufacturing jobs (not seasonally adjusted), in the Cleveland Metropolitan Statistical Area in December 2009 was 119,400 compared to 129,800 in December 2008. SOURCE: BUREAU OF LABOR STATISTICS, OHIO DEPARTMENT OF JOB AND FAMILY SERVICES
A: I’m in favor of expanding only some parts of the manufacturing sector — those that provide good jobs making high-quality products. As a region, we need to figure out how to help firms and workers gain the skills they need to compete on “value, not price,” as the governor’s Auto Industry Support Council has proposed. A first step would be simply to collect data that measure value. Right now, when a firm is deciding whether to expand in Northeast Ohio, the most detailed data that we have to offer is about wages — which are seen as a cost, so the lower the better. It would be great if we could instead demonstrate the value that NEO firms provide, in terms of productivity, quality (and) new-product introduction. If value is high enough, workers, consumers and shareholders can all win — that’s what we should aim for. In some cases, we’ll need to develop these capabilities. Northeast Ohio, like much of the U.S., is caught in the middle — stuck between high-skill places like Germany and low-wage places like China. Q: The past year obviously has seen dramatic shifts in the U.S. auto industry. What does the future hold for auto-related manufacturers as that sector regains its footing? A: Most forecasts say U.S. automobile sales will rise in the next couple of years to 13 or 14 million units annually, significantly above the 9 to 10 million that were sold last year. So many firms that have survived this long will see significant growth. But this next couple of years could be very tricky. ... Many NEO firms in the auto industry supply primarily the Detroit 3. These automakers’ purchasing See INTERVIEW Page 15
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Manufacturers make it work with current resources
Jeff Walters, owner of Cleveland-based Master Products Co., said the business is doing more with less. The manufacturer also went to a fourday work week to boost productivity and morale.
Shops balance workloads with smaller staffs By DAN SHINGLER dshingler@crain.com
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or years now, manufacturers have been trying to figure out how to become more efficient and productive in order to keep up with overseas competitors with access to cheap labor. Today, the tactics they learned along the way are being employed to combat an economic downturn that has forced them to further reduce their payrolls — but which occasionally still lets enough business get through to require them to find a way to restore normal production levels, even if they only are temporary. “We’re doing more with less,” sums up Jeff Walters, owner of Cleveland-based Master Products Co., which stamps washers and other parts primarily for the transportation and durable goods industries. Companies such as Master Products are proving that area manufacturers not only are resilient, but that they seemingly can come up with endless ways to do more with less. They are using creative scheduling, cross-training, overtime and, in some cases, the use of temporary help to get them through the relatively busy times without hiring more people than they will need during slow periods. Master Products went to a fourday, 10-hour schedule last year, Mr. Walters said, in a move that helped increase productivity and boosted morale for his 46 employees. Before the new schedule, Master Products ran a typical five-day week and that meant working Saturdays when overtime was needed to meet any surge in orders.
Now, an overtime day pretty much means workers will work the usual Monday-through-Friday schedule, though still with 10-hour days. And when that’s not required, they get more days off, which Mr. Walters said is welcomed by his staff. “Morale is much better because everybody gets a three-day weekend,” he said. “And we’ve also seen an increase in productivity.” Productivity is up, in part, because the four-day schedule also allows the company to run its machines longer during work days, with less startup and shutdown time at the beginning and end of shifts, Mr. Walters explained.
Men and women of many talents Master Products and other companies also are cross-training their employees. This is not a wholly new practice, Mr. Walters points out, as manufacturers have been doing it for years now. Primarily, they’ve wanted to ensure that each member of the production team could do more than one task or operate more than one machine — giving the manufacturers more flexibility in terms of applying their existing work forces to the tasks at hand. If a worker is trained on only one machine, they only can be productive when there is work for that specific machine — but if they can run every machine in the shop they nearly always have work to do, manufacturers say. Chris DiSantis, president and COO of Cleveland-based Hawk Corp., said his company began looking at ways to retain key talent, while still slimming down as soon as the downturn hit it in 2008.
RUGGERO FATICA
“The first thing we did was look at between the plant and the office, everything that was variable,” Mr. said vice president of operations DiSantis said. “We looked at overChristopher Slabe. time hours and cut back on that and The company’s human relations we cut back on the use of temps.” generalist, for example, has become Hawk, which produces friction the temporary shipping foreman. materials used in brakes, transmisWhy not, Mr. Slabe reasoned — sions and other components that go there really was no need for the into everything from cars to jet company to be recruiting or planes and hiring during the tractors, felt the downturn, but it downturn early, still needed “We all wear different hats especially in the here. I take care of the sales someone to automotive oversee and and marketing, but my sector. But it’s coordinate its background is I’m a certified shipping. also seen other sectors gain, such tool and die maker.” “She’s moved as a division that from salary to – Gil Martello makes compohourly,” Mr. sales engineer/tool designer, nents for hydroPath Technologies Slabe said, “but gen fuel cells. all the while “When you’ve keeping her got segments that are growing and (original) job waiting for times to other parts of the business that are change.” receding, it’s important to have the At Path Technologies in flexibility to move people around,” Painesville, it’s much the same. and cross-training enabled the “We all wear different hats here. I company to do that, he said. take care of the sales and marketing, But, in the economic downturn, but my background is I’m a certified cross-training has sometimes been tool and die maker,” said Gil Martello, taken to a whole new level and even sales engineer/tool designer at Path. beyond the plant floor itself. “We do whatever it takes to survive.” At Slabe Machine Products in Train of thought Willoughby, not only has crossAnd now might be the best time training taken place across the to do such cross-training for compaplant, but it’s crossed the line
Work: ‘Cream of the crop’ ready for hire continued from PAGE 13
On the other hand, waiting to hire lets business owners be sure any comeback has staying power — and means they can avoid the cost and pain of possibly hiring people only to let them go quickly if business drops off again. One question, two answers — and as many rationales for either as there are businesses and consultants, it seems. “I would counsel to hire sooner,” said Mike Noretto, director of manufacturing services for the accounting firm Rea & Associates in New Philadelphia and Mentor. “At this point in the economy, you’re going to get your pick of the best people,” Mr. Noretto said. Some in manufacturing think the same way and are either hiring now or are about to do so. “I plan on doing some strategic hiring now, trying to get ahead of the curve and find some more good
people,” said Mike Gordon, owner of Tendon Manufacturing, a sheetmetal fabricating company in Cleveland. But as a consultant, Mr. Noretto is an adviser and not the one who decides if his clients pull the trigger on new hires — or the person who will need to lay them off if things go awry, he concedes. And he’s talked to enough clients to know that many won’t take his advice. He says he fully understands their reasoning. “I’ve had a few conversations lately about whether now is the right time to hire people, because there are really some excellent people out there right now,” he said. “But I really think most people will be reluctant to do that until they absolutely have to.” Putting off the hiring decision will present its own challenges, though, Mr. Noretto said. “What happens is, you delay in
hiring and then your people are so busy they don’t have time to train” the new hires, Mr. Noretto said. “If you stay ahead of the curve, the training process goes better and the assimilation into your work force goes better.”
