Crain's Cleveland Business by Crain's Cleveland Business

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$1.50/APRIL 12 - 18, 2010

Vol. 31, No. 15

STREET EATS New generation of food carts rolls into Cleveland as city clears path for mobile vendors to operate

Health care providers plan for transition Hospitals, other practices mull operational changes as reform implications take hold

By JAY MILLER jmiller@crain.com

ave you ever been walking around at lunch time and had a hankering for Himalayan rice and seared tuna? Or maybe a plate of dim sum? Or maybe a simple vegetarian soup? Well, you may be able to sample those varied cuisines and more beginning this summer on the streets of Cleveland. Cleveland City Council passed legislation last month that clears the way for a new generation of curbside food vendors. In a See FOOD Page 13

By SHANNON MORTLAND smortland@crain.com

Although the crowds of newly insured patients aren’t coming through the doors just yet, local health care providers are wondering how they will handle the onslaught of patients, as well as a multitude of other changes that are coming as a result of the health care reform bill. Among the issues providers are grappling with are how changes in the Medicare and Medicaid payment structures will affect them, how they will provide enough community benefit to maintain their tax-exempt status and how they can reduce costs while preserving high quality

standards. “Obviously this bill is going to have a major impact on all facets of the hospital,” said Heidi Gartland, the vice president for government relations at University Hospitals. “We’re definitely preparing ourselves to decipher which programs we’re going to participate in.” One of the biggest concerns for hospitals is the decrease in reimbursement from Medicare and Medicaid, said John Corlett, vice president of government relations and community affairs for the MetroHealth System. Hospitals with a large proportion of uncompensated care now receive See REFORM Page 21

Lenders more amenable to altering manufacturer loans Banks don’t want to be stuck with ‘illiquid’ assets By DAN SHINGLER dshingler@crain.com

There’s never a good time to default on your bank loan, but for many manufacturers now might be a better time than most when it comes to convincing a lender to renegotiate terms on loans teetering on default. That’s because the assets a bank would seize in a foreclosure — namely a manufacturer’s plant and equipment — aren’t easily sold in today’s depressed market. So, experts say,

faced with the prospect of either renegotiating a loan or taking ownership of assets destined to be sold at a loss, many banks are more willing to work with borrowers than they might be in better economic times. “The logic is obvious … you’re dealing with a bank that doesn’t want to own the property,” said Jean Robertson, chair of the business restructuring and bankruptcy practice at Cleveland’s Calfee Halter & Griswold law firm. See LOANS Page 9

INSIDE Watch for this new banking technology

Some banks such as PNC, Key, Fifth Third and Huntington are using drivethrough video screens to improve the customer service experience. The setups eliminate the need for a window at the teller lines and enable the banks to have more flexibility with interior design. Read Arielle Kass’ story on Page 5.

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COMING NEXT WEEK Young and just scraping by Recent college graduates are being forced to consider all avenues — including the dreaded living at home with mom and dad — to save money as they attempt to continue education or land better employment.

REGULAR FEATURES 30 and Counting................10 Bright Spots ........................7 Classified ..........................22 Editorial ............................10 Going Places .....................14

List: Largest money managers ................20-21 Reporters’ Notebook..........23 The Week ..........................23 What’s New........................23

APRIL 12-18, 2010

IT ADDS UP Americans spent nearly $140 billion on out-of-pocket health care expenditures in 2008, according to data released in March by the U.S. Bureau of Labor Statistics. That’s a lot of money, especially given that the total excludes health insurance premiums, nursing home care and nonprescription drugs, among a few other smaller categories. Here’s how the out-of-pocket expenses broke down:

Category

Expenditure

Prescription drugs

$42.9 billion

Dental services

$30.7 billion

Physicians’ services

$21.9 billion

Hospital care

$21.1 billion

Other professional services

$11.2 billion

Medical suppliers

$10.5 billion

SOURCE: BUREAU OF LABOR STATISTICS; WWW.BLS.GOV

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editors: Joel Hammond (jmhammond@crain.com) Sports Kathy Carr (kcarr@crain.com) Marketing and food Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Shannon Mortland (smortland@crain.com) Health care and education Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Arielle Kass (akass@crain.com) Finance and legal Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing coordinator: Laura Franks (lfranks@crain.com) Advertising sales director: Mike Malley (mmalley@crain.com) Account executives: Adam Mandell (amandell@crain.com) Dirk Kruger (dkruger@crain.com) Nicole Mastrangelo (nmastrangelo@crain.com) Dawn Donegan (ddonegan@crain.com) Business development manager & classified advertising: Genny Donley (gdonley@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Production manager: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Kristen Wilson (klwilson@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Circulation manager: Erin Miller (emiller@crain.com) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com) 1-888-909-9111

Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing Kathy Henry: Corporate circulation/audience development director G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year, $59; 2 years, $102. Outside of Ohio: 1 year, $102; 2 years, $180. Single copy, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-888-909-9111 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 136 Audit Bureau of Circulation

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Commercial loan delinquency issue lingers Lenders write down more of portfolios, file foreclosures to preserve asset values By STAN BULLARD sbullard@crain.com

Mark Jablonski is prospecting for bargains. A former commercial loan officer at a bank and real estate analyst for an accounting firm, Mr. Jablonski now is a developer who hopes to

THE WEEK IN QUOTES

mine treasures from the sour loans and distressed properties banks are unloading as they look to clean up their balance sheets. “If you were on the sidelines in the boom or have access to capital, you are in the driver’s seat,” said the president of Centermark Development LLC of Cleveland.

INSIDE: Delinquency data show improvement in fourth quarter, but not year-over-year. Page 12 Mr. Jablonski has yet to latch on to any deals, though recent figures indicate lenders still have plenty of bad debt and properties to ditch. According to the latest data from real estate consulting firm Foresight Analytics, commercial real estate loan delinquencies as of Dec. 31 in the Cleveland-Elyria-Mentor metro-

politan statistical area stood 2009 figure was much worse at 5.7% of total commercial than the 2.6% delinquency real estate loans outstanding. rate at the end of 2008. The That number was down Akron MSA covers Summit from a 6.7% delinquency and Portage counties. rate as of last Sept. 30, but On a nationwide basis, was still well above the the commercial loan delin3.4% delinquency rate at quency rate had climbed to year-end 2008. 5.1% at the end of 2009 Jablonski Likewise, in the Akron from 4.6% as of Sept. 30 MSA, the delinquent rate on comand 2.7% as of Dec. 31, 2008. mercial mortgages had edged down The dips in delinquency rates in to 4.5% by Dec. 31 from 5.3% as of the fourth quarter in the Cleveland last Sept. 30. However, the year-end See DELINQUENCY Page 12

INSIGHT

“Obviously this bill is going to have a major impact on all facets of the hospital. We’re definitely preparing ourselves to decipher which programs we’re going to participate in.” — Heidi Gartland, vice president for government relations at University Hospitals. Page One

“After talking with some bankers who are active in lending to manufacturers, it does appear that some banks are exercising a bit of flexibility in how they are dealing with their current troubled loans. ... This is not something that is going to be widely advertised.”

The Indians’ season-ticket sales have declined dramatically for 2010. Will the fans come back if the team reverses its current ‘down cycle’? By JOEL HAMMOND jmhammond@crain.com

rom 2000 to 2009, the Cleveland Indians won, on average, three fewer games per season than the Philadelphia Phillies. Unfortunately for the Indians, they were the wrong games: another win in 2005 would have brought another playoff appearance, another in 2007 would have meant another World Series berth. Instead, the Indians — who open the home portion of their 2010 schedule today at Progressive Field against

— Daniel Berry, CEO of Cleveland manufacturing advocacy group Magnet. Page One

“These big chain operations were coming in and taking over our market.” — Douglas Katz, president of the Cleveland Independents and chef/owner of Fire on Shaker Square. Page 15

“We stayed aggressive. We didn’t get defensive and pull back. We have been really marketing hard, primarily to protect our turf among clients in health care.” — Larry Fischer, a co-founding principal of Perspectus Architecture in Cleveland. Page 15

ED WOLFSTEIN/ICON SMI

AN EMPTY FEELING the Texas Rangers — have sold a staggeringly low 8,000 full-season ticket equivalents, meaning a combination of 81-, 20-, 12- and sixgame plans. The Phillies, meanwhile, won the World Series in 2008 and lost to the Yankees in the series last year, and have the season-ticket base to show for it: Philadelphia earlier this spring cut off season ticket sales at 28,750. Citizens Bank Park, which opened in 2004, holds 43,500. The Indians’ sales figures reflect an unprecedented level of fan anger after recent trades of players such as CC Sabathia, Cliff Lee — and that

tandem’s matchup in Game 1 of last year’s World Series — and Victor Martinez, and a fan perception that owner Larry Dolan won’t invest in the team’s major league payroll. The Indians’ payroll, according to a USA Today database, stands at $61.2 million. Now, the question is whether the fans who have left the club — the Indians sold 15,000 full-season equivalents in 2008, after 2007’s success — will return when and if the “cycle,” as team officials refer to it, swings back upward. “They believe that, as a smallSee INDIANS Page 13

State tech initiatives all effective, though reasons vary Third Frontier’s goals similar to Pennsylvania, Michigan, Georgia programs By CHUCK SODER csoder@crain.com

It’s applauded by politicians and business leaders from across the state. It has pumped hundreds of millions of dollars into university research and companies developing new products. Though it has faced budget cuts, it’s considered key to building a high-tech economy in: a) Ohio; b) Pennsylvania; c) Michigan; d) Georgia; or e) all of the above. Here’s a hint: Pick “e.”

The Ohio Third Frontier Project has a lot in common with programs created by other states aiming to build high-tech economies of their own. That’s not necessarily bad, though. All four of the states listed above have effective programs, according to Dan Berglund, president of the State Science & Technology Institute, which is based in Westerville, Ohio, but works to shape technology-based economic development programs across the nation. Though the Third Frontier —

which will end in 2012 unless voters approve a $700 million, five-year extension on the May ballot — isn’t the only game in town, it’s a program the state can brag about, said Mr. Berglund, who used to serve as director of Ohio’s Thomas Edison Program, an older state program that promotes high-tech research and development. He noted how employment in Ohio’s high-tech industries grew 4% between 2004 and 2008, while employment in other industries fell slightly over the same period, citing statistics from a

INSIDE: How lean budgets are tightening funding for technology. Page 11 Cleveland State University study commissioned by regional technology advocacy group NorTech. “That, to me, was a very powerful statistic,” he said. The various state programs are by no means identical, however. Though generally similar, they all have their own ways of doing things.

Cornerstone in the Keystone State Pennsylvania started pumping See TECH Page 11

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APRIL 12-18, 2010

Port Authority reorients itself Cleveland-Cuyahoga agency shelves bolder plans while setting more conservative goals By JAY MILLER jmiller@crain.com

Five months after the ouster of its president, the Cleveland-Cuyahoga County Port Authority is setting new, scaled-back — but still controversial — goals for the agency that runs the docks on Lake Erie and plays a major role in the county’s economic development. A chastened board of directors and an interim president have backed away from the bolder ideas authored by former president Adam Wasserman. Under his leadership the Port Authority had set in motion a $500 million, 20-year plan to vacate the waterfront east of the mouth of the Cuyahoga River, moving the Port of Cleveland docks east to new land along the lake at East 55th Street. The Port Authority also has abandoned a $10 million reconfiguration of the existing docks that Mr. Wasserman believed would attract container ships, which are vessels carrying containers that are unloaded and easily attached to trucks. It was opposition to those sweeping plans that led to Mr. Wasserman’s resignation in November of last year after less than two years on the job. “We’re in a mode of back to basics, first things first,” said Peter Raskind, the former chairman of National City Corp. who signed on as a $1-a-year interim president of the Port Authority after Mr. Wasserman’s abrupt departure. “I’m confident our appetite won’t be bigger than our stomach.” In a report to the community to be released later this week, the Port

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Authority will recount its efforts at setting short-term goals and reducing expenses, which include cutting staff and dropping plans to fill in a boat slip to more easily accommodate container ships. It also says a new authority director will be named in May. After a new boss is in place, Mr. Raskind said, the Port Authority will hire a director of maritime operations, a business development executive to drum up cargo business and a government relations and communications director, which would restore three of eight employees who were either laid off or have resigned since Mr. Wasserman’s departure. The report also says the agency is moving forward on a three- to fiveyear plan to redevelop 30 acres of dock land, a significant portion of the 100 acres the Port of Cleveland currently occupies and was planned as an urban neighborhood with new streets, homes, offices and shops. Mr. Raskind also told Crain’s Cleveland Business that the agency will be continuing to rebuild its development finance business as the economy recovers.

Charting a new course Until the current change in direction, the Port Authority had been following a plan to redevelop the entire 100 acres over 20 years as the docks moved in stages to East 55th Street. Opposition to that plan came from several fronts, including from Port Authority board members who were concerned the agency couldn’t afford the cost of a rapidly growing staff and wasn’t finding sources of funding quickly enough for its ambitious plans. The Port Authority’s move to East 55th Street also was opposed by boaters who saw the plan as costing them a lakefront marina and from a variety of other opponents. Most of the policy decisions the Port Authority was implementing, however, were made elsewhere, and the agency still must grapple with solving the problems those decisions created. In 2004, while Jane Campbell was mayor, the city of Cleveland adopted a Waterfront District Plan. That plan included transforming the land occupied by the Port of Cleveland into an urban neighborhood. In the original waterfront plan, the docks would have moved to an island north of the break wall built with soil regularly dredged from the bottom of

the Cuyahoga River to keep the shipping channel open. A Port Authority study later determined that the East 55th Street location would be a better and less costly location for a new port. Current Mayor Frank Jackson has embraced the East 55th plan, which was recommended by the Port Authority’s board. In an e-mail exchange late last week with Crain’s, the mayor said his views have not changed. “Right now, the port has the capacity for its development plan and current port operations,” he said. “However if we are looking to the future, we must create additional capacity for economic development and maritime opportunities — if we are to become truly competitive in the global marketplace.” John Baker, secretary-treasurer of Local 1317 of the International Longshoremen’s Association, has been a critic of the Port Authority’s lack of effort to attract new cargo business. Mr. Baker, whose union members make their living loading and unloading ships, believes the Port Authority’s shipping business has been neglected and the authority should concentrate first on building the cargo flow. “They’re not doing anything,” he said. “There is cargo out there” that should be coming to Cleveland.

Dredging up trouble Perhaps the biggest hurdle facing the Port Authority is deciding on a new dredge disposal site, an imperative regardless of whether it becomes the site of new docks, and finding a way to pay for it. The cost of dredging has long been covered in its entirety by the federal government. That will change when the current disposal site, near Burke Lakefront Airport, is filled and a new location is selected. A change in federal law will require the local community — not necessarily the Port Authority — to pay for 25% of the disposal cost of dredging work that will be done by the U.S. Army Corps of Engineers. When the Army Corps approved the plan to use the East 55th Street location as a 20-year disposal site, it estimated the cost to be at least $238 million. On an annual basis that is more than the Port Authority’s current operating budget. “It’s our role and responsibility to take the lead on behalf of the community,” Mr. Raskind said. “But it’s going to be a community effort to pay for it. “It’s probably a good bet it will turn out to be a combination of solutions ranging from user fees, possibly a tax levy or other possibilities (including state or federal funding).” ■

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. this Tuesday, April 13.

