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Vol. 31, No. 13
HEALTH CARE REFORM AND ITS EFFECTS IN NORTHEAST OHIO
Uncertainty surrounds bill’s passage
Tax on medical device makers could be taxing
Immediate changes likely to result in premium increase; large, midsize employers brace for additional costs
By CHUCK SODER csoder@crain.com
Assessment may stifle growth field
By SHANNON MORTLAND smortland@crain.com
The ink was barely dry on the health care bill when local businesses began asking professional organizations: How does this affect me? The answers aren’t completely clear yet, but what is certain is that everyone will be affected somehow, so businesses soon should begin working with outside profes“The biggest sionals to figure out how they fear and conwill address the health care cern is we don’t bill, said Pat Perry, president of ERC, an organization whose see (the bill) as members deal with human really helping resource issues. out businesses “No one should be panicking too much.” right now, (but) we will be suggesting that every organiza– Pat Perry, tion pause and have an president, ERC in-depth conversation with their consultants and brokers,” Mr. Perry said. “There is the opportunity to plan accordingly.” The Patient Protection and Affordable Care Act, as the bill formally is called, was signed into law last Tuesday, March 23, and is expected to provide coverage for 32 million Americans who aren’t covered by health insurance now. Various parts of the bill will be phased in through 2018, but businesses can expect to begin feeling See BILL Page 4
FILE PHOTO/MARC GOLUB
Hiroyuki Fujita, CEO of Quality Electrodynamics LLC, says the company — which makes coils for magnetic resonance imaging machines — could see a sales uptick with more insured people in the market. But, the company also could be hurt by its customers demanding price cuts when their contracts expire.
Some of Northeast Ohio’s medical device companies think all the surgery Congress just did on the nation’s health care system will help them grow bigger and stronger, but others believe it has left them with an infection in the form of a tax that could kill innovation and jobs. Dennis Stripe, CEO of OrthoHelix Surgical Designs Inc., can understand why they don’t all think alike. By increasing the “Taxing those number of people with health insurance, the growing health care bill that companies is President Barack Obama like taking signed into law last away food from Tuesday, March 23, could end up helping a teenager.” the Medina company – Bob Schmidt, sell more of the surgical CEO, Cleveland implants its makes for Medical Devices Inc. people with hand and foot problems. Mr. Stripe figures people with insurance are more likely to get that “hammer toe” fixed with OrthoHelix’s help. However, he knows those gains, if they materialize, won’t come free. The law includes a 2.3% excise tax on the sale of all medical devices except for consumer goods, such as contact lenses and hearing aids. The provision survived another trial last week, when Congress approved a follow-up bill to amend the first one. “We’re in a position to absorb it if we have to,” See DEVICES Page 5
Potential Huntington Building buyer already has interests here Miami outfit recently added two downtown sites By STAN BULLARD sbullard@crain.com
13
FILE PHOTO/RUGGERO FATICA
The landmark Huntington Building — viewed by some as the grand dame of Cleveland office buildings and by others as a prehistoric monster threatening the well-being of the city’s office market — may be in line for a new owner that already has displayed an appetite for Cleveland skyscrapers.
Tenants in Cleveland’s secondlargest office building recently received a memo from Hines, its property manager, saying that the building’s owner has signed a purchase agreement with Optima Ventures LLC. Hines manages the property on behalf of Huntington National Bank, which controls the building at 916 Euclid Ave. under a 100-year master lease that expires next year. Optima Ventures LLC is a name
similar to Optima International LLC, a Miami-based conglomerate that recently acquired One Cleveland Center, 1375 E. Ninth St., and the 55 Public Square office building downtown. Optima International spokesman Chaim Schochet did not return three calls from Crain’s by Wednesday, March 24. A copy of the letter to tenants dated Monday, March 22, and obtained by Crain’s, advised them that Optima has “indicated their interest in speaking with existing tenants in lease renewal discussions and may
be contacting you in the near future.” Retaining tenants would be crucial for the building’s next owner during the recession. Cleveland financier and real estate investor Carl Glickman owns the building and a land lease for the ground underneath it. Mr. Glickman holds the property through Chester Union Associates, a joint venture with a New York-based investor group, according to land records. The expiration of Huntington’s master lease means Mr. Glickman’s See HUNTINGTON Page 9
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WHAT’S UP? NOT MUCH
COMING NEXT WEEK
Say this about the recession: It’s keeping most things cheap. During the 12-month period that ended Feb. 28, the Consumer Price Index was up just 2.1%, according to the Bureau of Labor Statistics. And the increase in the index for all items excluding food and energy was just 1.3%, the lowest since February 2004. (Energy was the big gainer, up more than 14% during the past year as gasoline prices rose nearly 37%.) Here’s how consumer prices break down over the last 12 months:
All in the family Crain’s identifies some of the region’s most storied family businesses, including Great Lakes Cheese Co. (pictured), a second-generation business. We’ll also look at third- and fourth-generation businesses.
Category MARC GOLUB
CORRECTIONS ■ A March 22, Page 3 story about Lakewood Center North incorrectly identified a New York company that provided data on distressed commercial properties. The correct name is Real Capital Analytics. ■ The March 22 list of Largest Shopping
MARCH 29-APRIL 4, 2010
Centers reported incorrect information for the number of stores and percentage of retail space occupied for Great Northern Plazas. The correct number of stores is 40. Officials at the property did not disclose the percentage of retail space occupied.
Percentage increase
All items
2.1%
Food
-0.2
Energy (gas/household)
14.4
New vehicles
3.5
Apparel
0
Shelter
-0.4
Transportation services
3.3
Medical care services
3.7
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Manufacturers’ dismal outlook thaws Survey shows manufacturers optimistic about short term amid activity gains, but remain wary By DAN SHINGLER dshingler@crain.com
The new year is only three months old, but so far, so good, say many in the local manufacturing sector. They report widespread upticks in demand for goods ranging from industrial parts and highway lighting fixtures to medical devices and automotive components.
And the latest data from the Independence-based Precision Metalforming Association backs up their anecdotal reports. The group’s March survey of its North American members, many of which are in Northeast Ohio, shows that a majority of companies are optimistic about their near-term business and have called back workers who were laid off in the teeth of the recession. The survey shows 54% of respon-
dents reported that their daily shipping levels were higher in March than they were in December. That matched the same percentage that reported seeing an increase in business back in October — though the numbers turned worse when members were polled in December and January and, each time, only about one-third of respondents said business was up. Perhaps even more heartening for the general economy, manufacturers have been calling back their laid-off workers. In March, 58% of the survey’s participants said they no longer had See SURVEY Page 6
GOOD ATTITUDE The Precision Metalforming Association each month gauges its members’ attitudes about business conditions. March numbers reveal increased shipping levels: Compared to three months ago, current daily shipping levels are:
Time period
Up
Same
Down
March 2010
54%
36%
10%
December 2009
37
36
27
September 2009
53
30
17
June 2009
14
37
49
March 2009
9
18
73
December 2008
4
17
79
THE WEEK IN QUOTES
INSIGHT
Nat City takes on PNC ways, and sometimes vice versa
“Anytime you put 32 million more people into the (health care) system, it’s going to benefit us.” — Stephen Norton, spokesman for Steris Corp. Page One
Name change marks formal step in transition
“I’m glad to hear someone is going to invest in Cleveland. I think it’s a good time to position yourself here.”
By ARIELLE KASS akass@crain.com
— Geoff Coyle, a partner at Colliers Ostendorf-Morris. Page One
“The summer months are the dark days of the convention industry. … We’re thinking outside of the box.” — Chris Fassnacht, who operates the Great Lakes Expo Center. Page 11
“It’s been a pretty dry 18 months for special events.” — Margy Judd, CEO of Executive Arrangements Inc. Page 13
COMING UP Crain’s is seeking potential profilees for its Women of Note section, which will run in the July 19 issue. To submit a nomination, use the online nomination form at our web site, www.CrainsCleveland.com. You also may send a nomination to editor Mark Dodosh via e-mail at mdodosh@crain.com. The nomination should be no more than one page. Please put “Women of Note” in the subject line. Nominations via regular mail can be sent to Mr. Dodosh at 700 W. St. Clair Ave., suite 310, Cleveland, 44113. The deadline is 5 p.m. Tuesday, April 13.
FILE PHOTO/MARC GOLUB
Greg Stiles, owner of Heights Guitars in Cleveland Heights, died Feb. 8. Efforts are under way to keep the beloved independent guitar specialty store going.
LEGACY ROCKS ON After death of Heights Guitars owner, widow tries to orchestrate sale of storied independent music shop to carry on business By DAN SHINGLER dshingler@crain.com
T
he rock ’n’ roll capital lost an asset on Feb. 8, when Heights Guitars owner Greg Stiles died. Now, many in the guitar community hope his store at 2128 Lee Road in Cleveland Heights can find a way to survive as one of the last independent guitar specialty stores in the area. If his widow, Nina Stiles, has any say in the matter, that’s exactly what will happen. She said she is trying to negotiate a sale of the business to two of Mr. Stiles’ former staff members. But if that deal can’t be worked out, she’ll try to find another owner-operator who will run the business. “The last thing I want to have to do is stand at the door and watch everything go out one piece at a time,” Mrs. Stiles said. Mrs. Stiles said her husband died within three weeks of being diagnosed with pancreatic cancer — never believing his illness would take his life, even up to the end. “I don’t know how to run the store. I don’t know how to do appraisals and repairs — he spent 30 years perfecting those skills,” Mrs. Stiles said. See GUITAR Page 17
The former National City Bank has taken its merger with PNC Financial Services Group as a chance to look at things anew. Whether it’s the way the bank works with nonprofit organizations, how it sells customers and the products it peddles or even the way it approaches doing business in Cleveland, some things have changed. But others — like the employees who come face to face with customers — are the same. And PNC is even taking notes from National City, so the former Cleveland bank’s DNA will live on in its new owner. On April 12, PNC’s name will grace the former National City offices across the region as the bank undergoes its conversion in this area. But Paul Clark, PNC’s regional president for Northern Ohio, said most of the major changes have already taken place, and that they’re unilaterally for the better. Mr. Clark also emphasized that because the banks have similar values, the changes clients see will be minor. “It’s important to think of what’s the same,” he said. “It’s the same people taking care of the customer. … It’s the same leadership team.” But those leadership teams are operating in new ways. Because Cleveland no longer is the bank’s headquarters city, almost everyone employed in Cleveland outside of the operations center now is focused on doing what’s best here, Mr. Clark said. That wasn’t always the case, he said, as headquarters employees had their attention diverted to other states where the bank was focusing on competition in those markets and trying to enhance National City’s brand. “Without the clutter of the corporate structure, it’s just liberating,” he said. “We’re absolutely focused on the customer in a way that’s energetic and fresh.” See PNC Page 18
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Bill: Businesses may be on short end continued from PAGE 1
its effects almost immediately. To be implemented within 90 days of the bill’s signing is the creation of a high-risk pool for people with pre-existing conditions to obtain health insurance, said Steve Millard, president of the Council of Smaller Enterprises small business advocacy group. Many people previously have been denied insurance due to pre-existing ailments, or the premiums have been too high for them to afford insurance. Also, starting in September, parents will be able to keep their adult children up to age 26 on their health insurance plans, children cannot be denied coverage due to pre-existing conditions, coverage cannot be rescinded for anyone except in the
case of fraud, and insurers cannot place lifetime limits on coverage. As a result, health insurers likely will raise premiums, said Keith Ashmus, a partner at Cleveland law firm Frantz Ward and chairman of the National Small Business Association in Washington, D.C. “Premiums are going to go up probably pretty quickly to accommodate the changes taking place soon” and to avoid justifying those premium hikes, as will be mandated in 2011, Mr. Ashmus said. In the meantime, businesses should prepare themselves for the provisions that will directly affect them, sometimes in a positive way, professional advisers say. “Firms with 25 or fewer employees and average annual wages of less
than $50,000 per employee can receive a tax credit of up to 35% of health insurance premiums by picking up at least half the premium cost” of health insurance, said Amy Leopard, head of the health care group at Cleveland law firm Walter & Haverfield LLP. That tax credit bumps up to 50% in 2014, Mr. Millard said. In addition, companies with fewer than 10 employees who earn an average annual wage of less than $25,000 will receive a full tax credit for paying for at least half their employees’ health care premiums, Ms. Leopard said.