Now available: the cream While a person highly skilled in machining likely can go from one machine to another without much effort, using that machine in one setting might be different from a job using that same machine in another shop. And it’s those ins and outs of a company’s process that even skilled new hires must learn on a new job, manufacturers say. But many new hires, if and when they are made, won’t really be that new. Most manufacturers have let go of people in the downturn — often good people that they want back. “Companies went well beyond laying off their head cases — they
really got down to where they were cutting blood and bone and there’s no question they put people on layoff who were good, productive employees,” Mr. Noretto said. “When you hire those people back, they are a known commodity and obviously their ramp-up time is a lot less.” However, those same good employees are often the first to be hired elsewhere — and every manufacturer hoping to call back good workers knows the clock is ticking on rehiring them. Even so, it’s still a buyers’ market for help, said Tina Haddad, owner of R-H Industries in Cleveland, a metal fabrication company. “As an employer, you have the cream of the crop to choose from now,” she said. “And they’re willing to work for very reasonable wages.”
Stuck in a fog Ms. Haddad said she has seen résumés and job applications from highly skilled welders, machine operators and even engineers — all of whom would have been tough to find just a couple years ago. Often, she
nies that can do so. Some, including Mr. Martello, think such additional training has been long overdue. “It’s not just that you’re paying someone (to be trained) — you’re taking someone from another department to do the training — so people dropped their training programs,” he said of better times. “People were basically robbing Peter to pay Paul and hiring other people’s employees and that couldn’t go on forever.” And all of the cross-training and flexible scheduling is about more than mere productivity gains, though, say many manufacturers. They’re doing everything they can to keep their best employees and to maintain their production capacity for when things improve. Some, such as Mr. DiSantis, believe business conditions will improve this year — and the companies that did the best job of protecting their work forces and capacity will fare the best when it does. “There are some people who, regardless of what happens to the sales of the company in the short term, their skills are so valuable you have to find a way to keep them,” he said. “When the orders come back, I don’t want to tell the customers, ‘Sorry, you have to wait’ — we want to be able to capitalize on that.” ■
said, they are flexible about the wages they will accept and will work for less than they made at previous positions. “They’re very willing to negotiate,” Ms. Haddad said. “Their unemployment is running out and they need to pay the bills.” But, she said, wise employers will avoid the temptation to hire highly skilled employees at fire-sale prices. That practice might save a few dollars on the front end, but it will cause problems down the road when those same employees find another employer willing to pay them what they are worth. “You have to be competitive in the marketplace,” she said. Right now, manufacturers say, economic uncertainty and a slew of potential new government programs leave them, as one put it, “driving in a dense fog.” And many don’t want to take any passengers along for the risky ride unless they must. “I’ve been laid off before and I didn’t like it,” said Tendon’s Mr. Gordon, explaining why he now avoids laying off any of his 45 employees at all costs. ■
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MANUFACTURING
Supply chains in a tough position Interview continued from PAGE 13
Logistics challenges could surface when production ramps up By JAY MILLER jmiller@crain.com
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estarting a sluggish economy won’t happen overnight. Part of the reason, of course, is the difficulty companies are having prying loans out of their bankers. But another reason is that it will take time for companies’ supply chains to pick up speed. These chains — made up of all the resources and organizations that contribute to production — keep the economy rolling. They run from places like the iron ore mines of Minnesota and the plastics compounding shops in Ohio to the makers of nuts and bolts and plastic bottles, to the car makers and shampoo makers — and let’s not forget the manufacturing plants in China and elsewhere overseas. And they all end up at the auto dealers, Walmarts and mom-and-pops everywhere. Any hoped-for recovery will require a quick response from the supply chain. And logistics professionals — the people who manage the chain— and academics in Northeast Ohio are concerned that the supply chain may not be able to respond at as fast a pace as the demand for new products. That’s largely because of the short-term difficulties of getting the system back to full capacity. Some, though, see the economic slowdown having a longer-term impact on supply chain management. “If the economy really turns around rapidly there would be a problem meeting all the demand,” said Ronald Ballou, a professor of operations at Case Western Reserve University’s Weatherhead School of Management. “And there would be upward pressure on prices because of the lower amount of product to sell.” Dr. Ballou expects to see reluctance among the links of the supply chain to ramp up production or add employees until businesses see a sustained demand for the raw materials they mine or the widgets they make. “That is, rather than risk a lot of production and send it into inventory in the expectation that demand will really rise, they are going to be cautious” and increase production slowly, he said. Oya Tukel, a professor in the department of operations and supply chain management at Cleveland State University’s Nance College of Business Administration, hears the same thing from her students, who tend to be professionals in the field working on advanced degrees. Many work at small and medium-sized manufacturers, who are what she calls “suppliers’ suppliers,” producing the parts and components that go into finished goods at the automakers and other large manufacturers.