Volume 31, Number 15 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-

216.861.3810 www.clevelandfoundation.org

bined 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)9099111. REPRINT INFORMATION: 800-290-5460 Ext. 136

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Drive-through video screens allow banks flexibility in setup Perks include savings, improved customer service By ARIELLE KASS akass@crain.com

Customers who are drive-through banking savvy may be spotting something other than a teller window with an intercom system at some local branches. PNC, Key, Fifth Third and Huntington banks all are using video screens in some locations. The setups, which have the feel of computer webcams, eliminate the need for a window at the teller lines, let the banks put drive-throughs in locations they might not otherwise be able to and allow them to rearrange their branches’ interiors. Both Key and PNC said they have video tellers in their footprints, but could not give details as to how many branches had the technology, where they were or why those locations were chosen. U.S. Bank has one video teller, at a location in Minneapolis. The technology puts video screens next to the pneumatic tubes in which customers are used to seeing their cash come shooting down. Proponents of the technology say it is a more personable approach to drive-though banking, as the teller and the customer are better able to see each other due to the proximity of the screen. “You feel closer to the teller than if you’re looking 40 feet away at the window,” said Rob Soroka, Hunt-

ington’s senior vice president of retail and small business banking in Northeast Ohio. “If it wasn’t a better customer experience, I doubt this would have happened.” Indeed, Huntington has decided to put the technology into all its new branches. While it has no immediate plans for construction in Northeast Ohio, Mr. Soroka said there already are about a dozen video tellers in the Cleveland area; half are in new buildings and half were retrofit to equip branches that weren’t able to have drive-throughs in the past.

Solving a layout problem Kurt Raicevich, senior vice president and retail executive for Fifth Third in Northeastern Ohio, said the bank has 25 such video tellers across the footprint, including two in this area. But he said they are used primarily because of physical limitations at the buildings where they are found and are not something that would be broadly used at local branches. “I don’t know if it’s going to become the future,” he said. In both branches here, the technology has been in place for more than two years, Mr. Raicevich said. He said the decision was made to use the technology because the cost to renovate the buildings to add a traditional drive-through would have been significantly higher.

Cost savings is also a big part of the reason Huntington is interested in using Teller TV, as the bank calls it, more frequently. The equipment costs about $15,000, Mr. Soroka said, but can save the bank upwards of $150,000 in design costs per branch. That’s because the elimination of that drive-through window means that the same internal layout can be used from one branch to the next. There is no longer a need to redesign a space based on where a teller line would be. Mr. Soroka said the video tellers also allow for more flexibility both internally and externally. Drivethrough lanes now can be placed on any of the three sides of a building that don’t have the front door and in-branch break rooms and bathrooms can be placed behind the teller station. In the past, that was where the drive-through window was. This leads to a brighter, airier layout with more windows over the rest of the branch, Mr. Soroka said. The technology has been used in Huntington branches for nearly a decade, he said, but getting it into more branches has been a slow evolution as the technology has improved. “If it’s a sketchy picture, it’s not a good customer experience,” he said.

A conversation starter The newer branches have video tellers that show ads related to the bank or its products until a customer

Vicki Matthews, a team leader at a Huntington Bank branch in Avon, communicates with a customer. ARIELLE KASS

presses a button. Tellers, who still are located in each branch, are alerted to the fact that someone is in a drive-through lane either because they can hear a car approach, in the older lanes, or because a vehicle’s presence is announced, as in newer ones. Tellers can see a broad swath of the customer’s car, including the passenger seat, and have the ability to adjust a camera. Passengers see the teller’s face. Mr. Raicevich, at Fifth Third, said customers seem to enjoy the experience of the video tellers. “It’s very fun, it’s very interactive, it promotes a lot of conversation,” he said. “People ask, ‘Are you really in there?’ … It’s a pretty fun experience. Even (tellers) enjoy it.” Vicki Matthews, a teller and team leader at a Huntington branch in Avon, said at first, she didn’t think she would like the technology. She

soon changed her mind. “It seems to be easier to see people and talk to them,” she said. “It’s a more personal experience. They can see my face.” At normal windows, she said, the distance of the drive-through and the glare often prevented customers from knowing who they were talking to until they recognized her voice. Mr. Soroka said he could not think of any drawbacks to the system, calling the video tellers “another piece of technology improving people’s lives.” Both he and Mr. Raicevich said they had seen no technological problems with the equipment. “The customer has a much better view of you,” Mr. Soroka said. “The key is a better customer experience because they’re looking at that teller like you and I are sitting there talking.” ■

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Ohio Savings: Back and better New parent’s boss says former AmTrust has ability to hire, bring on more deposits

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By ARIELLE KASS akass@crain.com

>> WORK WITH POTENTIAL HIRES

Ohio Savings Bank is back, and Joseph Ficalora — chairman, president and CEO of its new parent company, New York Community Bancorp — said he expects it to be reborn better than ever. While some branches still may temporarily bear the AmTrust name, which was adopted in 2007 after the bank expanded into Arizona and Florida, the headquarters building in Cleveland again says Ohio Savings Bank, though now with an NYCB by its side. And Mr. Ficalora said because the bank had been downsizing for some time, it has the capacity to bring on more deposits and will hire the employees it needs to re-establish Ohio Savings. There are currently 60 job openings in the company, including 48 in Ohio. Some of that hiring already has taken place, with 43 new branch employees brought on since New York Community Bank took over AmTrust in a Dec. 4 transaction assisted by the Federal Deposit Insurance Corp. Mr. Ficalora said the bank already has seen an increase in deposits since the acquisition. Travis Lan, an associate analyst with Stifel Nicolaus & Co. in New Jersey, said he was not surprised to learn that deposits had grown after seeing a 97% retention rate following NYCB’s entrance into the market. He called the change to the Ohio Savings name a good thing, as did several other analysts. But Mr. Lan said of AmTrust Bank’s footprint, Ohio would likely be the last priority, behind Arizona and Florida. He did note, though, that he already has seen more interest in Ohio than what he and other analysts might have expected. Already, NYCB has added another six branches to its Arizona footprint with the March 26 acquisition of Desert Hills Bank in Phoenix.

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Mr. Ficalora spelled out plans for bringing Ohio Savings back to the deposit capacity it had in the past,

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when it was one of the top five banks by market share in the region, with a market share of more than 7%. By 2009, it had fallen to seventh and 4.43% of all deposits in the area. He said he plans to expand the bank’s hours and is looking at the possibility of adding in-store banking to some area grocery stores. Those kinds of moves could help put it on the radar of people who are reconsidering their banking options in the midst of a tumultuous market. “Those kinds of things are coming,” he said. “The bank is poised to improve its services, its hours and its systems. When you have massive change in any market, people rethink their choices.” Mr. Ficalora said the bank never plans the size of its franchise in a particular area and has no plans to build new branches, but would consider adding to the local footprint if the opportunity arose. He said while NYCB bid on a number of FDIC-assisted transactions before winning AmTrust, its first, this bank is the one it had set its sights on early. “We believe this deal is the best deal,” he said, noting that NYCB bid more aggressively for AmTrust than it had for other banks. He said he was aware of how long the bank had been downsizing and the opportunities that were present as a result of that. Mr. Ficalora also said NYCB’s systems operations outside of the metropolitan New York area will be in Ohio. While there are no new jobs related to that, he said the systems are being upgraded and all of NYCB’s customer service will be taken care of in this area as well. The systems operations capacity would include disaster recovery, which now is being done in New York, one county over from NYCB’s Westbury headquarters. As the bank makes more acquisitions outside of New York, their operations will continue to be handled out of Cleveland.

Mixed reviews Charlie Crowley, managing director of investment banking in Cleveland

“(New York Community Bank is) a strong, profitable bank that has been acquisitive over the years.” – Charlie Crowley, managing director of investment banking in Cleveland, Stifel Nicolaus & Co. for Stifel Nicolaus & Co., called the news “terrific.” “It’s very good news for the community,” he said. “They are a strong, profitable bank that has been acquisitive over the years. … They’re certainly in a position to consider some other transactions.” He said the lower cost of employment and office space likely made having some of those jobs in Cleveland a good financial choice for the company. And added growth could lead to more operations support jobs at the bank. But Gerard Cassidy, managing director of bank equity research at RBC Capital Markets in Maine, called the decisions — including the change to Ohio Savings, which he praised — the equivalent of putting a new coat of paint on a dilapidated building. “They have to give it a lot of tender loving care to get it growing again,” he said. “As long as the economy is growing, they should have some success. If the economy continues to stumble, to continue to grow deposits will be more challenging” if people need to move away to find jobs. He said, though, that NYCB’s focus on community banking could pay dividends as the bank continues to look for ways to increase deposits in this area. “They have a good shot at improving,” he said. Mr. Cassidy called the potential for expansion of NYCB’s footprint a real plus for the Cleveland area. Mr. Ficalora also said he intends to continue the AmTrust Mortgage Co., and thus far has. He is looking at how the bank’s signature loan program, multifamily mortgage loans, may work in this area. He said even though NYCB sought out AmTrust specifically, he’s been more than satisfied with how things are going thus far. “It’s been very positive,” he said. “It’s pleasantly better than I expected.” ■

Companies rethink suspended 401(k) matches By JERRY GEISEL Business Insurance

Brian Conroy Sr. V. President

APRIL 12-18, 2010

Amid signs of an economic recovery, many employers that suspended or reduced their 401(k) matching contributions are rethinking those moves. A survey released last week by Boston-based mutual fund provider and 401(k) plan administrator Fidelity Investments found that 44% of employers that suspended their matching contributions last year either have reinstated or intend to reinstate the match during the next 12 months. “As the economy begins to improve, employers large and small are bringing back their 401(k) matching programs,” said James M. MacDonald, president of Fidelity unit Workplace Investing, in a statement.

The likelihood of employers reinstating matching contributions, though, varies significantly by company size. For example, among employers with at least 5,000 employees, 70% either have restored or intend to restore the match within the next 12 months, nearly double the 36% of employers with 500 or fewer employees that either have restored matching contributions or plan to do so. The results are based on a survey this month of 293 Fidelity clients that suspended or reduced their 401(k) matching contributions last year. Last week, for example, defense and aerospace company GenCorp Inc. said it is reinstating its 401(k) plan matching contribution, the latest in a growing number of employers that have done so or will be doing the same.

In a Securities and Exchange Commission filing last week, Rancho Cordova, Calif.-based GenCorp said it will restore its 401(k) plan match for nonunion employees at the same rate prior to its Jan. 15, 2009, suspension. The match will be restored in July. Prior to the suspension, GenCorp matched 100% of employees’ salary deferrals up to the first 3% of pay and 50% of deferrals on the next 3% of pay. However, GenCorp now will make matching contributions in cash. It had matched contributions with company stock, which a GenCorp spokeswoman previously said was diluting the stock’s value. ■ Jerry Geisel is editor-at-large at Business Insurance, a sister publication of Crain’s Cleveland Business.

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BRIGHT SPOTS Bright Spots is an occasional feature in Crainâ&#x20AC;&#x2122;s. To submit information, e-mail managing editor Scott Suttell at SSuttell@crain.com. â&#x2013; TES Engineering, a mechanical, electrical and plumbing engineering consulting firm in Westlake, said it was awarded a $130,000 contract by Cleveland Public Power to perform energy audits for selected non-residential customers in a new program designed to reduce electricity usage. The one-year contract will provide the audits for about 26 commercial properties. The properties Cleveland Public Power is including in the audit have higher-than-average power usage. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re proud to be part of this major step by CPP to foster energy conservation,â&#x20AC;? said Lawrence M. Thomas, president of TES. â&#x2013; Excite IT Partners LLC, a provider of information technology staffing services, has opened an Independence office at 6100 Rockside Woods Blvd., Suite 435. â&#x20AC;&#x153;We are pleased to offer employers throughout Northeast Ohio a highly responsive, cost-effective means of attracting well-qualified information technology professionals,â&#x20AC;? said Stephen Putt, who heads the Independence office. Excite IT Partners, which is based in Towson, Md., offers information technology staff on a temporary, temp-to-perm and permanent placement basis. â&#x2013; Insivia, a strategic marketing agency in Cleveland, reports that it has gained several new clients and has expanded its staff and services. Among the new clients are Positively Cleveland and the Cleveland Clinicâ&#x20AC;&#x2122;s Global Cardiovascular Innovation Center Incubator Program. Chris Schmitt, chief strategist for the company, said new services at the firm go beyond traditional marketing and include online video, social media and mobile application development. Clients that recently took advantage of those services are the Cleveland Clinic, Microsoft, and the Greater Cleveland Sports Hall of Fame. The company expanded its staff to nine employees from five in the last half of 2009. Insivia plans to hire three more full-time staff before the summer begins. â&#x2013; â&#x20AC;&#x153;And the Winner Isâ&#x20AC;Ś,â&#x20AC;? a locally produced feature film from Cleveland natives Christina Grozik and Paul Shaia that was shot around Ohio and stars regional actors â&#x20AC;&#x201D; plus Jerry Springer! â&#x20AC;&#x201D; has secured a national DVD release. The filmâ&#x20AC;&#x2122;s distribution deal is with Anthem Pictures, based in Los Angeles. The distributor will release the DVD in the United States and Canada on April 20. Netflix has announced it will offer the DVD to subscribers, also on April 20. The feature-length â&#x20AC;&#x153;And the Winner Isâ&#x20AC;Śâ&#x20AC;? was shot in eight Ohio towns, including Cleveland, Avon and Elyria. The filmmakers say more than 75 Ohio actors and crew members worked on the film. â&#x20AC;&#x153;And The Winner Isâ&#x20AC;Śâ&#x20AC;? dramatizes a small townâ&#x20AC;&#x2122;s decision to elect its next mayor through a beauty pageant-style event.

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Bay nature center aims to boost endowment, expand $8M fundraising goal would allow facility to add to its popular programs By SHANNON MORTLAND smortland@crain.com

Nestled in the Cleveland Metroparks in Bay Village, the Lake Erie Nature & Science Center is hoping to boost its presence and programs to attract more visitors. The 60-year-old center, which is not owned by the Metroparks, is in the quiet phase of an $8 million fundraising campaign that aims to triple its $2 million endowment to $6 million and raise $4 million for capital improvements, said Catherine Timko, who became executive director of the center in January.

She previously was the division development director for the Trust for Public Land, a nonprofit that helps preserve land for public use and conservation. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m not eager to make a lot of changes to our programs because people love them,â&#x20AC;? she said. â&#x20AC;&#x153;Some of (the campaign goals) would be expanding what we already do.â&#x20AC;? The center has free admission and provides more than 100 nature and science programs for people of all ages, though the preschool programs are most popular because children can touch the animals while learning about them, Ms.