The fine print Whether the tax credit will motivate employers to extend insurance coverage to their workers is open to debate. COSE’s Mr. Millard said a tax credit likely won’t be enough to sway small companies to provide insurance coverage for employees if they don’t already do so because of the added cost. And, under the health bill, companies with fewer than 50 employees will not be mandated to provide insurance and will not be penalized for not providing coverage, he said. Still, Mr. Millard said, “Whether you are for or against the bill, there will be some benefits, especially for entrepreneurs who don’t have access to health care today.” However, there are catches, especially for midsize and large employers. Individuals will be required to carry health insurance, but if they earn less than $58,280 for a family of two, they will receive tax credits to help pay those premiums. This is where the health bill could get sticky for companies with more than 50 employees. If a business with more than 50 workers has at least one employee who receives a tax credit to help cover the cost of insurance premiums, the company must offer affordable insurance or pay a fine of $2,000 for each employee after 30, Walter & Haverfield’s Ms. Leopard said. The fine would increase to $3,000 per employee after 30 if the insurance the company offers is deemed unaffordable, she added. The federal government would deem an employee’s contribution to his or her health care premiums unaffordable if it exceeds 9.5% of the employee’s household income, Ms. Leopard said. ERC’s Mr. Perry said no one has suggested that the health reform bill actually would help companies reduce their own costs. “We will see organizations taking a hard look at what employee benefits they offer and what they should do in light of what has been passed,” he said.
Looking for the work-around In 2014, employers can expect premiums to rise again as insurers no longer will be able to deny coverage to anyone with pre-existing conditions and cannot impose annual limits on covered care, Mr. Ashmus said. These mandates will replace the temporary high-risk pools created this year. Both COSE and ERC will be offering seminars and workshops to educate members on the reform bill as the government irons out the details. Until then, they are urging employers to call them with any questions. “Whether it’s in the form of increased rates or additional taxes, this is going to keep consultants and attorneys busy for quite some time,” Mr. Perry said. “There will be a number of folks who are going to be looking for ways to work through and around what’s been passed.” ■
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Devices: Local companies’ momentum may be slowed by legislation continued from PAGE 1
Mr. Stripe said. Nonetheless, the tax, which goes into effect in 2013, might make it harder for young medical device companies such as OrthoHelix to reach profitability, he said, noting that OrthoHelix is closing in on that point. Among established medical device companies, Invacare Corp. of Elyria, the world’s largest wheelchair maker, has been a vocal opponent of the tax. Invacare CEO A. Malachi Mixon III in a January interview with Crain’s went so far as to say the tax was the equivalent of “throwing a hand grenade in the middle of the health care economy.” Yet another large medical device firm, Steris Corp. in Mentor, is “generally very supportive” of the health care reform effort, said spokesman Stephen Norton. The publicly traded maker of medical sterilization products is “concerned about the effects of the tax,” especially on smaller companies, but it believes the overall reform package will be good for the company, Mr. Norton said. “Anytime you put 32 million more people into the (health care) system, it’s going to benefit us,” he said. Invacare may not see similar benefits because much of its revenue comes from the sale of wheelchairs, which people typically buy out of need regardless of whether they have insurance, said Lara Mahoney, manager of corporate communications for the company. Invacare believes the tax could cost the company between $12 million and $14 million annually, Ms. Mahoney said. Invacare is working to get the U.S. Department of the Treasury to include its products in the exemption for consumer products, but it already has cut some employee benefits and frozen nonessential hiring in response to the tax. The company still is considering “long-term” responses such as raising prices and moving more jobs out of the country. “We have to look at everything,” Ms. Mahoney said.
The kids have to eat Like Steris, Quality Electrodynamics LLC expects to gain more than it will lose from health reform. Not only does CEO Hiroyuki Fujita expect sales of the coils that the Mayfield Village company makes for magnetic resonance imaging machines to rise as more people get health insurance, but he believes his product won’t be taxed because it goes inside other machines. A few years from now, however, when his contracts with various MRI machine makers run out, there is the chance the original equipment manufacturers could demand his company cut prices to help them defray the tax’s impact, Dr. Fujita said. “These OEM companies may come back to us and say, ‘We somehow have to come up with more
Volume 31, Number 13 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
competitive prices,’” he said. Anthony Ignagni, CEO of Synapse Biomedical Inc. of Oberlin, has yet to analyze all the ways the health care bill might impact the maker of neurostimulation devices, but he does expect to get more business as more people become insured. “Just the number of patients that will be covered probably plays into our benefit,” Mr. Ignagni said. Count Bob Schmidt on Invacare’s side. The CEO of Cleveland Medical Devices Inc., which develops devices to monitor and treat movement and sleep disorders, declined to say how the tax might impact his company, but he expects many medical device firms to cut staff
and research budgets in response to the tax. Mr. Schmidt added that it’s not wise to put a bigger burden on medical device companies, because Northeast Ohio and other regions are trying so hard to create jobs based around health care technology. “Taxing those growing companies is like taking away food from a teenager. From a growing child,” Mr. Schmidt said. Randy Theken, founder of a handful of Akron-based spinal implant companies that work under the Theken name, said he, too, expects the tax to slow researchand-development efforts and hurt medical device companies.
“This could also be the first time in decades that we’ve seen medical device manufacturers having to lay off personnel,” Mr. Theken said.
For better or for worse The tax could have hit harder, however: The Senate version of the health care bill was designed to generate $40 billion over 10 years, beginning in 2010. The House version of the bill scaled that amount down to $20 billion, and it won’t take effect until 2013. Plus, just before passing the bill the House voted to lower the tax from 2.9% and spread it among more medical device companies. The Advanced Medical Technology
Association of Washington, D.C., pushed for the changes but said in a statement that the tax still is not “ideal.” It originally sought a provision that would allow smaller companies to avoid it. An industry source who asked not to be identified went further, saying the “regrettable” addition of the tax to the bill would hurt innovation. The source said the addition of people to insurance rolls won’t increase sales for all companies, especially those with products for nonelective procedures and for the elderly, who have Medicare coverage. “There are going to be folks that come out better and folks that come out worse,” the source said. ■
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Bil-Jac rolls out freezers for shelves
MARCH 29-APRIL 4, 2010
Survey: Some manufacturers begin restoring staffing levels Medinabased Bil-Jac plans to ship more in-shelf freezers to grocery stores in Ohio and other states.
By KATHY AMES CARR kcarr@crain.com
Bil-Jac Foods has come up with a cool way for keeping its frozen dog food cold. An in-shelf freezer, which Bil-Jac is testing in three grocery stores — two of which are in Northeast Ohio — is placed within the pet foods aisle to increase the visibility and accessibility of its high-end dog food products. In most stores, Bil-Jac’s dog food is found within the frozen foods section, away from the pet products aisle. “It’s going to be so much easier now to market this product,” said Jim Kelly, executive vice president of the Medina-based producer of dog foods and treats, which does not spend a lot of money advertising its products. Since the in-shelf freezers were installed in the three stores, Bil-Jac has seen increases of 70% to 100% in the volume of frozen dog food products sold at those locations. Shelves were installed last March at Heinen’s in Avon, then last fall at an Acme store
PHOTO PROVIDED
in Akron and an Ingles store in North Carolina. Mr. Kelly said Bil-Jac now is preparing to ship its first order of 250 in-shelf freezers to various grocery chains in Ohio, Missouri, New England, North Carolina and Texas, although specific stores have yet to be determined. “We’re going to put more freezers in Acme and Heinen’s stores, too” Mr. Kelly said. It will cost Bil-Jac $1,000 to $1,500 per unit to build and ship the freezers to stores, Mr. Kelly said. The company sees it as money well spent. “The investment of putting a freezer into the pet foods section of a grocery store and the increase in volume we’re seeing in products so far offsets the cost of the freezers,” he said. Mark Roberts, category manager for Heinen’s, said the Avon location
has a couple more months before it analyzes sales and determines whether the in-shelf freezer grew its pet foods category overall. “At first, we lost sales because people were looking for the product in the frozen foods section, but sales have been restored,” Mr. Roberts said. “That happens when you move products around.” Mr. Kelly said Nottingham Spirk Design Associates, a product invention and development group in Cleveland, designed the prototype of the freezer a little more than a year ago. California-based Jimex Corp. manufactures the freezers. The shelf can hold 24 five-pound and 10 two-pound frozen dog food bags and eight bags of frozen treats. “They’re easy to install. It just sits on the gondola,” Mr. Kelly said. ■
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any of their work force on layoff. That’s up from 53% in January, which was the first time since November 2008 that a majority of those responding said they were at full strength in terms of staffing. In April 2009, only 15% of the survey’s respondents said they were at full staffing levels. Precision Metalforming Association president Bill Gaskin, announcing the monthly results, said his members “are experiencing 20% to 30% increases in orders and shipments compared to year-ago levels, when shipping levels were declining precipitously.” “Metalforming companies remain cautious about the mid- and longterm outlook, but in the near term, business continues to improve,” Mr. Gaskin said.
A question of degree To be sure, there’s no shortage of cautiousness in the market. But manufacturers contacted by Crain’s last week said PMA’s survey is correct — business is picking up. How much it’s picking up, however, varies from one company to the next, and the strength of each company’s recovery is pegged to the growth of its end market. For instance, those serving the medical device, aerospace, infrastructure or military markets report strong sales so far this year. “We’re seeing it across most of our industries — nice solid activity — in medical, aerospace and military,” said Eric Winbigler, president of Advanced Paint Technology in Cleveland. Likewise, R-H Industries, which makes such products as wire cages for overhead lights used in highway work and deck drains for navy ships, has seen its business increase in recent months, said owner Tina Haddad. “I brought back all the people I laid off,” Ms. Haddad said. She said she let five workers go last year but has called them all back since the beginning of February. Even those companies serving some of the worst sectors of the economy, such as the domestic automotive market, are seeing some increases, said Don Nicholson, CEO
of Advanced Secondaries in Cleveland, which performs custom drilling and other machining operations for other manufacturers. About 70% of the company’s business is tied to the automotive sector. The question for many manufacturers is whether the rebound in their business can be sustained — and that’s affecting their hiring decisions. “Manufacturers are afraid of bringing new bodies on, because they don’t know what’s going to happen next week,” Mr. Nicholson said.
Bottom’s up When those manufacturers try to do more with less, they often turn to Advanced Secondaries to do machining on parts that normally might be done in-house, Mr. Nicholson said. Advanced Secondaries has been able to recall eight of its workers — a far cry from just less than a year ago, when Mr. Nicholson had sent all of his workers home and drove the plant floor all alone on a tow motor, he said. Likewise, Cleveland-based Hawk Corp, which makes brake and clutch components for the automotive and industrial markets, has seen its business bounce back this year. “We’re in hiring mode now,” Hawk CEO Chris DiSantis wrote in an e-mail to Crain’s. Supertrapp Industries, a Cleveland manufacturer of specialty motorcycle exhausts, also has seen business pick up, said president Kevin Berger, and this year it called back the half-dozen employees that were laid off in 2009. But Mr. Berger echoes the caution that many manufacturers express when asked whether market conditions have really turned around. “Things are up — but compared to what? The bottom,” he said. “But at least things are starting to move in the right direction.” It’s going to take some time for many manufacturers to regain all their lost business, said David Wildermuth, president of Martindale Co. in Lakewood, a manufacturer of saw blades and other cutting tools for machine shops. “I think we’ll get back 5% to 10% of our business from 2009,” he said. “But we think a certain part of the customer base is just gone.” ■
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7
GOING PLACES
Mission Super Heroes!