will happen slowly. “They say they are as lean as they could get, trying to survive,” she said. “But they don’t have any intention of (expanding quickly). The companies can’t gear up quickly for two reasons, academic observers believe. First, many firms sold off trucks and trailers as the economy spiraled downward, and some older, idled equipment simply rusted and became unusable. But now, Dr. Tukel said, transportation firms, like nearly every other business in the country, will have trouble finding a bank to lend them the money to restore their fleets of trucks and rail cars. Dr. Ballou added that firms will be reluctant to hire new permanent employees until they are more confident the economy has recovered. And then, of course, not all the companies will be there as they were when times were good. Paul R. Murphy, professor of marketing and business logistics at John Carroll University, said businesses that cut back on the number of trucking firms they were using as the economy declined may have trouble rebuilding those networks since many of the firms they relied on have either gone out of business or cut back their own capacity. A survey by DC Velocity, a monthly magazine that covers distribution centers and other links in the supply chain, found that manufacturers and distributors were planning to be very cautious about growing their logistics spending in 2010. Though 56% were optimistic the economy would pick up, most expected weak growth and fewer were going to increase spending on transportation services. Only 35% expected to spend more on transportation services and 42% said they would consolidate more shipments into full truckloads, which would delay some deliveries that might other-
“From a strategic standpoint, the supply chain is going to have significant difficulty when the economy does heat up.” – Thomas Freese a management and transportation consultant wise have been sent at more costly less-than-truckload rates. Another factor that will slow down deliveries is the 31% of respondents who said they planned to cut back on even faster express shipments.
Long road ahead Beyond these short-term concerns, some worry about the longterm fragility of the supply chain. Thomas Freese, a management and transportation consultant based in Chagrin Falls, who held distribution and logistics jobs with Brush Wellman and Parker Hannifin, is concerned about rising costs that could result from shortages or delays along the supply chain and the impact of rising fuel prices. He has greater concerns as well. “From a strategic standpoint, the supply chain is going to have significant difficulty when the economy does heat up,” he said. “There is a critical shortage of (truck) drivers, a reduction in the amount of rolling stock on the highways because a lot of the older vehicles have been salvaged out and sent to Eastern Europe and there has been a minimal amount of rolling stock introduced into the railroads in the last 12 to 24 months.” “All of that will manifest itself in higher transportation costs along with the higher fuel that will drive total transportation costs up,” he said. ■
policies were focused on getting low initial prices, making little effort to measure the value that suppliers provide. This technique is great for squeezing suppliers’ margins — and the Detroit 3 were really successful with this, to the point that many suppliers were in bankruptcy even before the current crisis. But this method doesn’t help develop the skills needed to compete on value. All three automakers have said they now value collaboration more — let’s hope they do. Q: What is the greatest challenge right now for a small manufacturer (50 employees or fewer) operating in Northeast Ohio? A: Small manufacturers often have to compete with firms abroad that can offer lower up-front prices, due to lower wages and government subsidies. But many of these firms could survive if they were able to embrace agile production, in which they meet customer needs by introducing new products frequently, changing over quickly to produce a variety of products. But this requires a lot of investment and knowledge. For example, a study by (Stanford University professor) Kathryn Shaw of valve producers found that moreefficient firms adopted advanced information technology, while also changing their product strategy (to produce more customized valves), their operations strategy (using their IT capability to reduce setup times and defect rates) and humanresource policies (employing workers with more problem-solving skills and using more teamwork). The success of the changes in one area depended on success in other areas. For example, customizing products isn’t profitable without reducing the time required to change over to making a new product; this reduc-
tion comes from the improved information from the IT and the improved use of the information by the empowered workers. Conversely, the investments in IT and training were less likely to pay off in firms that did not adopt more customized products. Q: What recent government policies (state and federal) have been most helpful to NE Ohio’s manufacturing sector? Most hurtful? A: I’d pick the renewable-energy parts of the stimulus bill as being the most helpful. The most hurtful are policies that allow firms competing in socially-inefficient ways to undercut innovative firms paying fair wages — for example, trade policies that don’t protect environmental and labor rights, or policies that allow nations (and other U.S. states) to offer huge subsidies to attract firms to their regions. These subsidies are good for the firms that get them, but bad for firms that aren’t threatening to move, and for the rest of us that either have to pay more taxes or accept reduced services and worse schools. Q: In your opinion, is Northeast Ohio prepared to take advantage of green manufacturing opportunities? A: NEO has some great building blocks — we have the Great Lakes Energy Institute at Case Western; the Great Lakes Wind Network is developing a wind-energy supply chain; Cleveland Foundation’s wide-ranging support of wind energy; and some good training programs. But we are not operating at the scale that we need to be. We need to improve both on the supply side — for example, expand technical-assistance agencies like the Great Lakes Wind Network and MAGNET to help firms become more agile — and on the demand side — creating a national commitment to manufacturing renewable-energy equipment in the U.S. as a strategic priority.
MAGNET SUPPORTS MANUFACTURING In 2009, the Ohio Department of Development designated MAGNET the “go to” Edison Technology Center serving the motor vehicle and parts manufacturing industry statewide. MAGNET looks forward to providing its proven consulting expertise to that industry segment throughout Ohio while continuing to serve the entire manufacturing community in Northern Ohio with programs and activities designed to increase your growth and improve your profitability.
Not-so-special deliveries From her conversations with students, Dr. Tukel believes the transportation sector, which is critical in distributing goods along the chain, will bounce back, but it
www.magnetwork.org
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Hobby: Arts stores expand Credit: Companies find other sources continued from PAGE 3
know what a Hobby Lobby store was when he first heard the name, but got an awakening when he mentioned it at meetings in the Summit County suburb. “Sometimes people look at me like, ‘What are you talking about?’ Other times, we’ll have five people go nuts and say they don’t want to drive to Stow or Medina,” the mayor said. Regardless, he’d love to land the store.