Timko said. The plan is to expand the existing 22,000-square-foot center by 20%, or 4,400 square feet, to add classroom space for more programs, she said. The center already has raised $3.2 million, but ground will not be broken until fundraising is complete, she said. Though the current programs are popular with the centerâ&#x20AC;&#x2122;s 180,000 annual visitors, Ms. Timko said she is talking to the public to determine what programming they would like in the future. The list is never ending, but she said she would like to create more programs to teach people

about Lake Erie, which is within walking distance of the center. She is working with the Ohio State University Extension office located at the center to create these programs under the Ohio Sea Grant College Program, which is a federal program that is run by OSU Extension. Tory Gabriel, the fisheries program coordinator and director of the Ohio Sea Grant program for the OSU Extension office, said he already teaches children about Lake Erie but he will help Ms. Timko develop programming to teach adults about the lake. â&#x20AC;&#x153;We want to get people hands-on and interested and make them understand that the lake is important to them,â&#x20AC;? he said. â&#x20AC;&#x153;A lot of people donâ&#x20AC;&#x2122;t understand why yet.â&#x20AC;? â&#x2013;

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Workplace medical clinics gain popularity By JEREMY SMERD Workforce Management

Last fall in New York, as employers sought to inoculate workers against swine flu, employees of Bloomberg, Random House and Sony Corp. who were at risk simply could walk down the hall, roll their sleeves up and get a shot. While these companies each had a medical clinic in the workplace, they also shared a common health clinic provider: Take Care Health Systems, a subsidiary of Deerfield, Ill.-based Walgreens. According to records from the New York City Department of Health and Mental Hygiene, nearly 50 employerbased medical clinics received the swine flu vaccine from the city. Take Care operated at least 20 of those clinics at employers that included Morgan Stanley, Goldman Sachs and the state-run Metro North Railroad. The wide presence of Take Care’s clinics among employers in New York shows how Walgreens has aggressively tapped into the growing market for work-site medical clinics as part of its effort to rebrand itself as a health and wellness company. In 2007, Walgreens bought Take Care Health Systems, then a retail-

based clinic, and the next year acquired two of the largest worksite clinic companies in the country, CHD Meridian Healthcare and Whole Health Management. Today, Walgreens is the largest provider of work-site medical care, with more than 375 Take Care Health clinics. Analysts say the move makes sense. Walgreens can steer employers to its mail-order pharmacy, while patients can access its chain of 7,000 retail drugstores. More than 350 Walgreens stores contain a Take Care Health retail clinic that offers care for minor medical conditions such as earaches, sinus problems and the flu. Walgreens further solidified its New York presence in February by acquiring the city’s largest drugstore chain in a $1.075 billion deal that will expand the network of pharmacies available to clients of Take Care clinics. There are 257 Duane Reade pharmacies in the city, compared with 70 Walgreens in the entire metropolitan area. Walgreens rival CVS Caremark has not followed Walgreens into the work-site medical clinic market, focusing instead on retail clinics. Several years ago, pharmacies embraced retail clinics over work-site

clinics with the thinking that as more employers used high-deductible health plans, more employees would be interested in low-cost alternatives for basic health care such as flu shots. But growth in retail clinics has stagnated. MinuteClinic closed 122 clinics last year, says Tom Charland, CEO of Merchant Medicine, in Shoreview, Minn., which tracks the industry. The percentage of employers providing on-site health clinics, meanwhile, increased tenfold from 1% in 2008 to 10% in 2009. Now, CVS says it plans to change its approach to work-site wellness. “Our main focus in the past has been on retail, but we are interested in corporate opportunities that are a good fit for our model of providing excellent, convenient and low-cost care,” said Andrew Sussman, president of MinuteClinic and senior vice president/associate chief medical officer of CVS Caremark, in an e-mail interview. Clinics make good business sense for diversified health care companies, says Brian Klepper, a health care analyst based in Atlantic Beach, Florida, and an adviser to WeCareTLC, an on-site clinic firm based in Lake Mary, Fla. ■

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APRIL 12-18, 2010

States face trouble as pension funds threaten coffers By BARRY B. BURR Pensions & Investments

State pension funds in Oklahoma and Louisiana could face a “day of reckoning” in 2017, when they run out of assets and have to rely on state general revenues to pay pension benefits, new research shows. Illinois, New Jersey and Connecticut could follow in 2018. California could completely deplete its pension assets in 2026 and Texas in 2029. In fact, no state system would be sustainable beyond 2042, according to an article by Joshua R. Rauh, an associate professor of finance, Kellogg School of Management at Northwestern University. The best-positioned state in Mr. Rauh’s rankings is Utah, whose pension assets wouldn’t be all gone until 2042. Utah is followed by Delaware, 2040; South Dakota, 2035; New York, 2034; North Dakota, 2034; and Florida, 2033. Mr. Rauh combined the pension systems in each state to arrive at his conclusions. (His research excluded North Carolina because of a lack of data.) He assumed the states would earn 8% on their investments and contribute to their pension plans the present value of any newly accrued benefits. In addition, he discounted the system’s pension liabilities by the risk-free Treasury rate, an approach that raises total liabilities, instead of applying the common public-plan actuarial practice of using the expected rate of investment return. States could face a catastrophic shock to their revenue needs by having to move to a pay-as-you-go system when their retirement systems run out of pension assets, Mr. Rauh wrote. Once their pension funds run out, the retirement system generally would have to draw a large proportion of state general revenue every year, based on 2008 tax revenue. Among the worst, if Ohio’s pension funds run dry in 2023, it will face $19.1 billion of benefit payments just in 2024, money that would come out of state general revenue, Mr. Rauh wrote. That amounts to more than 72% of the $26.4 billion in tax revenue collected in 2008. For Illinois, having to pay $14.5 billion in pension benefits out of general revenue in 2019 would amount to 46% of $31.9 billion in 2008 tax revenue. For Louisiana, the corresponding figure is a smaller but still worrisome 28% for 2018, he wrote.

Just to pay the pension benefits for only the first year after the pension fund is depleted, Oklahoma in 2018 would have to have $2.6 billion from the state’s general revenue, which would amount to an estimated 31% of the state’s 2008 tax revenue, Mr. Rauh wrote. Colorado would have to draw $5.6 billion from state general revenue, equivalent to 59% of the state’s 2008 tax revenue, in 2022, the first year after it runs out of pension assets.

No transfers Mr. Rauh, in response to a question, said he realizes even if a state has more than one retirement system, the “assets of one fund cannot be used to pay liabilities of another. But if fund 1 is about to run out and fund 2 has another couple years, it seems likely that the state will just throw all its contributions at fund 1 in those final years.” “If we are going to keep providing generous pensions to state workers, taxes will have to rise dramatically in the near future to pay for them,” Mr. Rauh wrote in the article. “Alternatively, public employee benefits could be limited to the extent possible under the law, and other spending could be cut. The most equitable solution is probably one in which both taxpayers and public employees share in the pain to some extent. One thing is for certain: to continue ignoring the problem until states run bankrupt is not in anyone’s interest.” Keith Brainard, the research director of the National Association of State Retirement Administrators, who is based in Georgetown, Texas, said in response to the study: “His calculation is a bit alarmist.” Mr. Rauh’s use of the Treasury rate to discount liabilities “isn’t in conformance with the (Government Accounting Standards Board) and actuarial practice,” Mr. Brainard said. His method raises significantly the liabilities and “has the effect of speeding up the demise,” Mr. Brainard added. “I think he is being overly bearish with regard to the calculation of liabilities.” Some public retirement systems have problems, Mr. Brainard acknowledged. “A number of plans need to make adjustments to either their benefits or their financial arrangements in order to restore their sustainability,” he said, noting Virginia, Utah, New Jersey, Illinois, Alabama and Colorado have done so or are considering doing so. ■

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MANUFACTURERS, LENDERS WORKING IT OUT Manufacturing industry observers say lenders these days are more willing to modify loan terms. ■ Reasons: Lenders don’t want to be strapped with a manufacturer’s plant or equipment, which are risky assets to hold in today’s market because they are hard to sell. ■ The time is now: Now is when more banks are being hit with requests to renegotiate because companies operating on a calendar

year have 90 days to turn in yearend financial statements. ■ Lenders still holding their own: Financial institutions don’t want to issue more loans or extend lines of credit with current or new customers. ■ Quotable: “They’ll say, ‘Let’s reduce our future exposure by cutting off the debt.’” — Ken Latz, turnaround consultant, Conway MacKenzie Inc.

Loans: Banks uneasy about extending credit continued from PAGE 1

“For them, it’s the lesser of two evils to negotiate,” said Ms. Robertson, who noted that most manufacturing assets are “essentially illiquid.” Ken Latz, a turnaround consultant with Michigan-based Conway MacKenzie Inc., agrees. Mr. Latz came to Cleveland at the end of last year to establish a local presence for his firm, which has about 70 other professionals working on turnaround situations, mostly at automotive-related companies. Mr. Latz often is brought in by a lender trying to make the most of a troubled loan in order to provide help to a manufacturer struggling to make payments. A turnaround of the bank’s client could mean that the client either becomes profitable with new terms on its loan or is acquired. The last outcome the bank wants to see, Mr. Latz said, is a repossession and subsequent sale of the client company’s assets at a loss in today’s environment. Many times, Mr. Latz said, he is hired by a company because its lender has stipulated that he or some other turnaround expert be brought in, both to help the company’s management and to keep the bank abreast of the company’s ongoing situation. Banks are trying to be flexible, but also want to watch the situation closely. “They’re not foreclosing on companies as much as you might think, given the perceived distress” of the economy and financial markets, Mr. Latz said. “They’re looking at the liquidation recoveries in this market and seeing how bad they are.”

The time is right Now, early in the year, is a time when many banks are being hit with requests to renegotiate — or when they find out the true condition of a troubled borrower. That’s because companies operating on a calendar year have 90 days to turn in yearend financial statements to their lenders, said William Beaufait, a shareholder at the Cleveland accounting firm Maloney + Novotny who specializes in working with manufacturing firms. “Many companies are working with their banks to restructure their loans, which would include changing loan amortizations, discounting, changing or adding collateral and/or guarantees,” Mr. Beaufait said in e-mail correspondence on the issue. “Waivers of loan covenant violations are at an all-time high,” he added, because banks don’t want to take over businesses they don’t know how to run, nor do they want to try to sell them in a market where

there is no demand and little financing to buy them. But it’s not all good news for distressed borrowers. While banks don’t want to take on assets they can’t sell, they also don’t want to make more loans upon which they won’t collect — and that includes not only loans to new customers, but existing lines of credit with the customers they already have, Mr. Latz said. “They’ll say, ‘Let’s reduce our future exposure by cutting off the debt,’” he said. That response puts many borrowers in a bind, Mr. Latz said, because they often rely on lines of credit to buy inventory, or even to make payroll. But banks, already saddled with bad loans, do not want to throw good money after bad by investing in a company that can only make payroll by borrowing more money, say those working with both borrowers and lenders alike. Representatives of Cleveland’s two largest lenders, KeyBank and PNC Bank, both declined to discuss the matter but said they treat each borrower as a separate case.

Keep it quiet Some who work on behalf of manufacturers said they see the phenomenon as well, including Daniel Berry, CEO of the Cleveland manufacturing advocacy group, Magnet. It’s no surprise to him, though, that banks aren’t advertising their leniency. “After talking with some bankers who are active in lending to manufacturers, it does appear that some banks are exercising a bit of flexibility in how they are dealing with their current troubled loans,” Mr. Berry said in an e-mail discussion. “However,” he added, “this is not something that is going to be widely advertised.” Mr. Berry also echoed the banks’ view that each loan is considered individually. “In the event the quality of a loan to a manufacturer begins to deteriorate, a specific workout plan is developed and an analysis of collateral would be conducted as part of the process,” Mr. Berry wrote. “In the case of manufacturing equipment, an outside appraisal would typically be ordered based on an ‘orderly liquidation’ value.” From that point on, Mr. Berry and others say, banks are working to minimize their losses on each loan. That still may mean a foreclosure and sale of assets — but the attractiveness of that option is minimized when sale prices for those assets are low. ■

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APRIL 12-18, 2010

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Priority 1

oters often say they want lawmakers of the two major political parties to work more closely together to produce sensible legislation that improves the quality of their lives. That seemingly simple goal often proves exceedingly difficult to achieve, so we should applaud any effort where bipartisan cooperation leads to good policy. Issue 1, the statewide measure on the May 4 primary ballot that will renew the Ohio Third Frontier technology-focused economic development program, is just such an effort, and it deserves voter support. The current funding mechanism for the Third Frontier, which voters approved in 2005, expires in 2012. Passage of Issue 1 will authorize $700 million in bonds to extend funding through at least 2016. The extension is critical if Ohio is to continue its momentum in building an economy that looks to the state’s future rather than its past. The Third Frontier program has done an exceptionally good job at its primary goal: making targeted state investments in promising technologies, research and entrepreneurs. Northeast Ohio, in particular, has benefited from the program because of the strength of this region’s biotech, health care and higher education sectors, as well as the efforts of groups such as BioEnterprise Inc. and NorTech. Since its inception, the Third Frontier has helped launch nearly 600 new companies. It helped create 55,000 jobs as of Dec. 31, 2009, according to Ohio Third Frontier Commission statistics that are based on a formula created by consulting firm SRI International of Menlo Park, Calif. Despite the awful economy of the last couple years, Third Frontieraided ventures are holding up well; the SRI formula indicated the program had helped to create 41,000 jobs as of December 2008. Those are numbers that Democrats and Republicans can agree look very good in our growth-hungry state. Indeed, the Third Frontier — the most significant positive legacy of former Gov. Bob Taft, a Republican — today enjoys the support of current Gov. Ted Strickland and his Republican challenger, John Kasich. Vast majorities of Democrats and Republicans in the Ohio General Assembly support it, too, as do most agricultural, business, labor and higher education organizations. Given that level of political support and the evidence of results from the Third Frontier, it’s tempting to think Issue 1 is a slam dunk. Don’t fall into that trap. In 2005, the Third Frontier program passed by only a 53% to 47% margin. When the campaign to support Issue 1 kicked off in February, officials cited an Ohio Business Roundtable survey conducted in summer 2009 that found only 16% of voters were familiar with the program. We hope the campaign conducted so far this year emphasizing Third Frontier-aided job gains has raised awareness of Issue 1, but many citizens likely will enter the voting booth with little knowledge of the program’s success. We encourage members of the business community to use the three weeks that remain until the election to talk up Issue 1 to their friends, co-workers and business partners. Our economic future will look significantly better with its passage.

FROM THE PUBLISHER

It’s about time to hit NE Ohio links

meant to him and his pals that golf he weekend has passed, the season was upon them. green jacket has been slipped And so it seems here in Northeast onto a worthy golfer’s shoulders Ohio, when you’re as apt to have a fire in (presumably) and the golf season the fireplace as sun on the links when — in the minds of us Northerners — now you’re watching the Masters. But regardcan begin in earnest. less, that telecast always stirs the senses, I say “presumably” because I wrote and perhaps even more so this year with this as the Masters golf tournament just the Tiger Woods drama. began. I had no idea who would The world’s best golfer, win, how Tiger would do, or BRIAN who’s chasing a son of Ohio to whether nature will cooperate TUCKER become the sport’s most decoand the event will crown its rated champion, chose the champion on schedule. But I do genteel grounds of the Augusta know that warmer temperaNational Golf Club and its tures are on their way and the revered invitational tournaweekend warriors will be ment as his first competition champing at the bit to hit their after six months away and a favorite course (despite whatever life-altering string of adultery mud, bumpy greens or chilly claims followed by a stretch in temps get in the way). rehab. I listened as Padraig Harrington, the What has happened since Tiger’s reigning best Irish golfer, explained to a fateful Thanksgiving night car accident television interviewer how he felt about has captivated the golf world and conthe Masters as he was growing up, and it sumed the more salacious media outlets. was very familiar. He said that watching His appearance at a televised news conthe Masters, which was one of the few ference to apologize to his family and fans golf tournaments they could depend on drew the world’s attention, only to be seeing on Irish television in the 1980s,

trumped by a far more forthright, candid appearance last week in the press room at the Masters. And then along came the starkly filmed, dramatic Nike commercial that showed Tiger staring into the camera as the words of his late father spoke of the need to learn from life’s challenges. Contrast that with the televised, eloquent statements from Masters chairman Billy Payne about Tiger’s actions and potential for the future. It was a whirlwind, and it stirred up nearly as many opinions as there are golf fans out there. As I drove to the office Thursday morning, I was intrigued by a caller to a satellite radio talk show who said he and his wife watched the Nike commercial for the first time the night before. He said that after the short spot ended, his wife hesitated and then said, “He’s making some good lemonade.” If Tiger finishes in the top 10, it will only add to his legacy as a golfer. Seeing him sign a few autographs and interacting with the crowds a bit more was a heartening first step. I hope that doesn’t disappear when he regains his dominance on the golf course. ■

AND COUNTING ... What was your favorite movie or TV show filmed or set in Cleveland during the last 30 years?

Crain’s Cleveland Business is celebrating its 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.

ROCHELLE THORNTON

ROSANNE UDIVICH

MICHELLE MANDATO

Cleveland

Seven Hills

Cleveland

“Antoine Fisher.” That movie was just great. In the end, he turned that person all the way around.

“The Deer Hunter.” It was a good movie.

“A Christmas Story.”