Rothman to associate.
FINANCE
MANUFACTURING
FIRST FEDERAL OF LAKEWOOD: Tiffany Cardenas to branch manager, Fairview Park.
BRUSH WELLMAN INC.: William D. Nielsen to product marketing director, bulk products; Thomas Hazen to global market manager, plastics tooling; Robert D. Bertin to market manager, global aerospace.
FIRSTMERIT CORP.: Robb C. Lightell and Tara T. Stephen to assistant vice presidents, portfolio bankers; Meghan M. Lambert to portfolio manager. KEYBANK: Lisa Kious McGovern to community development banker.
SIFCO INDUSTRIES INC.: Randy Kimberlin to senior quality engineer; Ann Klodor to quality assurance manager; Tim Hebauf to heat treat supervisor/plant metallurgist.
FINANCIAL SERVICE
MARKETING
BCG & CO.: Timothy Stiller and Dave Duma to associates.
HOME TEAM MARKETING: Dan Malone to group director, state associations.
PROTIVITY INC.: Aaron Stamp to manager. WELLS FARGO ADVISORS: Warren S. Wernick to managing director; DeAnna M. Spear and Morris Beverage III to financial advisers.
ZIG.MARKETING: Lorraine Bivin to partner; Peter DeMichele to media director; Kris Patel to account strategist; Nicole Selzer to production manager.
HEALTH CARE
NONPROFIT
SOUTH POINT HOSPITAL: Dr. Dennis Kane to co-chief of staff.
VOCATIONAL GUIDANCE SERVICES: Adam Ross to development director.
INSURANCE BRUNSWICK COS.: Renee Gallagher to personal lines manager. HYLANT GROUP: Ken Barber to client service specialist; Ann Brunello to senior client service specialist; Megan Ewing, Tony Gielty, Diana Jaworski, Christina Proctor and Vicki Sharpe to client service assistants; Mary Gerding to client service executive; Sue Nisoff to client service manager; Pam Santa to senior client service manager.
REAL ESTATE K&S REALTY CO.: Emily Dennis to sales associate. RUSSELL REAL ESTATE SERVICES: Terri Czarnecki, Scott Smith and Rita Bando to sales associates. TRANSACTION REALTY: Lee Goodman, Florence Tripp and Tim Akhadov to sales associates.
SERVICE
MEDICAL MUTUAL OF OHIO: Donna Piko to director of contracts, certificate development and benefit compliance.
CEFARATTI GROUP: Carmen Petrello to major account representative.
LEGAL
MFS SUPPLY: Brandon Guzman to national account manager.
BONEZZI SWITZER MURPHY POLITO & HUPP LPA: Christine C. Cover and Mary E. Purcell to shareholder.
TECHNOLOGY MCPC INC.: Jane Graber to director of shared services.
MCMAHON DEGULIS LLP: Sarah J. Staley to associate.
MODIS CLEVELAND: Brad Friedel to business development manager.
OGLETREE, DEAKINS, NASH, SMOAK & STEWART P.C.: Jason
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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
Get the ax
T
oo many government bodies have yet to make the type of serious cuts in staff, payroll and benefits that most private-sector employers imposed last year as the recession battered their bottom lines. They need to do their taxpayers a favor and take an ax to their personnel budgets so they’re aligned with what is likely to be an extended period of depressed tax receipts. The numbers are inescapable, and they’re not pretty. The latest Census figures show state tax collections in Ohio in the third quarter of 2009 totaled $5.6 billion, down 8.8% from nearly $6.14 billion in the third quarter of 2008. That’s a drop of more than a half-billion dollars, and that decline only covers a three-month period. Lucy Dadayan, an analyst at the Rockefeller Institute of Government at the State University of New York, said the weakness in tax revenue that nearly all states are seeing is expected to continue “well into 2010, if not further.” Yet even in the face of this falloff in revenue, the state of Ohio managed to reduce its payroll last year by only 1.5%. Worse still, many state agencies actually added to their payrolls. We’ll accept that the recession has increased the demand for certain social services, such as Medicaid and unemployment benefits, and therefore makes personnel cuts in these areas tough. But for many departments, life goes on as before, which indicates their leaders lack the will or guts to rein in their costs. Many private-sector employers cut staff by anywhere from 5% to 20% last year and reduced the compensation of remaining employees by similar percentages. We haven’t seen that level of sacrifice at most government agencies, whether municipal, county or state. Many seem to dabble more along the fringes, freezing pay and letting attrition reduce their staffs rather than take an aggressive approach with their personnel expenses. A big problem for government bodies is that many of their employees work under union contracts, which make unilateral changes in pay and benefit levels impossible. This is where determination enters the picture. With their budgets under duress, elected officials and their surrogates must look union leaders square in the eye and say, “We’re going to eliminate the jobs of 10% of your members unless you take a 5% pay cut and start paying more of your health insurance.” This wouldn’t be a negotiating ploy; the choice for workers would be either absorb some of the same hits to your paychecks that many of the taxpayers who pay your salaries have taken or see your co-workers lose their jobs. You make the call. It isn’t a pain-free process. Just ask the city of Akron, which is trying to negotiate contract concessions with the city’s five unions in order to balance its budget. Union leaders think the cuts should come from elsewhere. But as Akron finance director Diane Miller-Dawson recently stated, “We simply don’t have the revenue.” It’s going to become a familiar refrain at all levels of government. Government leaders must be prepared to wield an ax if personnel costs can’t be brought down in another manner.
FROM THE PUBLISHER
Tech initiative’s May renewal a must
T
Voters should remember that this o those of us who care deeply election is a renewal, and will not create about the economic future of a new tax. This bond issue, launched by Northeast Ohio, nothing tells a then-Gov. Bob Taft and approved by votsuccess story like this headline ers in 2002, has paid big dividends for our atop one of our web stories last week: state. According to an analysis by Silicon “Third Frontier Commission awards $4.3 Valley consulting firm SRI International, million to five NE Ohio tech companies.” the Third Frontier technology investWritten by Chuck Soder, the story ments had created 41,000 jobs explained that the latest awards by December 2008. By the same from Ohio’s innovative economic BRIAN time last year, that number had development program would TUCKER swelled to 55,000. spur further development of Finally, we have a program four companies that are creating that is the envy of the nation, advanced-materials technoloand it’s operating exactly as its gies and a fifth that’s in sensor framers had envisioned. We’re technology. The five grants were not simply burning through part of more than $10 million scarce state funds and resources awarded last week to Ohio to woo a plant from another companies by the Third Fronstate or country; we’re creating tier fund. new companies that are growing and It proves that this program, which is employing well-paid professionals. being copied around the country and is In last week’s announcement, the up for renewal as Issue 1 this May, is doing Third Frontier awarded $1 million to exactly what it was designed to do: Help AlphaMirror of Kent to develop and create the kind of New Economy compatest a liquid crystal-based mirror for nies — and the jobs they represent — automakers. Kent Displays received that are Ohio’s hope for the future.
another million dollars to improve the performance of the polymers in its liquid-crystal products. A Lockheed Martin company in Akron received $1 million for improving the fabrics on the high-altitude airships they’re developing for the U.S. military. Momentive Performance Materials of Strongsville received nearly a million dollars for high-tech lighting products and Solon’s Pressco Technology received just a little more than $400,000 for sensor development for the bottling and food packaging business. These five are among the Third Frontier-supported companies that have produced more than $6.6 billion in total economic impact in Ohio, according to the group pushing for passage of Issue 1. Half of the program’s cost already had been repaid in tax receipts by the end of 2008. Venture capital investment in our state from 2003 to 2008 grew 2.5 times faster than rest of the nation. The Third Frontier is an idea that promised much and delivered more. We desperately need for it to continue. ■
AND COUNTING ... What local woman has been a good role model for aspiring woman entrepreneurs? (Asked at a City Club of Cleveland forum on “Emerging Female Leadership” sponsored by Cleveland 2.0.)
Crain’s Cleveland Business is celebrating tis 30th year as Northeast Ohio’s premier source of business news with a special double issue, which will feature profiles of the 30 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 CrainsCleveland .com/30thanniversary.
LAURA PETTIT RUSICK
KIMBERLY HIST
ELLIE CHALKO
Sagamore Hills President, OPTSolutions Inc.
Cleveland Sprout Connections
Mentor Cynergies Solutions Group
Jennie Zamberlan, owner of Avantia Inc., information technology consultants. She’s just got a great entrepreneurial background. She’s very willing to talk to people and she gives good advice.
Beth Mooney, vice chair, KeyCorp. She does a lot of things in the community, in particular the Key 4Women program (which provides education, networking and financing for women-owned businesses). People like Beth are great role models.
April Miller Boise, partner in charge of the Cleveland office of the Thompson Hine LLP law firm. The whole Thompson Hine Spotlight on Women program (which Ms. Miller helped develop) helps women in business with ideas, influence and mentoring.
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Roetzel restructuring focuses on practices Tired of Being Screwed? Firm aims to enhance collaboration, expand its Cleveland footprint By ARIELLE KASS akass@crain.com
The law firm Roetzel & Andress is overhauling its management structure to focus more on practice groups and less on individual regions, and has named a new partner-in-charge of its Cleveland office who said he wants to expand the firm’s name recognition and reach in the city. Previously, the law firm’s 11 offices in Ohio, Florida and Washington, D.C., were managed by state. But Bob Blackham, former partner-incharge of both the Cleveland and Ohio offices, said the firm didn’t want to be a firm of silos. “We are one firm,” Mr. Blackham said. “There’s no reason why all
our real estate lawyers shouldn’t be communicating, interacting. It helps to strengthen and enhance those relationships. It helps to expand the platform for many of our lawyers.” He said the moves also improve Roetzel’s “bench strength” firmwide. Mr. Blackham is now one of three new national practice group chairs at the firm, along with fellow Clevelander Robert B. Casarona and Michael S. Yashko, in Florida. Doug Spiker has been named partner-incharge of the Cleveland office. Former state Attorney General Jim Petro is now the Columbus office’s partner-in-charge. Mr. Spiker said one of his goals at the firm is to increase the number of attorneys in the Cleveland office, which already has grown “substantially” over the past 10 years. The firm, which has more than 220 attorneys across its footprint, has about 40 attorneys who spend all
their time in Cleveland, and another 15 or so who split their time between Akron and Cleveland. Its Akron office is its largest, with more than 50 lawyers. In two years, Mr. Spiker said, he would like to have more than 50 attorneys in Cleveland. “Every scenario you could conceive of, we’re willing to explore,” he said. “There are opportunities that exist, and we want to seize those.” The firm also is looking to acquire new offices in other Midwest states and in the Carolinas. In Cleveland, Mr. Spiker said the firm has a chance to improve its standing in its corporate business, creditors’ rights, labor and employment, environmental and intellectual property groups. “We think there are growth opportunities here,” he said. “If the Cleveland office grows, it’s good for the firm. If the firm grows, it’s good for Cleveland.” ■
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Huntington: Building’s vacancy likely will go up continued from PAGE 1
group would have total control of the property next year, clearing the way for the sale of the building to a new owner. Mr. Glickman was on the phone when Crain’s called his office last Tuesday morning, March 23, and he did not return the call that day. He also did not return two calls from Crain’s over the past three weeks inquiring about rumors the building is on the market. Michael Boeschenstein, the Hines property manager running the Huntington Building, declined comment. Optima acquired One Cleveland Center in May 2008 and 55 Public Square in July 2008 in multimilliondollar deals. Mr. Schochet in 2008 said the company has interests in industrial and property ventures in eastern Europe and is acquiring real estate throughout the United States. A prospective buyer for the Huntington Building with a stake in Cleveland sounds like good news to Geoff Coyle, a partner in the Colliers Ostendorf-Morris brokerage who works in the office market. “I’m glad to hear someone is going to invest in Cleveland. I think it’s a good time to position yourself here,” Mr. Coyle said. “It’s a charming, fascinating building with high ceilings and a great banking lobby. It’s a classic building with retail tenants on the lower floors and offices above. I’d hate to see it go dormant.”