Filling the blanks “I’m not much of a crafter, but as the former owner of a small business, I know this: Business begets business,” Mayor Kuchta said. “Filling that store will mean more business for the restaurants and other stores in (Macedonia Commons). Losing Tops cost us $50,000 a year in city income taxes.” In Fairlawn, Hobby Lobby will go into the Shoppes of Fairlawn, which Robert L. Stark Enterprises Inc. of Cleveland owns. Steve Rubin, Stark’s chief operating officer, said the shopping center owner will use space from the Borders store that will close in March and empty space in the center
to create enough space for the 55,000-square-foot retailer. “We’re excited to have them,” Mr. Rubin said. “It will add synergy to the center and help other retailers.” With its superstore format, Hobby Lobby would seem to take aim at arts and crafts retailers already in the market, including Strongsvillebased Pat Catan’s and Hudsonbased Jo-Ann Fabrics Inc. However, Mike Catan, CEO of family-owned Darice Inc. which operates the Pat Catan’s chain, said in an e-mail that he believes there is “plenty of room” for competition in the category here. While many retailers have hunkered down over the last year, arts and craft stores are expanding as a category. An RBC Capital Markets Corp. study of retail demand this month reported retailers expect to add 11 craft stores over the next year and 22 over the next two. RBC said the nation has 2,628 such stores currently. That is a different from much of the retail category; RBC said the retail industry as a whole plans to shut more stores than it opens. RBC said retailers have stated plans to shed 2,976 stores this year and 5,007 over the next two years. ■
continued from PAGE 1
it, they have preferred rates and they don’t.” Mr. Treu said the lines of credit that are going unused tend to be the ones that companies use to grow their businesses. When utilization starts to increase, he said, it’s a good sign of improvement in the economy. He added that because so many businesses are stockpiling cash, they may have the available credit to make changes quickly.
Uncertainty abounds Tom Partridge, Northeastern Ohio market president for Fifth Third Bank, said the bank also has seen a decrease in credit utilization, but it was not a particularly noticeable issue. The decline has continued over the past 12 months, he said, as companies focus on managing their working capital more efficiently. “It’s noticeable to me because I look at it every week,” he said. “Clearly, if a company is very focused on reducing working capital, it means there’s less need for workers to produce that inventory.” A spokeswoman for Charter One said the bank also has noticed the trend, and in a Jan. 21 conference call with investors, PNC Financial
“From the largest players to the smallest players, the most important source of stabilization is the availability of money.” – Joseph R. Ficalora, chairman, president and CEO, New York Community Bank Services Group chairman and CEO James Rohr said he has seen “soft” loan utilization among clients. That helped lead to an $18 billion decrease in the bank’s loan portfolio, though that downward trend seems to have eased recently. PNC stated in a Jan. 21 filing with the Securities and Exchange Commission that it “originated and renewed more than $110 billion in loans and commitments in 2009.” Mr. Rohr said in the call that he still expects low utilization rates and low loan demand to persist in 2010. The chairman, president and CEO of New York Community Bank, Joseph R. Ficalora, said the low utilization level is “indicative of why this crisis is going to be long and hard.” “Rightly so, Mom and Pop don’t want to take on an additional loan when they’re uncertain about revenues,” Mr. Ficalora said. The new owner of AmTrust Bank does not make business loans, but Mr. Ficalora said borrowers at other banks need to be more willing to take on additional risk before anything will change. “In this environment, they certainly are more risk averse,” he said. “From the largest players to the smallest players, the most important source of stabilization is the availability of money.” Not all banks are seeing such a slump. Andy Randall, Ohio president of TriState Capital Bank, said the usage rate at his bank is 82%.
Checking out alternatives But Lawrence Mack, executive
vice president of KeyBanc Capital Markets, said the largest players are finding money — they’re just finding it elsewhere. Larger companies are going to the capital markets, Mr. Mack said, after being chastened by banks that started to pull back credit when the worst of the crisis hit. “Going forward, they don’t want to rely on bank credit too much,” Mr. Mack said. “They want to diversify their funding source.” While big companies are using money from all means available, Mr. Mack said small companies, for the most part, are stuck with their bank relationships because they don’t have access to the capital markets in the same way that large companies do. Mr. Mack also said because of the slowdown, some companies may not need to borrow as much, while others may not be as creditworthy as they were in the past. Mr. Greig of FirstMerit said the “million-dollar question” is when credit utilization will be on the upswing among businesses and the economy will turn around. Eventually, he said, companies will need higher levels of inventory or new plant equipment and will tap into the lines of credit they have available to them. “One way to look at it is companies today are more liquid,” Mr. Greig said. “They’re better able to withstand it if any further economic turmoil should occur. In a lot of respects, it’s prudent management.” ■
Hostile workplace suit stemming from derogatory language proceeds By JUDY GREENWALD Business Insurance
ATLANTA — A female employee subjected to considerable genderspecific vulgarity can pursue her hostile work environment claim, even though the profanity was not directed specifically at her and was common at the workplace, a federal appeals court has ruled. The decision by the 11th U.S. Circuit Court of Appeals in Atlanta in Ingrid Reeves vs. C.H. Robinson Worldwide Inc. overturned a lower court’s dismissal of the case. A panel of the appeals court also ruled in Ms. Reeves’ favor in 2008. The court subsequently vacated the panel’s decision and granted a rehearing. According to the full court’s decision, Ms. Reeves was the only woman who worked on the sales floor as a transportation sales representative in the Birmingham, Ala., branch of C.H. Robinson, an Eden Prairie, Minn.-based shipping company, from July 2001 to March 2004. In addition to profanity that was not gender-specific, Ms. Reeves said she heard a “substantial corpus of gender-derogatory language addressed specifically to women as a group,” although the language was not directed at her specifically, according
to the decision. She was also forced to listen to a morning radio show that regularly talked about topics such as the size of women’s breasts and “elderly people having sex,” according to the decision. After her complaints to management went unheeded, Ms. Reeves resigned and filed suit, alleging she had been subjected to a hostile work environment in violation of Title VII of the Civil Rights Act of 1964. “Sexual language and discussions that truly are indiscriminate do not themselves establish sexual harassment under Title VII,” the appeals court said in its unanimous decision. “Nevertheless, a member of a protected group cannot be forced to endure pervasive, derogatory conduct and references that are gender-specific in the workplace, just because the workplace may be otherwise rife with generally indiscriminate vulgar conduct. “Title VII does not offer boorish employers a free pass to discriminate against their employees specifically on account of gender just because they have tolerated pervasive but indiscriminate profanity as well,” the court ruled in remanding the case for further proceedings. ■
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WWW.CRAINSCLEVELAND.COM
17
LARGEST HOTELS
RANKED BY NUMBER OF GUEST ROOMS Number of guest rooms
Number of meeting rooms
Group room rate ($)
Full-time employees (12-1-2009)
1
Kalahari Resort & Convention Center 7000 Kalahari Drive, Sandusky 44870 (877) 642-6847/www.kalahariresorts.com
Hotel owner
General manager
884
26
95,000
95-195
94-594
950
Todd Nelson
Brian Shanle
2
Hotel Breakers One Cedar Point Drive, Sandusky 44870 (419) 627-2106/www.cedarpoint.com
650
3
2,898
NA
97-279
3
Cedar Fair LP
NA
3
Renaissance Cleveland Hotel 24 Public Square, Cleveland 44113 (216) 696-5600/www.renaissancecleveland.com
491
33
62,000
239
109-299
351
CTF Hotel Holdings Inc.