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Tech: Renewal may bring Ohio national benefits continued from PAGE 3

money into high-tech research in 1982, when it founded the Ben Franklin Technology Partnership. The collaboration, which consists of four regional organizations that assist and invest in startups, helped inspire the design of the Third Frontier’s Entrepreneurial Signature Program, which funds similar groups throughout the state. Both Ohio and Pennsylvania have other technology programs that put money into investment funds that commit to financing companies in their respective states as well as programs that help universities develop and commercialize new technologies. They aren’t so similar, however, when it comes to how they are funded, said NorTech president Rebecca Bagley, who used to serve as deputy secretary for Pennsylvania’s Technology Investment Office. Pennsylvania’s program gets all of its money from the state’s general fund budget. That has hurt the program in recent years, Ms. Bagley noted, as tight budgets have pushed Pennsylvania legislators to cut the Technology Investment Office’s budget to about $35 million in fiscal year 2010, down from $80 million in fiscal 2009. Though budget cuts in Ohio reduced the overall size of the 10year Third Frontier program to about $1.4 billion from $1.6 billion, the program was buoyed by a $500 million bond issue voters passed in 2005. If voters approve the $700 million renewal this May, the program would be able to continue investing about $140 million per year for the next five years, allowing Ohio to fill the void as other states cut their programs, Ms. Bagley said. “We could really catapult ourselves into a leadership position,” she said. But the funding could disappear if Ohio voters, who according to polls know little about the Third Frontier program, reject the bond issue. By contrast, Pennsylvania’s programs have always gotten some level of state support, said John Sider, who replaced Ms. Bagley as deputy secretary in July 2009. “We’ve not had to over and over again make a case for why these things should exist,” he said.

And to our north … Michigan increased its focus on technology-based economic development 10 years ago, but it turned up the volume in 2006 when it formed the 21st Century Jobs Fund. The initiative was designed to invest $2 billion into Michigan’s technology economy over 10 years. That dollar figure is bigger than the amount the Third Frontier is investing, but Ohio shouldn’t be too worried about getting left in the dust. For one, the $2 billion figure includes a few programs that are comparable to Ohio programs that fall outside of the Third Frontier’s umbrella, such as a state tax credit to promote investments in high-tech companies. Plus, the state hasn’t been giving the fund as much money as originally promised, said Ned Staebler, vice president of capital access and business acceleration with the Michigan Economic Development Corp. Like the Third Frontier, the 21st Century Jobs Fund invests in university research and product commercialization. However, instead of just giving grants, the Michigan fund uses some of its money to make investments in companies or investment firms that

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Tight state budgets attack technology ■ In Ohio … The state legislature cut annual general revenue funding for the Third Frontier from $17 million to about $3.5 million when it approved its biennial budget last summer. On top of that, it cut roughly $130 million that the program was supposed to get for the state’s settlement with the major tobacco companies. However, the program still has money from both the $500 million bond issue passed in 2005 as well as the Wright Capital Fund, which is financed by the state’s capital appropriations bill. Those funding sources will allow the Third Frontier program to invest at least $144 million in fiscal years 2010 and 2011, though the 2011 figure could drop if the state cuts funding in its capital appropriations bill. ■ In other states … Pennsylvania’s allocations to its

target technology companies. Taking equity allows the state to get a monetary payback in addition to creating jobs, Mr. Staebler said. Being able to show that a program made money also makes justifying its existence easier, he added. It’s still too early to say if the investments will be profitable, but a previous state program that invested $11 million in six private investment funds already has paid for itself and should make another $12 million at least, Mr. Staebler said. “When you’re dealing with forprofit companies, I think it’s better to make investments than grants,” he said. Even so, Mr. Staebler said he is a fan of the Third Frontier, as are others who run tech economic development programs in other states. “I certainly have heard people from other places speak highly of the program,” he said.

Technology Investment Office fell from $80 million in fiscal year 2009 to $43 million in fiscal 2010, which includes $13 million of the $40 million the office will receive from $650 million in bonds the state issued in 2008 for a larger energy program. Michigan originally planned to use $1 billion in tobacco settlement money to cover half the cost of its $2 billion 21st Century Jobs Fund initiative. The state used it to pay for a total of $400 million in technology investments during 2006 and 2007, but since then the state has not lived up to promises to provide $75 million annually from the settlement fund. Those allocations totaled $53 million in 2009 and $28.5 million in 2010. Georgia’s allocations to the Georgia Research Alliance fell from about $30 million annually to about $20 million for fiscal 2011.

of time. He noted that Ohio formed its Thomas Edison Program to provide product commercialization services to various high-tech industries back in the 1980s. To illustrate the benefits of sustained investing, Mr. Sider, of Pennsylvania’s technology office, pointed to oral fluid collection device maker OraSure Technologies of Bethlehem, Penn. The company went public in 2000 and employs nearly 300. Plus, its founder used the money he made for a new venture capital fund. “Right now we’re starting to see the self-sustaining activity that was starting in the mid ’80s or early ’90s,” he said. ■

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A different approach Of the three programs profiled here, the Georgia Research Alliance probably has the least in common with the Third Frontier. Though the Third Frontier includes the Ohio Research Scholars Program and other university-focused initiatives, Georgia’s program started 20 years ago specifically to recruit university scientists who conduct research in areas with commercial potential. Since then, however, it has put more money toward entrepreneurial projects, just as Ohio and Michigan have in recent years, said alliance CEO Mike Cassidy. The alliance in 2002 formed an organization called VentureLab that has provided 165 grants and loans to universities and companies developing marketable technologies, and in January 2008 it formed GRA Venture Fund LLC, which has raised $20 million that will be used to invest in companies created through VentureLab grants. A clear need drove the alliance to create the venture fund in the face of budget cuts, Mr. Cassidy said. He described how a huge increase in university invention disclosures in the 1990s didn’t translate into an increase in new companies. Though different, Ohio’s technology programs share one important similarity with Georgia’s, according to Mr. Cassidy: They both are making steady investments over a long period

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APRIL 12-18, 2010

Auto execs shy about yearlong numbers Incentives, fleet sales have led to respectable early numbers, but they may not be sustainable

“It’s not a great recovery. It’s a ‘blah’ sort of recovery.”

By DAVE GUILFORD Automotive News

– Nariman Behravesh, economist, IHS Global Insight

NEW YORK — Perhaps it was the near-biblical rains that pummeled New York auto show press days, but industry executives here were reluctant to predict a significant sales revival this year. That was before March sales came in at a seasonally adjusted annual rate of 11.7 million. Sales for the month finished a respectable 24% above last year’s anemic totals but were a bit below analysts’ expectations. Ernst Lieb, CEO of MercedesBenz USA, had one of the rosiest assessments. “Last year the stars were out of sync,” Mr. Lieb told Automotive News, a sister publication of Crain’s Cleveland Business. “It seems things are getting more aligned.” U.S. light-vehicle sales in 2009 plummeted to 10.4 million. Most forecasts for this year call for an increase. J.D. Power and Associates recently raised its forecast to 11.7 million units, while General Motors Co. has predicted sales of 11.2

million to 11.7 million. Mercedes has shed the excess inventory it had a year ago, Mr. Lieb said. “Our dealer network is healthier, mainly because there has been a reduction in expenses, and we are spending significantly less on incentives,” Mr. Lieb said. “There is a strength in the market, which allows us to pull back (on incentives), and we’re more healthy.” Mr. Lieb’s archrival, BMW of North America CEO Jim O’Donnell, was less cheery, terming the recovery “very mild.” He said January and February sales were disappointing, adding that housing and commercial real estate remain problems. BMW sees the total market up 10% this year, Mr. O’Donnell said, “unless Toyota goes very wild with incentives. If you spend money, sometimes you get results.” Several other executives said incentives remain a key variable after Toyota’s push to rebound from its recall crisis. John Krafcik, CEO of Hyundai Motor America, said high fleet sales and, especially, high incentives have propped up sales.

“That has really inflated the retail market,” Mr. Krafcik said. “A question, I think, a lot of us are asking is: Is that a sustainable retail pace for the rest of the year? Personally, I don’t think so.” Most executives said their companies would prefer to avoid high incentives, particularly after last year’s drastic production cuts. Fred Diaz, CEO of Chrysler’s Ram brand, said Chrysler Group has no intention of reverting to past ways of overproducing, then piling on incentives. “We’re a disciplined organization that will not go back to that, and we did not waver one bit,” Mr. Diaz said. But that resolve will be tested if, as several observers predict, the industry and the overall economy face a slow climb out of the depths of 2009. Economist Nariman Behravesh of IHS Global Insight predicts sluggish growth for the economy. “It’s not a great recovery,” the economist said. “It’s a ‘blah’ sort of recovery.” ■

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Delinquency: Only time will heal lending market continued from PAGE 3

and Akron markets may seem encouraging, said Matthew Anderson, Foresight Analytics managing director. But, as Mr. Anderson noted, “It doesn’t mean the (delinquency) problem has gone away.

“It just means it’s someone else’s problem,” Mr. Anderson said. “It’s still a defaulted mortgage. It’s just on someone else’s balance sheet or has been written down to whatever the bank received for it.” Foresight bases the report on federal regulators’ reports of calls to banks on the status of loans and covers loans more than 90 days past due. Among the 100 largest metro areas Foresight tracks, the commercial mortgage delinquency rate as of Dec. 31 in Jacksonville, Fla., topped the nation at 8.5% followed by Charlotte, N.C., at 7.4% The Cleveland MSA ranks 27th nationally and Akron’s ranked 63rd in terms of delinquency percentages. Carl Dyczek, a lawyer at Walter & Haverfield LLP in Cleveland who frequently represents lenders in real estate matters, said banks “had to really write down a lot of loans” for delinquency rates to drop so much so quickly. At the same time, Mr. Dyczek said, he is seeing the filing of more foreclosures on commercial and residential properties as “banks try to preserve asset values, although there are lots of absolute bottom fishers out there” waiting for troubled properties to become available. Andrew Randall, the Clevelandbased Ohio president of TriState

Capital Bank, said improvement in the commercial lending market only will come with time and a recovery in the economy. “Delinquency rates are a funny thing,” Mr. Randall said. “A bank might find a loan delinquent because a building has lost value; an appraisal done in 2005 is less than one done in 2009 in the recession. No one expects values to come rocketing back. In our own portfolio, we are seeing stability.” There even are signs of a slight easing in the availability of bank credit. Mr. Randall said his bank recently had a prospective customer come back with a loan offer from a competitor who had been out of the commercial property market. Likewise, Mr. Dyczek said he recently completed legal work on a new commercial loan a bank was issuing to rehabilitate a building. “It’s the first new loan I’ve worked on in six months,” he said. However, Foresight’s Mr. Anderson said even with improved delinquency rates here it is too soon to look for a big resumption in lending, especially with delinquency rates still high and worsening nationwide. “We won’t see new lending until joblessness goes down and the economy recovers,” Mr. Anderson said. ■

UP AND DOWN Data compiled by Foresight Analytics show the commercial loan delinquency rate in Akron and Cleveland still are well above fourth-quarter numbers from prior years.

Metro area 2009

2008

2007

2006

2005

4.5%

2.6

1.6

1.5

1.3

Cincinnati

5.8

2.7

1.9

1.6

1.4

Cleveland

5.7

3.5

2.2

1.6

1.3

Columbus

5.6

3.0

2.6

1.5

1.3

Detroit

5.5

2.9

1.7

1.5

1.0

Pittsburgh

6.6

3.4

2.3

1.7

U.S. total

5.1

2.7

1.6

1.1

Akron

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

Food: Carts may compete with eateries continued from PAGE 1

pilot program, the cityâ&#x20AC;&#x2122;s economic development and parks and recreation departments are selecting vendors, offering help with meeting city health and safety requirements and even making available small loans to launch the businesses. So far, four vendors have been approved, and Kevin Schmotzer, the economic development departmentâ&#x20AC;&#x2122;s executive for small business development, hopes to have 10 merchants operating by June. He said the businesses â&#x20AC;&#x201D; carts or trucks specially designed for food service â&#x20AC;&#x201D; will be clustered at a few key locations, including the northeast quadrant of Public Square, Key Plaza at Playhouse Square and around Case Western Reserve University. The new food stands would supplement 80 hot dog carts that now cover the city, Mr. Schmotzer said. Elvis O. Serrano is planning to operate a truck heâ&#x20AC;&#x2122;s calling Grand River Grille and he hopes to be located around Case Western Reserve. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s been a dream of mine since I was 9 years old to own my own restaurant,â&#x20AC;? the former wine sales rep said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re going to be something different.â&#x20AC;? Mr. Serrano said his menu will feature bison and venison sausages heâ&#x20AC;&#x2122;s calling â&#x20AC;&#x153;Mountain Manâ&#x20AC;? sandwiches, a chicken ginger soup and the Himalayan rice and tuna dish. The food truck will complement a delicatessen of the same name that Mr. Serrano plans to open later this month on Lorain Road near Kammâ&#x20AC;&#x2122;s Corners.

Chris Hodgson is jumping the gun on the formal city program. Anticipating that he will be accepted into the pilot program, the culinary school alum who has worked in restaurants in Cleveland and New York expects to have his food truck, Dim and Den Sum, outside University Hospitals Case Medical Center in University Circle and open for lunch by May 1. He is planning to move the operation downtown in the evenings. He described the food as â&#x20AC;&#x153;soul food with an Asian flair.â&#x20AC;?

Mobile feasts nationwide Gourmet food carts are increasing the lunch and even dinner options in cities across the country, including Austin, Texas, Chicago, Portland, Ore., and San Francisco. Nationâ&#x20AC;&#x2122;s Restaurant News reported in a front-page story on the movement last month, noting the 45-member Southern California Mobile Food Vendors Association estimates Los Angeles has at least 63 different food truck concepts and that one truck, selling Korean barbecue, grosses $2 million a year. One reason the carts are a story for Nationâ&#x20AC;&#x2122;s Restaurant News is that established restaurants are objecting to the new competition. Because of their lower-cost business model and, in some cases, government subsidies, the restaurateurs see the food trucks as unfair competition. Matty Lucarelli, executive director of the Cleveland Area Restaurant Association, said she was unfamiliar with the cityâ&#x20AC;&#x2122;s program and couldnâ&#x20AC;&#x2122;t comment on its potential impact on

sit-down restaurants. The cityâ&#x20AC;&#x2122;s call for proposals says the goals of the program are to provide broader all-day food options for workers and visitors, promote small business growth and increase the availability of healthy and locally produced food products. Concessionaires may be able to operate more than one stand.

Rules of engagement The authorizing legislation includes strict requirements for operators including health, safety and design standards and a permitting process that gives the city considerable control over the vendorsâ&#x20AC;&#x2122; operations. Vendors must have a permit from the city parks department to operate in specific locations with specific menus â&#x20AC;&#x201D; Mr. Schmotzer said the city is favoring applicants who plan to use locally grown foods. The health permit allows more on-site preparation than currently allowed under the law that regulates hot dog carts, but it requires a permanent commissary for the preparation and storage of food. To compensate for all the permit requirements, the cityâ&#x20AC;&#x2122;s economic development department is offering $5,000 loans to qualifying operators and has set up a pool of money with Charter One Bank to pay artists a stipend to design graphics for the carts and trucks. The vendors will not pay rent to the city. Once the pilot program is under way, the city will analyze the vendor operations to see if the program can be expanded. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;d like to grow this next year,â&#x20AC;? Mr. Schmotzer said. â&#x2013;

Indians: Team understanding of fansâ&#x20AC;&#x2122; skepticism continued from PAGE 3

market team, their strategy has to be cyclical,â&#x20AC;? said noted sports economist Andrew Zimbalist, a professor at Smith College in Northampton, Mass., who has authored 19 books, including a handful on baseball. â&#x20AC;&#x153;When theyâ&#x20AC;&#x2122;re on the down part of the cycle, it doesnâ&#x20AC;&#x2122;t make sense for them to spend big, because if they do, they wonâ&#x20AC;&#x2122;t be able to spend when their core is in the majors and ready to win. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s nothing wrong with that strategy, though theyâ&#x20AC;&#x2122;ll obviously sell fewer tickets. The attendance, too, will go through cycles.â&#x20AC;?