Wide open spaces Dormancy is a risk because a hulking building with 1.36 million square feet of office and retail space
won’t be easy to fill in the current market. About 24% of Huntington’s space already is available — a staggering 335,000 square feet, according to online realty data provider CoStar. And plenty more empty space is slated to follow. The building’s namesake, Huntington Bank, has signed a lease and plans to move late this year or early next year to the former BP Tower, now known as 200 Public Square. Meanwhile, two other big Huntington Building tenants — the Ernst & Young accounting firm and the Tucker, Ellis & West law firm — have inked deals to serve as the anchor tenants for a proposed office building at the Flats East Bank project in Cleveland. The Wolstein Group and Fairmount Properties, the developers behind Flats East Bank, have said they hope to break ground for their office building and hotel this year — if they complete a complex financing package. Various real estate insiders speculate the Huntington Building might be converted to residential or hotel use, or a mix of uses to produce more profits. The structure has a 1,000car parking garage that would be particularly valuable in a residential conversion. Colliers O-M’s Mr. Coyle said the Huntington Building is likely to maintain an office component in a mixed-use redo, but he is not sure if the structure — with its large floor plates — accommodates conversion to housing. Moreover, lenders have little taste for housing-linked lending in a recession that many blame on a housing downturn. The pending master lease expiration puts the building’s many retail
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tenants in limbo because their leases automatically expire at the same time. Joe Scafidi, owner of Joseph Scafidi Inc. custom tailors and shirtmakers in the building, said word of a prospective buyer was “not total news” because many tenants expected something to occur soon — either a sale or a redo. Mr. Scafidi said he would entertain staying in the building. “I’ve been in this building 26 years and on this block for 41 years, most of my career,” Mr. Scafidi said in a phone interview March 23. However, he noted he might like to move to one of the building’s empty storefronts that face the street. ■
RON LEDIN
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BREAKFAST SERIES RECAP HR experts say keeping best employees during recovery will be a challenge
C
rain’s Cleveland Business and sponsor Towers Watson convened a panel March 10 to address the realities of the employeremployee relationship in a post-recession environment. The panel was part of the Crain’s Ideas at Dawn Business Breakfast series. This event addressed motivating and retaining talent in a challenging economy, and Northeast Ohio’s human resources executives had no shortage of ideas on how to deal with a recession-battered work force. For more information about the Crain’s Cleveland Business Breakfast Series, visit www.CrainsCleveland.com/breakfast.
About 200 people attended the business breakfast on motivating and retaining top talent in a tough economy.
EMPLOYER CHALLENGES Employers are concerned about their employees‘ well-being now and in the future. Key issues include: ■ Employees may be settling in, but are frustrated about advancement. What are the key risks for keeping and engaging talent? ■ Workers know they’re responsible for their futures, but worry about their ability to handle it. If cost shifting goes too far, what reactions are likely in terms of motivation and performance? * Insights from Towers Watson’s 2010 Global Work Force Study
For a recap of the breakfast event, visit the Crain’s podcast at: www.CrainsCleveland.com /section/audio.
ABOVE: Panelists discussed workplace issues. They are (from left): Phil Goldstein, executive director of human resources at American Greetings; Ann Killian, vice president of human resources at Ferro Corp.; Tom Matthews, director of career services at Case Western Reserve University; and Julie Womack, senior consultant at Towers Watson. LEFT: Crain’s editor Mark Dodosh moderated the business breakfast.
KEY REMARKS “As organizations are preparing for this post-recessionary time frame, they have an opportunity to take a step back and figure out what they are going to focus on going forward .” — Julie Womack, senior consultant at Towers Watson
Towers Watson’s Julie Womack shared insight on the 2010 Global Work Force study with Scott Hersh, district sales manager for ADP National Account Services.
“We are concerned about our key talent since they may be at risk and may go to other companies.” — Phil Goldstein, executive director of human resources at American Greetings
The next Crain’s Breakfast Series event is 7:30 to 9:30 a.m. April 22 at the Doubletree Hotel, Downtown Cleveland. The topic is “2010 Green Outlook: Examining Northeast Ohio’s Environmental Economy.” To register, visit www.CrainsCleveland.com.
Crain’s Cleveland Business Custom Publishing SPECIAL ADVERTISING SECTION
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INSIDE
12 CLEVELAND BUCKET LIST CHECKS OUT GREAT SITES.
11
EVENT PLANNING THEINTERVIEW
“It gives customers a choice when they are looking at Cleveland to host an event.”
JEFF PRICE President and CEO Experient Inc.
– Deborah Hermann, director-at-large, International Special Events Society’s Cleveland chapter
I
PHOTOS PROVIDED
The Great Lakes Expo Center in Euclid is a new entrant to Northeast Ohio’s meeting and event planning industry. The expo center opened in January with the Cleveland Home & Garden Show, which previously had been at the I-X Center in Cleveland.
NEW ADMISSION Event planners say Euclid expo center complements region’s meeting, event sector
Q: As the company’s new president and CEO, do you have any specific plans or focus areas for Experient?
Cars line up for the Cleveland Home & Garden Show. The 10-day event drew about 62,500 people, more than the 55,000 its producer, Expositions Inc., had expected.
By KATHY AMES CARR kcarr@crain.com
D
espite some market inactivity, a new expo center in Euclid does not appear to be crowding Northeast Ohio’s meetings and convention industry. Indeed, the new venue might even serve as a complement to existing and planned facilities. Local meeting planners say that even though the 215,000-square-foot Great Lakes Expo Center will compete with other regional venues on some levels, its presence likely will enhance the region’s event landscape. “It gives customers a choice when they See CENTERS Page 14
n February, event industry veteran Jeff Price was named president and CEO of Experient Inc., an integrated meeting planner based in Twinsburg. Mr. Price most recently was executive vice president and chief operating officer of Freeman, an event services contractor based in Dallas, where he oversaw 4,000 employees across 18 offices. He also is a past chairman of the International Association of Exhibitions and Events’ board of directors and has served on a variety of other industry advisory boards. “Jeff is the right executive to move Experient Price into the next phase of its evolution,” said Andrew W. Strauss, chairman of Experient’s board and a partner with The Riverside Company private equity firm, at the time of Mr. Price’s appointment. Mr. Price recently answered questions from Crain’s Cleveland Business regarding his plans for Experient and the state of the meetings and event industry as a whole.
Solon-based Marketplace Events held the Great Big Home & Garden Expo at the I-X Center. Attendance totaled 79,000 for the Feb. 6-14 event.
INSIDE: Northeast Ohio had three home and garden shows this winter, in Cleveland, Euclid and in Akron. Attendance figures varied, though some of the lull in traffic was attributed to bad weather. Page 14
A: Meet with the employees and get them to understand that things are looking better. 2009 was a difficult year in our industry and for them, so I want to get out and meet as many employees as possible within that first 60- to 90-day period of time, listen and share with them and help them get the swagger back in their step. Get with our customers and do the same thing; help them understand our vision of “perfecting the event experience,” but also listen to them to see what we may be able to do together to better serve their needs now and in the future. Get out and meet with prospects, even those with whom we may have done business in the past, listen for new service opportunities and impress them with how, if they were working with us, they’d be sleeping better at night. And I want to get out there at industry events, walking the talk, by participating and speaking at face-toface shows and meetings, building Experient’s reputation as a thought leader. Q: What do you see as key growth segments in the meetings and events industry in the next five years? A: Return to pre-2008 corporate meeting levels — the general economic upturn will create a rebound as companies return to face-to-face See INTERVIEW Page 12
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EVENT PLANNING
Cleveland Bucket List in familiar territory Group helps fans of NE Ohio experience region’s unique sites
“If that company name is not there, then it starts with the people,” Mr. Nischwitz said. “From there, it’s figuring out what you can do together.” The Cleveland Bucket List visits some of the area’s unique sites. Participants explored the waters of the Cuyahoga River, for example.
By JOEL HAMMOND jmhammond@crain.com
W
hat’s been on your to-do list for what seems like ages, yet you just haven’t been able to get around to it? Three gentlemen — Bob Aber, David Akers and Jeff Nischwitz, the founders of event producer 3 Guys Present — want to know, as they are on a mission to provide fellow Clevelanders the opportunity to see some of the city’s most unique spots. They’re doing it through the Cleveland Bucket List, a 3 Guys spinoff that held its first event last September. So far, the Cleveland Bucket List has opened attendees’ eyes to the Cuyahoga River (and a super-choppy Lake Erie); the Franklin Castle, an Ohio City landmark long thought to be haunted; and the newly renovated Capitol Theatre, which featured a
Interview continued from PAGE 11
meeting solutions. Social media augmentation of live events will grow as these products evolve from “wild, wild west” products to industry standards. Live simulcast participation for
PHOTO PROVIDED
showing of the Cleveland classic, “A Christmas Story.” “All three of us share an abiding love for Cleveland, and we get frustrated by people having negative images of the city,” Mr. Akers said. “We looked around, and while all three of us do a lot around town, there are plenty of things we haven’t gotten to.” Messrs. Akers and Aber — colleagues at Warrensville Heightsbased The Collaborent Group, a group purchasing facilitator for local government entities,
nonprofits and businesses — are native Clevelanders and Mr. Nischwitz, an attorney and founder of Think Again Coaching, is a transplant going on 25 years in the city. The firm 3 Guys Present was founded in January 2008, and it will hold its 10th event next month. It produces what the trio calls “highly relational” networking events: Everyone invites one person, and if you’re invited, you’re allowed to invite one person. Nametags purposely don’t include company names.
select sessions at events, plus sales of archived sessions for additional revenues and event marketing after the event is over.