Gary McGauley
4
Crowne Plaza Cleveland City Centre Hotel 777 St. Clair Ave. N.E., Cleveland 44114 (216) 771-7600/www.clevelanddowntownhotel.com
472
20
28,000
139-169
99-159
NA
Driftwood Hospitality Management LLC
Steve Groppe
5
Hilton Cleveland East/Beachwood 3663 Park East Drive, Beachwood 44122 (216) 464-5950/www.hiltonclevelandeastbeachwood.com
404
17
16,000
149-179
115-135
187
Twin Tier Hospitality LLC Satish Duggal
Ali Chiani
6
Cleveland Marriott Downtown at Key Center 127 Public Square, Cleveland 44114 (216) 696-9200/www.clevelandmarriottdowntown.com
400
16
17,000
179-249
99-179
230
Wells Real Estate Funds
Bob Megazinni
7
Doubletree Hotel Cleveland Downtown/Lakeside 1111 Lakeside Ave. E., Cleveland 44114 (216) 241-5100/www.clevelanddowntownlakeside.doubletree.com
379
10
10,347
119-189
79-179
70
The Hotel Group
Leonard Clifton
8
Cleveland Airport Marriott 4277 W. 150 St., Cleveland 44135 (216) 252-5333/www.clevelandairportmarriott.com
372
16
15,500
149+
109+
165
Thomas Point Ventures
Rick Bertram
9
Holiday Inn Cleveland South/Independence 6001 Rockside Road, Independence 44131 (216) 524-8050/www.hiindependence.com
364
18
18,100
130
85-99
90
Janus Hotels & Resorts Inc.
Tom Moore
10
Breakers Express One Cedar Point Drive, Sandusky 44870 (419) 627-2106/www.cedarpoint.com
350
NA
NA
NA
89-199
1
Cedar Fair LP
NA
11
Holiday Inn Strongsville 15471 Royalton Road, Strongsville 44136 (440) 238-8800/www.holidayinn.com/cle-strongsvil
303
10
12,500
139
89-109
100
Lodgian
Joe Isernia
12
InterContinental Hotel & Conference Center 9801 Carnegie Ave., Cleveland 44106 (216) 707-4100/www.intercontinentalcleveland.com
299
13
35,000
NA
NA
NA
Cleveland Clinic
Campbell Black
13
Cleveland Marriott East 26300 Harvard Road, Warrensville Heights 44122 (216) 378-9191/www.clevelandmarriotteast.com
295
15
15,000
189
NA
NA
Western and Southern Insurance-Eagle Realty
Kenric A. Hall
14
Hyatt Regency Cleveland at the Arcade 420 Superior Ave., Cleveland 44114 (216) 575-1234/www.cleveland.hyatt.com
293
9
7,100
189
NA
NA
Cleveland Arcade LLC
Robert Kallmeyer
15
Sheraton Cleveland Airport Hotel 5300 Riverside Drive, Cleveland 44135 (216) 267-1500/www.clevelandairportsheraton.com
287
22
22,000
179
NA
135
Oakbrook Hotels
Thomas Rousher
16
Akron City Centre Hotel 20 W. Mill St., Akron 44308 (330) 384-1500/www.akroncitycentrehotel.com
274
20
18,000
129
NA
NA
David and Ann Brennan
Tom Finley
17
Embassy Suites Hotel Cleveland Rockside 5800 Rockside Woods Blvd., Independence 44131 (216) 986-9900/www.embassysuites-rockside.com
271
13
17,500
159-209
129-169
125
AP/Aim Independence Suites TRS LLC
Kendall Clay
18
Holiday Inn Westlake 1100 Crocker Road, Westlake 44145 (440) 871-6000/http://www.ichotelsgroup.com/h/d/hi/1/en/hotel/clewl
266
11
11,000
99.00
NA
65
Twin Tier Hospitality
Tom Hibsman
19
Holiday Inn Elyria/Lorain 1825 Lorain Blvd., Elyria 44035 (440) 324-5411/www.holidayinn.com/cle-elyria
248
7
10,280
79-99
69-99
30
HIE Operating Co.
Janet Taylor
20
Hilton Garden Inn Cleveland Downtown 1100 Carnegie Ave., Cleveland 44115 (216) 658-6400/www.clevelanddowntown.stayhgi.com
240
14
20,000
159
99-149
100
Gateway Hospitality Group George M. Iannacone Harvey Schach
20
Sawmill Creek Resort & Conference Center 400 Sawmill Creek Drive, Huron 44839 (800) 729-6455/www.sawmillcreek.com
240
25
50,000
85-165
105-195
120
Gregory Hill
Gregory Hill
22
Crowne Plaza Cleveland Airport 7230 Engle Road, Middleburg Heights 44130 (440) 243-4040/www.crowneplaza.com/clevelandarpt
238
14
16,000
119-169
89-169
50
Toledo Inns Inc.