For perspective â&#x20AC;Ś If the drastic dropoff in sales was happening leaguewide, there might be less alarm. But that doesnâ&#x20AC;&#x2122;t appear to be the case. American League Central rival Minnesota â&#x20AC;&#x201D; opening new Target Field this season â&#x20AC;&#x201D; like Philadelphia cut off season ticket sales at 24,000. The Twins and Phillies clearly are special cases, but looking at teams closer to the Indians in payroll and success doesnâ&#x20AC;&#x2122;t exactly pretty up Clevelandâ&#x20AC;&#x2122;s numbers. The Texas Rangers â&#x20AC;&#x201D; with two winning seasons since 2000 â&#x20AC;&#x201D; are at 10,000 fullseason equivalents, according to team spokesman John Blake. The Pirates, meanwhile, are holding steady at about 8,000 fullseason equivalents, according to a report last week in The Pittsburgh Post-Gazette. But thatâ&#x20AC;&#x2122;s not very good company: The Pirates havenâ&#x20AC;&#x2122;t had a winning season since 1992, a record for the four major sports; their best season in that 17-year

stretch was 79 wins in 1997. John Fisher, the Arizona Diamondbacksâ&#x20AC;&#x2122; vice president of ticket sales, would not reveal the teamâ&#x20AC;&#x2122;s overall number, but he said the teamâ&#x20AC;&#x2122;s season ticket base is down only 10% over 2009 after a 92-loss season. The Indiansâ&#x20AC;&#x2122; base has declined by nearly one-third, from 11,700 in 2009. (Calls to the Nationals and Marlins, other Indians peers in payroll, and AL Central rivals Detroit and Kansas City, went unreturned.) White Sox officials would not disclose their season ticket sales but said theyâ&#x20AC;&#x2122;re faring well. And their path may offer Indians fans hope: Leading up to their World Series title in 2005, their payroll was $51 million in 2003 and $65.2 million in 2004. Now their payroll hovers around $100 million, thanks in part to improved season ticket sales. â&#x20AC;&#x153;Success there helps in a lot of places â&#x20AC;&#x201D; selling sponsorships, cost projections and elsewhere,â&#x20AC;? said White Sox chief marketing office Brooks Boyer. Will fans come back? â&#x20AC;&#x153;Fans (in Cleveland) might say that theyâ&#x20AC;&#x2122;re never coming back, but if the product gets better, they will.â&#x20AC;?

Back home Indians vice president of public relations Bob DiBiasio, in his 31st year with the club, said heâ&#x20AC;&#x2122;s never seen anger from fans on par with last summerâ&#x20AC;&#x2122;s. The aforementioned trades, team president Paul Dolanâ&#x20AC;&#x2122;s news conference days later addressing the teamâ&#x20AC;&#x2122;s losses and the Sabathia-Lee Game 1 World Series matchup combined to infuriate many Tribe backers. But, Mr. DiBiasio said, owner

Larry Dolan and other team brass are understanding of fansâ&#x20AC;&#x2122; views and their wait-and-see attitude, and expect a comeback when the team improves. He also said the elder Mr. Dolan remains committed to the team and as passionate as ever, and will continue to authorize the moves his management team recommends, even if it means further deficit spending. â&#x20AC;&#x153;When an owner truly steps up isnâ&#x20AC;&#x2122;t when they sign a free agent, but when he has to step up and write the check when you have a $9 million loss,â&#x20AC;? Mr. DiBiasio said. â&#x20AC;&#x153;At the same time, Larry understands that fans donâ&#x20AC;&#x2122;t care about that; he wants to win, just like they do.â&#x20AC;? That includes Rob Vaughan, a Lakewood resident who bought a 20-game ticket package from 200507 before opting not to renew. â&#x20AC;&#x153;Part of me wants the Indians to do well so attendance increases, which means a better team,â&#x20AC;? Mr. Vaughan said. â&#x20AC;&#x153;But at the same time, theyâ&#x20AC;&#x2122;re saying, â&#x20AC;&#x2DC;When the fans come, weâ&#x20AC;&#x2122;ll pay.â&#x20AC;&#x2122; A restaurant doesnâ&#x20AC;&#x2122;t say, â&#x20AC;&#x2DC;Weâ&#x20AC;&#x2122;ll serve crappy food and when we have a full restaurant, weâ&#x20AC;&#x2122;ll serve filet.â&#x20AC;&#x2122;â&#x20AC;? Mr. Zimbalist said the Dolansâ&#x20AC;&#x2122; decision to publicly announce their losses may not have worked as well as theyâ&#x20AC;&#x2122;d have liked. â&#x20AC;&#x153;What they can do is explain better the teamâ&#x20AC;&#x2122;s strategy,â&#x20AC;? he said. â&#x20AC;&#x153;They need fans to begin every year with hope, but when you announce youâ&#x20AC;&#x2122;re in a down cycle, that might not do it. You donâ&#x20AC;&#x2122;t see Toyota say, â&#x20AC;&#x2DC;Weâ&#x20AC;&#x2122;ve had this brake problem, so donâ&#x20AC;&#x2122;t buy our cars for three years.â&#x20AC;&#x2122;â&#x20AC;? â&#x2013;

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APRIL 12-18, 2010

manager; Jason Holm to web developer; John Hochberg to assistant interactive project manager.

GOING PLACES JOB CHANGES

FINANCIAL SERVICE

ARCHITECTURE

212 CAPITAL GROUP: Bob Bajic to financial adviser.

BRAUN & STEIDL ARCHITECTS: Rachel Hersh Schwarz to director of business development.

EDUCATION SOUTH EUCLID-LYNDHURST SCHOOL DISTRICT: Kristen Romito to coordinator of media and community relations.

FINANCE HUNTINGTON NATIONAL BANK: Elizabeth Victor to vice president, treasury management team leader; Maureen Shildwachter to vice president, treasury management; Rita Patel to business banking specialist.

BRUNER-COX LLP: Catherine B. Berni to tax manager; Anna M. Capaldi to tax director; Carla T. Frank to general services manager. CHRYSALIS VENTURES: Wendy Jarchow to director of business development in Cleveland.

MITCHELL ALLEN: Kelly Bowman to public relations specialist. RADIUS ADVERTISING: Lori R. Marefka to account supervisor. Berni

Capaldi

Frank

Berick

manager of customer relations and appeals.

Tocci

BENESCH: Deviani M. Kuhar and Richard A. Plewacki to partners.

INSURANCE

NORTH COAST CONTAINER CORP.: Don Kish to vice president, chief financial officer.

MANUFACTURING

RPM INTERNATIONAL INC.: Terri

MEDIA

L. Wallace to manager, global treasury; Marvin Muhumuza to information technology auditor.

GIE MEDIA: Pat Jones to publisher and editorial director, Golf Course Industry.

MARKETING

NONPROFIT

BROWNFLYNN AND BROWNFLYNN LEARNING: Jennifer Klie to director of operations.

PAX: PEACE FOR ANIMALS: Barbara Morin to event sales; Bill Taylor to researcher.

DIX & EATON: Robert G. Berick to senior managing director.

REAL ESTATE

HITCHCOCK FLEMING & ASSOCIATES INC.: Geoff Crowe to designer; Jason Craig to interactive project

GUARDIAN TITLE & GUARANTY AGENCY INC.: Valerie Tocci to sales manager.

LEGAL

THE RIVERSIDE CO.: Eric Keen to vice president; Ryan Richards to senior associate; Dan Haynes to associate.

KAISER PERMANENTE OHIO: Pamela A. Hara to vice president of quality; Phyllis A. Tennant to

Bowman

RETAIL MAURICES: Kristy Wilkinson to store manager.

SERVICE

T H E VA L U E O F I N D E P E N D E N C E I N CUSTOMER-FOCUSED BANKING.

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we are the region’s largest

It is not completely free to act solely

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on behalf of the customer. It is, rather, motivated by gain on behalf of shareholders. This is the very reason why Dollar Bank has remained steadfastly independent of Wall Street since 1855. And since our beginning as a mutual bank, we have celebrated our independence with an ongoing mission: To focus solely on our customer and the

HUMAN ARC: Paula Wagner to senior sales executive. THE KEYSTONE PEER REVIEW ORGANIZATION INC.: Linda Stokes to director, health science research; Joseph Woodside to director, health informatics and business intelligence.

communities we serve.

You have only to follow the

CENVEO INC.: Jeffrey Ritter to regional sales representative.

independent of Wall Street, our sense of responsibility, civic pride and customer commitment will only strengthen in the future. If all of this sounds unusual, it is. To us, banking has never been, and never will be, about shareholder needs. To us banking will continue to be about customer needs. Period.

SAFEGUARD BACKGROUND SCREENING LLC: Bruce Sundman to director of sales; Lana Iklodi to operations support specialist. SAFEGUARD PROPERTIES: Kellie Chambers to director, property preservation operations; Kathy Cogan to director, REO client account management; Palmer DePetro to director, REO regional coordinators and customer service; Jennifer Jozity to director, inspections department; Amy Nauer to director, REO operations; Nancy Runyon to director, vendor management.

TECHNOLOGY MCPC INC.: Jamie O’Brien to inside Cisco account manager; Susan Murtaugh to customer service manager; Robert Lapmarado to government business leader; Dominic Del Balso to director of engineering; Rick Bishop to senior account manager; Tom Dannery to network engineer. MODIS CLEVELAND: Brad Friedel to business development manager.

BOARDS FRIENDS OF WESTLAKE PORTER PUBLIC LIBRARY: Jennifer Cirincione to president; Cathy Schultz to vice president; Dr. Richard Hong to treasurer; Carol Welo to recording secretary; Karen Alfred to corresponding secretary. THE HOUSING RESEARCH & ADVOCACY CENTER: Patricia Burgess to president; Carelton Moore to vice president; Kathy Kazol to treasurer; Harold Williams to secretary. PAX: PEACE FOR ANIMALS: Sandy McNally to president.

Inquiries: 1-800-242-BANK

Send information for Going Places to dhillyer@crain.com.

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INSIDE

16 TAX TIPS: COURT RULING AT ODDS WITH IRS OVER FICA.

SMALL BUSINESS Small firms cautiously bolstering staff sizes Businesses seek to grow, still guarded on economy By STAN BULLARD sbullard@crain.com

A GOOD BUY Community programs aim to bag residents’ dollars by providing incentives, touting benefits of local shops By SHANNON MORTLAND smortland@crain.com

s chain restaurants began popping up on street corners across Northeast Ohio at a faster pace, local restaurateurs knew they had to spring into action if they were going to compete. “These big chain operations were coming in and taking over our market” with more locations and marketing dollars, said Douglas Katz, president of the Cleveland Independents and chef/owner of Fire on Shaker Square. “Survival was our focus,” he added. “We were thinking, in two or three years, we might not be here.” See LOCAL Page 17

he job-creation engine of the U.S. economy known as small business may be slowly picking up speed in Northeast Ohio. That is the view that emerges from multiple Northeast Ohiobased small businesses that are adding jobs this spring or added them over the last year. Despite being in the hard-hit architecture profession, Larry Fischer, a co-founding principal of Perspectus Architecture in Cleveland, said the firm took a Warren Buffett approach to the downturn: “We stayed aggressive. We didn’t get defensive and pull back. We have been really marketing hard, primarily to protect our turf among clients in health care.” As a result, Perspectus more than held its own the past two years, boosting its staff by two to 25, and it is interviewing to fill another job, in part to help design a campus for a U.S. Customs leadership academy in Harpers Ferry, W. Va. Indications are that Perspectus is not alone, and small business as a sector may start to resume its role of job creator, helping to nibble away at high unemployment numbers. Pittsburgh-based PNC Bank’s spring 2010 economic outlook found that 19% of the small and mid-sized Ohio firms it surveyed expect to hire full-time employees in the next 12 months. That is far different than a year ago, when just 8% planned to hire. PNC said firms in its survey generally have a more positive outlook, though they remain worried about the overall economy.

Playing offense Maintaining a strong marketing thrust through the downturn appears central to many firms that already are adding staff. Jason Therrien, president of thunder::tech in Cleveland, said the 25-person integrated digital marketing agency recently added two people and is interviewing a third. It will not fill a fourth job because the firm only can accommodate so many new hires at one time. “It’s a good problem to have,” Mr. Therrien said, which he credits to “reaching out to clients twice as much (through marketing) in 2008 and 2009 and helped them with financing.” Even though things got tight in that period, Mr. Therrien See HIRE Page 16

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Hire: Innovation, new product development spur firmsâ&#x20AC;&#x2122; growth continued from PAGE 15

took the approach that the firm could maintain the status quo for a month or two at a time and made it through the worst of the recession. â&#x20AC;&#x153;You canâ&#x20AC;&#x2122;t do that for years at a time. And you canâ&#x20AC;&#x2122;t do it if you want to grow a business and sell it in six months, but weâ&#x20AC;&#x2122;re in it for the long haul,â&#x20AC;? Mr. Therrien said. He credited that perspective, of keeping track of â&#x20AC;&#x153;the little thingsâ&#x20AC;? to tide through bad times until things recover, to growing up in a home where he watched both his parents operate businesses. Some companies are positioned to grow because of new product lines or directions. That was the case for Adam Fried, CEO of Akron-based Simply Canvas, which started out providing canvas digital prints for photographers. â&#x20AC;&#x153;We looked for other products we could sell themâ&#x20AC;? when the downturn hit, Mr. Fried said. â&#x20AC;&#x153;Our customers are very particular. They love our canvas prints. We figured we could sell them five times as many (less expensive) paper prints.â&#x20AC;? That paid off in increased sales to the extent that 10 of Simply Canvasâ&#x20AC;&#x2122;s 40 employees were added in the new paper-print unit last year. He expects to need another 10 employees this year, but may hire more part-timers and college students because he worries about how much health insurance will cost under health care reform. Kenyon Mau, a principal of Cleveland-based Human Capital Advisors, a human resources consulting

and recruiting firm, said heâ&#x20AC;&#x2122;s getting more inquiries about hiring, which he views as an indication that more firms are gearing up to add staff.

Looking into the crystal ball But that does not mean making the decision to hire or call the economyâ&#x20AC;&#x2122;s direction is easy. â&#x20AC;&#x153;We worry as much about hiring now that we are 25 as when we were three people and hiring our fourth person,â&#x20AC;? Perspectus Architectureâ&#x20AC;&#x2122;s Mr. Fischer said. â&#x20AC;&#x153;We always think of the families that people have and donâ&#x20AC;&#x2122;t want to hire for a particular (assignment).â&#x20AC;? At Perspectus, a key indicator of the need to hire is when the firm starts having employees work more overtime than it believes generates a good work-life balance. Mr. Therrien said the key is for small companies to have â&#x20AC;&#x153;innovation as part of their DNA.â&#x20AC;? One thing that will be different, he said, is that his firm will no longer hire in anticipation of gaining work; that went away with the recession. Likewise, he and other small business owners estimate the economy will improve, but will grow slower than before. Herb Wainer, CEO of Warrensville Heights-based Horizons Inc., which makes specialized labels for manufactured products, said his firm has added four to its 140-person staff because it remains focused on growth through developing new products â&#x20AC;&#x201D; even in downturns. â&#x20AC;&#x153;The when (you hire) has little to do with the economy,â&#x20AC;? he said. â&#x20AC;&#x153;The when has to do with people who plan for the future.â&#x20AC;? â&#x2013;

Severance pay taxes in question Michigan court ruling at odds with IRS over FICA requirements

he challenges in todayâ&#x20AC;&#x2122;s business environment have forced many companies to downsize their work forces. Such downsizing often results in severance payments to terminated employees. While it is clear that such severance pay is subject to income tax withholding, in February a federal district court in Michigan decided that such severance pay is not subject to Federal Insurance Contributions Act (FICA) taxes, which include Social Security and Medicare taxes. While this decision has generated a significant amount of attention, employers should be cautioned that this decision clearly does not reflect the view of the IRS, and the IRS is likely to challenge any attempt to exempt severance payments from FICA taxes until Congress, or perhaps the Supreme Court, addresses this issue. It is clear that Congress intended a uniform definition of â&#x20AC;&#x153;wagesâ&#x20AC;? for purposes of income tax withholding and FICA taxes, but there has been some question about whether Congress intended to include severance pay in â&#x20AC;&#x153;wagesâ&#x20AC;? for both income tax withholding and FICA tax purposes. In general, the term â&#x20AC;&#x153;wagesâ&#x20AC;? means all remuneration for employment, including the cash value of all remuneration, including benefits, paid in any medium other than cash.