lobbying group spearheaded by the U.S. Travel Association is a big plus. We now have an experienced “machine” in place to advocate for our industry in Washington on behalf of the meetings, incentives and trade show industry. The downturn in the economy created a clear focus of the effectiveness of face-to-face meetings,
Q: Are the effects of the recession still holding strong? Did any good come out of the recession for the industry? A: Coalition efforts of a strong industry
A different experience Bucket List events — the ideas for which are submitted by friends and colleagues or generated over a few beers — are more experiential, Mr. Nischwitz said. The events are activity-based, so it’s a bit harder to develop those relationships when experiencing something new. That’s not to say it doesn’t happen: At the first Bucket List event, a September “three-hour tour” of Lake Erie that quickly turned into a Cuyahoga River tour due to a choppy lake, Chris Tjotjos made a handful of new connections he still uses. Mr. Tjotjos, president, CEO and owner of Westlake-based Logos Communications, supplied the boat for the tour’s 20 or so participants and said after knowing just one person before the event, he’s still using lessons learned from a book recommended by one of the participants. “These events are good ways to tell Forbes to jump in their own lake,” Mr. Tjotjos said, referring to the maga-
especially in support of the sales and marketing function. Q: Is there any one area of the meetings and events industry that was more affected by the downturn than another? A: I think the banking/financial and residential building industries’ meetings were the hardest segments hit, but the trickle-down effect of low meeting participation overall has had the farthest-reaching effects. I don’t think legislators or people in general really understood how many jobs were negatively affected by a reduction in business travel. The numbers of workers who support the travel industry infrastructure — servers, cab drivers, housekeepers and others — whose jobs were negatively affected by the downturn was simply staggering. Q: How has the evolution of technology and social media changed the world of events? A: Think back a few years to the advent of the Internet. Everyone was in a flurry to get a web site up
zine’s designation of Cleveland as the United States’ most miserable city. Tim Schmidt, meanwhile, met the person he’d eventually hire as the new executive vice president for WestPark Direct, his downtown Cleveland business-to-business telemarketing outfit, during the Franklin Castle event, which also included dinner at Momocho. (The Capitol Theatre event was paired with dinner at Stone Mad, a new Detroit Shoreway restaurant; “We’re trying to marry unique things, like a unique destination and a unique restaurant,” Mr. Akers said.) “Unlike most things, these are events you actually look forward to,” said Mr. Schmidt, who also attended the boat tour. “It’s interesting to do something I’ve never done.” Proving the Bucket List events won’t just be Cleveland landmarks, the trio is preparing its next event — the Bushwood Open — for April 14. Named after the fictional country club in the cult classic “Caddyshack,” the event is a traditional golf outing — 19th hole, skins game, mulligans available for purchase — at a minigolf course, Firefly’s Minigolf at Westfield SouthPark mall in Strongsville. “We’ve created things that don’t exist in Cleveland,” Mr. Nischwitz said. “There are lots of cool things to do in Cleveland; someone just has to do them. We’ll do them.” ■
and running. Now having a 2.0 web site is a given, a valuable and expected tool. We’re in the same place with social media now. These tools will continue to evolve but will soon become essential tools for creating communities that are engaged before, during and after events. Q: What are some of the top trends that you are seeing in your industry? A: Increased interest in what we call second-tier cities like Cleveland due to their affordability and increased competition in the marketplace overall. The ability to monetize and quantify (return on investment) of holding a meeting (for the event organizer) and participating in one (for the attendee) is a result, which will benefit the industry in the future. There is a symbiotic relationship between social media, the Internet and face-to-face meetings, one that is just being realized, but that will be tremendously powerful going forward. ■
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EVENT PLANNING
These days, venues may be more open to negotiating deals By JAY MILLER jmiller@crain.com
N
o one has said it better than negotiating trainer Chester Karras: “In business, you don’t get what you deserve, you get what you negotiate.” And 2010 is expected to be a very good year for meeting and event planners to negotiate, at least for the short term. “At this point, everything is negotiable,” said Dan Williams, vice president of sales at Positively Cleveland, the regional convention and visitors’ bureau. “2009 was rock bottom; 2010 we’re starting to see some uptick.” But Mr. Williams said hotels and conference centers still are willing to make attractive deals on hotel room rates, meeting rooms and food and beverage service. “It’s still a buyer’s market so the meeting planners and the organizations still have a lot of power right now,” he said. PKF Hospitality Research, a research arm of San Franciscobased PKF Consulting, reported earlier this month that it expects hotel revenue to decline by 1.1% in 2010 compared with 2009, even though it believes that hotel occupancy will increase by 0.3% to 55.2%. The firm reported that with national hotel occupancy below 60%, it expects that rate discounting will persist as hoteliers are eager to build a base of volume contract business to reduce inventory. “If you don’t (negotiate discounts), another city will,” said Mr. Williams said. “You don’t have to give the planner or the organization every concession they ask for, but there are certain things that may be crucial to the group — the number of complimentary hotel rooms, free meeting space, free Internet.” A venue looks at the total revenue package for an event. The group’s commitment to spend on food and beverage, audio and visual equipment and other incidentals matters as does the group’s history of meet-
ing its commitment to fill rooms. Groups also can negotiate the hotel-room guarantee. Most hotels will require that a group guarantee a certain number of hotel rooms, but the size of the guarantee and the penalty if the number of rooms falls below the guarantee are negotiable. Hotels also might offer free meeting space, with the amount usually tied to the number of hotel rooms used. If a group is going to use 100 hotel rooms and wants a single meeting room, the meeting space might be complimentary. But if the samesized group wants to tie up all of a hotel’s meeting space, to the point where the hotel can’t book another meeting, meeting space likely won’t be free of charge. The further out a meeting is planned, however, the less willing suppliers may be to negotiate. “Once the economy starts turning, you’re not going to be able to get rates as good or concessions as favorable,” said Hugh Easley, vice president of meetings and expositions for the National Association of College Stores in Oberlin. Mr. Easley said that likely won’t affect the annual event he sponsors — the Campus Market Expo — which earlier this month brought more than 7,000 people to Orlando, but it will hurt the ability to negotiate for small events. “If you’re dealing with an event that’s only 100 or 150 people, and you’re looking at 2013, (hotel and convention sales people) are probably not going to deal as much because they’ll be thinking the economy will be roaring back,” he said. Key to a group’s ability to negotiate low rates, good times or bad, is the location and time of year, say planners and bookers. Mr. Easley believes you should negotiate, but a hotel or convention salesperson have a does bottom line. “They may have a revenue manager who looks at the total package and will tell a salesperson, ‘You’re not going to offer less than X,’” Mr. Easley said. “The hotels are in it to make a profit.” ■
Events still conservative affairs By DAN SHINGLER dshingler@crain.com
I
t might be awhile before most folks party like it’s 1999. The world of special events was turned upside down along with the global economy at the end of 2008, and those who plan, organize and host affairs for Northeast Ohio organizations say the environment still is more often like a wake than a gala. There are fewer events, those that are being planned have smaller budgets and continue to be less extravagant than in years past, and invitees are being asked to foot more of the bill when attending such gatherings as industry and trade association conferences, say those in the business. “It’s been a pretty dry 18 months for special events,” said Margy Judd, CEO of Executive Arrangements Inc. in Cleveland Heights. In the event planning business, six months’ worth of cancellations and no new bookings can equate to nearly a year’s worth of lost revenue, according to Ms. Judd. Because so many events are planned six months or more in advance, current events got canceled and future events never got planned. “Yes, people are starting to open up their purse strings a little again,” Ms. Judd said. “But there was a sixmonth period in late 2008 and early 2009 where every client we had just canceled and paid the retainer fee.”
A new, less glitzy, normal While Ms. Judd scoffs at the question of whether things in the
special events and party arena are back to normal, she said they are at least better than they were at the beginning of the financial crisis. Denise Fugo is chairwoman and CEO of Sammy’s in the Flats, which has hosted Cleveland events since it was founded in 1980. “For Northeast Ohio, I don’t think normalizing is the right word,” she said. “I think a new normal is developing here — there are just too many corporate vacancies and too much residential real estate” on the market. The new normal might not be nearly as much fun as the old one. Ms. Fugo sees more nonprofits throwing smaller events, often with smaller budgets. Corporations put off planning events because they were unsure of what to spend, then needed to plan them quickly. “I was shocked by the number of calls we got in November from for-profit companies — for events in December,” Ms. Fugo said. Many times, she said, corporations are spending less than they used to because they are no longer locally headquartered after they were bought out by out-of-town rivals. “You always do better with a corporate headquarters; they spend more,” she said. Nonprofits almost have to have events because they rely on them for fundraising, said Amy Pappas, owner of aza events LLC in Cleveland. But they are trying to cut corners, both to save money and so donors don’t think money is wasted, she said. “For instance, with catering, labor is a big cost,” she said. “It might be a matter of coming up with a creative
menu that requires less labor, but still puts on a top-notch event.” Meanwhile, nonprofit events tend to be smaller, according to Ms. Fugo, because donor attendees are harder to find. “I believe we only had one event (of the last 30) that had more people than in prior years,” said Ms. Fugo. “We had one that matched prior years’ attendance, but everyone else was off by 30% to 50%.”
No more free rides Even trade conferences, once known for putting on not only big events, but for subsidizing the attendance of participants, are pinching their pennies. “It’s ‘get there on your own, and we’ll take care of everything while you’re there, but we’re not paying for airfare and hotels anymore,’” Ms. Judd said. But the planners, or at least those that can, party on. Ms. Judd said she knew of perhaps a dozen people in the area who used to do event planning. “They just don’t exist anymore,” she said. What might be left are fewer planners competing for a smaller party pie. On the bright side, at least phones are ringing again and proposals are being written. And even if the glitz is slow to come back, they will at least be busy helping those who need to have events do so successfully — and on budget. “In the past few weeks, I’ve gotten out a handful of proposals,” Ms. Pappas said. “I do see it turning around, and people have become more optimistic, especially in the last four to six weeks.” ■
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EVENT PLANNING
Centers: Operators anticipate turnaround in industry continued from PAGE 11
are looking at Cleveland to host an event,” said Deborah Hermann, director-at-large for the Cleveland chapter of the International Special Events Society. Dennis Roche, president of Positively Cleveland, said venues such as the Great Lakes Expo Center typically appeal to smaller events. “I don’t see the Great Lakes Expo Center competing with the (International Exposition) Center or downtown convention center,” Mr. Roche said. The Great Lakes Expo Center, which opened in January in a former Kmart building, recently gained six events after plans for the Cuyahoga Convention Center in Garfield Heights fell through, said Dean Taylor, who was on tap to be executive director of the nowdefunct project. That 125,000-square-foot center was supposed to open in February in an abandoned Walmart, but nearby tenant Giant Eagle exercised its leasing rights to veto the building’s opening, and Garfield Heights Mayor Vic Collova said he now believes the Walmart will remain vacant. Chris Fassnacht, who operates the Great Lakes Expo Center under 1200 Babbitt LLC, said the facility has 15 bookings through the fall, and the company is bringing new ideas to the table to find ways to attract visitors. For example, since the Great Lakes Expo Center does not have events booked during the warmer season, Mr. Fassnacht said he is in negotiations with companies for outdoor events. He’s also considering bringing a custom-car night or outdoor barbecue
Northeast Ohio home, flower shows in bloom A new home and flower show sprouted up this year in Northeast Ohio, and even though attendance was down for similar events at the International Exposition Center in Cleveland and in Akron, the Great Lakes Expo Center in Euclid said its show’s traffic fared better than expected. Chris Fassnacht, president and CEO of Expositions Inc., said the 67th annual Cleveland Home & Garden Show held Jan. 22-31 drew 62,500 people over 10 days, about 13.6% above the 55,000 the show producer had projected. “It was still a rough year for sponsorships,” Mr. Fassnacht said. The Cleveland Home & Garden Show moved this year from its long-
to the venue. “The summer months are the dark days of the convention industry,” said Mr. Fassnacht, who also is president of event producer Expositions Inc. “We’re thinking outside of the box.”