Kathy Jennings
23
Castaway Bay 2001 Cleveland Road, Sandusky 44870 (419) 627-2106/www.castawaybay.com
237
8
7,691
99-259
99-259
6
Cedar Fair LP
NA
24
Cleveland Clinic Guesthouse 9601 Euclid Ave., Cleveland 44106 (216) 707-4200
232
NA
NA
NA
NA
NA
Cleveland Clinic
Campbell Black
25
Days Inn & Suites Richfield 4742 Brecksville Road, Richfield 44286 (330) 659-6151/www.clevelandrichfieldhotels.com
216
6
30,000
79
72
25
Sandip Thakkar
Sandip Thakkar
25
Embassy Suites Hotel Beachwood 3775 Park East Drive, Beachwood 44122 (216) 765-8066/www.embassybeachwood.com
216
7
5,878
189-249
99-229
95
IA Urban Hotels Beachwood TRS LLC
Mark Herron
27
Comfort Inn Sandusky 5909 Milan Road, Sandusky 44870 (419) 621-0200/www.sanduskyhotels.com
209
1
2,200
NA
NA
NA
Carmelo Ruta Inc.
Amy Margheim
27
Sheraton Suites Akron/Cuyahoga Falls 1989 Front St., Cuyahoga Falls 44221 (330) 929-3000/www.sheratonakron.com
209
14
23,000
189
99-149
NA
Riverside Community Urban Redevelopment Corp.
Robert Trammell
29
Ritz-Carlton, Cleveland 1515 W. Third St., Cleveland 44113 (216) 623-1300/www.ritzcarlton.com
206
12
24,466
249-289
159-229
250
Forest City Enterprises Inc. Joseph Mattioli
30
Wyndham Cleveland at PlayhouseSquare 1260 Euclid Ave., Cleveland 44115 (216) 615-7500/www.wyndhamcleveland.com
205
9
13,079
129-209
89-169
77
PlayhouseSquare
Brian Moloney
31
Hilton Akron/Fairlawn 3180 W. Market St., Akron 44333 (330) 867-5000/www.akronhilton.com
203
16
17,000
129
115-169
75
RDA Hotel Management Co. Rennick Andreoli
Tim Winter
Name Rank Address Phone/Web site
Meeting space Corporate (square feet) room rate ($)
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.
RESEARCHED BY Deborah W. Hillyer
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Nonprofits: Organizations make donations appeal continued from PAGE 3
“It’s an extraordinary moment in time. The economy is so devastated with unemployment and job loss and now there’s a natural disaster,” said K. Michael Benz, president and CEO of United Way of Greater Cleveland. Natalie Leek-Nelson, president and CEO of Providence House, said she fears a repeat of what happened following Hurricane Katrina in 2005. As people provided help to Katrina victims, her crisis nursery in Cleveland saw a drop in donations, so she took to the airwaves to plead for help on local radio stations. “If the (Haiti) relief efforts continue to encourage donors to give, give, give all the way into spring and summer, we will really be in trouble,” she said. Though the economy has bounced back somewhat, Ms. LeekNelson said donations to Providence House are down to about one a day. The nursery typically receives several
Contact: Phone: Fax: E-mail:
donations a day at this time of year, she said. “Everybody is not out of the woods yet, so you’re seeing this finite ability to give,” she said. “Donors feel compelled to (donate to Haiti) and don’t have the money to support local nonprofits.” Though another radio appeal is not in the works, Ms. Leek-Nelson said Providence House is creating its first social media fundraising campaign. It will be launched in mid-February as a way to attract younger donors and to help educate people about the needs of Cleveland’s children. The City Mission in early February also will begin educating the public about its 100th anniversary of providing services for the homeless. The nonprofit had planned to launch a new advertising campaign on Jan. 15 on WKNR-AM, 1220, and WFHM-FM, 95.5, but chose to postpone it until Feb. 10 to avoid the many advertisements to help Haiti,
Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com
said Jim Whiteman, the City Mission’s chief development officer. “It wouldn’t have made sense for us to spend the money if the ads were going to get lost,” Mr. Whiteman said.