Cedar Point is the perfect place for a company outing! Itâ&#x20AC;&#x2122;s affordable, and easy to plan too. We do all the work for you. So your only job is to have fun! No matter how big your group is, we can plan a fun-filled day for everyone. Plus, for Group Events we offer a wide variety of tasty meal options. And at Cedar Point, you only pay for members of your group that show up! Thereâ&#x20AC;&#x2122;s also the Good Any Day Program where employees can purchase a discounted park ticket to use any day all season long. You can even set this up online for free, and make things even easier.

CARLGRASSI

TAX TIPS In addition to this basic definition, the income tax withholding statute provides that certain types of payments, including any â&#x20AC;&#x153;supplemental unemployment compensation benefit,â&#x20AC;? or SUB, are to be treated as if they are â&#x20AC;&#x153;a payment of wages by an employer for a payroll period.â&#x20AC;? A SUB is defined as â&#x20AC;&#x153;amounts which are paid to any employees, pursuant to a plan to which the employer is a party, because of an employeeâ&#x20AC;&#x2122;s involuntary separation from employment (whether or not such separation is temporary), resulting directly from a reduction in force, the discontinuance of a plan or operation or other similar conditions.â&#x20AC;? In its most recent guidance, the IRS determined that the definition of SUB pay for income tax withholding purposes is not applicable for FICA purposes. Instead, SUB pay is defined by the administrative pronouncements published by the IRS. The IRS has determined that, in order for SUB pay to be exempt from FICA tax, it must be linked to the receipt of state unemployment compensation and must not be received as a lump sum payment. Until the decision of the federal district court in Michigan, employers who reduced their work forces and provided their laid-off workers with severance payments were in most cases required to withhold income taxes and FICA taxes from such payment. The district courtâ&#x20AC;&#x2122;s decision in U.S. Quality Shares Inc. came to a different conclusion. In the Quality case, the district court determined that the severance payments that the company

made to its former employees, some of which were lump sum payments and none of which were linked to state unemployment compensation, were not subject to FICA taxes. In effect, this district court decision disagrees with the IRSâ&#x20AC;&#x2122;s position, and it also contradicts the position taken by at least one other federal district court. The district court decided that severance payments were not subject to FICA taxes for several reasons. First, in amending the income tax withholding statute to include SUBs, the Senate recognized in its committee report that without this amendment to the statute, SUB payments were not subject to income tax withholding because they do not constitute wages or remuneration for services. Second, the income tax withholding statute states that SUBs are to be treated as if they are wages. It can be inferred from that statement, according to the court, that SUBs are not wages; otherwise they already would be subject to income tax withholding. Third, the district court noted that the purpose of the FICA statute was to provide for a social welfare benefit. The district court concluded that â&#x20AC;&#x153;where severance payments are intended to serve the same purpose as Social Security benefits, i.e., support for workers in lieu of a lost ability to earn wages, the collection of social benefit taxes on the wage-replacement benefits makes little sense.â&#x20AC;? This decision may prompt other employers to seek refunds of FICA taxes paid on severance benefits. This may lead to decisions by the federal appeals courts, the Supreme Court or even actions by Congress. If the reasoning of the district court in Quality becomes the rule, then employers and terminated employees will save a significant amount of tax. Until then, it is likely that the IRS will be challenging any claims that severance payments are exempt from FICA taxes. â&#x2013; Mr. Grassi is a member and president of McDonald Hopkins LLC.

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WWW.CRAINSCLEVELAND.COM

SMALL BUSINESS

Local: Programs boost economy continued from PAGE 15

The result was Cleveland Independents, a 7-year-old grassroots group of local restaurant owners who are sharing ideas on how to manage and improve their eateries while also offering incentives to get patrons through the doors. The Cleveland Independents is just one of the area programs that urge people to spend their money in locally owned stores. Among the others are I Buy NEO and the Hudson Gift Card program; though some programs have had a slow start, others already have seen positive outcomes. I Buy NEO’s director Dan Roman said buy-local initiatives are becoming increasingly popular. In a recent survey of 483 members of the Council of Smaller Enterprises, 81% said promoting a business as locally owned is valuable, and 74% said the buy-local message is a better way to sustain the local economy than trying to drum up new customers. Indeed, Jonathon Sawyer, chef and owner of the Greenhouse Tavern on East Fourth Street downtown, said he joined the Cleveland Independents shortly after opening his restaurant in April 2009 because many of his favorite restaurants already were members. He said events organized by the group such as Restaurant Week, during which participating local restaurants offer three-course meals for $30, have been a boon to his business. “It brings in people you wouldn’t normally get to your restaurant,” Mr. Sawyer said.

Hitting close to home The Cleveland Independents try to set themselves apart from chain restaurants by working with local farmers to create dishes featuring locally grown items, such as strawberries or corn when in season, Mr. Katz said. He said the results have been favorable, with patrons telling him they want to support local businesses. The Hudson Area Chamber of Commerce & Tourism Bureau also has found that people want to support its businesses. The chamber created the Hudson Gift Card seven years ago, allowing people to put up to $500 on a card and spend it at more than 70 local businesses, said Carolyn Konefal, president of the chamber. The card is swiped just like a credit card, she said. Last year, the chamber sold about $55,000 in gift cards, mostly around the holidays and from Mother’s Day to the end of the school year, she said. The program

“The more you put into it, the more you get out of it.” – Dan Roman director, I Buy NEO will be modified in August so nonusage fees are not assessed to the card unless it is dormant for 12 consecutive months. The penalty fee then will be $2.50 per month, she said. Since the program was created, cities from all over the country have called for advice on creating similar buy-local initiatives, Ms. Konefal said. Meanwhile, the 3-year-old I Buy NEO incentive program — which consists mostly of businesses in Cuyahoga County — is being tweaked to appeal to larger audiences. Initially launched by COSE as an online directory of local small businesses, the group introduced a community card nearly two years ago as a way to provide rebates for people who shopped locally, said Mr. Roman, the program’s director. About 11,000 cards were sold by local nonprofits — usually for $10 — and the nonprofit kept a portion of the proceeds, he said. As part of the program, consumers had to provide bank account information to I Buy NEO in order to receive rebates. However, consumers thought that was a cumbersome process and didn’t want to part with their bank information, so the program is being revamped, Mr. Roman said. Mr. Roman said I Buy NEO is trying to figure out how businesses can help each other within the program and how nonprofits can continue to participate. A better idea of how the program will be redesigned is expected by the end of April. In the meantime, I Buy NEO still is urging its 300 business members to give discounts to those carrying the card.

Buying local — elsewhere Across the state, buy-local ventures are being created to help businesses hold on to as many local dollars as possible. In Columbus, the Small Business Beanstalk, a for-profit venture launched last September, created a buy-local service that promotes local businesses and provides incentives to get people to shop locally, said Wolf Starr, founder of the Small Business Beanstalk. Under the program, local businesses pay $500 per year to belong to the Beanstalk, he said. In return, the Beanstalk promotes a consumer

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card to local neighborhood associations, apartment complexes and libraries, and at local events, he said. About 7,000 free consumer cards have been handed out so far and 200 local businesses have joined the Beanstalk, Mr. Starr said. The program is rolled out by neighborhood or suburb and only after a significant number of businesses in that area agree to offer discounts to people carrying the card and to promote the Beanstalk and fellow businesses, he said. “It’s been overwhelmingly positive,” Mr. Starr said. “(The participating businesses) have a vested interest in the program themselves.” A similar effort is taking shape with the Toledo Choose Local program, in which businesses get varying levels of marketing support from the organization based on the amount of money they pay to join, said John DuVall, president of Toledo Choose Local. Details are still being ironed out on a consumer card to be sold for $10 to $20 that provides monthly discounts at participating businesses, he said. Mr. DuVall said he and his fellow small business owners realized they had to do something before Toledo was “overrun by WalMart and Applebee’s.” Though buy-local programs can be beneficial, local businesses will have to make some effort as well to ensure their success, I Buy NEO’s Mr. Roman said. “The more you put into it, the more you get out of it,” Mr. Roman said. ■

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Akron entrepreneurs’ group forms Social media invaluable By AMY ANN STOESSEL astoessel@crain.com

orrine Beller enthusiastically talks about the importance of initiatives to help Northeast Ohio’s entrepreneurs. “The entrepreneurial world in Northeast Ohio is highly connected,” said Ms. Beller, who is the director of outreach for the University of Akron’s College of Business Beller Administration. And as organizer of the newly created Akron-based Entrepreneur’s Idea Exchange, Ms. Beller is doing her part to help broaden those connections and add to that network. “In a poor economy more people want their own business … they want to be able to control their own destiny,” Ms. Beller said. The Entrepreneur’s Idea Exchange is for any person with a business idea, at any level of development. Meetings are two hours, and discussions are informal, facilitated by seasoned entrepreneurs and professionals in a small-group setting. The first meeting for the organization was held in March, with 71 people in attendance. Participants were divided into groups of about nine and given a chance to discuss their business concepts and solicit advice on everything from whether there is a market for their idea to what need it could fill.

Christy Motley, the owner of Akron-based Christ’eas Bakery, participated in the first meeting of the Entrepreneur’s Idea Exchange. Ms. Motley’s business specializes in full-service catering, with a focus on boxed lunches and baked goods, in particular those that are sugar-free and that use natural, organic products. Ms. Motley has been in business since 2006, previously having worked as a deputy registrar for the city of Akron. “Of course, I want to grow,” said Ms. Motley of her current status, noting that in particular she’s hoping to find a permanent location for her business. “Sitting in that group gave me a lot more different ways of thinking,” Ms. Motley said. “I walked away with so much.” Specifically, Ms. Motley said those in her discussion group — with whom she has stayed in contact — suggested that she consider working with more institutions and that she consider seeking government contracts. “I think everyone walked away with something,” she said. “Knowledge is power.” For Ms. Beller’s part, it is not surprising that she looked to bring such an organization and structure to the Akron area. She was part of a group of Harvard Business School grads who helped launch the Cleveland-based Founder’s Café, which also aims to help get ideas to the startup phase.

Ms. Beller said the Founder’s Café has had more than 500 people attend sessions over two years. Ms. Beller said in working to get partners and volunteers to assist in her recent effort, she found that people were very receptive to the idea of the Entrepreneur’s Idea Exchange. “People were very excited,” she said. “They could see the advantages to the area with just a little bit of work.” Ms. Beller stressed that the Entrepreneur’s Idea Exchange is not intended to be a networking group. Rather, it’s a forum in which to get feedback and advice: “This is strictly to get business ideas off the ground,” she said. As for the goal of the Entrepreneur’s Idea Exchange: “The bigger picture is to have more businesses off the ground … and bring more jobs to Northeast Ohio.” The next meeting is scheduled for 6 p.m. to 8 p.m. May 20 at the College of Business Administration on the University of Akron campus (across from St. Bernard’s Church). The meetings will be held every other month. There is a $15 fee to attend the sessions — “it ensures this is a serious event,” Ms. Beller said — and the cost includes parking, food and beverage. Advanced registration is required and can be done at the organization’s web site at http://ohioideaexchange.com, although some walk-ins may be accepted depending on space availability. ■

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tool for job recruiting

mall businesses can face challenges in hiring because they don’t always have a dedicated recruiter or the budget to support high-cost recruiting methods, such as reviewing thousands of résumés or supporting job postings on large career sites. Social media is a powerful and cost-effective tool for small business recruiting. It allows a company to share their job openings with a large network, “meet” candidates with whom they might not otherwise come in contact and find out if a potential hire is a good match for an organization. There are a variety of social networks, including LinkedIn, Facebook, Twitter and a company’s blog, that allow a company to communicate with potential hires. With more than 80% of Americans using social media sites monthly, according to research, your ideal candidate quickly can be found. ■ The power of posting: When thunder::tech has a job opening, we use our online properties to publicize positions. We share a link to our web site, along with succinct messages on our company blog and Facebook, Twitter and LinkedIn accounts. Since these sites are maintained regularly, we have strong existing networks of engaged users. These users share and provide links to our job postings with their network. Social networking is just like personal networking — you must be visible and approachable. By regularly participating in social networks, you will develop an online network with an interest in your company, which will create a receptive audience for your hiring announcements. ■ Share your message with interested candidates: In addition to posting your hiring announcements on a Twitter account or Facebook fan page, look for industry or specialty groups within these networks and post to those pages’ message boards and forums. On Twitter, a common practice is to use a hashtag. A hashtag, which is made up of the “#” symbol and a keyword or phrase, provides a way for Twitter users to share information and track conversations. By adding a hashtag, you will enable interested users to find your message and they in turn can share it with others. Some sample recruitment hashtags include: #tweetmyjobs, #jobs, #career, #jobseekers and #hiring. You can also pair two hashtags, such as #jobs and #cleveland in the same post to target your information. ■ Be clear and concise in your message: Despite the high number

JASONTHERRIEN

ADVISER of active users, there are some challenges to recruiting using large online networks. Last year we received more than 1,000 résumés, despite being a company with a 20member team. Social media and the ease of submitting a résumé online open your company up to a wide network, which can be both exciting and overwhelming. To match the right hire to your company, you need to clearly identify the position you are searching for and outline core competencies for the candidate in your postings and messages. ■ Improve the interview and hiring process: Social networking allows you to enhance and expedite the interviewing and hiring stages of recruiting. By researching and getting to know candidates before they come into your office, you can effectively screen candidates or learn about behaviors or personalities that may be a red flag for your company. “Googling” a candidate to discover their digital footprint now is a common practice. With the expanded search features in social media sites, a smart hiring manager will go beyond a simple Google search and search on Twitter, LinkedIn, Technorati and Facebook. When you are researching a candidate online, don’t immediately judge them on one photo or post, but look for patterns. ■ Recruit online for profitable hires: The rise of social media’s popularity for job hiring is influenced by the challenging economic climate, the mainstream adoption of social networking and its use for professional contacts. Recruiting efforts can be streamlined by expanding your online network and thoroughly researching a hire. Don’t be afraid to use social media to find a new team member who is passionate, an active online participant and knowledgeable. Ultimately, this will benefit your company with a hire who is positioned for long-term success. ■ Mr. Therrien is president of the Cleveland integrated marketing agency, thunder::tech.

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SMALL BUSINESS IN BRIEF Cleveland architect firm builds overseas presence HSB Architects working on LEED certification with firm in Germany Cleveland-based HSB Architects + Engineers, which specializes in Leadership in Environmental Energy and Design, or LEED, implementation, has finalized an agreement with a company in Germany to assist in several overseas projects. HSB will be working with the facilities management firm Alpha Group EE to help LEEDcertify buildings nearing completion in Germany and Hungary. As LEED continues to gain accep-

GRAND OPENINGS ADKINS BORLING LLC 801 E. Washington St., Suite 225 Medina 44256 www.adkinsborling.com

tance globally, HSB — which recently opened an office in Phoenix — plans to expand relationships with builders, developers and consultants who seek to leverage LEED’s global brand. “Certainly HSB has broad experience LEED-certifying client projects here in the U.S. But we also possess a great understanding of how to apply this standard to overseas markets, and specific building types within those markets,” HSB’s Robert Bajko said. ■ NEW SERVICES: The Kemper Co. now is offering specialized home care, providing personalized companion and caregiving services. Care is not limited

to one’s home, but it also is available in long-term care or rehabilitation facilities, during a short-term hospital stay or for any other situation that may be required. Kemper Home Care, a wholly owned entity of The Kemper Co., specializes in caring for people with diagnoses of Alzheimer’s or other disorders resulting in memory impairments. ■ GAINING FLOOR SPACE: Marshall Carpet One & Rug

Gallery in Mayfield Heights will double the size of its showroom to 17,000 square feet later this month with a move to Eastgate Shopping Center at SOM Center and Mayfield roads. The move to 1451 SOM Center Road combines Marshall Carpet One and Marshall Rug Gallery, which are currently in separate buildings on Mayfield Road. “While the housing market is ailing, people are deciding to fix up their homes, instead of moving,” said

Chuck Wien, president of Marshall Carpet One. ■ LOOKIN’ GOOD: Studio V Salon & Spa has opened at the Akron General Health and Wellness Center on Medina Road in Akron. The location is a sister business to VCS Salon & Spa, located in Medina. It is owned by Lucy Mahoney and daughters Coleen Morlock and Mary Kay Hallas. Studio V is a full-service salon and spa, providing a complete array of services including therapeutic massage and reflexology, as well as complete skin, body and hair care. Hours are 9 a.m. to 8 p.m. Tuesday through Thursday; 9 a.m. to 5 p.m. Friday; and 9 a.m. to 4 p.m. Saturday.