Growing room Although the I-X Center lost one show to the Great Lakes Expo Center this year — the Ohio Promotional Products Association — Robert Peterson, president of I-X Center Corp., said smaller shows such as this one represent a marginal piece of its business. “We’d love to have it back, but the bread and butter of our
time home at the I-X Center to the Great Lakes Expo Center. Mr. Fassnacht said he expects to lose some traffic, but gain it in other ways. “We’ll lose some attendees from the west and south, but conversely will gain it in other snowbelt counties,” he said. Meanwhile, Solon-based Marketplace Events produced the Great Big Home & Garden Expo Feb. 6-14 at the I-X Center. Attendance was nearly 79,000, which the I-X Center estimates to be about 16% lower than it was last year during the Cleveland Home & Garden Show. Both the I-X Center and the 16th annual HBA Akron Home & Flower show, which was held Feb. 26-28 at
business is large consumer shows,” he said. The I-X Center hosts about 50 events a year, including 10 to 12 consumer shows, and while Mr. Peterson noticed a drop last year in attendance — ranging from 10% to 20% — he thinks the market has bottomed out, and by 2011, attendance will increase. “Attendance had been increasing every year until we hit 2009,” he said. Mr. Peterson also dismissed the threat of competition from the planned medical mart and convention center in downtown Cleveland, which will bring another 300,000 square feet of exhibit space for meetings and conventions.
the John S. Knight Center, experienced a “slight decrease” in attendance from 2009 — and both shows blamed the lower figures on bad snowstorms. Attendance at the Akron event, which, until this year, had been trending up, was about 9,000. While home and garden shows at the I-X Center and Great Lakes experience some crossover in attendance, show producers say they don’t see the smaller Akron show as a competitor because it serves primarily Portage and Summit counties. “We actually view them as complementary to our show (at the I-X Center),” said Tom Baugh, president of Marketplace Events. — Kathy Ames Carr He said the facility, which will cater mostly to medical-related exhibits and conventions, won’t be a sufficient venue for some of the I-X Center’s consumer shows, such as the Cleveland Auto Show and the I-X Indoor Amusement Park. “Most of our events are too large for downtown,” he said. Still, he said new venues augment the area’s meeting and convention industry. “It’ll be just like when Jacobs Field, the Browns’ stadium and The Q all opened,” Mr. Peterson said. The I-X Center in November 2008 signed a five-year lease extension ahead of its current lease expiration in 2014, which means the exposition center has a leasing commitment that runs until 2019. “As long as we are making money, there is no reason not to extend it,” Mr. Peterson said. Meanwhile, Gregg Mervis, vice president and chief operating officer of the John S. Knight Center, said bookings at the Akron facility are solid, and he expects a small but
healthy increase over 2009. Skittish customers, however, are booking events closer to their dates. Rather than traditionally booking one year in advance, for example, they are reserving the event six months ahead, Mr. Mervis said.
Bet on a rebound For his part, Tom Baugh, CEO of Solon-based event producer Marketplace Events, is unsure of whether the market can sustain another venue like the one in Euclid. In Cuyahoga County alone, there is at least 1.58 million square feet of available convention space — not counting the Great Lakes Expo Center — including major hotels and meeting and event facilities, according to Positively Cleveland. “The big issue is whether the Great Lakes Expo Center is viable,” said Mr. Baugh, whose firm recently produced a home and garden show at the I-X Center and had plans to put on events at the failed Cuyahoga Convention Center. “Only time will tell. It’s a tough time to be in the business.” While meetings, conventions and other events these days tend to be more conservative, scaled-down events, echoing national industry trends, some venue operators still say they are confident the regional sector slowly will rebound. Positively Cleveland’s current funding from Cuyahoga County bed taxes dropped 21% over two years — from $8 million in 2007 to $6.3 million in 2009 — but Mr. Roche, the organization’s president, said this year so far has shown signs of the decline flattening. Collections of bed taxes, or taxes on hotel room charges, are one indicator of the current meeting and event planning industry’s performance. With the planned casino scheduled to come online in Cleveland by 2012, “I expect by the end of ’11 and into ’12, we’ll be back in business,” Mr. Roche said. ■
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15
LARGEST COMMERCIAL REAL ESTATE BROKERAGES RANKED BY NUMBER OF LOCAL AGENTS/BROKERS
Name Address Rank Phone/Web site
Number of Number Square feet sold agents/brokers of FTEs or leased 2009
Dollar value of sales transactions 2009
Dollar value of lease transactions 2009
Number of sales and lease transactions 2009 Top 2009 broker
Top local executive Title
1
CB Richard Ellis Inc. 200 Public Square, Suite 2560, Cleveland 44114 (216) 687-1800/www.cbre.com/cleveland
47
150
6,200,000
$114,923,000
$234,608,000
385
Allen Wiant
David Browning managing director
2
Colliers Ostendorf-Morris 1100 Superior Ave E, Suite 800, Cleveland 44114 (216) 861-7200/www.colliersom.com
43
69
1,978,936
$45,211,500
$47,368,035
185
Barry B. Holtzer
Warren L. Morris president, CEO
3
Grubb & Ellis 1350 Euclid Ave., Suite 300, Cleveland 44115 (216) 861-3040/www.grubb-ellis.com
32
39
NA
NA
NA
NA
Terry Coyne
Robert C. Nosal executive vice president, managing director
4
Kowit & Passov Real Estate Group 6001 - D Landerhaven Drive, Mayfield Heights 44124 (216) 514-5100/www.kowitpassov.com
23
6
NA
NA
NA
147
Tori Nook
Brad Kowit Steve Passov partners
5
Cresco Real Estate 3 Summit Park Drive, Suite 200, Independence 44131 (216) 520-1200/www.crescorealestate.com
17
8
4,620,000
$36,255,696
$82,541,232
286
Fred Christie
Joseph Barna, managing partner; Robert Garber, co-managing principal
5
Jones Lang LaSalle Americas Inc.(1) 127 Public Square, Suite 2410, Cleveland 44114 (216) 861-7171/www.us.joneslanglasalle.com
17
21
2,810,968
$0
$248,444,455
73
Robert J. Roe
Robert J. Roe managing director
5
The Krone Group 2101 Richmond Road, Suite 1000, Beachwood 44122 (216) 464-5900/www.thekronegroup.com
17
NA
NA
NA
NA
NA
James Becker
David Krone president
5
Marcus & Millichap Real Estate Investment Services 5005 Rockside Road, Suite 1100, Independence 44131 (216) 264-2000/www.marcusmillichap.com
17
3
NA
$63,712,042
NA
37
Michael S. Barron
Michael L. Glass regional manager
5
NAI Daus 23240 Chagrin Blvd., Suite 250, Cleveland 44122 (216) 831-3310/www.naidaus.com
17
8
1,847,000
$35,000,000
$25,000,000
137
Robert Brehmer
Robert Brehmer managing partner
10
NAI Cummins Real Estate 787 White Pond Drive, Suite A, Akron 44320 (330) 535-2661/www.naicummins.com
15
2
1,366,000
$12,900,000
$15,900,000
131
Tom Fox
John F. Herwick, CEO Tom Fox, president Bob Raskow, vice president
11
Chartwell Group LLC 1301 E. Ninth St., Suite 2210, Cleveland 44114 (216) 360-0009/www.chartwellgroup.com
14
22
2,397,287
NA
NA
93
David R. Stover Mark S. Abood
Mac Biggar president
12
Goodman Real Estate Services Group LLC 25333 Cedar Road, Suite 305, Lyndhurst 44124 (216) 381-8200/www.goodmanrealestate.com
12
13
506,129
$31,459,829
$51,671,995
109
Steven Altemare
Randall J. Goodman principal, broker
13
Munsell Realty Advisors Inc. 23250 Chagrin Blvd., Suite 255, Beachwood 44122 (216) 504-4820
10
16
NA
NA
NA
NA
Tony Lehman
Mark R. Munsell president
14
Allegro Realty Advisors Ltd. 8111 Rockside Road, Suite 250, Cleveland 44125 (216) 524-0710/www.allegrorealty.com
9
10
NA
NA
NA
NA
NA
George B. Hutchinson president, CEO
14
Arnold J. Eisenberg Inc. 24500 Chagrin Blvd., Suite 120, Beachwood 44122 (216) 831-6773/www.arnoldjeisenberg.com
9
2
1,242,000
NA
NA
106
Steven B. Eisenberg
Steven B. Eisenberg president
14
Coakley Real Estate Co. LLC 1382 W. Ninth St., Cleveland 44113-1231 (216) 772-4700/www.coakleyrealestate.com
9
2
49,050
$445,000
$795,000
17
Francis M. Coakley
Francis M. Coakley president
14
RJ Wohl Co. 24960 Center Ridge Road, Suite 300, Westlake 44145 (440) 835-0300/www.rjwohl.com
9
10
NA
NA
NA
NA
Jack M. Sanfilippo
Jack M. Sanfilippo executive vice president
18
The Gatto Group 29010 Chardon Road, Willoughby Hills 44092 (216) 621-1800/www.gattogroup.com
8
2
NA
NA
NA
NA
Michael Gatto
Steve Joseph vice president
19
Gerspacher Real Estate Group Inc. 113 W. Liberty St., Medina 44256 (330) 722-5002/www.sellingmedinacounty.com
7
2
544,934
$2,775,000
$4,189,691
74
James A. Gerspacher
Troy Gerspacher owner
19
Kelly & Visconsi Associates LLC 28601 Chagrin Blvd., Suite 250, Cleveland 44122 (216) 831-0300/www.kelly-visconsi.com
7
9
NA
$6,000,000
$30,000,000
95
Greg Slyman
Anthony T. Visconsi partner
21
The King Group 25550 Chagrin Blvd., Suite 300, Beachwood 44122 (216) 831-9330/www.thekinggroup.com
6
40
NA
NA
NA
NA
NA
Donald M. King president
21
Pinnacle Real Estate Services 4807 Rockside Road, Suite 270, Independence 44131 (216) 328-1555/www.pinnaclecleveland.com
6
4
NA
NA
NA
NA
Doug Smith
Donald M. Rudy president, owner
21
Reisenfeld & Co. 3659 Green Road, Suite 315, Beachwood 44122 (216) 765-8080/www.reisenfeld.com
6
1
NA
NA
NA
NA
David Cole
Drew Sulzer president
21
Weber Wood Medinger 25800 Science Park Drive, Suite 150, Beachwood 44122 (216) 464-7100/www.wwmrealestate.com
6
7
NA
NA
NA
NA
Alan W. Wood
Gerald B. Medinger president
25
Davison & Co. 7580 Kimberly Lane, Cleveland 44026 (216) 861-0600/www.davisonandcompany.com
5
2
NA
NA
NA
NA
Dyann Davison
Dyann Davison president
25
Emmco Corp. 3681 S. Green Road, Suite 201, Beachwood 44122 (216) 292-3700/www.emmcocorp.com
5
20
NA
NA
NA
NA
NA
Jeffrey E. Soclof president
25
Mogen Real Estate Co. 3296 W. Market St., Akron 44333 (330) 873-1200/www.mogen.com
5
3
NA
NA
NA
NA
NA
John A. Mogen president
28
The BEC Group Inc. 20575 Center Ridge Road, Suite 310, Rocky River 44116 (440) 773-9912
4
2
NA
NA
NA
NA
NA
Thomas L. Jelepis broker
29
Egar Steiger Associates 24100 Chagrin Blvd., Suite 435, Beachwood 44122 (216) 360-9090/www.egarsteiger.com
3
3
NA
NA
NA
NA
Steven Egar
Steven Egar president
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. (1) The dollar amount reported for lease transactions represents both sales and lease transactions. The company estimates that sales transactions equal approximately 15-20% of the total.
RESEARCHED BY Deborah W. Hillyer
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CRAIN’S CLEVELAND BUSINESS
Contact: Phone: Fax: E-mail:
WWW.CRAINSCLEVELAND.COM
MARCH 29-APRIL 4, 2010
REAL ESTATE
Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com
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AUCTIONS
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4 Parcels at one of the HIGHEST TRAFFIC AREAS in the area; corner of Sylvania & Talmadge
1: Undeveloped Lot
2: Electronic Media Billboard
#
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3: 10,195 SqFt Multi-Tenant Shopping Center
#
1470 Ford St. off Dussel Dr., Maumee, OH 43537
4: 26,912 SqFt 2-Story Office Building
#
Reichle Klein
9154 SqFt Multi-Tenant Commercial Center on 1.36 Acre Lot
★ SEALED BID LIQUIDATION ★ Sealed Bids DUE April 27th @ 5:00pm for the following:
DeVeaux Village Shopping Center
2600 W. Sylvania Ave. at the corner of Douglas Rd., Toledo, OH 43613. 71,900 SqFt Complex; Renovated in 2006; 9 Suites on 3.6 Acres — Great cash flow!!