Spreading the word The Greater Cleveland chapter of the American Red Cross has collected about $300,000 from local donors for Haiti relief, but the wellknown nonprofit is reminding local residents that none of that money stays in Northeast Ohio, said MaryAlice Frank, CEO of the Greater Cleveland Red Cross. “The Red Cross locally does not keep any money designated to Haiti,” she said. “Please don’t think this is your Red Cross donation for the year.” Ms. Frank said the local Red Cross is spreading that message through e-mail, Facebook, Twitter and letters to former donors. Letters will be mailed to about 200
individuals, corporations and organizations that typically give $1,000 or more each year to remind them of the need in Northeast Ohio. Greater Cleveland’s older housing stock leads to about 40 house fires each month in the city of Cleveland, all of which the Red Cross responds to, she said. In addition, many people who have lost their jobs are inquiring about the nurse assistant training provided by the Red Cross, but the organization needs donations to expand the program, she said. The Red Cross raised about $2 million in the last six months of 2009, up from $1.2 million in the like period a year earlier. However, its fee-based services have seen a 25% decrease in the number of people paying to take such courses as Learn to Swim, First Aid and CPR, Ms. Frank said, so it has needed the added donations. Many of those donors who usually give $5,000 or more each year
REAL ESTATE
LEGAL NOTICE NOTICE TO VENDORS Notice is hereby given that sealed proposals will be received in the Board of County Commissioners Office of Procurement & Diversity, Room 100, County Administration Building Annex, 112 Hamilton Court, Cleveland, Ohio 44114 until 11:00 A.M. local time on March 15th, 2010 for lease of certain street level office or retail space (approximately up to 5,200 square feet with an additional 1,100 square feet of storage space in the basement) located in the County owned Marion Building, 1264 and 1276 W. Third Street, Cleveland, Ohio 44113. The official closing time shall be determined by the wall clock located in the Office of Procurement & Diversity. (SAME ADDRESS) Late proposals will be returned unopened. There will be a Pre-proposal Conference and walk-through of the spaces offered for lease on February 24th, 2010 at 2:00 P.M. local time at the Marion Building, 1264 and 1276 W. Third Street, Cleveland, Ohio 44113. IT IS STRONGLY RECOMMENDED THAT INTERESTED LESSEES ATTEND. Specifications and proposal blanks may be obtained at the Board of County Commissioners Office of Procurement & Diversity (SAME ADDRESS). Questions may be addressed to Mr. John Myers, Real Estate Manager at 216.698.2517 The Board of County Commissioners reserves the right to accept or reject any proposals or any part or all parts of any proposal submitted, and waive all technicalities. Each proposal must state in full the name and address of each person, firm or corporation interested in the proposal submitted. BY ORDER OF THE BOARD OF COUNTY COMMISSIONERS OF CUYAHOGA COUNTY JIMMY DIMORA TIMOTHY F. HAGAN PETER LAWSON JONES LENORA M. LOCKETT, DIRECTOR Office of Procurement & Diversity
OFFICE SPACE FOR LEASE
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are not giving at that level this year, and the Red Cross is seeing fewer gifts of appreciated stock, which used to be a popular way to donate, Ms. Frank said. United Way also has seen a slowdown in donations to its current $40 million campaign, which was reduced from $40.5 million, Mr. Benz said. The campaign ends March 5 and to date has collected $36.6 million. The City Mission saw a decrease in donations immediately after Hurricane Katrina and could experience the same with the crisis in Haiti, Mr. Whiteman said. But he believes that, if a lull occurs, it would be brief because people realize Northeast Ohioans need help, too. Indeed, calls to the UnitedWay’s 211/First Call for Help line reached 206,000 in 2009, up 8% from 191,000 in 2008 and up 36% from 151,000 in 2007, Mr. Benz said. “The needs are going through the ceiling and the resources are down because of unemployment and the economy,” Mr. Benz said. “We’re trying hard to raise every dollar. I’m begging everywhere.” ■
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19
THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
JANUARY 25 — 31
Let us introduce ourselves. We’re PNC.
The big story: The Obama administration awarded $400 million to Ohio’s proposed 3C passenger rail corridor that would link Cleveland, Columbus, Dayton and Cincinnati by train. The money is part of $8 billion in federal awards for passenger rail projects under the American Recovery and Reinvestment Act. The administration received applications seeking nearly $50 billion in rail money from 39 states. The administration awarded grants to 13 projects that span from the Pacific Northwest and California to the Midwest and Florida.
■ National City Bank patrons in this area have received 16 pages filled with pictures of smiling customers, happy-to-help bank tellers, flow charts and a “frequently asked questions” section in advance of the transition to PNC Financial Services Group Inc. later this spring. Accompanied by a letter that spells out the April 12 date of the transition and tells customers that they’ll receive account transfer information in March and new ATM cards in April, the Customer Update — measuring about 5.5 inches by 8.5 inches, or the size of a paperback — is a brightly colored introduction to PNC. On the inside front cover, PNC chairman and CEO James E. Rohr tells customers that “earning your continued trust and confidence is our utmost priority.” For the short term, he wrote, nothing will change. But as it does, PNC’s first priority is to make the transition “as seamless as possible.” The pamphlet tells of PNC’s history, formed with the 1982 merger of Pittsburgh National Corp. and Provident National Corp. in Philadelphia, and gives details of its work in the community. That includes the Grow Up Great program and the PNC Foundation in addition to the bank’s environmental commitment. PNC applies green building standards to all renovated and newly constructed branches, the pamphlet said, and has more
Leap of faith: You could say defense contractor HDT International Holdings Inc. in Solon jumped at the chance to make this acquisition. HDT, formerly known as Hunter Defense Technologies, acquired Airborne Systems Group Ltd., a maker of parachute products. HDT did not say what it paid for Airborne, which is based in Pennsauken, N.J. Airborne has North American manufacturing operations in Pennsauken as well as in Santa Ana, Calif., and Belleville, Ontario, in Canada. It also operates a plant in the United Kingdom.
Rolling along: A Cleveland nonprofit that has spent four years laying the tracks for an indoor “velodrome” — a custom-built, banked bicycle track — in the city is moving closer to making its goal a reality. Fast Track Cycling Inc. entered into a purchase option agreement with the city of Cleveland to buy a vacant nine-acre site formerly occupied by St. Michael Hospital in Slavic Village. Brett Davis, president of the board of Fast Track Cycling, said the purchase price is $385,000. Fast Track Cycling has a one-year option on the land that could be followed by a one-year extension. Fast Track Cycling plans to develop and operate a $6.5 million indoor recreational facility that would include a velodrome. An era of change: Developers Diversified Realty Corp. is changing another key position in its management ranks. The shopping center owner said its chief financial officer, William H. Schafer, will conclude his employment with the company effective Feb. 15. Replacing Mr. Schafer on an interim basis is David J. Oakes, who will serve as CFO in addition to his regular duties as senior executive vice president of finance and chief investment officer. The announcement came less than a month after David Hurwitz assumed the CEO post at Developers Diversified from Scott Wolstein.
Come visit: The visitor center at NASA Glenn Research Center is moving to new space. NASA Glenn and the Great Lakes Science Center signed a 10-year agreement that makes the Science Center the official visitor center site for Glenn. About 20 exhibits from NASA Glenn’s existing on-site visitor center will be transported to and installed within the Science Center beginning in March. The Science Center also is raising $3 million to build an updated visitor center.
Does Beachwood have traffic?: Carnegie Investment Counsel is moving to the suburbs. After 35 years downtown, including 22 years in the Halle Building, the investment management and planning firm is heading to Beachwood. Principal and chief investment officer Richard Alt said the decision was made because clients do not enjoy fighting downtown traffic and paying for parking. The firm will move Feb. 1 to the Chagrin-Richmond Plaza.