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CRUISIN’ 50’S DINER 8807 Mentor Ave. Mentor 44060 Cruisin’ 50’s Diner is a 1950s-themed family-owned restaurant led by siblings George, Pete and Diane Foradis. The eatery is open seven days a week from 7 a.m. to 10 p.m., serving breakfast, lunch and dinner. Specialties include milkshakes and burgers, as well as omelets and French toast for breakfast. 440-255-1950 To submit a new business, contact sections editor Amy Ann Stoessel at astoessel@crain.com or call 216771-5155 with questions.

* Results may vary depending on your business situation.

20100412-NEWS--20-NAT-CCI-CL_--

4/8/2010

2:39 PM

Page 1

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

APRIL 12-18, 2010

MONEY MANAGERS

RANKED BY ASSETS UNDER MANAGEMENT LOCALLY

Company Address Rank Phone/Web site

Total assets under local management with discretion (millions) Dec. 31, 2009

Dec. 31, 2008

% change

Minimum Total number individual of local account accounts (thousands)

Portfolio analysts on staff

Compensation for services

Victory Capital Management Inc. 127 Public Square, Cleveland 44114 (216) 689-4400/www.victoryconnect.com

$48,009.0

$46,555.0

3.1%

649

$10,000.0

Percentage of assets under management

Boyd Watterson Asset Management LLC 1801 E. Ninth St., Suite 1400, Cleveland 44114 (216) 771-3450/www.boydwatterson.com

$3,053.7

$2,163.2

41.2%

320

$250.0

Fee only, percentage of assets under management

FirstMerit Bank NA 106 S. Main St., Akron 44308 (888) 384-6388/www.firstmerit.com

$2,483.0

$2,280.0

8.9%

3,600

$250.0

Percentage of assets under management

Ancora Advisors LLC 2000 Auburn Drive, Suite 300, Cleveland 44122 (216) 825-4000/www.ancora.ws

$2,470.9

$1,946.7

26.9%

1,123

$20.0

Fee only

Glenmede Trust Co. 25825 Science Park Drive, Ste. 110, Beachwood 44122 (216) 378-2900/www.glenmede.com

$2,255.7

$2,046.7

10.2%

1,650

$3,000.0

Fee based on assets under management and strategies employed

Fifth Third Asset Management Inc. 600 Superior Ave. East, Cleveland 44144 (800) 786-8651/www.ftam.com

$2,217.2

$2,151.7

3.0%

377

$100.0

Lincoln Financial Advisors/Sagemark Consulting(1) 28601 Chagrin Blvd., Suite 300, Cleveland 44122 (216) 765-7400/www.lfa-sagemark.com

$1,927.7

$1,736.6

11.0%

4,105

BNY Mellon Wealth Management 30195 Chagrin Blvd., Suite 350W, Cleveland 44124 (216) 464-4244/www.bnymellonwealthmanagement.com

$1,791.0

$1,550.0

15.5%

2,057

Cedar Brook Financial Partners 5885 Landerbrook Drive, Suite 200, Cleveland 44124 (440) 683-9200/www.cedarbrookfinancial.com

$1,720.0

$1,800.0

-4.4%

Skylight Financial Group 1660 W. Second St., Suite 850, Cleveland 44113 (216) 621-5680/www.skylightfinancialgroup.com

$1,306.8

$1,226.5

Huntington National Bank 917 Euclid Ave., Cleveland 44115 (800) 480-2265/www.huntington.com

$1,300.0

MAI Wealth Advisors LLC 1360 E. Ninth St., Suite 1100, Cleveland 44114 (216) 920-4800/www.maiwealth.com

$1,285.3

$1,050.8

22.3%

328

$500.0

Wasmer, Schroeder & Co. 1111 Superior Ave., Suite 965, Cleveland 44114 (216) 622-0000/www.wasmerschroeder.com

$1,050.6

$720.9

45.7%

279

Oak Associates Ltd. 3875 Embassy Pkwy., Akron 44333 (330) 668-1234/www.oakfunds.com

$960.0

$750.0

28.0%

Northern Trust 200 Public Square, Suite 1950, Cleveland 44114 (216) 357-2400/www.northerntrust.com

$881.1

$718.0

NCA Financial Planners 6095 Parkland Blvd., Suite 210, Cleveland 44124 (440) 473-1115/www.ncafinancial.com

$822.6

Rehmann Financial(2) 1340 Depot St., Suite 205, Rocky River 44116 (440) 356-4520/www.rehmannfinancial.com

Chief investment officer Greg River Craig Ruch Brian L. Gevry Clyde E. Bartter Robert M. Leggett

Denis J. Amato

Top local executive Title Robert L. Wagner president, CEO Brian L. Gevry, CEO, CIO Timothy M. Hyland sr. exec. vice president Kenneth A. Dorsett exec. vp, Wealth Management Services Frederick D. DiSanto CEO

Gordon B. Fowler

Frank I. Harding managing director, first vice president

Percentage of assets under management

E. Keith Wirtz

Peter Klein Mark Koenig managing directors

Fee and commission

Tim Johnson Ben Huddle

John DiMonda managing director

$2,000.0

Percentage of assets under management

Leo P. Grohowski

William G. Caster regional president

$0.0

Negotiated

Azim Nakhooda

Michael Perlmuter managing principal

6.5%

5,000

$0.0

Fee and commission

Steve Thompson

Paul Fox president, CEO

0.0%

1,200

$300.0

Percentage of assets under management

Randy Bateman

Chris Cwiklinski vice president, portfolio manager

Fee only based on assets under management or set fee for non-investment services

Gerald H. Gray

Richard J. Buoncore managing partner

$1,000.0

Percentage of assets under management

John S. Majoros III N. Richmond Jr. Michael J. Schroeder Thomas principals, managing directors

Percentage of assets under management

D. Oelschlager James D. Oelschlager James president, CIO

22.7%

828

$1,000.0

Percentage of assets under management

Mary Lynn Laughlin Douglas Y. Wang

Michael A. Cogan president, CEO, Ohio

$504.9

62.9%

1,250

$250.0

Percentage

Dennis P. Lehman

Kevin H. Myeroff president, CEO

$675.0

$379.4

77.9%

2,000

$250.0

Fee or commission

Jeffrey Phillips

Joseph P. Heider principal

Stratos Wealth Partners 30575 Bainbridge Road, Suite 100, Solon 44139 (866) 553-9882/www.stratoswealthpartners.com

$650.0

10,900

$0.0

Fee, commission, % of assets under management

Fairway Wealth Management LLC(3) 6393 Oak Tree Blvd., Suite 108, Independence 44131-6958 (216) 573-7200/www.fairwaywealth.com

$575.0

$460.0

25.0%

$2,000.0

Fee only, based on assets or scope of services

Carver Financial Services Inc. 7473 Center St., Mentor 44060 (440) 974-0808/www.bullmkt.com

$570.2

$460.1

23.9%

2,400

$250.0

Fee and commissions

Goode Investment Management Inc. 50 Public Square, Suite 1700, Cleveland 44113 (216) 771-9000/www.goodeinvestment.com

$471.8

$438.6

7.6%

$0.0

Percentage of assets under management

Bruce T. Goode

Beacon Financial Partners LLC 25800 Science Park, Suite 200, Beachwood 44122 (216) 910-1850/www.beaconplanners.com

$420.0

$368.0

14.1%

2,020

Fee and commission

Dale Rubin

Gregory G. Randall managing partner

212 Capital Group(4) 22901 Millcreek Blvd., Suite 360, Highland Hills 44122 (216) 595-0123/www.212capitalgroup.com

$390.0

$312.0

25.0%

___

$1.0

Compensation for all services

Curt Lindsay

Curt Lindsay managing partner

North Point Portfolio Managers Corp. 5910 Landerbrook Drive, Ste. 160, Mayfield Hts. 44124 (440) 720-1100/http://nppmcorp.com

$373.9

$296.6

26.1%

193

$500.0

Percentage of assets under management

Diane M. Stack

Winslow Asset Management Inc. 3333 Richmond Road, Suite 180, Beachwood 44122 (216) 360-4700/www.winslowasset.com

$360.0

$280.0

28.6%

104

$1,000.0

Percentage of assets under management

Gerald W. Goldberg

Gerald W. Goldberg chairman, CIO Kara H. Lewis, president

Inverness Holdings LLC One Chagrin Highlands, Suite 440, Beachwood 44122 (216) 839-5130/www.invernesswealth.com

$350.0

$250.0

40.0%

200

$500.0

Fee and commission

Jeffrey van Fossen

Richard Renner principal

Spero-Smith Investment Advisers Inc. 3601 Green Road, Suite 102, Beachwood 44122 (216) 464-6266/www.sperosmith.com

$326.0

$281.2

16.0%

270

$500.0

Fee only and percentage of assets under management

Mimi Lord

Robert C. Smith president, CEO

RAV Financial Services LLC 2000 Auburn Drive, Suite 310, Beachwood 44122 (216) 831-4900/www.ravfinancial.com

$309.0

$274.0

12.8%

366

$500.0

Fee only

David M. Taucher

Robert A. Valente president

Sequoia Financial Group LLC 121 S. Main St., Suite 300, Akron 44314 (330) 375-9480/www.sequoia-financial.com

$291.8

$244.8

19.2%

1,494

$0.0

Percentage of assets under management, fee and commision

Thomas A. Haught

Thomas A. Haught president

Gratry & Co. 20600 Chagrin Blvd., Suite 320, Shaker Heights 44122 (216) 283-8423/www.gratry.com

$275.1

$143.0

92.4%

521

$0.0

Fee only

Jerome R. Gratry Mark A. Anderson Gregory A. Tropf

Jerome R. Gratry president, managing director

Dan Jacoby

Mark S. Weiskind

Jeffrey Concepcion president, CEO Daniel R. Gaugler CEO, managing director Randy Carver president Bruce T. Goode president

Ronald J. Lang president, secretary

20100412-NEWS--21-NAT-CCI-CL_--

4/9/2010

11:44 AM

Page 1

APRIL 12-18, 2010

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

MONEY MANAGERS

RANKED BY ASSETS UNDER MANAGEMENT LOCALLY Total assets under local management with discretion (millions)

Company Address Rank Phone/Web site

Dec. 31, 2009

Dec. 31, 2008

% change

Minimum Total number individual of local account accounts (thousands)

Portfolio analysts on staff

Compensation for services

Chief investment officer

Top local executive Title

Cornerstone Capital Advisors 1507 Boettler Road, Suite G, Uniontown 44685 (330) 896-6250/www.ccadvisors.com

$264.3

$297.0

-11.0%

843

$100.0

Fee only

Mario C. Giganti

Proper Analysis 3201 Enterprise Pkwy., Suite 320, Beachwood 44122 (216) 595-3842/www.properanalysis.com

$246.7

$191.6

28.8%

257

$250.0

Fee only

HW Financial Advisors 23240 Chagrin Blvd., Cleveland 44122 (216) 378-7296/www.hwfa.com

$224.0

$195.0

14.9%

453

Percentage of assets under management

Stephen L. Rudolph

First Fiduciary Investment Counsel 6100 Oak Tree Blvd., Cleveland 44131 (216) 643-9100/www.firstfiduciary.com

$219.9

$195.4

12.5%

275

$250.0

Percentage of assets under management

Carnegie Investment Counsel 25550 Chagrin Boulevard, Suite 101, Beachwood 44122 (216) 367-4114/www.carnegie-capital.com

$213.0

$194.0

9.8%

258

$250.0

Fee only

Richard L. Alt

Gary P. Wagner, COO Richard L. Alt, CIO

CBiz Financial Solutions Inc. 6050 Oak Tree Blvd. S., Suite 500, Independence 44131 (216) 447-9000/www.cbizwealth.com

$210.8

$165.6

27.3%

141

$1,000.0

Fee, commission and percentage of assets under management

Brett D'Arcy

Luke F. Baum president

Scott Snow (financial advisors) LLC 24601 Center Ridge Road, Suite 175, Westlake 44145 (440) 871-7669/www.s2fa.com

$210.0

$196.0

7.1%

$1,000.0

Fee only

Scott P. Snow

Scott P. Snow managing director

Private Harbour Investment Management & Counsel 29525 Chagrin Blvd., Pepper Pike 44122 (216) 292-5700/http://privateharbour.com

$200.5

$181.0

10.8%

189

$1,000.0

Percentage of assets under management

James A. Blue

Geofrey J. Greenleaf CEO

The Mutual Fund Store 36040 Detroit Road, Suite E, Avon 44011 (440) 934-6565/http://mutualfundstore.com

$186.0

$124.6

49.3%

2,379

$50.0

Tower Wealth Management 20600 Chagrin Boulevard, Ste. 803, Shaker Hts. 44122 (216) 295-2400/www.towerwealthmanagement.com

$173.1

$139.2

24.3%

100

$500.0

Percentage of assets under management

William R. Anderson Ensign J. Cowell S. Sterling McMillan William G Batcheller

MGO Investment Advisors Inc. 1301 E. Ninth St., Suite 1400, Cleveland 44114 (216) 771-4242/www.mgo-inc.com

$163.3

$103.3

58.1%

1,736

$20.0

Percentage of assets under management

Michael Bradford Moskal

Fee only

Reform: Providers must rethink delivery of care continued from PAGE 1

an extra payment from Medicaid that enables them to cover some of the costs incurred by caring for the uninsured. For MetroHealth, that payment amounted to $36.4 million last year, Mr. Corlett said. However, that payment will begin to be phased out for all hospitals in 2013 in expectation of the number of uninsured dropping dramatically, he said. That’s one year before 32 million more Americans will be covered under Medicaid or the state insurance exchanges, which will be designed to provide affordable insurance coverage. Gary Robinson, vice president of government and community affairs at Lake Health, said he worries the additional payment from Medicaid will expire before more of the uninsured become covered under various health insurance programs. As the government continues to detail the new mandates under the reform bill, hospitals are looking for ways to handle more patients with an already-existing shortage of primary care doctors. MetroHealth in 2008 launched a program to steer more uninsured patients to primary care physicians, but Mr. Corlett said access will remain an issue. “There is probably a lot of pent up demand out there,” he said. “We are likely to see an influx of patients into the system.”