Chesterfield Plaza
Timberstone Office Complex
1392 Conant or 120 Chesterfield Lane, Maumee, OH 43537. 31,000 SqFt Complex; Renovated in 2005; 9 Suites on 3.8 Acres — Close to Interstate & Turnpike Exit!
1630 Timberwolf Dr., Holland OH 43528 (Just off Airport Hwy). 8252 SqFt Top Quality beautifully appointed Office Complex, MultiTenant compatible, in an UP-SCALE Commercial Office Park w/great location!
★ PUBLIC AUCTION ★ Thurs., April 22nd @ Noon (12:00PM) 03750 Silica Rd., Sylvania, OH 43560 22+/- Acres of bare development land w/873+/-' of frontage; Zoned M-2. Very attractive property in a GREAT AREA! All Sales By Order of the Court Appointed Receiver The Skutch Company, Ltd.
WILSON AUCTION & REALTY CO., LTD.
For More Information, Terms & Bidding Procedures go to Our Website
www.WilsonAuctionLtd.com
Auctioneers/Brokers & Liquidators
Bryan, OH 866-870-5500 Bowling Green, OH 419-354-7653
Or, contact any of the following for more detailed information, Due Diligence Packets & to Register for a Bidders Packet
CBRE/Reichle Klein 419-861-1100 ★ Signature Associates 419-249-7070
COURT ORDERED REAL ESTATE AUCTION
SEALED BID AUCTION
In the Court of Common Pleas, Mahoning County, Case #2009CV01179, we will offer for sale at Public Auction the following
Submission Deadline - April 21, 2010
FRIDAY APRIL 30, 2010 @ 12:30 PM (54)TOWNHOUSE RENTAL UNITS IN (11)BUILDINGS GO TO WEBSITE FOR DETAILS, PICTURES & TERMS PLEASE CALL FOR BIDDER PROSPECTUS ROMAN REALTY, LTD. GEORGE ROMAN AUCTIONEERS, LTD. 22 W. Main St. Canfield, OH 44406 330-533-4071 www.georgeromanauctioneers.com
STEVE PLATZ REALTY, INC. 4021 Via Cassia Poland, OH 44514 330-757-4889 www.steveplatzrealty.com
4127- 41 Mayfield Road, South Euclid 8723 sq. ft. Commercial Building See website for details 10% Buyer’s Premium
2% Broker Participation
Midwest Properties Auctioneers, LLC and R.G Nieto Co., Inc. Robert Nieto – Auctioneer, Broker
www.midwestprops.com
Industrial and Office Spaces to Fit Any Need! 216.520.1200 • www.crescorealestate.com
Available Office Space INVESTMENT SALE OPPORTUNITY - 22,500 sf property under lease - located across the street from the new Federal Building in downtown Canton - Patrick Reardon, SIOR BEACHWOOD SUBLEASE - recently renovated offices - below market lease rate - 4,595 sf - large open floor plan - Chagrin Blvd building - John Glasstetter, SIOR 4,500 SF 2 STORY COMMERCIAL BUILDING AT FLEET & I-77 - divisible with seperate entrances - perfect live/work layout - sale or lease - Tom West, SIOR UNIQUE HEALTHCARE/SENIOR RESIDENCE OPPORTUNITY - highly visible I-271, 7 acre site with opportunity to develop up to 184 units for senior assisted living / nursing / congregate living - value priced - Rico Pietro, SIOR or Bob Garber, SIOR
Available Industrial Space SOLON/TWINSBURG - multiple office-warehouse units from 3,000 to 108,000 sf - ready for immediate occupancy with offices, docks, drive-ins - professionally managed and maintained Matt Beesley, SIOR or Bob Garber, SIOR STREETSBORO - 67,030 sf whse/mfg crane building on 11.24 acres with 4 truck docks - 4 drive-in doors - 2-5 ton OHD cranes - upgraded T-8 lighting and 30’-34’ clear ht. - Simon Caplan, SIOR or Eliot Kijewski
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413 Mathews Rd. Boardman, OH 44512
ON O S
3 BUILDINGS - SALE/LEASE - 13,000, 32,000 & 59,800 sf - 1 story - docks - up to 27’ clear - manufacturing/warehouse - Armand Aghajanian I-480 / I-77 - 59,626 sf with 8 docks - 1 drive-in - 3,600 sf of office - 19’ ceilings Bob Garber, SIOR FOR SALE FREESTANDING 52,540 SF - manufacturing/warehouse building built in 1991 - situated on 25.1 acres - located adjacent to Youngstown-Warren Regional Airport George Pofok, SIOR or Joe Barna, SIOR PRICE REDUCED - user/investor opportunity - 23,600 sf - 4 building complex available for sale - 1,500 to 10,200 sf - currently vacant - easy I-90 access - Moore Rd, Avon Lake - Kevin Kelly IDEAL OPPORTUNITY - 20,000 sf on 3.16 acres for lease or sale - divisible to 10,000 sf tenant could remain - 1985 construction - oversize DI’s - 8” floors - heavy power - rubber roof - secured yard - suburban location - Joe Barna, SIOR AIRPORT AREA - units available from 2,464 sf to 11,737 sf - competitive rates docks/drive-ins - 16’ clear - Pamela Bertovich CUYAHOGA HEIGHTS - 10,797 sf freestanding building with 1,200 sf of office - 1 dock and 1 drive-in - Fred Christie, SIOR I-90 / RT 611 (AVON) - interchange land - 1.19 acres of ready to build land adjacent to McDonalds - across from Lake Erie Crushers Stadium - Ken Anderson
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Guitar: Widow hopes to keep shop alive continued from PAGE 3
She also did not truly know how important her husband and his store were to the local music community. She learned when more than 80 people came to the store for a memorial jam session, followed by more than 300 who filled a small church to capacity for his funeral service. â&#x20AC;&#x153;My daughter said, â&#x20AC;&#x2DC;Why didnâ&#x20AC;&#x2122;t you ever tell me I had such a cool dad?â&#x20AC;&#x2122;â&#x20AC;? Mrs. Stiles said. â&#x20AC;&#x153;I said, â&#x20AC;&#x2DC;I never knewâ&#x20AC;&#x2122; â&#x20AC;&#x201D; I mean, I knew he was pretty cool, but ... this?â&#x20AC;? Mr. Stiles was known for taking young guitar players and turning them into both adults and valuable
workers. Current store employee Erik Erdman, now 19, was taken in by Mr. Stiles two years ago, even though the young man only had been playing guitar for six months at the time and was a long way from repairing guitars or setting them to play perfectly for demanding customers. â&#x20AC;&#x153;I asked him if I had to tune every guitar exactly,â&#x20AC;? Mr. Erdman said. â&#x20AC;&#x153;He said, â&#x20AC;&#x2DC;Well you should get â&#x20AC;&#x2122;em as close as you can.â&#x20AC;&#x2122; â&#x20AC;Ś I offered to work for free, but he wouldnâ&#x20AC;&#x2122;t let me.â&#x20AC;?
Striking a chord A lot of people hope Mrs. Stiles succeeds in keeping the store and
maybe even its spirit alive. â&#x20AC;&#x153;Oh man, thatâ&#x20AC;&#x2122;d be nice,â&#x20AC;? said Mike Zaite, also known as the â&#x20AC;&#x153;doctorâ&#x20AC;? at Clevelandâ&#x20AC;&#x2122;s Dr. Z Amplification, a nationally renowned maker of tube amplifiers for guitars. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;d hate to see them all go away,â&#x20AC;? said Mr. Zaite, referring to independent guitar stores that were more prevalent before superstores such as Guitar Center took over the market. Dr. Z general manager Brent Ferguson â&#x20AC;&#x201D; himself a former employee of Mr. Stiles â&#x20AC;&#x201D; said Heights Guitars was one of only two Cleveland distributors of Dr. Z amps. The company would like to have more,
but it does not sell through big-box stores, only independent shops, and â&#x20AC;&#x153;thereâ&#x20AC;&#x2122;s a lack of those kinds of guitar stores here,â&#x20AC;? Mr. Ferguson said. Independent guitar specialty shops probably have been more affected by the big-box stores than general music stores such as Prospect Music in Cleveland, said Prospect owner Mike Rubin. The big retailers have gone after the more popular market for guitars, but not attacked the market for trumpets, saxophones and other less popular instruments, Mr. Rubin said.
An encore performance Mr. Rubin said he knew Mr. Stiles only a little, but was well aware of his good reputation. He said Mr. Stiles found a good location for his store, near many doctors, lawyers and other
17
professionals, and then built his name with quality repairs and service. But he predicts it might be tough to sell a store in todayâ&#x20AC;&#x2122;s market. â&#x20AC;&#x153;(Mrs. Stiles) might find that at least at this time it might be wiser to keep it open with a good, reliable staff until the economy improves,â&#x20AC;? Mr. Rubin said. But Mrs. Stiles said sheâ&#x20AC;&#x2122;s only just begun efforts to sell the store. It was closed for two weeks while she and the staff took an inventory that Mr. Stiles had committed to memory, and she was quickly approached by former employees about a purchase. She hopes that sale works, but if it doesnâ&#x20AC;&#x2122;t, she hopes the storeâ&#x20AC;&#x2122;s reputation will help attract other potential buyers. â&#x20AC;&#x153;Before I start advertising it, I want to give these guys a chance,â&#x20AC;? she said. â&#x2013;
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PNC: Bank forms local relationships Rocky River tech firm’s web software gets results continued from PAGE 3
Mr. Clark said the loss of the headquarters has not made a difference in executives’ ability to make decisions locally, which has “never been greater.” Terry McEvoy, managing director and bank analyst at investment firm Oppenheimer & Co. in Portland, Maine, said he has heard anecdotally that some customers have left the bank because business lending has been more focused in Pittsburgh. He said he did not know if most switched immediately after the merger or more recently. Mr. Clark said local executives make both credit decisions for customers as well as charitable decisions. Philanthropic gifts don’t have to go through the bank’s Pittsburgh headquarters, he said. Mr. Clark also said the bank has taken this opportunity to rethink existing relationships with philanthropic organizations, offering time and creating educational programs, for example, instead of simply writing checks. Immediately after a merger, Mr. McEvoy said, banks do a lot of work to show that their role in the community has not been diminished. He said, though, that those commitments often shrink over the years. “Over time, things change,” he said. “For now, it would appear they’re very committed.”
Cultural shift With the structural changes in Cleveland, executives have created a
president’s forum where leaders in each line of business talk jointly about broad opportunities in the marketplace. A new client and community relations director in each market is the point person for all philanthropic and charitable work in that market. Holly Buffington, executive vice president of PNC wealth management for the western region — essentially, all of National City’s old footprint — is a legacy PNC executive. She said the changes have allowed the bank to become more interconnected across its business lines. PNC has made changes to the way it does business across National City’s footprint as well. It has increased the bank’s focus on selling a broad array of products to customers, a move Mr. Clark said has been well-received. PNC also offered an array of products that National City did not, including derivatives, public finance capabilities and Delaware trust capabilities on the wealth management side. Employees now are focused more than ever on selling those products, said Mr. Clark, who also has increased the time he spends on the phones. “It’s a cultural thing, that’s for sure,” he said. “Everybody sells. My performance starts with how much product is sold in the market. It’s the biggest dial on the dashboard.” Barry Robinson, executive vice president of PNC wealth management in the Cleveland office, said while National City had areas where it successfully cross-sold customers, the practice has taken on greater ur-
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gency with the bank’s new owner. “If there’s a valuable service that PNC has, they’re going to hear about it,” he said of the customers. Mr. McEvoy, of Oppenheimer, said PNC wants to be a “smarter bank” than National City was, working harder to develop a complete relationship with clients. “They want to get a greater share of their customers’ wallets,” he said.