WHAT’S NEW
newly constructed LEED-certified buildings than any other company. In addition to extolling the bank’s virtues externally, the pamphlet reminds customers that they can use their National City card at PNC ATMs and lists services and products offered by the bank. It also answers a dozen questions, from how direct deposits will be affected (in most cases, they won’t) to whether account numbers will change (they will). For more information on the transition, visit WelcomeToPNC.com or call 1-877-762-9119. — Arielle Kass
Somebody is drinking our share of spirits ■ With retail sales in Ohio down across so many product lines, let’s offer a toast to one product that saw improved sales in 2009 — the state-run liquor business. In 2009, the sale of spirits by the Ohio Division of Liquor Control reached $734.8 million, which was 2.2% above 2008’s $719.1 million. Not only were sales up, but the division turned a record profit of $224.2 million — a 30.1% profit margin. “Dollar sales have been increasing for several years, mostly due to increases in product prices, consumers buying premiumpriced products and a rise in the level of consumption,” said state barkeep-in-chief Kimberly Zurz, director of the Ohio Department of Commerce, in a statement. Volume was also up 1.82% to 10.7 million gallons, or four-and-a-half fifth bottles for every
There’s a marriage of form and function in the newest faucet in the Moen portfolio. Arbor offers a “graceful, high-arc spout, multi-function pulldown wand and docking mechanism,” Moen says. An S-shaped handle can be installed on the right or left side of the faucet. The faucet’s single-lever handle offers easy-to-use temperature and flow control, Moen says, while the ergonomically designed spout and wand make it easy to perform tasks such as filling large pots or vases in and around the sink. With the touch of a button, Moen says, users can switch several water flow patterns, including aerated spray, stream or a pause button, to reach areas outside the sink. The faucet also includes a fiber pulldown hose with a ball joint at the end of the wand for quiet operation and easier maneuverability when rinsing corners of the sink. The Arbor faucet is ADA compliant and is available in Chrome and LifeShine Classic stainless finishes. For information, visit www.moen.com. We want to hear about your company’s new products. Send information to managing editor Scott Suttell at ssuttell@crain.com.
An effort to broaden the research universe ■ People with disabilities soon could find it easier to participate in clinical trials. Case Western Reserve University’s Frances Payne Bolton School of Nursing has a $400,000 grant from the National Institute of Nursing to find ways to include the disabled in medical research projects. Researchers often unknowingly exclude the blind, hearing impaired and illiterate from research studies. Under the nursing school’s project, experts from the Cleveland Sight Center and the Cleveland Hearing and Speech Center, researchers in engineering and teaching, rehabilitation specialists who work with the disabled, and communication scientists will collaborate to find ways to help the disabled participate in research studies. Staffers from the hearing and sight centers will head up workshops in which researchers will learn how to use communication technologies commonly used by the blind and hearing impaired. Researchers also will be able to test various communication tools that help the blind and hearing impaired before using them in a research project. The hope is that inclusion of the blind and hearing impaired will enable research studies to produce better results. The first workshop will be held on Feb. 9. — Shannon Mortland
BEST OF THE BLOGS Excerpts from blog entries on CrainsCleveland.com.
COMPANY: Moen Inc., North Olmsted PRODUCT: Arbor pulldown kitchen faucet
man, woman and too-young-to-drink child. The top selling brands were Kamchatka vodka, Jack Daniels Tennessee whiskey, Bacardi Superior light rum, Captain Morgan spiced rum and Smirnoff vodka. — Jay Miller
WSJ sees little harmony even after orchestra’s labor pact ■ The Wall Street Journal isn’t convinced the new labor contract at the Cleveland Orchestra will do enough to ensure the long-term financial health of the acclaimed ensemble. “The compensation model needs to be radically restructured if the institution is to survive in the long term,” The Journal said in a Jan. 23 culture section piece. No argument there. But another point is a little more contentious. “Maestro Welser-Möst is a fine, if understated, musician. But he’s not ‘box office,’ as few conductors are,” the newspaper wrote. “Not many music lovers purchase tickets because he is on the podium: So how can even high-six-figure compensation be justified for leadership of an artistically successful but financially precarious organization? And musicdirector compensation is emblematic of orchestras’ broader payroll problems.” The piece concludes that the survival of all orchestras “involves the reduction of their cost base, and for that to happen, managements across the country need to make their financial situation transparent to their musicians and make them full partners in creating fiscal viability for the enterprise.”
Now about that recovery we’ve all been anticipating … ■ Cleveland is one of the cities being watched closely by housing data and research firm Zillow.com for signs of a double-dip in the housing debacle. Forbes.com said the others on the watch
list are Baltimore, Boston, Denver and Los Angeles. Those five cities, which had experienced several months of gains in the housing market, “turned in much weaker appreciation in November and are very likely to show renewed depreciation in the coming months,” according to a blog post from Zillow .com chief economist Stan Humphries. Tellingly, the Associated Press-Re/Max Monthly Housing Report, released Jan. 25, showed that sales fell in December in nine of 12 major Midwestern cities. In Cleveland, home sales declined 19% in December 2009 from December 2008 — the biggest decline in the region, according to the AP. Linda Hart, an agent with Re/Max Traditions in Cleveland, told the AP that buyers “are still making incredibly conservative decisions.” For instance, she said doctors moving to the city to work at the Cleveland Clinic for a couple years often used to buy a house but now rent for fear prices will continue to fall.
In Massillon, students take a global view starting in China ■ A recent New York Times piece on the decline of public schools teaching foreign languages notes one major exception: teaching Chinese. Jackson High School in Massillon started its Chinese program in fall 2007 with 20 students and now has 80, said Parthena Draggett, who directs Jackson’s world languages department. “We were able to get a free Chinese teacher,” she told the newspaper. “I’d like to start a Spanish program for elementary children, but we can’t get a free Spanish teacher.” The Times clarified that Jackson’s Chinese teacher is not free; the Chinese government pays part of his compensation, with the district paying the rest.
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