Managing care and its costs The federal government hopes to solve that issue temporarily by paying primary care doctors higher Medic-

aid rates from 2013 to 2015 to entice them to take on more Medicaid patients, Ms. Gartland said. Medicaid reimbursement rates historically have been lower than Medicare reimbursement rates, but the two will be equal during that two-year span, she said. UH is trying to direct more new doctors to the primary care field by informing medical residents that, under the reform bill, the federal government has promised to forgive more medical school loans if a student pursues primary care in medicallyunderserved areas, she said. A Work Force Commission also was created under the reform bill to monitor the need for nurses, doctors and medical personnel and to determine how to solve those problems, Ms. Gartland said. “I’m sure you’re going to see additional dollars for nurse practitioners and physician assistants,” which are in short supply, she added. “The country is going to be faced with a shortage of health care professionals.” Consequently, Congress is urging providers to better manage the health of senior citizens so they won’t need as much care. The reform bill established a program for accountable care organizations, which are providers that band together to share Medicare cost savings, said Amy Leopard, head of the health care group at Cleveland law firm Walter & Haverfield LLP. Under the provision, groups of providers who care for at least 5,000 seniors combined can begin contracting with Medicare in 2012 for at least three years to manage the

health of those seniors. A yet-undetermined portion of the money saved by Medicare under this program will be shared with the participating providers, Ms. Leopard said. “The government is saying, ‘If you guys are able to get together and manage care successfully, we are going to share rewards with you,’” she said. “They’ve never done that before.” Ms. Leopard expects the provision to boost cooperation among hospitals and private practice doctors. Thomas Selden, president and CEO of Southwest General Medical Center, said there currently are no accountable care organizations in Northeast Ohio but, like Southwest General, most local hospitals likely are considering them. Southwest General has a large enough senior population on its own to participate in the program, he said. The government will implement a number of initiatives designed to stem rising health care costs, among them are freezing or reducing Medicare reimbursement rates and cutting payments to hospitals with higher patient readmission rates or hospital-acquired illnesses such as pneumonia, Ms. Leopard said. “All of these changes are intended to decrease the Medicare budget,” she said. “Essentially what they’re saying is, ‘You have to invest in a new delivery system.’” As the amount of uncompensated care dwindles due to fewer people being uninsured, providers also must demonstrate their community benefit contribution to retain their tax-exempt status. They will have to

Anne P. Ogan president

conduct community needs assessments, provide emergency care regardless of the patient’s ability to pay, and will not be allowed to charge the uninsured more than they charge insured patients. Many local hospitals claim they already provide free or reduced prices for care to people who earn up to 400% of the federal poverty level, which is $10,991 for one person and $22,025 for a family of four. Those financial assistance programs must be maintained, in addition to restrained billing and collection policies, which also will need to be disclosed to the public, Ms. Leopard said. “You do have to tell folks what the collection practices of the hospital are before you send them to collections,” Ms. Gartland said. Though providers will have to implement new policies and procedures, the reform bill likely will have a positive effect on them, Lake Health’s Mr. Robinson said. “The (providers) that respond and make changes like working more closely with physicians and embrace prevention and wellness, I think they could weather this,” he said. However, the reform bill won’t come without challenges to providers, especially as reimbursement rates are cut. Mr. Selden said he expects the reform bill overall to reduce Southwest General’s average reimbursement by 2% a year. “We have to find ways to deliver quality care for a lower cost,” he said. “We need to be innovative, creative and smart about the way we re-engineer care today.” ■

Stephen L. Rudolph CIO Mary F. Anderson president

Adam Bold

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. Business lists and The Book of Lists are available to purchase at www.crainscleveland.com/section/crains-lists. (1) Minimum account size is at the discretion of the representative. (2) Rehmann Financial entered into mergers with Dawson Wealth Management, Cotter Advisory Group and Pension Builders & Consultants. (3) Reported assets include non-discretionary and discretionary accounts. (4) Formerly Brennan Financial Group.

Mark W. Fearigo principal

Brian Fowles managing partner, senior investment advisor Ensign J. Cowell managing principal Michael Bradford Moskal director of Investments

RESEARCHED BY Deborah W. Hillyer

ON THE WEB

Story from www.CrainsCleveland.com.

Ad outfit Brokaw and chain link up Brokaw Inc. in Cleveland has been named advertising agency of record for quick-service Italian restaurant chain Fazoli’s, which just launched a new prototype restaurant and menu. Following an agency review, the 250-unit Fazoli’s, which is based in Lexington, Ky., “determined Brokaw Inc. could best capture the brand’s revitalized direction,” the company said in a news release. Billings were not disclosed. “We are very excited about our new partnership,” said Cathy Hull, chief marketing officer for Fazoli’s, in a statement. “Brokaw’s reputation for brand positioning and creative strategies is renowned. The agency’s strength in these areas, as well as its personality, aligns well with Fazoli’s current and emerging needs.” Fazoli’s said Brokaw “has established itself as an awardwinning center for original, strategically driven creative for clients such as vitaminwater global, Bruegger’s Bagels and Cleveland Hopkins International Airport.” Tim Brokaw, managing partner at Brokaw, said in a statement that Fazoli’s “has tremendous growth potential” and that “the timing is right to help take this unique brand to the next level.”

20100412-NEWS--22-NAT-CCI-CL_--

4/9/2010

10:40 AM

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

APRIL 12-18, 2010

Experts alert employers to hidden costs in dropping health coverage By JERRY GEISEL Business Insurance

Employers viewing the enactment of health care reform legislation as an opportunity to drop health coverage and escape a huge financial burden may want to rethink that idea, experts say. The hidden costs of dropping their health care plans could far outweigh the fine that employers would face for not offering health care coverage, they say. At first blush, though, the financial advantages for an employer that terminates its health insurance plans are compelling.

Contact: Phone: Fax: E-mail:

Employers that take that route would have to pay a $2,000 per employee penalty to the federal government starting in 2014. But with health insurance costs averaging about $9,000 per employee, the savings from the elimination of coverage would dwarf the penalties paid. Some employees also could benefit from health care plan terminations. Lower-paid employees would be entitled to federal health insurance premium subsidies to buy coverage through state insurance exchanges that the reform law authorized and are to be set up by 2014. Those subsidies could result in some employees paying less for

coverage than they do under their employer’s plan. But the perception that every employer will come out ahead financially by dumping their health care plan differs from reality, experts say. “When we have drawn up models, the vast majority of employers would pay more” compared with maintaining their plans, said Dave Osterndorf, senior health and group benefits actuary in the Milwaukee office of Towers Watson & Co. “There may be scenarios where plan terminations may make economic sense, but they would be rare,” said Marcia Benshoof, presi-

dent of broker IMA of Colorado Inc. in Denver. “We are counseling against any knee-jerk reactions.” There are several reasons why a plan termination would not be cost-effective for employers, with the most significant being the cost that employers likely would incur by increasing salaries of employees not eligible for premium subsidies and those whose subsidies would be far less than their current share of the group premium. Under the new law, employees with adjusted gross family incomes exceeding $88,000 would not be eligible for a federal subsidy and would have to pay the full premium.

REAL ESTATE

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AUCTIONS

Since family premiums already often exceed $15,000 a year, upper middle-income and upper-income employees would effectively have a huge reduction in compensation if their employers terminated coverage and employees had to pay for their own coverage. To make up for that huge loss of compensation, employers wishing to retain workers would have to bump up salaries, which would increase employers’ share of FICA taxes. ■ (Jerry Geisel is editor-at-large at Business Insurance, a sister publication of Crain’s Cleveland Business.)

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20100412-NEWS--23-NAT-CCI-CL_--

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APRIL 12-18, 2010

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

THEINSIDER

THEWEEK APRIL 5 - 11 The big story: Cedar Fair Entertainment Co. and the private equity firm Apollo Global Management called off their merger. As a result, Cedar Fair said it will pay Apollo $6.5 million to reimburse it for expenses related to the transaction, which was announced last year, but had faced opposition from Cedar Fair unitholders. “The board has heard from Cedar Fair unitholders, and it is apparent that the merger transaction does not have the required level of investor support,” Cedar Fair CEO Dick Kinzel said. Cedar Fair has been under pressure to continue making payments on its debt and in March informed unitholders that if the company’s performance did not improve, it could violate loan covenants.

Nice save: Steris Corp. has saved its flagship product. The Mentor sterilization products company received the U.S. Food and Drug Administration’s approval to sell a product designed to replace its popular System 1 processor, which is used to clean endoscopes and other medical equipment. The FDA’s announcement of clearance for the Steris System 1E Liquid Chemical Sterilant Processing System was a big win for the company. The federal agency on Dec. 3 ordered all health care facilities that use the device to replace it with an FDA-approved alternative.

Settling down: Six public education institutions in Northeast Ohio will receive funds from the state of Ohio’s settlement of a lawsuit with American International Group. Ohio Attorney General Richard Cordray said AIG agreed to pay $9 million to settle the lawsuit, filed in 2007, which alleged violations of the state’s antitrust laws. In the settlement, 26 public entities throughout the state — including the Cleveland Municipal Schools, Cleveland State University, Kent State University, the Northeastern Ohio Universities Colleges of Medicine and Pharmacy, the University of Akron and Youngstown State Universities — will receive reimbursements. Mr. Cordray said AIG, the world’s largest insurance company, is alleged to have conspired with insurance broker Marsh & McLennan and other insurers “to eliminate competition in the commercial casualty insurance industry.”

Upon further review: A Strongsville company that was expected to move its corporate headquarters to Aviation High School on Cleveland’s lakefront has reconsidered its decision. “We have decided that the former Aviation High School location is not the best fit for our organization’s needs and goals at this time, and are considering other options,” said Beth Stec, director of corporate communications and human resources at MCPc Inc. She said the computer technology reseller would not discuss its plans for a move any further but noted, “We are making every effort to keep MCPc in Northeast Ohio.” Power up: A FirstEnergy Corp. subsidiary is beginning to sell electric power to residential customers outside the company’s traditional Northern Ohio service area. Cincinnati-area customers now served by Duke Energy Corp. who sign up for service from FirstEnergy Solutions can purchase power through December 2012 for 10% cheaper than Duke’s “price to compare.” The “price to compare,” which appears on electric bills, is the price for power generation and several related charges that can fluctuate monthly. The incumbent utility, in this case Duke Energy, will continue to provide power distribution and billing to FirstEnergy Solutions power purchasers.

To keep up with Northeast Ohio business news as it happens, visit www.CrainsCleveland.com.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

RTA may have a future in the futures business

last week announced his purchase of the former Painesville Speedway, a 0.2-mile ■ The profits aren’t enough to allow it track in Painesville to restore any lost service, but since Township. the beginning of 2010, the Greater CleveThe track will get a land Regional Transit Authority has been boost from becoming making money in the futures market. only the third track in For the first three months of 2010, Ohio to be sanctioned the transit agency has made by NASCAR, which $542,815.19 selling heating oil futures, offers benefits such the agency’s board learned last week. as name recognition RTA began purchasing the futures (which Mr. McCartlast year as a way to control its diesel ney said will help him fuel costs, said Gale Fisk, RTA’s director market the track) and PHOTO PROVIDED of management and budget, after it could no longer get long-term, fixed- NASCAR representative increased prize money price diesel fuel contracts. There is no Robert Duvall (left) con- and insurance for futures market for diesel fuel so the gratulates Andy McCart- drivers that will draw agency instead buys heating oil futures ney, the new owner of the bigger names and Lake County Speedway, at better drivers. Columcontracts. That market, Mr. Fisk said, moves a news conference last bus Motor Speedway and Kil-Kare Raceway in tandem with diesel fuel costs. So week. in Xenia, a Dayton when RTA has to pay more for diesel suburb, are the other two Ohio NASCARfuel, the prices of its heating oil futures rise sanctioned tracks. and the agency can sell them at a profit. A Bowden team leader and a long-time In February, RTA announced budget and driver at Painesville Speedway, Randy service cuts that would reduce its 2010 Holbrooks will run the operations, while Mr. operating expenses to cover an anticipated McCartney already has overhauled the $12 million shortfall in transit sales tax track’s marketing by unveiling a redesigned revenue. — Jay Miller web site at www.lakecountyspeedway.com and employing social media to get the word out. Mr. McCartney said there had been little advertising done previously. ■ Never heard of the Lake County SpeedMr. McCartney, who said very few infraway? Andy McCartney wants to change that. structure improvements had been made Mr. McCartney, who runs machining recently, already has made around $100,000 shop Bowden Manufacturing in Willoughby, in improvements to the track in anticipation

New Lake County Speedway owner is off to a fast start

WHAT’S NEW

COMPANY: US Endoscopy, Mentor PRODUCT: Entrada colonic overtube US Endoscopy, which designs and makes gastrointestinal endoscopy products, says the new Entrada colonic overtube offers greater control during a colonoscopy in patients with difficult anatomy, particularly a condition known as tortuous sigmoid looping. Patients with difficult anatomy “often present challenges for clinicians during colonoscopy procedures,” says Gulam Khan, the company’s co-chairman and CEO. “If an ‘N’ loop forms during colonoscopy, then the scope can be difficult to advance, causing much time delay, frustration and patient discomfort.” Once the loop is reduced, he says, the Entrada overtube “can prevent the reformation of sigmoid loops and enable clinicians to effectively advance the endoscope with improved control.” The company says the Entrada overtube features a flexible design to form a smooth transition between the overtube and a range of colonoscopes. The device also has a hydrophilic coating for ease of insertion and scope movement. For information, visit www.usendoscopy .com. Send new product information to managing editor Scott Suttell at ssuttell@crain.com.

of bigger crowds, both drivers and fans. That includes grading work on the track and improvements to fencing, concession areas and the bathrooms. “The wives already are saying, ‘You had me at fixing the restrooms,’” Mr. McCartney said. — Joel Hammond

It’s all Greek to us ■ Two Kent State University professors have been tapped to help teach American children uncommon foreign languages. Uma Krishnan, who teaches Hindi, and Fetna Mikati, who teaches Arabic, were two of eight people chosen by the National Foreign Language Center at the University of Maryland to participate in its STARTALK program. Under that program, the professors appear in online videos to guide lessons to teach these languages. In her video, Ms. Krishnan uses the Hindi language, culture and information to explain the Nehru dynasty and the idea of multigenerational families. Ms. Mikati teaches Arabic through a conversation between two people whose native tongue is Arabic. The STARTALK Classroom Video Collection is available to teachers at www.startalk.umd.edu/teacher-development /videos. Among the other language professionals selected for the videos are professors from the University of Pennsylvania and San Diego State University. — Shannon Mortland

BEST OF THE BLOGS Excerpts from blog entries on CrainsCleveland.com.

Bicycle magazine says Cleveland’s on a roll

Watch out, Jay-Z. Finance pro Kenneth-R is about to blow up

■ Bicycling offered its list of the 50 most bike-friendly cities in the country, and there’s good momentum for Cleveland. The city’s ranking, No. 39, doesn’t look all that impressive, but Bicycling puts Cleveland in a subcategory of five cities showing the most improvement of late. Here’s how Bicycling describes what’s happening here: “A new trail just beyond the city’s southern border runs all the way to Akron — 110 miles in all,” the magazine said. “Plans call for a web of trails to unspool east and west as well. To get tourists in the act, the city launched a bike-rental program last summer — part of a goal to expand into an indoor parking garage with showers, changing rooms and lockers.”

■ The next YouTube superstar might turn out to be … Cleveland financial adviser Kenneth Robinson? The Wall Street Journal gave Mr. Robinson a boost last week with a blog post that called attention to his rap video — yes, you read that right, his rap video — titled “It Won’t Go to Zero.” He told The Journal that he thought a music video would be a more effective way to teach investors about future economic downturns than a more traditional approach.

The economy’s still down, and wage garnishments are up

The five-minute musical montage features the bespectacled Mr. Robinson wearing a gold dollar-sign medallion over his blue button-down shirt and yellow tie. He turns some mean phrases, including this one on the need to diversify your stock holdings: “A good way to do this, in my professional view, is with mutual funds, which have gotten the clue, that if you track a broad index it’s harder to go wrong, the S&P 500s, they should be pretty strong.” It you’re curious, the video is at http://tinyurl.com/y5udwoe.

■ An April 1 New York Times piece looked at the rise of wage garnishments, a growing problem in Cleveland. “One of the worst economic downturns of modern history has produced a big increase in the number of delinquent borrowers, and creditors are suing them by the millions,” The Times reported. “Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge interest charges and penalties they often tack on.” After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, The Times reported, “but the pay seizures are rising fast in some areas — up 121% in the Phoenix area since 2005, and 55% in the Atlanta area since 2004. In Cleveland, garnishments jumped 30% between 2008 and 2009 alone.”

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4/8/2010

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