The best of both worlds Not all the bank’s calls are to sell, though. Customer satisfaction is measured more than in the past, with each bank branch rated on a star system. Customers receive phone calls asking about their experience at branches. All of that isn’t to say that National City doesn’t have anything to offer to PNC. The Cleveland bank’s mortgage company was adopted by its new owner, as was the points program that rewards National City customers for using the bank’s services. PNC branches are converting to some National City software once all National City branches have switched to the PNC name. The trust side, for example, was stronger under National City, Ms. Buffington said, and PNC will transition to its model. National City also had client satisfaction and contact standards “down to a science,” she said, something Mr. Robinson said the bank believed in “passionately.” Ms. Buffington said PNC came into the acquisition knowing that both institutions would make some changes. Like Mr. Clark, she said the focus should be just as much about what hasn’t changed as what has. “We went into the organization with the idea that not one organization was better than another,” she said. “We would take the best of both and try to blend them.” ■
By CHUCK SODER csoder@crain.com
After meeting with some people from Rocky River-based Idea Engine, Steven Lindseth was ecstatic. And really mad. The former CEO of Axentis Inc. was elated to find a better way to attract customers to the Cleveland software firm’s web site and to have a tool — Idea Engine’s SyncShow software — that could help him do it. But seeing how much time and money Axentis had wasted to maintain an underperforming site left him furious. “I was practically enraged,” Mr. Lindseth said. “I was like, ‘How could we have not done this before?’” And he had an earlier version of Idea Engine’s SyncShow, a product that’s driving growth at the small digital marketing firm and eliciting big responses from customers, said managing director Chris Peer. “That’s the kind of reaction we’re getting when we sell SyncShow to people,” Mr. Peer said. The newest version, SyncShow 6.0, summarizes all sorts of information from web analytics software programs to give web site managers updates on who is visiting their site, for how long and what they’re clicking on. It’s a lot simpler than having a client wade through the reports themselves, Mr. Peer said. “Try dragging a customer through a 120-page report in an hour. It’s a little overwhelming,” he said. Plus, if a site is performing poorly in a given area, the update is accompanied by action items suggesting what should be done to fix the
problem. It might involve putting key words in particular spots to attract customers from Google or altering the site’s resolution so that, say, Macintosh users who aren’t staying on the site very long can see it better. SyncShow also uses statistics to pinpoint visitors likely to become customers, which can help a company find sales leads. The company created SyncShow to do what they often taught clients to do themselves, said chief technology officer Dan Carbone. He plopped a thick search engine optimization book called the “SEO Bible” on the table in front of him. “You’d have to read a lot of these books (to do what SyncShow does),” Mr. Carbone said. As a result of SyncShow’s popularity, Idea Engine has hired three people to bring its staff to 11, and it is looking to hire two more. The company does not release revenue figures, but sales exceeded $1 million and grew 36% in 2009. Software companies and manufacturers have been quick to adopt the technology, Mr. Peer said. LHP Software of Columbus, Ind., has seen big improvements since it started using an earlier version of SyncShow a few months ago, said David Glass, president of LHP, which develops software for cars, medical equipment and power generation technologies. SyncShow was “a key element” in a recent marketing effort that has put the company back into hiring mode after it lost much of its business from its biggest customer, Mr. Glass said. “It’s just way beyond where we were before,” he said. ■
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THEINSIDER
THEWEEK MARCH 22 - 28 The big story: The Ohio Third Frontier Commission awarded $4.3 million in grants to five Northeast Ohio technology companies, while also releasing updated statistics on the performance of the Ohio Third Frontier Program. The program, created in 2002, had created 55,000 jobs as of Dec. 31, 2009, according to commission statistics based on a formula that previously showed the program had created 41,000 jobs as of December 2008. Of the five local companies that received grants, four are developing technologies related to advanced materials, and the fifth is developing sensor technology. The local companies receiving grants are AlphaMirror Inc.; Kent Displays Inc.; Lockheed Martin MS2 Integrated Defense Technologies; Momentive Performance Materials Inc. of Strongsville and Pressco Technology Inc. of Solon.
Hungry for more: J.M. Smucker Co. outlined a capital investment initiative that will result in new production capacity, though the changes will come at a cost of 40% of the 450 jobs at the plant in its headquarters city of Orrville. The maker of Smucker’s jellies, Jif peanut butter and Folgers coffee said the investment in its operations will total $220 million over the next three years. In addition, the company plans to close four plants and will incur restructuring charges of $190 million over the course of the initiative. Smucker said it will replace its existing plant in Orrville with a new plant that should begin production in the summer of 2012. Life in the fast lane: More than 100 homes on Hessler Street in Cleveland and several local institutions soon will get super-fast Internet access. Case Western Reserve University is leading a year-long experiment that will allow the university, several area hospitals and Hessler residents to access the Internet at speeds of 1 gigabit per second — about 100 times faster than standard cable and phone line connections. The university will track how the participants end up using the service. It also is encouraging participating institutions — including the Cleveland Clinic, University Hospitals Health System and MetroHealth System — to come up with ways to exploit the technology.
Shipped out:
The surge in manufacturing work over the last decade in China cost Northeast Ohio 19,300 jobs from 2001 to 2008, according to a study by a union-sponsored think tank. The Economic Policy Institute report, “Unfair China Trade Costs Local Jobs,” says manipulation of China’s currency that has kept the yuan’s value artificially low cost the four congressional districts of Northeast Ohio 1.73% of their total employment from 2001 to 2008.
On the money: Brennan Financial Group and 212 Capital Group have combined. Together, the firms have eight offices in as many Northeast Ohio cities. Brennan brings 21 advisers and seven other employees to the merged firm, which will be called 212 Capital Group, while 34 advisers and 10 other employees come from 212.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Timing is everything ■ When does a bank know the end is near? It depends upon whom you ask. Dick Wise, the former president and CEO of American National Bank in Parma, said he was running the bank from his retirement home in Florida when he found out it was over. He said he first got a call from the bank’s chief financial officer at 1:30 p.m. on Friday, March 19, and learned that a regulator was there from Washington, D.C. At 3:30 p.m. the same day, CEO Larry Cardinal called again to say the Federal Deposit Insurance Corp. was there and was taking over the bank, Mr. Wise said. Mr. Cardinal told Crain’s he didn’t know if he was authorized to talk about the takeover, and therefore declined to be interviewed. But Dean DeBuck, a spokesman for American National’s regulator, the Office of the Comptroller of the Currency, said banks are informed ahead of the scheduled closure. “We set a date and let the bank know and all that,” Mr. DeBuck said. “The bank knows a week ahead of time.” That’s because the FDIC holds a meeting for all interested bidders ahead of any bank’s closure, Mr. DeBuck said. In the case of American National Bank, there was just one bidder, an FDIC spokesman said. Mr. Wise, who was the bank’s CEO and president from 1988 to 2003 and remained
on the board until 2007, said he intends to go back to the bank to see how the employees are doing, but that he has no intention of getting another job. “It’s not a good feeling when that happens,” he said, referring to the bank closure, “but I’m going to get on with life. I’m going to play a lot of golf. I have no desire to go into the active business world.” — Arielle Kass
This bit of business is hardly a drag ■ Database marketing company Hedges & Co. in Hudson has carved a nice niche in the automotive world, based on its principals’ years of experience in the field. But that little niche recently got a lot bigger, as the company announced a deal with the National Hot Rod Association (NHRA), the national sanctioning body for the sport of drag racing. Hedges & Co. has culled consumer buying history and association membership history, among other things, to provide NHRA a database with its best prospects, said Jon Hedges, the company’s founder. “This is not something a lot of companies have the ability to do in-house, at least not at this level,” said Mr. Hedges, whose wife, Julie, manages the company’s market research practice. Mr. Hedges worked in marketing, advertising and merchandising at Summit Racing Equipment in Tallmadge for 13 years before starting Hedges & Co. in 2004. The company also counts Norwalk’s Summit Motorsports Park and the Specialty Equipment Market Association (SEMA) in California as clients.
MILESTONE
BEST OF THE BLOGS
COMPANY: Millennium Capital and Recovery Corp., Hudson THE OCCASION: Its 10th anniversary
Excerpts from blog entries on CrainsCleveland.com.
The company, which helps financial institutions with collateral recovery and debt resolution, was formed in late-1999 by business leaders with expertise in finance and consumer lending. It currently offers services including national, regional or local collateral recovery and debt resolution through a single point of contact; skip tracing, impound negotiation and Bronchetti transportation; and remarketing coordination through auction affiliates nationwide. Robert Bronchetti, president and CEO of Millennium, said the company has grown over the years because of a philosophy based on “integrity, performance and accountability,” coupled with expanded service options. For information, visit www.mcrc.biz. Send information about corporate anniversaries to managing editor Scott Suttell at ssuttell@ crain.com.
Bully for schools for trying something new ■ We so rarely get to see good news about the Cleveland schools that a recent piece in The New York Times was a pleasant surprise. The Times looked at schools’ get-tough, “zero-tolerance” discipline policies, which result in an increase in suspensions. “But whether banishing children from schools really makes them safer or serves the community well is increasingly questioned by social scientists and educators,” the newspaper reported. “A growing body of research, scholars say, suggests that heavy use of suspensions does less to pacify schools than to push already troubled students toward academic failure and dropping out.” As a result, more districts, including Cleveland’s, “are already reversing course and trying new approaches, including behavioral counseling and mediation, to reduce conflict and create safer, quieter schools while ejecting only the worst offenders,”
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Hedges & Co. administers SEMA’s monthly benchmarking study, which provides analytics to the association’s 7,000-plus members. Mr. Hedges said the economy has forced many companies, including in the automotive industry, to search for ways to reach their target audiences. “It’s been a challenge to a lot of people,” he said. “Any company is looking for more efficient ways to market their products or services. We have gotten a lot of interest in our abilities because of the economic climate; we offer a solution that has (return on investment).” — Joel Hammond
A clear case of brand awareness ■ This reporter committed a cardinal sin when interviewing a former National City — and now PNC — executive earlier this month: I took notes with a pen branded with the red KeyBank logo, after failing to find another working writing implement in the bottom of my purse. Paul Clark, PNC regional president, Northern Ohio, spotted the offending quill after mere minutes and stopped the interview to jokingly chide me on my choice of note-taking devices. He then insisted I put the pen away and take his own, a logo-less, blue uniball micro. At the end of the interview, he told me to keep it rather than risk committing a similar offense in the future. Mr. Clark also pledged a case of PNC-branded pens following the bank’s conversion mid-April to ensure the mistake wouldn’t be repeated. — Arielle Kass
The Times said. Among the efforts shown to help are antibullying programs, positive-behavior feedback and training of students and teachers in conflict resolution. “With similar strategies, including peer mediation, violent incidents in Cleveland schools fell by one-fifth in each of the last two years,” The Times reported.
Hubs up in the air, but Continental likes Cleveland ■ In a Q&A with USA Today, a Continental Airlines executive talked up the importance of the airline’s hub in Cleveland. Jim Compton, Continental’s executive vice president and chief marketing officer, was asked if he sees Cleveland remaining as a Continental hub indefinitely, especially given the “de-hubbing” of Pittsburgh, St. Louis and now, possibly, Cincinnati. Mr. Compton responded, “It is an important part of our network. It serves our demand in the Midwest. We’ve been very disciplined about matching capacity with demand, because we think it’s really important with being successful in this business.”
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